Market data is hot-button, perhaps sexy.  On Wall Street, that is.  Thanks are due, in large part to high-frequency traders who feed heavily on exchange "non-core" data.  So the 2 largest exchange families - NYSE Euronext, and Nasdaq OMX Group - are duking it out, each seeking to tighten its grip on the lucrative market data.  It will also answer a thorny court of appeals ruling that has held up petitions to charge new fees.  They've also recently proposed new fees for dues, market data and other charges - changes that would take effect immediately, on authority from the Dodd-Frank Act. 

NYSE Euronext is in a legal fight with Internet companies that, in the past, had free access to certain data.  Nasdaq recently has submitted a rule filing proposing to revise market data rules.  NYSE Arca submitted a rule proposal that the U.S. Court of Appeals for the D.C. Circuit had blocked.  The court ruled that the SEC had not made a strong enough case to continue to allow the all-electronic exchange to charge fees for the data, a potential revenue blow for NYSE.  [ID:nN29229053]

    Rain Maker on Wall Street.  Market data is the No. 2 revenue driver for the two big NYSE and Nasdaq.  While the exchanges in their filings said they satisfied the appeal court's objections, it remains to be seen if the SEC or others will take issue. 

"It seems pretty clear to me that it isn't consistent with the decision of the court, but they've taken the position that Dodd-Frank sort of trumped the court's decision, which it did not," -- Jeffrey Brown, SVP - legislative, reg'y affairs at Chas. Schwab.

    Further Issues Brought Out by the Court.  

• Court was concerned if the fees for ArcaBook met the SEC's "fair and reasonable" standard.  A legal source suggested the 2 exchanges were essentially daring someone to challenge their use of Dodd-Frank, and had pinned their filings on a clever argument.  "We believe our filing effectively addresses the issues raised in the court order," said NYSE spokesman Richard Adamonis.
• Court had said NYSE Arca failed to show how ArcaBook's fees for its depth-of-book data are constrained.  In its November filing, NYSE Arca said competition for order flow is an effective constraint on what it charges.
• Court's 8/6 ruling arises from a case brought by NetCoalition and SIFMA, against the SEC.
• The SEC has 60 days to review and, if it chooses, suspend any rule changes.

"The SEC still has an obligation to enforce the '34 Act with respect to these filings, and the '34 Act still requires that fee filings be fair and reasonable and not unreasonably discriminatory," Brown said.   [Reuters, 12/3]