Economically, an Alternative Trading System (ATS) may not afford to subscribe to every Exchange’s proprietary feed. ATSs use a mix of SIP feed, selected choice of proprietary feed(s), and vendor solutions to navigate the market in finding suitable liquidity for their clients. Instead of mandating ATSs to source market data other than the published data provided by the SROs, the SEC should consider extending the market data infrastructure rule - latency neutralization concept across Exchanges, ATSs, and Self-Aggregators. To achieve this and the protected-quote requirements we advocate for the use of time-lock encryption to make market data available securely in synchronized time. Be assured this is not another speed bump; time-lock would ensure no premature decryption of data.
We attribute the phenomenon of proliferation in “communication protocol systems” (CPS) to the fact that competition is intense to find natural liquidity in the fragmented markets. If a pond is overcrowded with fishing boats and it costs almost nothing to throw bait, then the pond may be polluted with too much bait and no fish. Reaching out to other clients to find a potential match when receiving an initial buying or selling interest is like throwing bait. Let those who want to throw bait in catching fish own up to the relevant costs.
