Fears grow as exchanges up sales of data

Sources interviewed for this story agreed the SEC has not been thorough in its assessment of exchanges' market data proposals. The SEC generally "rubber stamps" exchange data product proposals, said Tyler Gellasch, executive director of Healthy Markets Association, Washington, a non-profit group of money managers, brokers and pension funds with a combined $1.5 trillion in assets held or under management that lobbies on trading and market structure issues. "Information leakage and cost issues all stem from a fundamental problem — for-profit firms are writing these rules and the SEC is approving them," Mr. Gellasch said.

Among Healthy Markets Association's 10 members are the $355.5 billion California Public Employees' Retirement System, Sacramento; PSP Investments, which manages the assets of the C$135.6 billion ($109.2 billion) Public Service Pension Investment Board, Montreal; Janus Henderson Group PLC and Brandes Investment Partners. In a Jan. 17 letter to SEC Chairman Jay Clayton seeking to revamp the SEC's procedures for approving exchange market data proposals, the association said for-profit exchanges "have been able to exploit their essential role in the market infrastructure to add complexity and costs to a broad swath of market participants. And we found that almost no information related to the volumes and impacts of these fees is public."

Read more in Pensions & Investments.