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purchase direct data feeds in order to stay
competitive.
“Given the realities of the modern
electronic market, no market participant
that desires to route an order effectively
and consistent with its best execution ob-
ligations - either as a principal or an agent
– can do so without paying for full depth
of book market data from 11 exchanges
“No market participant that
desires to route an order
consistent with its best execution
obligations can do so without
paying for full depth of book
market data from 11 exchanges.”
DOUG CIFU, VIRTU FINANCIAL
(again, NYSE, Cboe and Nasdaq) and con-
nectivity from them all,” Virtu’s Cifu said
in his opening statement.
“While the SIP is useful and necessary
for some parts of our business, we and
every other modern market participant are
compelled to purchase proprietary data
feeds and exchange connectivity. Virtu’s
clients take their fiduciary responsibilities
very seriously and hold all their brokers to
the highest standards available, including
using all publicly available information
when routing orders.”
Cifu claimed that exchanges charge a
total of $1,188,000 every year for six cross
connects, which are cables that plug into
the exchanges for connectivity. He added
that his firm contacted a cable vendor in
Hicksville and bought one for just $189 –
it can even be found on Amazon for $89.
Six cables in total, one primary and one
backup, to connect to NYSE, Nasdaq and
Cboe, means the cost to the exchanges on
this basis, in terms of providing access and
connectivity, could be as low as $1,300.
The actual costs of producing the SIP
feeds, providing market access and direct
data feeds are unclear, and were described
by IEX’s Katsuyama during the roundtable
as being “almost completely cloaked in
44 // TheTrade // Winter 2018
darkness”, with his exchange estimat-
ing that the mark-up by NYSE, Nasdaq
and Cboe for providing connections to
exchange data centres could be as high as
3,000%.
The exchanges, specifically in this
case Cboe’s Concannon, argued that SIP
revenue has been flat-to-down over the
past decade and that firms have a choice
when it comes to purchasing direct data
feeds and market access due to increased
competition. Concannon took no prisoners
when delivering his opening statement to
the SEC, highlighting that the debate has
led to a battle between Wall Street and the
regulated exchanges around profits and
economic frets.
“When I first heard about this round-
table several months ago, I was very
hopeful,” Concannon said. “I thought this
will be the opportunity to make some real
“In light of the recent unprecedented
and unwarranted public assaults
on exchanges, we now have less
appetite for compromise.”
CHRIS CONCANNON, CBOE GLOBAL MARKETS
changes to the SIP and that we would
come here with productive proposals and
offer our help. However, in light of the
recent unprecedented and unwarranted
public assaults on exchanges, we now have
less appetite for compromise. I come here
with no proposal in hand and little willing-
ness to suggest compromise.”
Representing the buy-side was Mehmet
Kinak, a 19-year T. Rowe Price veteran
who currently heads up global systematic
trading and market structure for the asset
manager. He slammed Concannon’s com-
ments about unwillingness to compromise
as representative of an industry which fa-
vours regulated exchanges over investors.
“What concerns me is an ecosystem that
slants one direction over another, [the
exchanges] set the rules and we have to
follow them,” Kinak told the SEC. “Now