SEC Requires Prior Approval on SRO Fee Increases
Commentary by Steven Lofchie
The SEC rescinded a national market system ("NMS") plan exception under NMS Rule 608 ("Filing and amendment of national market system plans") that allowed fee changes to go into effect, upon filing with the SEC, without any public comment period or express SEC approval.
As previously covered, Rules 608(a) and (b) of Regulation NMS require that amendments to an NMS plan (i) must be published in the Federal Register and be subject to public comment and (ii) may be implemented only upon approval by the SEC.
The rule goes into effect 30 days after the date of its publication in the Federal Register.
Commentary
This is not a mere change in the formalities. Last June, the U.S. Court of Appeals ruled that the SEC was time-barred from seeking to undo certain potentially "unreasonable" fees imposed by Nasdaq. See DC Circuit Court Limits SEC Authority in Exchange Fee Dispute. In response, the SEC appears to be slowing down the fee approval process, which will, among other things, give broker-dealers and other firms affected by any fee increase an opportunity to comment on the justification for the increase. By installing process impediments to any exchange fee increase, the SEC is making sure that it gives itself adequate time to consider whether to approve or reject the increase.
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