OPINION: The Market Data Reform Marathon


Wall Street has hit the latest round of “Am not! Are too!” regarding market data pricing as Nasdaq responds to the IEX’s recently published market-data and connectivity cost study.

The IEX compared its cost to provide market data as well as physical and logical connections with the prices that other exchange operators charge the IEX for the same services.

The 38-page report’s conclusion should come to no surprise to anyone following the debate.

The authors found “the existence of dramatic, and times egregious, differences between the costs of proving market data, and connectivity, and the fees charged by NYSE, Nasdaq, and Cboe.”

It only took about 24 hours before Nasdaq that market data fees should be viewed as one of the components of “all-in” trading costs that also include co-location and trading costs.

Present those figures in a cost-per-share format, and the performance of the various exchanges operators flips almost completely.

Both pieces look to recapture the momentum that their respective sides had just after the two-day market-data and market-access that the Division of Tradings and Markets hosted in late October 2018.

During that period the SEC approved the access-fee pilot for later this year as well as overturning the decision of one of the regulator’s administrative law judges affirming Nasdaq’s and NYSE’s depth-of-book filings and remanding 400 SEC-approved price filings to the exchange operators for review.

Then came the 35-day US Federal government shutdown that has put the breaks on many things while the SEC works to catch up on the work that it accumulated during late December and most of January.

Now, all of the involved parties look to jump back into the argument from a standing start.

What once looked like a sprint at the end of 2018, remains a long hard slog, according to Adena Friedman, CEO of Nasdaq.

“We believe this debate and related litigation will continue for many years to come,” she said during Nasdaq fourth-quarter earnings call.

Friedman also noted that Nasdaq had appealed the SEC’s remand order to the DC Circuit Court of Appeals and expects that the court to hear the case late this year.

“Separately, the SEC was asked to reconsider the remand order and, in response, decided to stop the clock on its proposed six-month time frame for exchanges to design a review procedure for the remanded files,” she added.

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