After writing about market data for more than 20 years, I wasn’t surprised. New York-based exchange operator IEX Group’s recent decision to begin charging fees for its market data had all the inevitability of a Bond villain gloatingly revealing his entire plan before 007 escapes and foils the scheme.

“Ah, data fees,” I said, stroking the imaginary white cat sitting in my lap. “I’ve been expecting you.”

It’s not surprising for an exchange to assess fees for its data. What was surprising was that IEX had always been vehemently opposed to charging data fees, referring to connectivity costs as a “shakedown,” and describing “how stock exchanges abuse their privilege and power for monopolistic profits.”

And while IEX has consistently encouraged regulators to ensure that fees charged by other exchanges are “reasonable, transparent, and based on costs,” it has also —until the introduction of these fees—consistently been opposed to charging any fees for its own data. In a February 13, 2019, letter to Securities and Exchange Commission (SEC) secretary Brent Fields, IEX CEO Brad Katsuyama wrote: “Our primary goal as an exchange is to match buyers and sellers at fair and orderly prices, and … [we] reject burdening our members with fixed costs for market data and connectivity.”

But now fees are here, and presumably here to stay. However, it should be noted that IEX has consistently been very transparent about what it costs the exchange to provide market data, and how those costs compare to the fees charged by other exchanges, publicly documenting its own costs. Now, it’s also true that IEX doesn’t handle the same level of volume as its larger rivals, and hence doesn’t need to support the same scale of infrastructure, so while its costs may be proportional to others, its total spend may be very different.

And, to be fair, IEX’s fees are far from unreasonable. They’re a fraction of the fees charged by other exchanges: The maximum that a firm subscribing to IEX’s data would pay is $3,500, and that’s if it takes IEX’s Level 1 data at $500 per month, its market depth at $2,500 per month and forks out a further $500 per month to distribute the data to third parties (although if those third parties are receiving real-time data from a subscriber, they would also need to sign an agreement with IEX and would also be subject to the same real-time fees). Data delayed beyond 15 milliseconds remains free of charge. And, unlike the current trend among other exchanges, IEX doesn’t charge for derived data, analytics, indexes, or anything else created using its data.

Also, the fact is that IEX’s decision isn’t unusual. In fact, it’s the norm. All exchanges charge fees for their data. They all incur substantial costs from operating global marketplaces and providing connectivity and data distribution capabilities, datafeeds, co-location facilities, and from investments in making data available via the cloud. Even those that start out operating a fee-free model for data inevitably cave and start charging for data once they reach a certain size and market share. Whether it’s to cover their growing costs, or because they’re seduced by the lure of a lucrative revenue stream, all exchanges charge for market data.

All, that is, except for Members Exchange (Memx). The startup exchange, which has quickly overtaken IEX in market share as a result of order flow directed to the venue by its the consortium of trading firms that founded it, has not yet begun charging any fees for its data. The exchange has always said that it will charge fees “at some point,” but that these will be more reasonable than those charged by other exchanges. However, to date it has not yet begun doing so.

There is a possibility that Memx—with its focus on reducing costs for its founding trading firms—may decide to not introduce any fees, either on a medium-term basis, or indefinitely, if it can generate enough revenue from trading operations to cover the costs of providing it. After all, the exchange was never envisaged to be a money-spinner for its investors, but rather a more reasonably priced liquidity source. So, it’s not unreasonable to assume that a fee-free model could be sustained—and may even be desirable longer-term.

And this begs another question: Are there any exchanges bold enough to set aside data fees altogether, believing that the goodwill and order flow that change would generate could outweigh lost revenues? Here’s a thought: The last exchange before IEX to go from fee-free to fee-liable was Bats (now part of Cboe), which began introducing fees for value-add datasets in 2010, while keeping its core market data free—though it has since introduced market data fees under Cboe’s ownership.

WatersTechnology asked Cboe if its execs would be willing to describe the thought process behind that, to provide some insight into what IEX and Memx would be considering (Cboe was unable to find anyone willing to discuss fees). But for an exchange group whose largest market is options, and which in recent years has assembled a cadre of value-add data assets, including LiveVol, Hanweck, FT Options, and Trade Alert, there’s an opportunity to change the playing field. Equities data is commoditized, while options data and analytics have greater value. So, why not give away the equities data for free to drive consumers to your ultra-premium datasets instead? Intercontinental Exchange (Ice) could do the same thing with its Nyse equities data, and still make a killing from its bonds and derivatives data.

In the hunt for revenues, exchanges have better things to do than spend time trying to wring money out of commoditized datasets, and wading into drawn-out fights with brokers and regulators. Change is afoot—from Memx poaching order flow, to the transformation of the consolidated feeds, to cloud and new operating models potentially disrupting how data is delivered, licensed and paid for. Those who move now to get ahead of those changes will reap the rewards later.