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Stock Quotes in (Real) Real Time?

Financial portals such as CNBC  and Google  will be able to offer free real-time stock quotes if the Securities and Exchange Commission (SEC) accepts a new proposal filed today by the New York Stock Exchange (NYSE) .

In its filing, NYSE said it wants to start a pilot program called NYSE Real-Time Trade Prices (RTTP), which would allow "vendors to redistribute on a real-time basis last sale prices of transactions that take place on the Exchange."

NYSE said it would charge Internet companies $100,000 per month for RTTP and would allow them to syndicate that information to other sites.

It would also prohibit the publication of more detailed trading information, such as bid and offer prices and transaction volumes, and will require sites to display the text "NYSE Data" near the quotes.

Ron Jordan, vice president of market data for NYSE, said the service is unlikely to be available before March because of regulatory hurdles, including a mandatory 30-day comment period.

RTTP is significantly different from an earlier NYSE proposal, opposed by Google, Yahoo  and others, to charge Internet companies between $1 and $75 per unique visitor for real-time trade information. It may also put a simmering debate to rest between the exchange and the financial Internet portals that use its data.

Six months ago, NYSE proposed ARCA Book, a full-service real-time data feed costing $1 per unique visitor per month. Jordan acknowledged that Internet companies were "really mad" about ARCA Book, but said RTTP does not represent a retreat for the exchange but another choice.

One qualitative difference between the two proposed services is that RTTP includes just the last price, but not crucial trading data such as the size and amounts of bids and offers, which would be available in ARCA Book. "[Quotes] are an important piece of the data but not the full data," Jordan told internetnews.com.

According to Jordan, Google and CNBC  are among those that will offer real-time quotes to their customers when the service becomes available, but did not know which other portals would be interested.

Google, Yahoo, IAC/Interactive  and others argued in a November 2006 filing with the SEC that ARCA Book pricing would cost them at least $588 million per year, making it "financially untenable for Internet companies to provide real-time market data to their users."

NYSE has not rolled out ARCA Book because it is still being reviewed by the SEC, but Jordan said the exchange would make it available if it is approved by the SEC.

Jordan defended the pricing of ARCA Book on the grounds that it represents data created by the exchange. "The selling of that data is valuable and is part of how we fund what we do here."

Katie Jacobs Stanton, group product manager at Google, called RTTP a "great step forward," in a blog posting this morning.

Nevertheless, it remains to be seen if any of the financial portals can turn this to their advantage.

Currently, many financial sites offer streaming prices that look real-time, but are in fact delayed by at least 15 minutes. Internet users can only get real-time stock quotes from sites where they maintain brokerage accounts.

JupiterKagan analyst Asaf Buchner said that most investors use those sites for research purposes, but have to go to a brokerage site to execute the trade. Since real-time trade data matters mostly when a trade is executed, having that information on a financial portal may not matter all that much.

That said, Buchner noted in an e-mail to internetnews.com that, "as an investor, if one site offers a more accurate (up-to-date) quote, I would prefer that one over the others, so it can serve as a competitive advantage."

Clearly, Google and CNBC have deep enough pockets to afford a $100,000 monthly fee, which they would hope to offset with increased revenues from online ad sales.

But, noted Tom Taulli, author of Streetsmart Guide to Short Selling and other investment guides, "a lot of mid-tier sites won't have it because they can't afford it or can't justify it in terms of revenue."