The regulation is about equal access, not free access. Now, the SIP feed contains combined market data from all of the exchanges to which the National Best Bid / Offer (NBBO) applies, so that a broker-dealer can look at the SIP feed to determine nationally what the best bid across many exchanges is and what the best offer across many exchanges is. The Reg NMS mentioned is that the broker can't give you a price (before fees) that's outside the NBBO. (There's an exception if the investor explicitly opts the order out of Reg NMS requirements and directs that the order be filled on a specific venue. Last I checked there are 70-some equity venues in the US.)

The consolidated feeds are necessarily slower than the direct feeds, due to processing delays, unless the exchanges intentionally slow down their direct feeds. There are several companies that will sell you expensive FPGA or IBM Cell-based cards that will locally create a consolidated feed from all of the direct feeds. These cards aren't cheap, but are necessary for trading latency arbitrage strategies, and are also useful for low-latency market making.

Of course the consolidated feed requires a slight processing delay, so unless they intentionally slow down the direct feed, quotes from NYSE will appear first in the direct feed and very slightly later in the SIP feed. The argument here is about if the delay between SIP and the direct feed is small enough to be permissible.

The "public" being talked about is the paying public. Nothing in the regulation requires a free SIP feed, and I assure you NYSE doesn't provide a free real-time SIP feed. The regulation is to prevent selling an intentionally slow connection to everyone, and giving a faster feed to only their top tier customers.

Disclaimer: I'm not a lawyer.

The SIP (consolidated feed) is tasked with using the most efficient hardware and software available. If a private company can consolidate faster than the SIP, then the SIP isn't using the most efficient hardware and software available now is it?

Pretty simple.

The exchanges take in $500M a year in SIP fees, which are supposed to go to the most efficient hardware and software available. Pretty sure that's not happening.

> Pretty simple.

Oversimplification, forgetting the laws of geometry and physics.

The triangle inequality and relativity conspire against the SIP. If you're getting the SIP from B, any new prices at C go to B and then forwarded to you, so it's faster (best case equal in the degenerate triangle case) to get direct feeds from B and C and consolidate locally.

Not to mention the CAP theorem. For the SIP to work you have to have a much stronger consistency model across many more nodes. To arbitrage latency in it you need neither.

Are you saying the SIP runs on the best hardware/software available? I want to get that cleared up before moving on to a new topic.

I don't know about the hardware being used by the SIP. It might very well be very slow hardware. You clearly have a lot more knowledge than I do and have done some very good research.

I was just pointing out that

> If a private company can consolidate faster than the SIP, then the SIP isn't using the most efficient hardware and software available now is it?

is faulty reasoning.

If NYSE wants to lobby for laws to be changed, then they're welcome to do that. Just like Uber or Airbnb when they get hit with fines.

But the law's the law. "It doesn't make sense" isn't a valid defense.

Imagine that they're providing free firewood to the public - what obligates them to provide the pickup trucks?

The law, in the same way we regulate many markets that can only efficiently support fewer participants than would be required for a fully competive marketplace.

Usually due to capex: energy infrastructure, network effect: financial, or limited availability of resources: wireless spectrum.

If it's in the public interest to have trucks and no firewood seller would otherwise provide them. That's absolutely something government can (and IMHO should) mandate in exchange for a firewood license.

Well I demand that my free server have 128GB of ram, and holograms. Fucking fatcats.