There could be good news coming for one side of a war tearing Wall Street apart (NDAQ)

Trading firms have long complained about the mounting cost of data charged by US exchanges like the New York Stock Exchange and Nasdaq.
The Securities and Exchange Commission's appointment of Brett Redfearn, a trading veteran and critic of the way exchanges sell data, may signal change is on the way.

Wall Street has been embroiled in a civil war between traders and exchanges over the rising cost of market data, and a recent hire by the Securities and Exchange Commission is being viewed as a win by one side of the war.

The SEC on Wednesday announced Brett Redfearn, a trading exec at JPMorgan, w

Big traders have long accused exchanges such as the NYSE and Nasdaq for unfairly spiking the cost of their proprietary market data, which market makers claim is essential to competing in the trading business.

"Unlike SIPs, 100% of the revenues from competing, proprietary market data products go to the exchanges selling that data. These proprietary data products are far superior to the product produced by the SIPs, such that broker-dealers — including my firm — must purchase these proprietary data feeds from exchanges to provide competitive trading products for our clients.

"The latency issues associated with the SIP are today so well known that, for broker-dealers providing electronic trading products, 'using the SIP' is considered uncompetitive. In client meetings, it is imperative that we reiterate that we use direct feeds."

The logic is: Without the exchanges' proprietary data traders don't have clients. That gives exchanges the upper hand, some critics say, to increase the costs of proprietary data.

Rising costs have become a pain point for traders, many of whom are also facing historically low volatility, which has sapped the markets of profit opportunities.

Redfearn's appointment, which came as a surprise to many people on Wall Street, is being viewed as a signal that the tide may turn.

"When you have all of your customers unhappy, that's not going to last very long," Friedman said. "ICE is the biggest culprit here, CME and Bats are the least bad, and Nasdaq is somewhere in between."

Vlad Khandros, head of market structure and liquidity strategy at UBS, told Business Insider in an emailed statement that data fees are "substantial" and changes would be welcomed.

Richard Repetto, an analyst at Sandler O'Neill + Partners who covers a number of exchanges and trading firms, told Business Insider that he expects Redfearn to act without bias in his new position.

"He is a knowledgeable professional who will take a balanced approach taking everyone's position into account," Repetto said.