Web sites await SEC on real-time stock quotes

Discussion in 'Wall St. News' started by S2007S, Nov 14, 2007.

  1. S2007S


    By Karey Wutkowski Tue Nov 13, 1:13 PM ET

    WASHINGTON (Reuters) - Internet finance sites run by Google Inc and Yahoo Inc have been waiting months for regulatory permission to start offering free, real-time U.S. stock quotes.

    But questions over how much the stock exchanges can fairly charge Web sites for trading data has the U.S. Securities and Exchange Commission in the middle of a thorny debate over whether the market for such data is competitive and whether the charges will discriminate against smaller Internet sites.

    Katie Stanton, a Google group product manager, said the Google Finance site won approval from two Chinese exchanges in Shanghai and Shenzhen to carry real-time quotes last month and almost immediately saw a leap in demand for that service.

    Access to real-time stock quotes is the No. 1 demand of users of the Google finance site, Stanton said, and Google would like to offer a number of related tools to help consumers manage their investments.

    "You can get real-time sports scores, weather, news, but you still can't easily get real-time stock market data," she said. "We should have had this ages ago."

    As part of the SEC's regulation of U.S. stock exchanges, the agency has the power to approve new products they offer for sale, including market data.

    "We're falling behind the rest of the world here," said Ron Jordan, senior vice president of NYSE Euronext's U.S. market data. "The fact that China can introduce real-time prices into the United States before the NYSE can is ridiculous."

    Currently, most Internet sites not associated with a broker show U.S. stock quotes with a 15- or 20-minute delay unless users pay a fee. The delay allows the sites to avoid a "device fee" charged to customers for real-time data.


    The major exchanges are keen to sell Web sites real-time, last-sale stock prices for a monthly fee, as new securities regulations make market data distribution easier. The sales would add to profits at a time of increased competition among global exchanges.

    The NYSE and Nasdaq filed the real-time proposals with the SEC in January.

    Supporters said they expected swift SEC approval. But they soon realized they had to wait until the SEC acted on a more contentious plan from NYSE Arca, NYSE's online exchange.

    In May 2006, NYSE Arca said it had gained enough market share to stop giving away some of its real-time trading data for free, and proposed to start charging Internet sites a monthly per-user fee. But Web sites balked at what they considered excessive fees and an administrative nightmare to track users.

    Google and Yahoo banded together with Bloomberg LP and CNET Networks under the umbrella of NetCoalition, an Internet industry group, saying for-profit exchanges had monopolistic control over their data and were trying to charge unfair prices.

    The coalition argues the exchanges have an obligation to follow securities regulations that call for market data to be distributed at a "fair and reasonable" rate.

    "We were feeling the negotiations were extremely one-sided, and the prices were take it or leave it," said Markham Erickson, director of federal policy for NetCoalition. "It did not reflect a viable business model."

    But Google and other allies such as CNBC, the business news cable network that is part of NBC Universal, say the January proposals from NYSE and Nasdaq took a more realistic approach. The SEC should approve them while working to address NetCoalition's broader concerns, they said.

    NBC Universal is majority owned by General Electric. Vivendi holds a 20 percent stake.

    An SEC spokesman said the agency had not set a date for acting on the market data proposals.

    SEC Chairman Christopher Cox told a congressional hearing in June the agency was reviewing the exchanges' proposals and he expected a decision in months. "The review is intended to ensure that the regulatory structure for market data remains up-to-date and reflects such important developments as for-profit (stock exchanges) and the expanded types of data that are needed by investors," he told lawmakers.

    The SEC is also hearing from smaller Internet sites such as ADVFN's InvestorsHub.com and Silicon Investor, which are still unhappy with the more recent exchange proposals.

    "A high flat rate, 'all you can eat fee'-style deal would, in effect, create a monopoly situation with only information suppliers as big as Google, Yahoo and (Microsoft's) MSN able to afford this high barrier of entry," ADVFN said in a letter to the SEC.

    Adena Friedman, who oversees Nasdaq's data products unit, said the SEC review should make clear to exchanges what pricing models will be quickly approved in the future. "We certainly don't want to be put in this situation again," she said.

    But both Friedman and NYSE's Jordan said the exchanges are more than ready to start offering Web sites real-time stock quotes, with Jordan saying it would take three weeks to get the products to market upon SEC approval.

    "We have a feeling of frustration," Jordan said. "No one is really benefiting right now."