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Regulation and Compliance > Federal Regulation > SEC

Wall Street Giants Fight Over Who Helps Small Investors Most

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Stock exchanges and other powerful Wall Street players battled each other on Thursday to persuade regulators they’ve got the best interests of small investors in mind as they fight over hundreds of millions of dollars in industry fees.

The debate kicked off a two-day roundtable discussion convened by the Securities and Exchange Commission in Washington — the latest development in a lengthy fight over whether exchanges have too much power to set the rates they charge for market data, a vital source of information that investors need to trade.

The attempts by the New York Stock Exchange, Nasdaq Inc., Virtu Financial Inc. and T. Rowe Price Group Inc. to cast themselves as the true helper of Main Street was a direct appeal to their regulator. SEC Chairman Jay Clayton called for the discussion to focus on retail investors, whom he often refers to as Mr. and Ms. 401(k).

The high-stakes, wonky debate centers on how closely the SEC should regulate the fees that exchanges charge for market data and to connect to trading venues. Banks, investors and other firms — including Bloomberg News parent Bloomberg LP — want the SEC to curb the charges. Meanwhile, the exchanges have argued their opponents just want to maximize their own profits.

For almost two hours Thursday, as executives made their cases — and sometimes exchanged barbs — in an auditorium at SEC headquarters, Main Street never felt too far away. Here are a few key moments [from the first panel]:

Doug Cifu, CEO of market maker Virtu

“I need to be maniacally focused on our costs so that we can continue to provide that service to Mr. and Mrs. 401(k) in a sustainable and efficient manner,” he said. “Every dollar we pay for overpriced market data or connectivity is one less dollar available for price improvements.”

Chris Concannon, president of exchange operator Cboe

“Retail investors have never had it better,” he said. “I can go on my phone today, get real-time market data for free, execute an order for $4.95 or, in some brokerages, free, and get executed at or inside the spread.”

Stacey Cunningham, present of NYSE

“The Main Street investor has never had it better,” she said. “The market-data debate is not a Main Street issue. It’s a Wall Street issue. It’s about Wall Street profits.”

Mehmet Kinak, trading executive at T. Rowe Price

“I get tired of hearing exchanges say that they represent the institutional community, that they represent retail and that they represent long-term Main Street investors. They do not, we do.”


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