The SEC approved a change to the Consolidated Tape Plan yesterday that caps an exchange’s quote-related revenue at five times its trade-related revenue in each periodic distribution. Any excess is redistributed among the other plan members. FINRA is exempt, and an exchange receiving no more than $50,000 a year in quote revenue gets a de minimis exception intended to avoid penalizing a small new venue. SEC approval order, September 14
The numbers behind the filing explain why the cap exists. In 2024, Long-Term Stock Exchange’s quote-to-trade revenue ratio was approximately 107:1 on Tape A, 70:1 on Tape B and 88:1 on Tape C. NYSE Chicago, now NYSE Texas, had ratios above 20:1 in parts of 2021–24. The typical plan member has been well below 5:1. SIFMA’s later sample suggests the rule would have affected three exchanges in 2025 and two in the first quarter of 2026. The target is a small set of venue economics.
The mechanism matters because consolidated-data revenue can subsidize an exchange that posts frequently at the NBBO, often in high-priced or inactive stocks, while executing little flow. The approved cap weakens that particular business model without removing payment for useful quotations. It may alter where marginal quoting is encouraged, although routing behavior should only change if displayed quality or fill probability changes with it.
LTSE’s objection deserves more than ceremonial acknowledgement: an exchange can quote aggressively and still trade little because routers favor venues with a history of fills, larger displayed size or better fee tiers. Executions are therefore a rough test of contribution and an incomplete measure of price discovery. The approval order gives no implementation date. Once it takes effect, watch which capped venues reduce NBBO time or size—and whether any lost quotes were actually executable.