On April 23, the Committee submitted a comment letter to the Securities and Exchange Commission (the “SEC”) regarding its proposal to introduce competition among providers of consolidated equity market data for national market system stocks (the “Competition Proposal”). The Committee supports the Competition Proposal, because we believe it will improve the quality and decrease the cost of consolidated equity market data, ultimately enhancing market efficiency for investors.
The letter proceeds in two parts. Part I briefly describes the existing landscape with respect to the dissemination of U.S. equity market data. At present, market participants can purchase: (i) consolidated equity market data from securities information processors (“SIPs”) jointly controlled by exchanges; and (ii) unconsolidated equity market data directly from exchanges via proprietary data feeds.
Part II summarizes the Competition Proposal, which would authorize competing consolidators that would perform the collection, consolidation, and dissemination functions currently performed by exclusive SIPs. Under the Competition Proposal, competing consolidators would pay fees to each exchange for access to each individual exchange’s market data, which they would then consolidate and sell. The exchange fees would be subject to SEC approval. The Committee supports the Competition Proposal. However, we recommend that the SEC go further and require exchanges to disclose the underlying cost of the equity market data that the exchanges sell to competing consolidators, so the SEC and the public can appropriately scrutinize the market data fees that the exchanges charge competing consolidators.
The Committee’s letter can be found here.