Interesting nugget from Reuters (via @defrag): Nasdaq and the New York Stock Exchange (NYSE) now generate more revenue from selling market data than from equities trading. At Nasdaq, the market data accounts for 20 per cent of revenue, while at NYSE, the figure is 14 per cent.
The context for that factoid is that NYSE is seeking SEC permission to sell real-time market data to media and online organisations, following in the footsteps of Nasdaq (which has an arrangement with Google, CNBC and the WSJ) and BATS Trading (which has teamed up with Yahoo).
Subject to SEC approval, NYSE intends to launch the new product, called NYSE Realtime Reference Prices, on July 1 for a four-month pilot, Reuters said. The exchange will charge a flat fee of $100,000 per month for data derived from NYSE trades of NYSE-listed stocks. It has yet to announce a fee schedule for trades on NYSE-listed stocks on other exchanges.
If this all sounds terribly familiar, it’s because NYSE has tried this before. Last January - as in 2007 - the exchange said it hoped to bring real-time stock quotes to Internet users as “early as March”.
At the time, Google and other members of NetCoalition - an Internet lobby group - had been actively pushing the SEC, NYSE and NASDAQ to liberalise access to such data.
Now, 18 months or so later, NYSE is trying again. The exchange intends to charge would-be providers $100,000 a month - the same as in its original proposal, and in-line with Nasdaq’s fee. In contrast, BATS is providing its data free to Yahoo.
BATS, which handles more than 10 per cent of US equity trading and which filed for exchange status late last year, is committed to providing free market data:
“From the time BATS was created we have pushed for free market data for market participants,” BATS Chief Executive Joe Ratterman said.
Mr. Ratterman also added: “True to our roots, BATS has never charged participants for the receipt of our market data, a practice we will continue as we approach Exchange status.”
Compare this approach with that espoused by NYSE’s executive vice president for market data, Ronald Jordan, which is that its paid-for model “provides for a fair and reasonable economic incentive to the Exchange to produce this data.”
Moreover, and perhaps worryingly for BATS’ rivals, Mr Ratterman believes that:
Over time, with continued pressure from competitive market centers such as BATS, we believe that market data fees will decrease or be eliminated altogether.”
Mr Ratterman may be right. The democratisation of (financial) data is already well underway, and poses a real threat to any company with a business model predicated on charging a premium for such.
The aforementioned NetCoalition - the trustees of which include CNET Networks, Bloomberg and lAC/Interactive - is also
engaged in a long-running war of words and petitions with the exchanges regarding their approach to the provision of market data, including full depth-of-book data.
And FT Alphaville cannot help but comment on the irony of the exchanges’ apparent desire to furnish Internet consumers with free online market data. Because, lest we forget, it was because of a decision by NYSE and Nasdaq to change the pricing structure for access to market data (back in 2006) that financial web sites first started charging for real-time stock quotes.
(This post was first published on June 12 2008.)
Related links:
Market Data Dispute Over NYSE’s Plan to Charge for Depth-of-Book Data Pits NSX Against Other US Exchanges - Wall Street & Technology (2007)
NetCoalition’s letter to the SEC regarding exchanges’ changes to pricing structure - SEC Filing
NetCoalition files complaint over NYSE data fee hikes - CNET (2006)
Google, Yahoo Seek SEC Review Of Stock Quote Fees - AP (2006)
