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Exchanges Triumph on 2016 SEC Market Data Decision

Traders Magazine Online News, January 10, 2018

John D'Antona Jr.

And it is the exchanges that prevail in the market data pricing and competition debate.

In a recent judgement and decision from Securities and Exchange Commission Administrative Judge Brenda Murray, she ratified a June 2016 decision that exchanges' market data businesses are subject to competitive forces. Her decision, reported first by S&P Global Intelligence, effectively could bring to a close the nearly two-year battle between the brokers and the New York Stock Exchange and Nasdaq regarding pricing of data.

The case, first brought by the Securities Industry Financial Management Association (SIFMA) argued broker/dealers were being charged unreasonable prices for the exchanges' market data feeds. The argument was rooted in the fact that since the different feeds offered by the exchanges cover different data sets and all feed data is necessary for brokers to route order in compliance with best ex mandates, feed prices were unconstrained by competition.

However, in June 2016, Judge Murray ruled in favor of the exchanges, writing that their depth-of-book prices are constrained by a client's ability to switch to another exchange's product. Soon after the ruling, the SEC granted SIFMA an appeal to the decision, but when Murray requested any new evidence from SIFMA, Nasdaq and the New York Stock Exchange in December 2017, the three parties declined to do so.

The case is still pending a final review by the Commission.

SIFMA, in a letter to Traders Magazine, issued the following statement:

"Recent reports indicating this decision brings the case to a close are inaccurate.  In August, 2016, the Securities and Exchange Commission granted a petition filed by SIFMA asking for the review of an administrative law judge’s initial decision in a case involving exchange market data. In December 2017, the ALJ issued a procedural decision aimed at expediating the appeal process. The underlying case remains pending before the Commission."

S&P reported that NYSE and Nasdaq all declined to comment on the matter.

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