In 2020, the SEC issued two orders aimed at consolidating the three existing NMS plans into a single, consolidated plan and modifying the governance structure to increase efficiencies and mitigate conflicts of interest.
After filing a proposed NMS plan complying with the SEC orders in 2020, a group of exchanges — Nasdaq, the New York Stock Exchange and Cboe Global Markets — challenged the orders in the U.S. Court of Appeals for the District of Columbia Circuit in 2021.
The exchanges particularly took issue with three provisions of the final, SEC-approved updated NMS plan, referred to as the CT plan: the inclusion of representatives of non-exchanges as voting members of the CT plan's operating committee; the grouping of exchanges based on corporate affiliation for voting; and the requirement that the administrator of the CT plan be "independent," meaning independent of any exchange that sells equity market data products.
The court in July 2022 granted the exchanges' petition with respect to the inclusion of non-exchange voting members on the CT plan operating committee, but denied the other challenges.
In light of the court's decision, Friday's order states that there will no longer be non-exchange members on the operating committee and the commission has modified the voting provisions to require that action by the operating committee would require a two-thirds majority of the votes allocated to the exchanges.
Because most of the original plan wasn't challenged or was upheld by the court, the SEC said it believes that the exchanges should be able to rely on a substantial portion of the proposed CT plan previously filed.
The SEC set a 45-day deadline following publication in the Federal Register for the exchanges to submit a new plan.
Kenneth E. Bentsen, president and CEO of the Securities Industry and Financial Markets Association, supported the SEC's action. "We have long held the view that updates were needed to streamline and make more efficient the distribution of equity market data, which is the lifeblood of the U.S. equity markets," he said in a statement. "Today's action is designed to establish a new, single equity market data plan to replace the three that currently exist, thus fostering greater efficiency in the distribution of equity market data. We look forward to reviewing the order and offering the industry's views."