SEC Directs Equity Exchanges and FINRA to Improve Governance of Market Data Plans

The Securities and Exchange Commission (SEC) has published a press statement in which it informs of an upcoming order to direct specified authorized exchanges and FINRA, the Financial Industry Regulatory Authority, to resubmit a new national market system plan (NMS plan) to replace three existing plans governing the dissemination of real-time consolidated equity market data for national market system stocks. This directive comes as a response to concerns about conflicts of interest between the exchanges‘ regulatory responsibilities and their interests in proprietary data products that were previously raised by various Self-Regulatory Organizations (SROs) which challenged aspects of the previous order of the SEC in this context (please see EventID 5287, EventID 6652, and the previous order for more information). Specifically, the SROs contested the inclusion of non-SRO representatives as voting members of the CT Plan’s operating committee, the grouping of SROs by corporate affiliation for voting, and the requirement for an independent administrator for the CT Plan.
On July 5, 2022, the D.C. Circuit Court granted the exchanges‘ petition regarding non-SRO voting members but denied it concerning the other challenged aspects, affirming the Commission’s actions on SRO group voting and the independent administrator requirement. The court vacated the CT Plan Approval Order in full but retained the portions of the Governance Order related to non-SRO representation.
In response to the court’s decision, the Commission now directs the SROs to resubmit a Revised New Consolidated Data Plan, consistent with the provisions mentioned in the enclosed upcoming „amendment order“. The Commission believes that, apart from the topics covered in this amended order, the provisions of the CT Plan approved in 2021 that were not challenged, as well as those found permissible by the court, remain appropriate. Consequently, the Commission expects the SROs to file a proposed revised New Consolidated Data Plan within 45 days of the publication of this amended order in the Federal Register.