Internet Firms Seek Rollback of Quote Fees
Tuesday, November 14, 2006
A coalition of leading Internet companies, including Google Inc., Yahoo Inc. and IAC/Interactive Corp., plans today to petition the Securities and Exchange Commission to reconsider new fees that U.S. stock exchanges charge them for posting real-time stock quotes on their Web sites.
These new charges recently prompted the financial Web sites owned by AOL, Yahoo, Google and others to stop offering real-time stock quotes, according to the trade group NetCoalition.com.
The coalition in particular is looking for the SEC to reverse a staff decision allowing the New York Stock Exchange to increase the fees for displaying information from its Archipelago electronic market, some of which had been free. In authorizing the new charges last month, the commission ruled they were legitimate because they were not out of line with those already imposed by the Nasdaq for similar data.
Markham Erickson, the Internet trade group's executive director and general counsel, said the coalition hopes to prompt a broader review of the practice of charging for market data, which U.S. exchanges such as the NYSE, the Nasdaq and others to a lesser degree see as a lucrative and growing source of revenue. As the exchanges have transformed themselves from nonprofits into for-profit entities, they have increasingly looked for ways to make money from the information they control, he said.
"The fees are being proposed without any justification for how these exchanges are arriving at their fees," Erickson said. Moreover, he added, "We don't think they own the information." He said the data was created by buyers and sellers acting in the market, while the exchanges simply aggregate the information.
A spokesman for the NYSE declined to comment on the issue. A message left at Nasdaq headquarters late yesterday was not returned.
Erickson said his group's research showed that the new fees billed to Internet companies range from $1 a month to $75 a month for each user, which prompted some Web sites to remove their free, live quotes and instead supply data that is at least 15 minutes old. "In some cases, the exchanges have sought retroactive fee changes, making carrying this data a prohibitive legal and financial risk," Erickson wrote in a letter last week to SEC Chairman Christopher Cox.
Though the exchanges argue that their prices reflect supply and demand for stock information, Erickson countered that the NYSE is a government-regulated monopoly, similar to a utility company, and that its charges do not reflect market forces.
Besides Google, Yahoo and IAC, coalition members also include Bloomberg L.P. and Cnet Networks Inc. as well as several local Internet providers. The Washington-based coalition announced last week that it was preparing to ask the SEC to stay its earlier approval of the NYSE charges. There is no firm deadline for the commission to act on the petition.