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Decision Looms In Case Over Market Data Fees

 Market data carries the information on quotes and orders that is the lifeblood of the electronic marketplace. The data plays a key role as it provides vital information for trading.

Oral arguments are scheduled today in a long-pending court case that may determine if U.S. stock exchanges will have to reveal their costs for producing market data, a key cog of high-frequency trading and the electronic marketplace, Reuters reports.

A trade association of brokers, bankers and money managers, along with a group of companies including Google Inc, eBay Inc, Yahoo Inc and Bloomberg LP, has accused the Securities and Exchange Commission of abdicating its duty to uphold “fair and reasonable” fees for market data.

The Securities Industry and Financial Markets Association (Sifma) and the NetCoalition technology trade group took the SEC to court for not objecting to new market data fees filed with the agency by units of NYSE Euronext and Nasdaq OMX.

The case before the U.S. Court of Appeals, District of Columbia Circuit could be thrown out because NYSE and Nasdaq, the two largest U.S. exchange operators, say the court lacks jurisdiction to review the complaint.

An amendment to the Securities Exchange Act was inserted into the Dodd-Frank financial reform act that allowed exchanges to file new rules for fees that are “immediately effective,” a change that has speeded a review process by the SEC that could take years.

Now the SEC has 60 days to temporarily suspend any new rule if regulators find it necessary or appropriate.

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