Securities Information Processor
A Securities Information Processor (SIP) is a data aggregation system that collects real-time quote and trade information from all US equity exchanges and disseminates a consolidated feed of best bids, best offers, and last-sale prices to the market.
The Securities Information Processor sits at the core of US equity market data infrastructure. Mandated under SEC Regulation NMS and the Securities Exchange Act, SIPs collect the quote and trade data submitted by every registered national securities exchange and compile it into the consolidated market data feeds — including the National Best Bid and Offer (NBBO) and the consolidated tape of executed trades.
There are two principal SIP entities in the US equity market. The Consolidated Tape Association (CTA) operates the SIP for NYSE-listed and other Tape A and Tape B securities. The UTP Plan operates the SIP for NASDAQ-listed Tape C securities. Both are governed by industry plans involving all participating exchanges, with SEC oversight.
The SIP performs a computationally intensive task: receiving quote updates from more than sixteen exchanges, comparing them to identify the national best bid and offer, and re-disseminating the result — all within microseconds. Despite this speed, the SIP is often described as slower than the proprietary direct feeds that exchanges sell separately. High-frequency trading firms co-locate at exchange data centers and subscribe to direct feeds to obtain market data before it is processed and re-distributed by the SIP, a speed advantage that has been at the center of debates about market fairness.
The SEC addressed the SIP latency issue in its 2020 market data infrastructure rules, requiring exchanges to reduce the latency of their SIP data submissions and expanding the content of SIP feeds to include depth-of-book information and odd-lot quotes. The rules also restructured the governance of SIP plans to reduce exchange control over data fees and content decisions.
For most retail investors, the SIP is invisible infrastructure. Quotes displayed on brokerage platforms and financial data websites are ultimately sourced from SIP feeds, making its accuracy and speed directly relevant to execution quality.