The New York Stock Exchange has told the U.S. Securities and Exchange Commission it does not believe it legally needs to make public the fees for a new high-speed connection to the exchange, questioning the scope of the regulator’s authority.
The issue is part of a decade-long dispute between stock exchanges and brokerages, banks and asset managers over what the financial firms see as excessive fees for market access and essential data charged by the bourses, which became for-profit companies in the early 2000s.
The SEC has in recent years challenged the exchanges’ ability to raise those fees if they do not adequately explain why increases are justified. In October 2018, the regulator retroactively overturned hundreds of exchange fee filings, leading to an ongoing legal appeal by the exchanges.
In a Feb. 11 SEC filing, the NYSE, which is owned by Intercontinental Exchange Inc, laid out the fees for a new microwave data transmission service run by an ICE affiliate. (https://bit.ly/2SmKsJd)
It will cost firms an initial $10,000 per connection and $9,000 to $45,000 per month, per connection, depending on the bandwidth requested.
At the same time, the exchange said that because of ICE’s affiliate structure, there are instances in which it should not have to go through the filing process.
“The Exchange does not believe that the present proposed change is a change to the ‘rules of an exchange’ required to be filed with the Commission under the Act,” the NYSE said, referring to the 1934 Exchange Act.
It said it made the filing only because the SEC’s staff advised it to do so in order to meet its exchange obligations.
An SEC spokeswoman declined to comment.
In a market where microseconds separate winners and losers, the new service will arguably be the fastest way to access ICE’s Mahwah, New Jersey, data center, where the exchange’s electronic trades are executed, due to its proximity to New York City.
But because the service is run by an ICE affiliate that the NYSE does not control, the exchange said it should not have to file the fees with the SEC.
Doing so puts ICE’s data affiliate at a disadvantage to other non-exchange affiliated vendors, it said, noting that while ICE’s affiliate has exclusive access to the Mahwah data center property, three firms have wireless connections nearby, allowing them to compete.Trading firm Virtu Financial blasted the NYSE’s plan for exclusive access to the site last July, calling it monopolistic.