U.S. regulators blocked stock exchanges’ request to raise some fees for market data, an unusual step suggesting closer scrutiny of an increasingly important slice of their businesses.
The fees that firms including NYSE Group Inc., Nasdaq Inc. and Cboe Global Markets Inc. wanted to boost are relatively obscure.
There is currently a monthly cap on how much retail brokers and other customers can be charged for the vital data feeds that supply prices for U.S. stocks. The exchanges sought approval from the Securities and Exchange Commission to increase the cap for a subset of those feeds.
But the move is still significant because the SEC has historically rubber stamped these requests. If the top stock-market regulator were to change its approach, it would be meaningful for exchanges. The trading platforms released data in March that showed they shared almost $400 million of market-data revenue in 2017.
“This is an unprecedented step for the SEC to say to the exchanges that they have to do a better job justifying their changes,” said Tyler Gellasch, executive director of the Healthy Markets Association, an investor advocacy group. “My suspicion is that this dramatically clamps down on market data hikes and fee changes by the public markets.”
Exchanges set these rates through committees they run, a setup that dates back to the days when they were private institutions run for the benefit of their members, brokers and traders. Now, they’re mostly owned by publicly traded companies. Investors and brokers have criticized the fact that they’ve been allowed to set rates with limited oversight.