Saturday, April 10, 2021

U.S. stock exchanges face further pressure on data charges amid SEC crackdown

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The New York Stock Exchange and Nasdaq face new threats to their earnings by selling stock data after the United States Securities and Exchange Commission tightened regulations and decided to inject more competition into the market.

New rules passed unanimously by the committee on Wednesday would require more public access to stock price information, the SEC said.

Exchanges will be forced to speed up and expand highly regulated data streams containing essential market information that they provide to the public – which could hurt the value of their proprietary data business, which offers more content. , faster, for a higher fee.

SEC rules also open up public flows to more competition.

“While some can afford an expensive trip along a high-speed, newly paved toll lane, others are relegated to a cheaper ride on a public road with a cracked sidewalk and potholes. “said Allison Lee, one of the Democrats in five. member commission.

Ms. Lee is expected to temporarily lead the SEC after the Departure Jay Clayton, appointed by the Trump administration, at the end of this year, and the unanimous nature of Wednesday’s vote suggests that exchanges will not be able to breathe easier under a Biden administration.

The exchanges fought for two years with the SEC over rule changes aimed at reducing their market power. In June, NYSE, Nasdaq and CBOE Global Markets won two court challenges against previous commission proposals designed to reduce data and trading costs.

Ms Lee said the current stock market is controlled by for-profit exchanges selling their own competing proprietary data products in a pay-to-play model that has hurt small investors.

Morningstar said in an April research note to the Nasdaq that the SEC’s new market data rules, “we don’t think this will cause news service revenues to drop. [but] we believe that this could limit the growth of the segment ”.

The Nasdaq said the rule changes would “reduce competition and make markets more expensive for all investors” and said it “would assess how best to protect the investing public in light of the SEC approval. “.

The NYSE said its markets and data infrastructure “have performed particularly well during this year’s volatility, and we believe the SEC hastily approved an irreversible experiment with mission-critical systems.”

Investor groups have cautiously welcomed the changes. Tyler Gellasch, Executive Director of Healthy Markets, which represents Calpers, Federated Hermes and other institutional investors, said: “While we welcome the reforms to make the public equity market data feed less expensive and more useful, these [SEC] the reforms are likely to add significant complexity for market participants and risks for investors. “

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