Christmas in Mpls

Back at the ranch...


After service at St. Johns

Opening presents

...and more presents

McChaCha Slide

Funny new commercial from McDs...

Increased data costs to financial websites

In May 2006 NYSE Arca filed a rule change with the SEC to charge per user fees for sites like Yahoo and Google to publish delayed stock price data. The NetCoalition intervened and the SEC agreed to put a stay on the rule change, after a committee in the SEC had approved the change. Supposedly NYSE and Nasdaq proposed in Jan 07 a more reasonable flat fee (WSJ article indicates $100k/month for NYSE) for real-time data feeds.

(for perspective on text below, Yahoo Finance has 15M monthly UU, 14% of total UU in Oct 07. Google Finance was 1.2M, 1% of their total UU. These nunmbers are US only, based on Nielsen)

An excerpt of the SEC's response to the NetCoalition is below. The SEC is still considering this. Given the revised rates from NYSE, it seems reasonable to expect that there will be fees imposed, and that they will likely be flat rate and reasonable.

The proposals made to Internet companies by the now for-profit exchanges have been exorbitant. They have ranged from $75 per unique visitor per month for Nasdaq data to $15 to $30, or $10 or $9 per unique visitor, per month for NYSEArca data to the $1 per unique visitor per month for the NYSE non-professional rate. At $75 per month for the roughly 49 million Americans visiting financial web sites, fees would theoretically run more than $3.6 billion per month, or $44.1 billion annually. (These numbers are, of course, in addition to the hundreds of millions of dollars already collected annually from the broker-dealer community). If all Internet users of financial pages sought NYSEArca data at the $9 rate, that would still run $441 million a month, $5.3 billion annually. Even the "bargain basement price" of $1 per month for NYSE non-professional data would still render the not-so-Spartan sum of $49 million per month, or $588 million per year. Any and all sums would be, of course, in addition to the actual transaction charges that would be levied on retail investors if they opt to engage in a transaction.

Relatively few of our members' customers are going to purchase market data at $75 per month. It is unclear how many would buy NYSEArca data at $9 per month, but clearly even at $1 per month - where one might expect more user participation - the Commission staff is authorizing a transfer from retail investors to a for-profit monopoly of hundreds of millions of dollars annually, with literally zero showing of any cost basis.

By not submitting any information to provide a factual justification for its proposed fees, NYSEArca prevents the Commission from considering, for example, whether charging Internet companies for access to real-time market data based on the number of users - or "eyeballs" - that visit the site can be justified against the mandate that fees be "fair and reasonable." Given the fact that the ECNs were providing real-time market data to Internet companies at no cost, it seems reasonable that a "flat rate" for access to market data is more appropriate than a "per user" structure that puts the availability of real-time market data out of reach for the vast majority of Internet users.

A more recent article from WSJ via Reuters:

NYSE plans test of real-time Web quotes - WSJ

NEW YORK, Jan 12 (Reuters) - The New York Stock Exchange plans a pilot
program later this year that could bring real-time stock quotes to Internet
users, The Wall Street Journal reported on Friday. The NYSE Group Inc. (NYX.N: )
unit is expected to file a proposal with the U.S. Securities and Exchange
Commission on Friday, the Journal reported.

If the SEC approves the plan, the NYSE will allow Web sites to publish
trade prices with nearly no delay in return for payments of $100,000 a month,
the Journal reported. The test program could be available as early as March,
depending on the SEC's response, the paper said.

Google Inc. (GOOG.O: ) and business news television station CNBC have
said they would offer data for free to their users, the paper said. The NYSE
also has had discussions with other Internet service providers such as Yahoo,
the Journal added. Google is a member of a group called NetCoalition, which has
complained about a lack of real-time stock data offered through services owned
by the NYSE Group and Nasdaq Stock Market Inc. (NDAQ.O: )