On February 28, the Committee submitted a comment letter to the Securities and Exchange Commission (the “SEC”) regarding its proposed order directing the relevant self-regulatory organizations, including the exchanges and FINRA, to submit a new national market system plan (a “Reg NMS plan”) for the dissemination of consolidated equity market data for NMS stocks (the “Governance Proposal”).


The letter proceeds in three parts. Part I describes the current landscape with respect to the dissemination of critical U.S. equity market data.  At present, market participants can purchase: (i) consolidated market data from securities information processors (“SIPs”) jointly controlled by exchanges through Reg NMS plans; and (ii) unconsolidated market data directly from exchanges via proprietary data feeds.


Part II analyzes the Governance Proposal, which would: (i) combine the three existing Reg NMS plans into one; (ii) provide market data stakeholders other than exchanges voting power in Reg NMS plan governance; and (iii) require SIPs to disclose pertinent operational and performance metrics. The Committee supports these proposed changes as a first step and recommends additional transparency as to the cost of operating the SIPs.


Part III sets forth the Committee’s longstanding position that the SEC should adopt a “competing consolidators” model for the dissemination of consolidated market data. Under that model, non-exchange market participants could purchase, consolidate, and resell market data in competition with the SIPs. By introducing competition to the dissemination of consolidated market data, a “competing consolidators” model could reduce the cost and improve the quality of consolidated market data and render the U.S. equity markets less vulnerable to a single point of failure.


The Committee’s letter can be found here.