Citadel Securities has called for more scrutiny around market data fees, arguing that costs are currently “excessive”.
The company states that market data fees, which make up a large proportion of exchanges’ revenues, are inflated. This increases the barrier to entry for smaller broker-dealers, increases costs for investors and ultimately misaligns with fairness requirements in the Exchange Act, it says.
Under the Exchange Act, modified by the Dodd-Frank Act, member fee changes can be established with immediate effect once self-regulatory organisation (SRO) documents are filed. These filings do not have to be approved by the SEC to become active, and exchanges can retract and refile repeatedly until they collect the relevant fee, Citadel Securities says.
The Dodd-Frank modification should be rescinded, Citadel Securities argues, as it allows exchanges to file fee changes with impunity and without oversight.
The company’s complaint echoes the report from Market Structure Partners on data costs in Europe earlier this year.
READ MORE: Buy side cries price gouging, exchanges say it’s a smokescreen
Filings from US exchanges illustrate the growing profits being made from market data fees.
In the first three months of 2025, revenues for Nasdaq’s data and listing service was up 3% year-on-year (YoY) to US$192 million. At ICE, data and network technology revenues were US$172 million – up 6%. Cboe reported “a decline in industry market data fees” for its North American equities business in the first quarter, but reported the greatest revenue increase of the three exchanges – an 8% YoY gain, reaching US$77.8 million in market data fee revenues over Q1 2025.
