TransWikia.com

US stock market: Will there be free market depth data in the near future?

Personal Finance & Money Asked on October 4, 2021

Currently (April 2021), it is easy to obtain the best bid and offer (NBBO) of a stock for free. One just has to use a mainstream financial website such as Yahoo Finance or even Google, and one can easily see the Level 1 quotes for free. From my understanding, these websites are able to provide the quotes for free because the data (indirectly) comes from Securities Information Processors (SIPs), which is one of the cheapest official sources of stock quotes. However, market depth data (i.e. other bids below the highest bid, and other offers above the lowest offer) is not available through SIPs, and that is probably why free websites do not provide market depth data for free.

I have recently come across some interesting documents from the SEC about SIP reform:

From my (poor) understanding of these documents, it appears that SIPs will start to disseminate a limited amount of market depth data sometime in the future. Quoting from the press release:

New “depth of book data” will include quotation sizes at each national securities exchange and on a facility of a national securities association at each of the next five prices at which there is a bid that is lower than the NBB and offer that is higher than the NBO.

My questions:

  • Does this mean that mainstream financial websites will soon be providing a limited amount of market depth data too? Of course, it is not possible to know what third-party websites are going to do. The question is whether or not the cost barrier is really going to be removed to make free and widely-dissimenated market depth data a reality, in the same way that free and widely-dissimenated NBBO data is now a reality.
  • When is the SEC rule going to be implemented?

Forgive me if the answers are obvious. I do not possess enough knowledge to understand the financial and legal terminologies in the ~900 page SEC report.

Add your own answers!

Ask a Question

Get help from others!

© 2024 TransWikia.com. All rights reserved. Sites we Love: PCI Database, UKBizDB, Menu Kuliner, Sharing RPP