10.17.2018
By Rob Daly

OPINION: It’s Not Market Data, It’s Market Structure

After the US Securities and Exchange Commission decided to set aside Nasdaq and NYSE’s respective depth-of-book fees, I am looking forward to the Division of Trading and Market’s market data and market access roundtable next week more than ever.

The first panel with representatives of Cboe, IEX, Nasdaq, and NYSE as well as Virtu Financial and T. Rowe Price should be interesting.

Tuesday’s decision, however, will not change things overnight: The SEC decision did not conclude that the fees were too high, but the exchanges did not prove that the specific fees were “fair and reasonable and not unreasonably discriminatory.”

The Commission’s dispositive decision seems ripe of appeal.

Even if the exchange operators are unsuccessful, they have more than 400 market fee and market access fee changes that they filed with the SEC since the start of SIFMA’s lawsuit, which the SEC has decided to send back the related filings to the exchange operators for review and potential re-submission.

The review is going to take a considerable amount of time, probably slightly longer than the time it takes Nasdaq and NYSE to appeal the SEC’s decision.

Meanwhile, the most interesting related to the decision is Commissioners Hester Pierce and Elad Roisman’s joint statement that they issued after the Commission’s announcement.

Although they voted in favor of the decision, they provided the exchange operators with three potential ways to couch their defense of future fee changes.

Commissioners Piece and Roisman also took direct aim at Regulation NMS’ Rule 611, better known as the Order Protection Rule, claiming that it forces broker-dealer to subscribe to the proprietary market-data feeds and questioning who it truly protects.

Of course, none of the Market Data and Market Access Roundtable panels will address market structure reform directly, but it is sure to come up quickly and often in any of the discussions.

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