Market Data

National securities exchanges sell data—used by retail investors, investment professionals, and high-speed trading firms—on current stock prices, recent trades, and supply-and-demand levels. Access to this market data is essential to America’s world-leading capital markets, because all participants need timely and complete data to make informed decisions.

While most of the costs associated with investing have declined in recent years, the fees exchanges charge for market data have skyrocketed. A survey of SIFMA members found the cost for one exchange’s proprietary market data increased by 1,100% from 2010 to 2017. How can this be, and what does it mean for investors?

One Exchange’s Fees Increased By 1,100% Between 2010 And 2017

Proprietary Data Fees Of One Exchange From 2010 To 2017

Source: Expand Research & SIFMA: An Analysis of Market Data Fees

Exclusive Control

Exchanges exercise exclusive control over the data investors generate on exchange platforms.

The United States has a two-tier system of market data comprised of:

  1. A public feed—the Securities Information Processor (SIP)—that distributes best bids and offers
  2. Faster proprietary data products that include best bids and offers plus information about other buy and sell orders

Both tiers are exclusively controlled by the exchanges. With this lack of competition, the fees for market data have risen unchecked for years.

Costs Of Premium Data Feeds Have Skyrocketed in Recent Years

Monthly Cost For Premium Data Feeds, 2012-2017

Source: R2G analysis, as cited in The Wall Street Journal

Skyrocketing Fees

It is important to understand the magnitude of the increases. One exchange’s fee filings with the Securities and Exchange Commission (SEC) show the price for one of its proprietary feeds increased between 966% to 2,916% from 2010 to 2018. These significant increases in cost suggest that exchanges can charge any price for its proprietary market data with minimal impact to its market share.

For The Same Market Data, Firms Pay At Least Ten Times More In 2018 Than They Paid In 2010

Change In Proprietary Data Fees For Firms With Different Business Models From 2010 To 2018

Source: Expand Research & SIFMA: An Analysis of Market Data Fees

SEC Decision

That’s why SIFMA supports the SEC’s recent unanimous decision to block the latest fee increase requested by stock exchanges.

SEC Commissioner Robert Jackson called the decision, “a victory for ordinary investors in our stock markets—who have, for too long, been paying steep costs for an uneven playing field,” and noted, “competitive forces, rather than market power, must justify any increase in the price exchanges charge for stock market data.”

Any changes and reforms to market data regulation should focus on promoting competition, supporting efficient markets, and providing a transparent and fair system for all investors.