Market Data Initiative:
Addressing Conflicts of Interest, Complexity, and Costs
Congress and regulators have long espoused the public’s need for key market information. Technological and regulatory changes over the past several decades have dramatically changed the needs and capabilities of the public. Huge volumes of information are now processed and trading actions are taken in fractions of seconds. Unfortunately, the regulatory framework for market data has not kept pace.
Exchanges have innovated to meet the ever-expanding desires for more market information faster. At its most basic level, exchanges are in charge of a government-mandated market data system, for which they are handsomely paid, as well as their own competing market data products, for which they are handsomely paid. And the exchanges are nearly constantly tweaking the competitions between each other, and the SIP itself. This basic conflict of interest has allowed for-profit exchanges to exploit their essential role in the market infrastructure to add complexity and costs to a broad swath of market participants.
Healthy Markets works to decrease complexity and costs, while increasing transparency, for market data and connectivity offerings. In our ground-breaking report, US Equity Market Data: How Conflicts of Interest Overwhelm an Outdated Regulatory Model and Market Participants, we offer a review of the legal regime for market data, an overview of the increasing costs and complexities, as well as recommendations for regulators. Since releasing that report, Healthy Markets has filed over a dozen objections to numerous market data-related filings, helping to the support the SEC's suspension, denial, and abrogations of several unsupported data filings. For example, on May 1, 2018, in response to objections raised by Healthy Markets, the SEC took the unprecedented step of abrogating two public data plan filings. It was the first time in the four-decade history of the public market data system that the SEC had abrogated a fee filing.
More recently, the SEC has offered numerous proposals to revise the governance and provision of market data, and we are deeply engaged in shaping those efforts.