The Nasdaq Stock Market, trying to head off rivals in the sale of stock price information, will begin paying securities firms next month for information on their trades in Nasdaq stocks.
The nation's second-largest market is promising cash to brokerages that report details on their trading exclusively to Nasdaq. But brokerages would forfeit the money if they also report trades in Nasdaq stocks through a rival market, such as the Chicago Stock Exchange.
"There is a lot of money at stake," said Joel Seligman, head of a Securities and Exchange Commission advisory committee on market data. "It's big-league stuff."
Nasdaq's revenue-sharing plan is a new tactic in the battle over who controls information on the size and price of stock trades that the markets sell for millions of dollars. Last year, U.S. markets generated almost $600 million in revenue by selling data to investors and vendors such as Reuters Group and Bloomberg.
The information has grown in value as more investors seek up-to-the-second trading data.
In January, Nasdaq will start paying brokers and market makers for reporting their trades in Nasdaq stocks through its Automated Confirmation Transaction system. Nasdaq also is seeking SEC approval of a clause that would require brokers to report "substantially all" of their trades to Nasdaq or lose the payments.
Rivals say Nasdaq is offering money to securities firms to stop migration of trades in Nasdaq stocks to competing markets. But Nasdaq defends the plan as necessary to compete with regional exchanges that use revenue from trading data to reward specialists who send trading in Nasdaq stocks to exchanges offering rebates, known as "payment for order flow."