Exchanges, Users Face Off Over Data Fees

Exchanges faced increasing push-back from their subscribers over market data fees in 2008 as new charges and price hikes met hostility from user firms battling to reduce their data budgets.

The year began with news that the Toronto Stock Exchange had agreed to shelve proposals to introduce fees on a per-server basis for data consumed by analytical applications that might utilize multiple servers (IMD, Jan. 7). The exchange planned to charge $250 per server in addition to existing fees for use of its data in server-based analytical and order-generating applications.

Users objected that the fees-which were first proposed in September last year, but did not come to a head until they were highlighted at FISD meetings in December-were vague and potentially excessive. TSX tried to clarify users' concerns, and capped the fees at nine servers, but relented after the Securities Industry and Financial Markets Association wrote to the exchange warning that its members would not be ready to report server usage by January, and requesting that they delay the charges, if not reconsider them entirely.

In March, the SWX Swiss Exchange (now known as the SIX Swiss Exchange) announced plans to introduce additional charges for use of data in non-display applications, following a similar initiative by Deutsche Börse the previous year (IMD, March 17). However, by June, when Deutsche Börse unveiled a revised, flat-fee policy, European banks were beginning to push back against the unpopular charges, with some firms reportedly delaying signing new contracts with the exchange. Nevertheless, Georg Gross, head of front-office data and analytics at Deutsche Börse, said that 100 firms had already signed the new policy (IMD, June 9).

Meanwhile, NYSE Arca finally gained Securities and Exchange Commission approval to charge fees for market data that used to be distributed free of charge by Arca prior to its purchase by the New York Stock Exchange. The SEC had not allowed NYSE to charge for the data after objections from Web interest group NetCoalition, which also held up approvals for fee-liable products from other exchanges. Although SIFMA objected to the approval, the SEC re-affirmed its decision in December, and plans to re-introduce the fees in January (IMD, Dec. 8).

CME Group also came under fire for plans to introduce charges for historical end of day, time and sales, best bid and offer, and full market depth data from the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange and Comex that firms had collected from the exchange group's real-time datafeeds to make available to their clients (IMD, Nov. 15).

The exchange contended that even though firms may have collected and packaged the data themselves, they still needed to pay for licenses before redistributing it to anyone else. Over the course of a series of announcements based on client feedback, CME reduced the fees, then subsequently delayed them until further notice in order to collect further feedback.

Max Bowie
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