The Securities Industry and Financial Markets Association is calling on the US Securities and Exchange Commission to revise its proposed treatment of market data fees.

SIFMA filed a comment letter with the SEC and released a study to support its claim that firms would pay too much if the SEC approves a proposed order allowing NYSE Arca, Inc. to establish fees for certain market data.

In its letter, SIFMA contends the SEC’s proposed order is “fatally flawed: its competition analysis is faulty, internally inconsistent, and wholly inadequate.” It further maintains that the order’s analysis of market data fees assumes that competition for order flow among exchanges equates to competition in the sale of market data. “Yet, market professionals must buy this data from both exchanges, even where each exchange’s share of liquidity approaches fifty percent,” it says.

“If they finalize this order, the SEC will be ignoring its congressional mandate to ensure these prices are fair and reasonable, which is unacceptable,” said Ira Hammerman, senior managing director and general counsel of SIFMA. “Both the NYSE and Nasdaq market data streams are necessary components for investment professionals’ businesses – like gas and water service are necessary utilities in one’s home. Gas power cannot serve as a substitute for water service – each is unique and therefore retains its monopoly pricing power – exactly like the exchanges’ market data products.”

SIFMA’s study finds that, “The two dominant exchanges are exercising monopoly pricing power by charging broker dealers and the investing public fees for depth-of-book data that are significantly higher than the relevant costs associated with distributing the data.”