Securities regulators have narrowed down their possible responses to industry concerns about market data fees, but they still haven’t determined a course of action.
The Canadian Securities Administrators (CSA) published an update Thursday on a consultation paper issued a year ago regarding market data fees. The paper examined issues associated with real-time market data fees, including the size of those fees, the fact that dealers consider themselves a captive market for these fees due to current trading rules, and the need for transparency in the regulatory review of fees; along with potential regulatory options to address these issues.
The paper proposed a variety of different options for dealing with these issues, and asked for input on these various alternatives, but didn’t particularly favour any one of them. Today, the CSA said that it will continue to explore a couple of the more popular options set out in the paper, along with other initiatives that may address some of these concerns.
The CSA said Thursday that, of the eight options proposed in the paper, only two garnered some level of support: limiting fees until a market reaches a given activity level, and publishing data fee proposals and models for comment. The first option was supported by marketplaces and market participants, although some of the smaller marketplaces were opposed to this approach, the CSA notes. And, the second option was supported by all industry associations and one market participant, it adds.
“CSA staff are of the view that these two options, along with possibly defining core data or the core data products that are needed to comply with regulatory requirements, although considered partial solutions, should be explored further to assess whether they could be part of a regulatory framework for real-time market data fees in Canada,” it says. However, it notes that commenters pointed out that these options do not address concerns about the level of fees currently charged by larger marketplaces.
As for the possibility of creating a data utility, the CSA notes that this would be a complex, costly solution. It would also require legislative changes and new regulations, it says. As a result, “CSA staff are of the view that this option may be considered in the long-term,” it suggests.
Additionally, the CSA indicates that its staff are currently reviewing the Order Protection Rule (OPR), which helps create the belief that dealers are a captive market for data fees. It says that the review of the OPR will be considering the rule’s impact on fees, including market data fees. And, it says that CSA staff “will be working toward the creation of a methodology for the evaluation of all such fees proposed to be charged by marketplaces.”