Associations Argue Ongoing Case Over Market Data Fees

In oral arguments, a tech group and a securities industry association urged a federal appeals court to require stock exchanges to reveal what they spend to produce market data, claiming the exchanges' fees are too high.

A long-running case involving stock market data fees could hinge on whether the court has jurisdiction.

Two trade groups, the Securities Industry and Financial Markets Association (SIFMA) and the soon-to-fold internet group NetCoalition, sued the Securities and Exchange Commission (SEC) over its approval of fees on market data.

Because the rule changes are in effect due to a decision by Congress, there is no agency action or order for this court to review.

The SEC chose not to object to the fees charged by the New York Stock Exchange (NYSE) and NASDAQ, leading to the current lawsuit. More details:

The background: The 2010 Dodd-Frank Financial Reform Act included a provision that allowed stock exchanges to more freely file fee rules, a process that once took years because such action required SEC approval, according to Reuters. Instead, the SEC has 60 days to temporarily block any rule found inappropriate.

The argument: Both NetCoalition (which represents many tech industry groups that display or distribute the data, such as Bloomberg and Google) and SIFMA (which represents hundreds of asset managers, banks, and brokers) believe the market data fees are much higher than they need to be. They would like the exchanges to disclose the costs of organizing and acquiring the data, which NetCoalition members used to acquire for free.

Prior rulings: A 2010 case, NetCoalition I, allowed for a market-based approach to determining whether fees were reasonable, though the court was skeptical about the SEC’s claim that data pricing was affected by competitive forces.

Will they dismiss? NYSE and NASDAQ have each asked that the case be thrown out, claiming that the U.S. Court of  Appeals for the District of Columbia Circuit does not have jurisdiction over the complaint. “Because the rule changes are in effect due to a decision by Congress, there is no agency action or order for this court to review,” the exchanges said in a legal briefing acquired by Reuters.

The court heard oral arguments in the long-running case on Tuesday.

(TMG archive photo)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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