Free Site Registration

PREVIEW: Equity Markets Association Publishes Open Letter to The SEC and Stakeholders on Market Data and Fees

Traders Magazine Online News, October 24, 2018

John D'Antona Jr.

Ahead of Thursday's SEC’s Roundtable on Market Data and Market Access the Equity Markets Association has published an open letter to the regulator on how the topic should be addressed. Traders Magazine shares the industry group's letter below:

---

 

The U.S. Securities and Exchange Commission’s Roundtable this week on Market Data and Market Access is timely and welcome.  

We can all agree that, not unexpectedly, data and technology play a bigger role in the equity markets than they did when the foundational rules of market structure were established because all systems evolve over time, and it is appropriate for the SEC to periodically consider whether public policy is as well-tuned as possible to support our flourishing capital markets and protect investors. The Equity Markets Association appreciates the Commission’s sincere consideration of stakeholder input and advice, as evidenced by this two-day public meeting. 

The Roundtable is also timely for two other reasons:

First, it creates an opportunity for the Commission to receive information from stakeholders and the public and communicate its views about some market structure issues with stakeholders.

Second, it is an opportunity for the Commission and market participants to firmly ground market data discussions in the context of the interests of all investors. 

We agree that protecting the interests of individual investors (call them “retail,” “Main Street,” or “average”) is a critical government interest. We are proud of the central role that exchanges play in making U.S. equity markets more accessible and fueling what can only be described as a Golden Age for investors who use the US equity markets, a Golden Age we think everyone agrees is critical to the national interest to allow to keep growing and expanding. For example, retail investing costs in the U.S. are a fraction of what they once were—trading, management, and advisory fees have all experienced massive compression thanks to technology and competition. 

Here are the facts. Between 2000 and 2017, equity mutual fund fees and 401(k) equity fund expenses declined 40 percent and 42 percent respectively. ETF fees followed suit—declining 28 percent between 2009 and 2017, while average U.S. stock trade commissions are down 40 percent.

Advances and innovation in market data have contributed to this Golden Age. Individual investors today can access state of the art analytical tools and real-time market data to transact in securities at little or no cost. Large retail brokers pay just 17 cents per customer per month for real-time market data, as shown by a new study from Prof. James Angel, a Georgetown University expert.

Meanwhile, exchange market data revenues are modest, stable, and a small cost for the industry overall, as shown by a recent study by Prof. Charles Jones, a Columbia University expert. Although revenues are modest and a small cost for the industry overall, the processes to aggregate and normalize get more and more sophisticated each year.

For more information on related topics, visit the following channels:

Comments (0)

Add Your Comments:

You must be registered to post a comment.

Not Registered? Click here to register.

Already registered? Log in here.

Please note you must now log in with your email address and password.