‘Flash Boys’ Exchange IEX to Start Charging for Its Market Data
(Bloomberg) -- IEX Group Inc., owner of the exchange that promotes itself as a champion for market fairness and integrity, will start charging customers for access to its data beginning next year.
The New York Stock Exchange, Nasdaq Inc. and Cboe Global Markets Inc. all charge for access to data, and IEX has been a vocal critic, saying their fees are exorbitant and should be more tightly regulated. Exchanges are overcharging for market data by as much as 1,800%, John Ramsay, IEX’s chief market policy officer, said in 2019.
“We’re not expecting competitors to lower their costs,” Ronan Ryan, IEX’s president and co-founder, said in an interview. But the move will help regulators make better comparisons among exchanges, and “set a new standard in market-data pricing.”
IEX, which launched as an exchange in 2016 and was made famous by Michael Lewis’s “Flash Boys,” said it will charge a flat fee of $500 a month for real-time access to its so-called “Tops” feed, and $2,500 a month for its “Deep” feed, according to the SEC filing. Subscribers will also be charged $500 a month for redistribution rights for both feeds.
Those willing to accept a 15-millisecond delay won’t be charged, “because it is the very demand for real-time, low-latency data that drives much of the costs associated with creating and distributing IEX data,” it said in the filing. It also set a maximum cost of $3,500 a month for subscribers who receive all data and redistribution rights in real time.
The new fees will help cover the cost of disseminating data, which the company said amounts to roughly $2.5 million a year.
“There are true costs to provide these types of services,” Ryan said, adding that the new fees are “a fair markup.”
Other exchanges offer pricing models that vary widely. Nasdaq and NYSE, for example, charge different amounts for professional and non-professional users. Nasdaq’s fee is $75,000 per firm for 250 subscriptions to its “Depth Non-Display,” while NYSE’s charges range from $100 to $6,250 depending on the product and user.
“It’s frustrating when exchanges charge opaque fees and don’t provide transparency into their costs to maintain and deliver the data,” Doug Cifu, chief executive officer and co-founder of Virtu Financial, said in a statement. “We appreciate how IEX is being transparent and reasonable about its market-data fees.”
IEX estimated that about 70 subscribers are likely to choose the delayed model to avoid the new fees. About a third of the remaining, non-individual subscribers are IEX members, another third are market professionals such as hedge funds and broker-dealers, and the rest are data vendors, according to the filing.
“While market participants are probably not thrilled by the prospect of a new line item in their expenses, we are committed to leading by example in charging a reasonable amount for market data that is priced and justified responsibly,” Ryan wrote in the blog post.
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