No one has yet devised a regulatory system that cuts prices by more than half in four years without bankrupting the suppliers. Before the advent of IRAs and 401ks, neither federal officials nor the financial industry imagined the kind of demand for market information that exists today. Federal officials simply assumed that production of consolidated data on each security would be a monopoly. Policymakers also assumed that cable television, telephone service, gas pipelines, and electric service were natural monopolies, meaning that costs and prices would be lower if one firm served the whole market. In each case, economic research has proved the policymakers wrong, and pro-monopoly policies are now being reversed.
Government actually prevents competition in market data from emerging.
The SEC sanctioned the creation of monopoly data consolidators, and new data consolidators cannot compete without regulatory approval. The SEC also discourages individual stock markets from selling their own data in competition with the consolidated stream. A regulation called the vendor display rule requires that any information vendor or stock broker displaying data from some stock markets must also display the National Best Bid or Offer and consolidated transaction information that can only be obtained from the government-sanctioned monopoly. Buying data only from some stock markets is not an option. Most amazing about the SEC price regulation proposal is its complete lack of historical perspective.