The US Securities and Exchange Commission (SEC) has ordered equity exchanges and the Financial Industry Regulatory Authority (FINRA) to develop a new national market system (NMS) plan for real-time equity market data distribution.
The new NMS plan will replace the three existing plans that govern the public dissemination of real-time, consolidated equity market data for national market system stocks, and is borne out of a May 2020 SEC order. The new plan should address inefficiencies of NMS plan operations and help allay concerns of market participants that are not self-regulatory organisations.
According to the SEC, consolidated equity market data is a “critical component” of the NMS through which equity investments are priced and traded but that advancements in technology and changes in equity markets have heightened conflicts of interest between exchanges’ regulatory responsibilities and their interests in maximising the value of the data products they sell.
“This has raised concerns about whether the existing NMS plans for equity market data continue to fulfil their regulatory purpose to ensure the availability of information with respect to quotations for and transactions in securities,” the regulator said.
The order from the SEC will see exchanges and FINRA submit a new NMS plan for public notice and comment. The SEC said until a new plan is in place, existing NMS plans will govern the provision of consolidated equity market data.
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