NEW YORK (Reuters) - Many small- and mid-sized trading firms will see massive data cost increases as a result of a “clarification” added to a plan that governs how essential stock trading data is collected and disseminated, according to an industry trade group.
The data in question comes from a market utility called the Consolidated Tape Association (CTA) that provides investors with stock quotes and last sale prices for New York Stock Exchange-listed securities. It is essential for trading and regulatory compliance.
Following a recent amendment to CTA rules, fees for some smaller trading firms will skyrocket twenty-fold or more, according to the Securities Industry and Financial Markets Association, which represents banks, broker-dealers and asset managers.
“As this likely impacts thousands of firms, we can be sure that an extraordinary number of investors will be facing a significant impediment to their ability to access core data,” SIFMA said in a letter to the U.S. Securities and Exchange Commission on Tuesday.
The CTA declined to comment.
A spokesman for the utility, which is run by the Intercontinental Exchange’s (ICE.N) NYSE unit and governed by 15 securities exchanges, as well as the Financial Industry Regulatory Authority, said the CTA would officially respond to the SEC next week.
The CTA said in December it was adding a “clarification” to its fee schedule around who has to pay fees for data access and displayed and non-displayed data. Displayed data has traditionally referred to data the recipient could see, whereas non-displayed data fed directly into trading algorithms.
As a result of the clarification, which the SEC published on March 23, with immediate effect, many firms that had been paying for displayed data only will also have to pay access and non-displayed fees.
For example, a firm that has received data on NYSE-listed securities to be used on 10 professional devices, such as laptop or desktop computers, for display use only, would have paid the CTA around $270 a month, SIFMA said.
Following the CTA amendment, those professional devices would be considered non-display and the firm’s bill would soar to $6,000 a month, SIFMA said. The CTA also includes data for securities listed on Bats, NYSE Arca and NYSE MKT exchanges, which would cost an additional $3,000 a month.
The steep price for essential data highlights conflicts of interest among exchanges, which have in recent years gone from being non-profit utilities to for-profit, publicly traded companies, but retained their regulatory responsibilities, SIFMA said.
Reporting by John McCrank; Editing by Steve Orlofsky