The New York Stock Exchange and Nasdaq have sued their regulator over new rules that would force them to share more data in an effort to increase competition in the sector.
The exchanges, along with Cboe Global Markets, filed court petitions against the US Securities and Exchange Commission on Tuesday over an attempt by the regulator to make them provide expanded access to their data feeds.
The SEC said it wanted to help more investors get high-quality data at the fastest speeds, but the exchanges have warned the rules could undermine their proprietary data businesses, which offer premium data services to the highest-paying users.
The companies have lodged their lawsuits with an appeals court in Washington, seeking to block the rules from being implemented on the grounds that the regulator has overstepped its authority.
The suit filed by the NYSE said: “The rule is arbitrary, capricious and otherwise not in accordance with law and does not promote efficiency, competition and capital formation.” The exchange did not comment further.
A spokesman for Nasdaq told The Wall Street Journal: “The SEC exceeded its authority with this ill-conceived remake of market structure. This will make markets more complex and costly.”
Cboe declined to comment. The SEC did not respond to a request for comment.
The three exchanges, which account for the majority of US equities trading, have been at loggerheads with the regulator for years over attempts to curb their market power. Last year the same three companies won a separate legal challenge against a proposed experiment by the SEC to cap trading fees on 1,400 different stocks.
The data rules were adopted last year by a unanimous vote at the commission.
They would require exchanges to disclose information about the levels of supply and demand on their public data feeds, rather than only on more expensive private ones.
At the time, Allison Lee, then a Democratic commissioner on the SEC, accused the exchanges of offering some customers “a pricey trip along a freshly paved, proprietary high-speed toll lane” and others “a cheaper ride on a public highway with cracked pavement and potholes”. Lee is now the acting chair of the commission.