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SEC to examine stock data pricing

The Securities and Exchange Commission reportedly plans to review how stock exchanges charge for stock-price data, the cause of a growing number of complaints from online brokers.

The U.S. Securities and Exchange Commission plans to review how stock exchanges charge for stock-price data, the cause of a growing number of complaints from online brokers, according to a report.

SEC chairman Arthur Levitt sent a letter this week to the different U.S. stock and option markets saying that the commission will undertake a review of the current fee structure for obtaining market data and the role of data revenues in the operation of the markets, the Wall Street Journal reported.

The SEC plans to issue a release that details the current market-data fees and revenues, hoping to get public feedback on the matter.

In 1997, the New York Stock Exchange earned $97 million, or 15 percent of its total revenue, from market-data fees. The American Stock Exchange earned $78 million, or 39 percent of its total revenue from these fees in 1997. The National Association of Securities Dealers, which runs the Nasdaq Market, earned $268 million, or 42 percent of its total revenue, from such data fees in 1997, the Journal reported.

The fee structure has met opposition from online brokers, whose customers regularly access quotes far more often than the average individual investor. Full-service brokerage firms normally pay a flat monthly fee per registered representative, according to the report.

While recognizing the importance of the fees for the exchanges, Levitt's letter also seems to question the current rate and structure of fees, the Journal reported.

Levitt wrote that the SEC is responsible for ensuring that quote and trade information "is available on terms that are 'fair and reasonable' and 'not unreasonably discriminatory.'"

The stocks exchanges are currently lobbying Congress to insert language that would strengthen their efforts against the piracy of their market data, the report said.

Spokesmen for the NYSE and the SEC declined to comment.