Fee hikes from exchanges for basic data will first require public comment and approval from the Securities and Exchange Commission, following a vote Wednesday to rescind a rule that until now has allowed exchanges to make changes unilaterally.
SEC Chairman Jay Clayton said that the rule-making will enhance the efficiency and transparency of the process for exchanges to assess new fees for National Market System, or Regulation NMS, data.
NMS regulations govern collection, consolidation and distribution of market data through four core data plans: the Consolidated Tape Association, Consolidated Quotation, Unlisted Trading Privileges and Options Price Reporting Association, and the Consolidated Audit Trail. According to the SEC, plan fees paid for core data generated $500 million for exchanges in 2017.
The rule change is to take effect 30 days after publication in the Federal Register.
Many market participant and investor groups petitioned the SEC in December 2017 to address widespread concerns about the high costs of market data and connectivity fees charged by exchanges and under the four data plans, and to require more transparency of all market data revenues and related costs, including making them subject to notice and comment first.
When the SEC proposed the new rule in October, officials there characterized it as a process improvement to give investors and other market participants an opportunity to review new fees, rather than one likely to significantly impact fees.
The change is long past due, said Tyler Gellasch, executive director of the Healthy Markets Association, whose members include many pension funds, in an email.
"When for-profit exchanges are setting fees for essential market data, the public deserves to have an opportunity to object before getting handed the bill," he said.
John Ramsay, chief market policy officer at IEX Group, said in a statement that the change "will be broadly welcomed by both brokers and their investor clients, and will remedy a longstanding industry frustration with the inability to weigh in on consolidated data fees before they go into effect."
