Nasdaq amends disputed fee proposal for key stock market data

Hawick Data NV

27/01/2017 18:57

By John McCrank 
    NEW YORK, Jan 27 (Reuters) - Nasdaq Inc  NDAQ.O  no longer 
plans to charge additional fees to access key data essential for 
stock market operations following complaints of price gouging 
from other exchanges, trading firms and an industry trade group, 
according to a regulatory filing. 
    The data is related to systems called securities information 
processors, or SIPs, which consolidate stock orders and last 
sales prices from the 13 U.S. stock exchanges. Regulators use 
the information to determine the best market prices, which 
brokers must give their clients when executing trades. 
    In August, Nasdaq said it planned to separate its 
proprietary trading data from third-party data - including the 
SIP for Nasdaq-listed stocks - it offers its customers.  
    The third-party data would be housed on a new network that 
could be accessed for additional fees, Nasdaq said in a filing 
with the U.S. Securities and Exchange Commission. Increased 
capacity of the new network connections would ensure the data 
could be accessed during peak demand, making the system more 
robust, it said. 
    Governance of the SIPs has been a contentious issue since 
August 2013, when a software glitch following unusually high 
message volume crippled the Nasdaq SIP, leading to a three-hour 
halt in trading of Nasdaq-listed stocks, including Apple Inc 
 AAPL.O  and Facebook Inc  FB.O . 
    After the outage, Nasdaq received industry support to 
undertake measures to make the SIP more resilient, including 
moving the system over to the same technology used to run its 
exchanges. 
    But Nasdaq's latest proposal drew opposition from exchange 
operators Bats Global Markets  BATS.Z  and IEX Group  IEX.AS , 
trading firms Virtu Financial  VIRT.O , KCG Holdings  KCG.N  and 
Citadel Securities, as well as the Securities Industry and 
Financial Markets Association trade group. 
    In letter to the SEC, they argued the SIP is an industry 
utility and fee increases must be approved by a committee that 
includes representatives from all the exchanges. They also said 
the increased capacity was not technically necessary and was 
just an excuse for Nasdaq to hike fees. 
    Nasdaq said it "strenuously disagrees" with the arguments 
against its plan, in a letter to the SEC dated Thursday. 
    But the exchange operator said it amended its proposal to 
give each of its customers one connection to the SIP at no 
additional cost.  
    It also said its customers could choose between a 
lower-capacity connection and the higher-capacity connection to 
the new network, though firms that choose the lower-capacity 
option would have to take responsibility if problems arise as a 
result. 
 
 (Reporting by John McCrank, editing by G Crosse) 
 ((john.mccrank@thomsonreuters.com Twitter @jmccrank; 
+1-646-223-6643; Reuters Messaging: 
john.mccrank.thomsonreuters.com@reuters.net)) 
 
Keywords: NASDAQ DATA/