The Securities and Exchange Commission is seeking public comment on a proposed order to modernize the governance of National Market System (NMS) plans that produce public consolidated equity market data and disseminate trade and quote data from trading venues.
“Today’s action is an important step in our ongoing efforts to modernize our national market system,” said SEC Chairman Jay Clayton. “The Commission has received extensive public input on issues relating to equity market structure and access to market data, as well as suggestions for how that structure should be updated to ensure that our markets continue to best serve the interests of investors. Today’s proposed order is designed to address issues regarding the dissemination of market data that affect the efficiency and fairness of our markets. In particular, we welcome public input on the specific proposed governance provisions.”
The proposed order would direct the equities exchanges and FINRA to file with the Commission a new NMS plan designed to increase transparency and address conflicts of interest and other issues presented by the current governance structure of the existing NMS plans. The proposed order describes the specific proposed governance provisions that the Commission preliminarily believes would address these issues. If the Commission decides to issue an order after considering public input, the NMS plan participants would be required to submit a new plan, which would then be published for public comment before the Commission takes any definitive action on a new plan. Until the Commission takes such action, the current plans will continue to govern.
Millions of Main Street investors, whether individually or collectively through mutual funds or pension funds, have invested their savings in equity securities. The consolidated market data produced pursuant to the current NMS plans is a critical component of the national market system through which these investments are priced and traded. Market developments have given rise to concerns about whether—as currently structured—the existing plans for equity market data continue to fulfill appropriately their statutory purpose. The proposed order states that the current governance structure of these plans perpetuates disincentives to enhance consolidated equity market data feeds, which are often slower and contain less information than the proprietary market data feeds offered by the participants that control much of the voting power for the NMS plans.
The Commission is also publishing for public comment notices of proposed amendments to the existing plans filed by the plan participants. The proposed amendments are designed to address conflicts of interest and the protection of confidential information. The Commission seeks comment on the proposed amendments and whether they adequately address those issues, and the Commission encourages commenters to refer to the specific requests for comment that the Commission has included in the notice for each plan amendment.
In order to facilitate a comprehensive discussion of these issues, the public may provide comments on how the proposed order and the proposed amendments would individually or collectively address the issues identified by the Commission.