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July 31, 1998

Discounters Fight CTA Price-Quote Rate Hike

By Staff Reports

A heated battle is raging over the cost of delivering real-time stock-price quotations quotes made initially by New York Stock Exchange traders.

Traders, however, are unlikely to win or lose money if the dispute is settled.

At issue is opposition by online discount brokers to a real-time price-quote rate hike approved by the Consolidated Tape Association (CTA).

Pilot Program

The battle was spurred last year after the CTA implemented a pilot program bringing real-time price quotes to online discount brokers. The real-time quotes are provided to facilitate online investors who consider the traditional 15-minute-delayed data "stale."

Now the fees for providing the quotes passed along by the CTA, the group that controls the transmission of listed stock quotes among the nation's exchanges are hitting discounters' pocket books.

Priding themselves on immediate and low-cost transaction services for investors, many of the nation's estimated 80 online discounters say the hike in fees from one-half cent to one cent per quote is not fair.

Online Brokers

Joined by two of the nations largest online brokers, San Francisco-based Charles Schwab & Co. and Boston's Fidelity Brokerage Services, a campaign has been waged to curb the CTA's authority to set price increases.

The Securities Industry Association is supporting the campaign, urging the CTA to make the pilot program permanent and to implement a flat-fee pricing structure.

The SIA argues that a permanent program would require the Securities and Exchange Commission, instead of the CTA, to oversee future price increases, while flat fees would hold down discounters' operating costs.

The CTA and SIA have been meeting on the controversial issue.