Market Watch : Dispute Erupts Over Proposed Fees for Stock Price Data : Wall Street: The debate raises a question: Are stock prices news or another salable commodity?
Small investors and the media could face higher costs for their daily diet of stock prices under a proposal by the nation’s stock exchanges that could lead to new fees for market data.
A group of news organizations, discount stock brokerages and database services is challenging the request for a contractual change that could open the door to charges on 15-minute-old stock quotes.
Delayed last sale information, as it is called, is now free to vendors, except for transmission costs.
The debate on Wall Street and in Washington centers on the ownership of data vital to the functioning of the nation’s financial markets. It also raises a First Amendment question: Are stock prices news or just another commodity for sale?
Under the present system, charges are applied only to “real-time” quotes, which are up-to-the-second prices. Individual investors pay about $13 a month for real-time quotations from the New York Stock Exchange. Institutions can pay up to $120 a month.
The stock exchanges say they own the data, real or delayed, and need to recover the costs of compiling and distributing it.
Opponents of the proposal by the NYSE and seven other exchanges, pending before the Securities and Exchange Commission, said Friday that delayed-price fees would drive investors who can’t afford to pay for real-time data from the markets. They said the 15-minute-old numbers are public property.
“It’s like charging for the wrapper on the candy after it’s been eaten,” said Hugo Quackenbush, spokesman for discount broker Charles Schwab & Co.
“The exchanges are in the business of making the financial markets accessible to everybody,” said John Foley, director of on-line stock trading for discount broker Quick & Reilly. “Information dissemination is part of that.”
As opponents read it, the proposed contractual change would eliminate the distinction between real-time and delayed data, allowing the stock exchanges to charge for all numbers.
But Thomas Haley, the NYSE’s vice president for market data, said the exchanges already have the right to charge for delayed data and to alter the definition of delayed data. He called the dispute “a tempest in a teapot.”
Haley, chairman of the Consolidated Tape Assn., which made the proposal, said charging some users for stock-price quotations and giving it away free to others is unfair and should be reconsidered.
“The exchange and the CTA receives nothing, zero, from those organizations for the use of that data,” he said. “That operation is being subsidized by all the others who are paying.”
“How long before you have the folks that are paying say, ‘I’m paying too much?’ ” he said. “You’re letting the other group off the hook. There has to be balance here.”
Haley indicated that the NYSE and other exchanges would consider various billing schemes that could lead to charging for delayed data or encouraging all users to buy real-time data.
Delayed stock prices reach the public in various ways. Individuals with personal computers pay database services for access to quotes. Newspaper stock tables and some television services such as Financial News Network run delayed prices.
Discount brokers use 15-minute-old quotes to cut down costs of servicing individual investors. Brokers said they would be forced to pass on a charge for delayed quotes to customers.
With the development of lightning-quick transmission capability and competing computer databases in the past decade, more businesses are using the stock exchange’s free data to make a buck.
“If the NYSE continues to give away . . . price dissemination they will at some point enable an electronic competitor to eat their lunch,” said Eric K. Clemons, a professor at the University of Pennsylvania’s Wharton School. “There’s a very substantial cost in providing that service.”
Haley said the NYSE has 134 contracts to provide delayed data to vendors, who in turn make it available to an estimated 1.5 million personal users.
The Associated Press is one of a dozen groups that have objected to the exchanges’ proposal. In addition to Schwab and Quick & Reilly, others include Financial News Network, Dow Jones & Co., Fidelity Investments and Instinet Corp.
“It’s always been our position that all stock information is news that under the First Amendment we have a right to report,” AP Business News Editor James M. Kennedy said.
