Meeting of the minds

In late October 2018, industry leaders met in Washington for the Securities and Exchange Commission's roundtable on exchange market data and connectivity. Over the course of two days, some of the brightest minds in the financial services industry went back and forth over the framework and fees associated with accessing equity markets and information.

When I started on the NYSE trading floor in the 1990s, its members had access to 90% of trading activity information, along with exclusive access to real-time "data" from the floor. If you didn't work in this market but needed to know the price of stock, you could check the next day's Wall Street Journal.

Times have changed

Over 20 years later, Regulation NMS, which introduced competition among exchanges, has helped liberate markets. US-listed securities are traded across 13 different licensed exchanges and over 50 off-exchange venues, supported by more sophisticated technology.

Advancements in technology over the last decade have also seen costs fall substantially. Our systems now process over 50 billion messages in a day. The "all-in cost" to trade on NYSE (including transaction fees, market data, and market connectivity) has fallen while the speed, efficiency, and quality of services have advanced dramatically.

Retail investors: the main beneficiaries

Who are the real winners? Retail investors. They've benefited enormously from new technology and the proliferation of choice. They can access critical trading information at no cost, and buy and sell listed securities instantly, at an extraordinarily low cost. Competition and technology improvements are the two main drivers of their success.

Wall Street firms have been able to leverage automation to scale their businesses and reduce their overall costs. While their investment in technology is greater and they've developed a growing appetite for market data to stitch a fragmented market back together, those investments return savings to their bottom lines and allow them to pass those savings to their clients in the form of better prices.

The power of market data

The growing value of data and access are not unique to financial markets. Even at an individual level, we recognize the productivity and scale unleashed with the right tools. Just over ten years ago, my cell phone came free with my cellular service and was primarily used to take calls and send text messages. Today, my iPhone allows me to take calls and send text messages as well as research on the internet, draft emails, track and trade stocks, make dinner reservations, monitor and adjust the temperature in my home, pay my bills and countless other tasks. My phone is no longer free but the value I receive is worth the rising price. It literally changes the way I operate.

Producing and distributing exchange market data isn't a standalone activity. Rather, it's an intrinsic part of operating an exchange that's resilient, efficient and trusted. Exchanges build this high fidelity market data, package it, house it, and then deliver it in a secure way at high speed. Our commercial terms are uniform and public, and the prices for products are charged based on the value they deliver and the competitive landscape.

Market participants are able to accomplish more with less given the value exchange market data provides. Real-time market data serves many purposes for market participants in today's fragmented trading environment. Just to highlight a few, it informs trading algorithms allowing brokers to deliver better results to clients, allows for better real-time risk management, and provides tools to build expand business models.

The debate

Despite the value and new opportunities market data and enhanced connectivity introduce, many market participants balk at their rising costs. They focus on only one component of the ecosystem and ignore the drastic savings elsewhere. Those savings are passed back to retail investors who are the real winners in today's market landscape.

If we want to look at the impact to investors, we need to look at the all-in cost to trade. Trading on the NYSE today on an all-in basis, including the costs to connect, consume data and trade, is cheaper than trading in a dark pool - a business made possible by the availability of reliable real-time data.

This debate centers on reducing costs for Wall Street firms. The debate is not about improving conditions for Main Street investors as it is sometimes characterized.

Better ways to spend our time

The US equity markets are extremely competitive and we offer our members choices. Not all of our members choose the most robust products, much like not all consumers will choose to spring for the iPhone XS.

The appetite for market data is only going to get bigger. We continue to meet industry demands to deliver significant, and continuous, technological enhancements. We recognize and welcome this responsibility.

To deliver the products and services that our customers demand, we need free market principles to drive how prices for them are determined. An overzealous agenda of government price setting will only benefit the bottom lines of Wall Street firms, at the expense of our ability to reinvest and innovate.

We aim to serve our customers, and the market, in the best way possible, and we listen closely to their concerns. We've outlined a number of actionable proposals to improve the operation and transparency of market data provision, which you can read here.

Now is not the time for our industry to be divided. When our brightest minds meet in Washington, our discussion should be about ways to enhance the markets for investors and listed companies. As industry leaders, our time would be much better spent focused on making U.S. capital markets — our crown jewel — more efficient and competitive. A top priority for the SEC — and all of us — must be making our public markets more accessible to growing companies, issuers and Main Street investors alike. Amid the noise on fees, we risk our U.S. leadership, as the most enviable marketplace in the world.