[throwaway183839]

Here's an interesting proposal - you charge a small amount (e.g. 0.001 of a cent) for every single order placement and rebate the proceeds to all market participants in proportion to how much volume they actually traded.

People who enter many quotes that they never trade on would be punished by this system (human traders and "flickering" high frequency traders alike) whereas people providing genuine liquidity, in the form of long-lasting quotes at a good price that they intend to trade, will benefit.

[yummyfajitas]

This is already done. There is an per-order fee and a per-trade fee. All your proposal would do is shift the balance slightly between these fees.

[throwaway283719]

What markets is this done on? On most markets that I'm aware of, there is a fee for passive trades and a fee for aggressive trades. Sometimes the fee for a passive trade is negative (a rebate) which encourages liquidity provision, but I don't know of any market that actually charges per order, and then rebates that proportionally to the liquidity providers.

One proviso is that I've never worked on US equity markets, so if this rule is in place there then I wouldn't know about it.

[yummyfajitas]

In US markets there is a (very small) per-order fee.

There are also rolling windows and disconnections for people who go crazy with quote spam or have low fill rates.