On October 25, 2018, Hal S. Scott, President of the Committee on Capital Markets Regulation, participated as a panelist at the Securities and Exchange Commission’s (SEC) Roundtable on Market Data and Market Access. Professor Scott delivered remarks and answered questions on a panel entitled “Overview of Current Landscape for Market Data Products and Market Access Services.” The other panelists were:

  • Doug Cifu, Virtu Financial;
  • Chris Concannon, CBOE;
  • Stacey Cunningham, NYSE;
  • Brad Katsuyama, IEX
  • Mehmet Kinak, T.Rowe Price; and
  • Tom Wittman, Nasdaq

Professor Scott’s opening statement described a wide range of options the SEC could undertake to examine whether the cost of critical market data services are excessively high, and, if so, actions the SEC could take to reduce those costs. Specifically, he stated that the Committee supports requiring exchanges to make standardized and thorough disclosures of their revenues from all critical market data services and the underlying direct costs of providing those services. He also noted that the SEC could require that when exchanges file for fee approvals that they provide further evidence that the fees they charge for critical market data are fair and reasonable, not discriminatory, and subject to market forces. In addition, he explained that the SEC could allow for competition among consolidators of SIP data, a position the Committee has supported in the past.

The statement concluded by noting that such reforms would not alone subject proprietary data feeds and connectivity services to competitive forces. Therefore, the SEC should accept public comment about regulatory changes that could subject those fees to competition and if competition is not possible, then the SEC should consider whether it would be more appropriate to allow exchanges only to charge fees for services that match the direct cost of providing them.

The full statement can be found here.