SEC Order on the Governance and Operation of the SIP
Summary
SIFMA provided comments to SEC on the Notice of Proposed Order Directing the Exchanges and the Financial Industry Regulatory authority to Submit a New National Market System Plan Regarding Consolidated Equity Market Data.
SIFMA commends the Commission for taking this important first step in seeking to resolve the current challenges with market data.
Excerpt
Vanessa Countryman Secretary
Securities and Exchange Commission
100 F Street NE., Washington, DC 20549
Re: SIFMA Comment Letter on the SEC Order on the Governance and Operation of the SIPs; File No. 4-757
Dear Ms. Countryman:
The Securities Industry and Financial Markets Association (“SIFMA”) 1 respectfully submits this letter to the U.S. Securities and Exchange Commission (“Commission”) to comment on the Notice of Proposed Order Directing the Exchanges and the Financial Industry Regulatory authority to Submit a New National Market System Plan Regarding Consolidated Equity Market Data (” Proposal” or “Governance Proposal”). 2 At the outset, SIFMA commends the Commission for taking this important first step in seeking to resolve the current challenges with market data. SIFMA supports the Commission’s Proposal to issue a final order requiring the Plan Participants to file a New Consolidated Data Plan that will consolidate the three existing plans into one plan with an improved governance structure. 3 Market data reform has long been an important priority for SIFMA and its member firms.4 SIFMA sees this Proposal as a positive initial step and looks forward to engaging with the Commission on other necessary enhancements to the current market data system, including those that would address content, latency, transparency, and fees concerns, many of which are addressed in the Commission’s recent Proposal on Market Data Infrastructure5, which we look forward to commenting on separately.
The Governance Proposal will assist with addressing the current conflict of interests for exchanges which operate the Securities Information Processors (“SIPs”) while simultaneously selling proprietary market data products. As the Commission noted,6 the current conflicts of interests for exchanges have contributed to the significant differences in content and speed between the SIPs and exchanges proprietary feeds. This results in broker-dealers becoming unable to rely solely on data provided by the SIPs to remain competitive in today’s markets and provide best execution to their customers. We support the Commission mandating these governance changes and recommend finalizing the order as quickly as possible with our proposed changes described below. In addition to our specific comments on the Proposal, we ask that the Commission, and SROs, consider our recommendations for further market data improvements highlighted in our previous letter. 7