John McCrank

NEW YORK, (Reuters) – A U.S. appels court ruled Tuesday that the Securities and Exchange Commission could continue with the overhaul of how essential stock market data are collected and disseminated. This is a major blow for exchanges which earn revenues from such data and have opposed the proposal.

After years of broker complaints that data exchanges were conflicted, the SEC adopted new rules for public data feeds in 2020.

Cboe Global Markets, NYSE:) and Nasdaq Inc opposed the plan. The plan allows companies other than exchanges to sell and develop data products based off data they have obtained.

These exchange groups control 12 of 16 U.S. stock markets. They claimed that the new rules are contrary to the Securities Exchange Act’s goals and policies.

Three-judge U.S. Court of Appeals panel denied petitions by exchanges to the SEC. Circuit Court of Appeals for the District of Columbia affirmed that the SEC’s ruling “clearly represents a reasonable balancing of the purposes Congress directed the Commission”.

Before they became for-profit businesses and were updated in 2005, the exchanges took over the management of data feeds that show stock prices, last trades and other information.

The exchanges created proprietary data feeds faster and more complex than those available to the public. Larger brokers believe they must pay more for private data feeds than the public to stay competitive. This has resulted in a market with two tiers.