SEC Commissioner Elad L. Roisman and SEC Division of Trading and Markets Director Brett Redfearn raised various questions and concerns relating to current market data products, market access services and related fees.

At the SEC Staff Roundtable on Market Data and Market Access, Mr. Redfearn described the means by which market data is distributed and the costs associated with obtaining such data. He explained that the SEC divides market data into two types: (i) "core" market data consolidated through a central information processor called the "SIP," and (ii) proprietary data that is sold by the individual exchanges, the price of which is generally set by the exchanges. Mr. Redfearn described the proprietary data as "faster, more content-rich and more costly" than core data. He expressed concern that market participants might not find core data sufficient and, thus, would be required to purchase proprietary data over which individual exchanges might have monopoly control. In such an instance, market participants may be overpaying for the data.

Mr. Roisman emphasized the distinctions between situations where market forces, as opposed to regulations, are driving prices. He encouraged the SEC to review certain rules (e.g., the Vendor Display Rule, or requirements to achieve best execution) to see whether the agency should tailor requirements to achieve regulatory objectives while limiting bad consequences. He questioned whether market participants, such as dark pools and alternative trading systems, are bearing their share of costs compared to exchanges, which are much more heavily regulated. Mr. Roisman also suggested that the SEC should revisit Regulation NMS as well as concerns relating to SRO structure and the structure of the fixed-income markets.

Commentary / Steven Lofchie

The pricing of market data is an area where the views of the Commissioners have tremendous significance. Although the SEC says that it does not want to declare winners and losers, but rather allow them to be chosen through market competition, when it comes to market data, the regulators determine the rules and the rules largely determine the winners.

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