MFA Letter on SEC Market Data Infrastructure Proposal

On May 29, MFA submitted comments to the SEC on its Market Data Infrastructure Proposal.  Our letter reiterated our concern that the current regulatory framework for proprietary exchange market data and consolidated market data fails to protect investors from unreasonable fees, unreasonably discriminatory pricing, and fees that may be imposing an unnecessary and inappropriate burden on competition.  MFA has been pleased with the SEC’s market data initiatives and generally supported the SEC’s Proposal, which is the latest in a series of reforms to equity market structure that we believe are necessary to advance the goals of the national market system.

In MFA’s view, certain aspects of the Proposal could be improved and we recommended to the SEC that:

  1. Market participants other than broker-dealers should be permitted to be “Self-Aggregators” to the extent such a category is necessary at all.
  2. Self-Aggregators should be permitted to share consolidated market data with affiliates.
  3. Fees for non-display use of consolidated market data should be tied to a reasonable cost basis.
  4. Competing consolidators should be required to provide a regulatory data-only feed at minimal cost and/or exchanges should be allowed to provide regulatory data via their proprietary feeds.
  5. The proposed five Round Lot tiers should be simplified to three tiers and all Round Lot quotations should be protected under Rule 611.