Stock Exchanges Win Legal Battle with SEC Over Data Fees

A court rejects the regulator’s decision to reject fee increases.

U.S. stock exchanges won a legal battle with their regulator on Friday when an appeals court ruled some fee increases can’t be challenged by the government after they have taken effect.

The decision by the U.S. Court of Appeals for the District of Columbia Circuit appears to end a 14-year legal dispute over fees that exchanges charge for data that show the most complete view of market activity. Brokers, traders and investors say the information is essential for pricing orders and responding to market conditions.

Companies such as ICE and Nasdaq sell different types of market-data feeds to Wall Street banks, quantitative hedge funds and other trading firms, while also licensing indexes to issuers of exchange-traded funds and offering various products used in financial analysis. Last year such “information services” captured $6.8 billion in revenue for the global exchange industry, or 18.8% of total revenue, up from 12.8% in 2010, according to a report released this month by Burton-Taylor International Consulting, a TP ICAP company.

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