NEW YORK (Reuters) – Online brokerage TD Ameritrade is calling on U.S. regulators to conduct a full review of rules governing market data and wants to break a hold that exchanges have by setting policy for the profitable data.
TD Ameritrade Holding Corpalso disputes claims in regulatory filings from the pair largest U.S. stock exchanges — NYSE Euronext and NASDAQ OMX Group Inc — that there is effective competition for market data products they sell.
“It’s a mean irritating after reading a few of the exchange filings saying there’s plenty of competition,” said Chris Nagy, managing monitor of market structure strategy at Omaha, Nebraska-based TD Ameritrade.
“The circumstance of the matter is there is no price competition for quotations during the term of broker-dealers,” he said.
TD Ameritrade especially dislikes the construction in which brokerages like TD Ameritrade and rival The Charles Schwab Corp pay in spite of the bulk of fees the exchanges charge brokers for quotations that acquire up the consolidated tape.
Revenue from market data is considerable, and who is charged and who profits from data is a long-simmering issue, said Seth Merrin, chief executive of mercantile venue Liquidnet.
“I’m not surprised that (the exchanges) force of ~ fight tooth and nail to keep that,” Merrin said. “But I in addition know that the other side of the spectrum is everybody that pays these vast fees for market data has been up in arms for a real long time about it,” he said.
In 2000, total mart information revenues were 8 million, according to an SEC study.
The issues TD Ameritrade wants the Securities and Exchange Commission to direct are not new and have festered for more than a decade, Nagy said. The online brokerage submitted a petition to the SEC on January 28 outlining its concerns.
TD Ameritrade wants to reiterate a debate that sparked an SEC concept release in 1999 and ~y advisory committee on market data that was chaired in 2000 and 2001 ~ means of Joel Seligman, a leading authority on securities regulation.
“Our supplication really in a lot of ways was kind of to rekindle the passion that started back in 1999,” Nagy said.
Voting rights at the Consolidated Tape Association, which since its establishment in 1976 oversees the dissemination of stock quotes generated ~ the agency of exchanges, is of particular interest to TD Ameritrade.
Only exchanges have voting rights, although there are non-exchange observers in the CTA.
“(The CTA) requires each unanimous vote of those stock exchanges to effectuate any change to place of traffic data,” Nagy said. “Well guess what, do you judge we’ve seen a lot of market data change over the past 30 years? No.”
The issue of how pricing is assign for market data is being litigated before the U.S. Court of Appeals in quest of the District of Columbia Circuit. Last August the court annulled a 2008 regularity by the SEC granting a petition by an NYSE unit to charge on account of a depth-of-book product known as ArcaBook.
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