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Regulation

Hedge fund trade groups ask SEC to review market data fees

The Managed Funds Association and the Alternative Investment Management Association have asked the Securities and Exchange Commission to initiate regulatory actions, issue guidance and conduct a study on data fees charged by some exchanges.

In a petition submitted last week, the associations said they are "concerned that exchanges as exclusive processors are charging unreasonable fees for market data products, and as a consequence, restricting trade and harming competition."

Many exchanges have continued to increase securities market data fees, create new fee categories and recategorize fees, according to the petition. "In the quest for greater market data revenue, exchanges have unbundled products and charged higher fees for the 'new' products," the petition said.

The hedge fund trade groups would like the SEC to request financial information from exchanges on market data operating costs and revenue, and require exchanges to file more detail with respect to market data fee schedules in terms of definitional specificity, among other requests.

"We are strongly concerned that the way in which the current regulatory framework is being implemented falls short of the goals of the Securities Exchange Act of 1934 … and is not adequately protecting investors from anti-competitive, unfair and unreasonably discriminatory market data licensing practices," the petition said.

In April, SEC Chairman Jay Clayton said the division of trading and markets will organize a staff roundtable this year that will focus on investor access to markets and market data. A date for the roundtable has yet to be announced.