Investors and other market participants could soon see more transparency into the fees plans charge for core data, following the SEC's vote Tuesday to make future fee changes first subject to a public comment period.
Officials at the Securities and Exchange Commission characterize the change as one of process, rather than one likely to significantly impact fees. Under the current process, fees under the National Market System plan, or Regulation NMS, become effective immediately.
SEC Chairman Jay Clayton said in a statement that the change "will help ensure that NMS plan fee changes benefit from review and comment by investors and market participants before those fees can be charged."
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. The proposed amendments will be published on the SEC website and in the Federal Register and open for a 60-day comment period.
According to the SEC's proposal, NMS plan fees paid for core data generated $500 million for exchanges in 2017.
The change was welcomed by market participant and investor groups, many of whom 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 SIP plans and to require more transparency of all market data revenues and related costs, including making them subject to notice and comment before becoming effective.
"Investors have longstanding concerns about the need for more transparency around exchange fees, given the opacity of the exchanges about all manner of fees and their natural monopoly over access to their own markets," said Amy Borrus, deputy director of the Council of Institutional Investors, in an email.
The change is "a more sensible regulation that will meaningfully level the playing field back towards investors and market participants, where it belongs," John Ramsay, chief market policy officer at IEX Group. "IEX stands firmly in support of the SEC removing this loophole, which has deprived the investing public of the accountability and transparency it deserves."
