Wall Street Basks in Market-Data Win


The sell side won a small victory on May 1 as the US Securities and Exchange Commission batted down a significant market-data fee increase proposed by the SIP plans sponsors.

The backers of the CTA and CQ Plans filed a request on March 5, 2018, to raise the Broker-Dealer Enterprise Maximum Month Charge for Network A and Network B data by approximately 84% and 31% respectively.

Fighting market-data increases in the past had been akin to taking on the role of Cervantes’ Don Quixote, quipped Doug Cifu, CEO of Virtual Financial during the firm’s first-quarter earnings call.

Doug Cifu,
Virtu Financial

“It was rolling a rock up a hill, but we feel somewhat vindicated and validated,” he said. “Six months ago, 24 investment firms of all shapes and sizes – Virtu, Citadel, Vanguard, and other buy-side firms and retail brokers- wrote a letter to the SEC essentially to say ‘Enough is enough. Give us some transparencies around these costs.'”

Cifu attributed the change in the regulator’s approach to market data issues to more industry veterans like Brett Redfearn, director of the Division of Trading and Markets at the SEC, helping to put the subject into a better context.

Exchange operator and a SIP plan sponsor Cboe Global Markets has noticed the change over the past couple of years, according to Chris Concannon, president and COO of Cboe Global Markets.

“Over the last couple of years, the SEC has been very diligent around any market data filing,” he said during Cboe’s first-quarter earnings call. “Certainly we spent a lot of time on what was Bats One, which now is Cboe One, working through that original filing and adding a lot more detail in the filing that we had in the past.”

However, the SIP plan sponsors expect to refile their request.

“[The SEC’s decision] does not mean that pricing cannot be changed; It means that the filing has to be enhanced that is made before the SEC,” he explained during the Cboe Global Markets quarterly earnings call. “So, it is still early in the process, and the exchanges are working with the SEC on the SIP filing.”

Concannon noted that goal for the SIP plan sponsor is to keep its pricing revenue neutral.

“When you declare something revenue neutral, you have to spend a lot of time explaining how it is revenue neutral,” he said. “I think a lot of the requirements that the SEC are putting on market data filings have been going on for a couple of years now. I do not see this as any real difference.”

Although the regulator refused to approve this particular increase, Cifu doubted that the decision would lead to rolling back costs for his firm.

“I’m not that insane to think all of a sudden these costs will be slashed in half and there will be a significant decrease in our expense base,” he said. “The important part was to say that there has to be some rationality to how these costs are derived and they cannot all be passed along to the industry.”

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