Notice of Filing of the Second Amendment to the Limited Liability Company Agreement of CT Plan LLC to Adopt a Fee Schedule

Summary

SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC) on the amendment to the CT Plan LLC filed by the self-regulatory organizations ("SROs") as Members of the CT Plan, requesting that the SEC adopt a fee schedule for consolidated market data.

Excerpt

The Securities Industry and Financial Markets Association ("SIFMA") ¹ submits this letter to comment on the amendment to the CT Plan LLC ("CT Plan") filed by the self-regulatory organizations ("SROs") as the Members in the CT Plan with the U.S. Securities and Exchange Commission ("SEC" or "Commission") to adopt a fee schedule for consolidated market data. ² Our comments here assume the status quo for Regulation NMS Rule 611, which is a driver of demand for market data given regulatory obligations to connect and route to exchanges with the protected quotes. Given the SEC's ongoing review of Rule 611, and potentially other parts of Regulation NMS and other rules, however, we recommend that the CT Plan be subject to further review and amendment to adapt to potential future changes to these rules and regulations.

SIFMA appreciates the outreach the Members conducted as they developed the Proposal as well as the Members' attempts to clarify and simplify the defined terms governing Professional versus Non-Professional usage and Direct versus Indirect Access. ³ In general, the new terms appear to be consistent with the Proposal's stated goal of reducing subscribers' administrative burdens and audit risks. SIFMA members are still reviewing how the new definitions and the proposed fees associated with various data uses in the Proposal will impact their total costs for consolidated market data. However, while it appears that some SIFMA members' fees may incrementally increase or decrease based on the changes, the Proposal seems to preserve for the SRO Members the same amount of aggregate revenue generated by the existing three Equity Data Plans.

Despite the expected efficiencies of consolidating the existing Equity Data Plans into one plan, the Proposal does not achieve a reduction in the overall cost of consolidated equity market data. Given these expected efficiencies, it would be reasonable to expect that overall fees and enterprise caps should decline, not be reset to preserve prior revenues. Therefore, the SRO Members should be required to amend the filing to provide cost breakdowns and support for the proposed fees, and where it is apparent that such fees are not reasonable based on this approach, the SRO Members should recalibrate fees and caps accordingly. If the SRO Members do not provide this information, we question whether the Proposal could be found to be consistent with the standards in the Securities Exchange Act of 1934 ("Exchange Act)" governing consolidated equity market data.

Executive Summary

• SIFMA supports the clarified definitions of Professional and Non-Professional and the safe harbor allowing real-time redistributors to rely in good faith on a user's representation regarding its Professional usage vs. Non-Professional usage.
• The Proposal does not demonstrate that the proposed fees are consistent with the Exchange Act because it does not include any information about the CT Plan's costs to collect, consolidate, and disseminate consolidated equity market data.
• Fees charged for the existing Equity Data Plans and exchange proprietary top-of-book ("TOB") feeds should not be used as a reference or benchmark in setting or demonstrating the reasonableness of the CT Plan's fees.
• SIFMA appreciates the inclusion of enterprise caps but urges the CT Plan to explore lower caps to encourage provision of core data to more investors.
• Given the changes to the CT Plan since 2020, the Commission should review whether the Competing Consolidator/Self-Aggregator model in the Market Data Infrastructure ("MDI") rules will still be able to achieve the improvements to the market for consolidated equity market data the Commission sought when it approved the MDI rules.
• SIFMA urges the CT Plan to modernize the policies applicable to the Proposed Fee Schedule.