We're gonna get hammered on data fees. SEC judge reaffirms '16 market data decision in favor of exchanges Wednesday, 03 January 2018 9:39 AM ET By Declan Harty Stock exchanges notched a key legal victory related to their highly profitable, yet controversial, market data businesses with a recent decision from a Securities and Exchange Commission administrative law judge. In a Dec. 21, 2017, court filing, SEC Chief Administrative Law Judge Brenda Murray ratified a June 2016 decision that exchanges' market data businesses are subject to competitive forces. The decision could mark the end of a nearly five-year court battle originally brought by the Securities Industry and Financial Markets Association, a group composed of dozens of broker/dealers and banks, against exchange operators Nasdaq Inc. and the New York Stock Exchange, which is owned by Intercontinental Exchange Inc. In its case, SIFMA argued broker/dealers were being charged unfair prices for the exchanges' market data feeds. Market-makers and broker/dealers, including the members of SIFMA, have argued that because the different feeds provide different data sets, and all the feeds' data is necessary for effectively routing orders, the feed prices are unconstrained by competition. But in June 2016, Murray ruled in favor of the exchanges, writing that their depth-of-book prices are constrained by a client's ability to switch to another exchange's product. Soon after the ruling, the SEC granted SIFMA an appeal to the decision, but when Murray requested any new evidence from SIFMA, Nasdaq and the New York Stock Exchange in December 2017, the three parties declined to do so. Days later, Murray filed her decision confirming the 2016 ruling in favor of Nasdaq and the New York Stock Exchange. SIFMA and NYSE did not respond to requests for comment. Nasdaq declined to comment on the matter. The decision to stand by the exchanges' market data businesses marks a win for exchanges in the face of scrutiny of the business line, which increased throughout 2017. The U.S. Treasury Department urged financial regulators in an October capital markets report to clarify that broker/dealers do not need to use exchanges' proprietary data feeds as a means of fulfilling best-execution requirements. Doing so could make the more lucrative proprietary feeds less valuable. Market data products have emerged in recent years as exchanges' most profitable offerings as markets, especially equity markets, have been plagued by depressed trading activity and diminished volatility. Exchange executives argue that concerns tied to market data are outdated. Criticisms of the business line were sparked in the wake of Michael Lewis' 2014 best-selling book Flash Boys. In November 2017, ICE Chairman and CEO Jeffrey Sprecher said the market data business is not nearly as expansive as many of its critics believe it to be. "We're still debating the 'Flash Boys' mentality in a world where I don't believe that the same dynamics exist today," he said.