Clearpool Weighs In on NYSE Access Fees


Say it ain’t so, New York Stock Exchange.

Joe Wald, chief executive officer at agency broker Clearpool, is saying no to proposed changes in access and connectivity fees that the NYSE Group family of exchanges is looking to charge. These fees, he argues in a comment letter to the U.S. Securities and Exchange Commission, are already costly and allowing for higher charges can only hurt brokers, and ultimately, investors.

Clearpool, in its filing with the SEC, said it’s happy the regulator has put the NYSE’s proposal out for comment and that it feels a review of the pricing of access and connectivity is overdue as these fees currently haven’t been competitive and beneficial to trading.

Joe Wald, Clearpool

Joe Wald, Clearpool

“It is clear that market driven solutions to concerns raised by these issues have not, to date, created a more competitive or equitable environment for the pricing of market data, and do not look to be the answer to addressing issues surrounding market data fees,” Wald wrote. “We believe the time is ripe for the Commission to thoroughly review the issues around market data and use its authority to ensure that exchanges price such data more competitively and equitably for all market participants.”

Last November, the NYSE, NYSE Arca, and NYSE MKT petitioned the SEC to amend the co-location services offered by the group to add and establish certain access and connectivity fees. In response, the SEC requested comment as to whether users have viable alternatives to paying the Exchanges a connectivity fee for the NYSE Premium Data Products.

The debate surrounding data costs, fees and access has gone public as of late as brokers, who need the most complete and timely data to satisfy best-execution mandates, are increasingly being forced to pay higher costs to the exchanges. The exchanges, the brokers like Clearpool argue, offer for free only basic information via the Securities Information Processor (SIP) which is antiquated and fails to help them meet ‘best ex’ requirements. Thus, the brokers are hamstrung and forced to pay increased prices and fees for higher level or premium data feeds.

The exchanges counter that the SIP is available to all and has been upgraded to satisfactorily meet the brokers’ needs. Also, the fees charged for higher level or premium data feeds offered are in line with the exchanges’ investment in such feeds.

Wald explained that while issues relating to market data fees, including access and connectivity fees, are significant for all broker-dealers, the impact of these costs on smaller and mid-size brokers outside of the so-called “bulge bracket,” such as his firm Clearpool and the core constituency which it serves, can be “disproportionate and can have a wide-ranging impact on not only these brokers, but also the investors who they serve.”

“We believe that there has not been enough focus on the unique issues that the current regime surrounding market data fees raise for this critical segment of the market,” Wald said. He added that the exchanges, such as NYSE, derive a sizable chunk of revenue from data provision, offsetting static trading revenue and listings fees.

“In turn, the incentives for exchanges to place their interests ahead of the users of market data thereby increases, as does the disincentives to reign in market data fees. At the same time, brokers, vendors, and investors alike are beholden to the exchanges for this data, as it becomes an ever increasingly important part of the overall trading process,” Wald said.

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