A group of U.S. stock exchange operators, including Nasdaq, NYSE, and Cboe Global Markets, has won a court ruling over the collection and distribution of core market data.
On Tuesday, July 5, the U.S. Court of Appeals for the D.C. Circuit rejected a 2020 U.S. Securities and Exchange Commission order that would have given securities firms and non-exchanges greater say in managing public data feeds.
“These representatives will serve as voting members of the steering committee governing the CT Plan and together will control one-third of the voting power of the committee,” according to the order.
Stock market data is collected, consolidated, and disseminated according to the NMS plan, which is managed and operated by “Self-Regulatory Organizations” (SROs), which are groups primarily comprised of the country’s major stock exchanges.
According to the court, the SEC’s decision to include non-SRO representatives on the plan’s governing committee was unreasonable.
In 2020, the European Commission consolidated existing NMS plans governing the dissemination of stock market data into a single Consolidated Plan (CT Plan) to increase efficiency and reduce conflicts of interest between stock exchanges. It issued two orders aimed at changing the governance structure. Facilitate the involvement of non-exchange stakeholders.
Prior to 2021, Regulation NMS required each stock exchange to report “core” market data for securities traded on the NMS to one of two central securities processors (SIPs). . SIP consolidated its core data and distributed it to its subscribers, including investors. Broker-dealers and data vendors.
Currently, three SRO-managed NMS plans, known as equity data plans, manage the collection, integration, and dissemination of core market data.
The National Exchange objected to three provisions in the final CT plan approved by the Commission. (1) Include non-SRO representatives as voting members of the CT Planning and Management Committee. (2) Grouping of SROs based on corporate affiliation for voting purposes. (3) Requirement that CT plan administrators be “independent.” This means it is independent from the SROs that sell stock market data products.
“We ultimately agree with the appellants on the first challenge, but reject the second and third challenges,” the court said.
