US equity exchanges increasingly depend on charging for data in a world of rapid-fire automated trading and that has sparked plenty of friction with the broader market. In the latest salvo, Healthy Markets Association, an investor trade group whose dozen or so members include Calpers and OppenheimerFunds, this week released a report on market data that describes a system rife with conflicts and calls for a broad overhaul led by chief US regulator the Securities and Exchange Commission.
Echoing a recent report from the US Treasury, Healthy Markets makes the argument that market participants are under increasing pressure to buy premium data both to stay competitive and comply with rules requiring them to execute trades at the best price available in the market at any given moment.
In its 80-page report, Healthy Markets says “exchanges have exploited an overwhelmed regulatory approval process to push through numerous significant changes and fee hikes in both the public and private data feeds that impact nearly all market participants, sometimes raising fees hundreds of per cent over just a few years”.
It found that a market participant who wanted the fastest connections with the most relevant trading information for CBOE, New York Stock Exchange and Nasdaq has seen its costs rise from $72,150 per month on June 1 2012 to $182,775 per month on June 1 2017.
“This has evolved from a problem that was really constricted to vendors and brokers to now impact every investor and other market participant,” says Tyler Gellasch, executive director at Healthy Markets. “Investors pay for these fees directly and they also have them passed through from their brokers and other service providers. Add it all together, and they get to be very significant.”
NYSE, Nasdaq and CBOE declined to comment on Healthy Markets findings or for this article.
Among Healthy Markets’ recommendations are a review of fee changes for “fairness, reasonableness and potential discriminatory impacts and undue burdens on market participants” as well as allowing investment advisers and broker-dealers greater say in market governance.
Read more in the Financial Times here.