Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to NYSE OpenBook® Exhibit C, 38226-38229 [E5-3457]
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38226
Federal Register / Vol. 70, No. 126 / Friday, July 1, 2005 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51925; File No. SR–NYSE–
2005–32]
Self-Regulatory Organizations; New
York Stock Exchange, Inc.; Notice of
Filing of Proposed Rule Change and
Amendment No. 1 Thereto Relating to
NYSE OpenBook Exhibit C
June 24, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on May 13,
2005, the New York Stock Exchange,
Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the NYSE. On
June 16, 2005, the NYSE submitted
Amendment No. 1 to the proposed rule
change.3 The Commission is publishing
this notice, as amended, to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The NYSE proposes to amend display
requirements pursuant to which
vendors may distribute to their
customers NYSE OpenBook
information. The Exchange has set forth
the display requirements in an Exhibit
C to the standard form of ‘‘Agreement
for the Receipt and Use of Market Data’’
(the ‘‘OpenBook Exhibit C’’). Below is
the text of the proposed rule change, as
amended. Proposed new language is
italicized; proposed deletions are in
[brackets].
*
*
*
*
*
EXHIBIT C Agreement for Receipt and
Use of Market Data: Additional
Provisions
21. NYSE [OPENBOOKTM]OPENBOOK
(a) [AUTHORIZATION—Exhibit A
describes Customer’s receipt of the
NYSE OpenBookTM Service
and]DEFINITIONS
(i) ‘‘NYSE OpenBook Information’’
means the limit order and other
information [included in that service.
(This Exhibit C refers to that
information,]that NYSE makes available
pursuant to the NYSE OpenBook
1 15
U.S.C. 78s(b)(1).
17 CFR 240.19b–4.
3 In Amendment No. 1, NYSE submitted an
Exhibit 4 to indicate the proposed changes to the
existing Exhibit C that governs the receipt of
OpenBook data.
22
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Service and any modified version of that
information and any information
derived from that information.
(ii) ‘‘Other Data’’ means limit order
and other information that other market
centers make available.
(b) AUTHORIZATION—Exhibit A
describes Customer’s receipt of NYSE
OpenBook Information. NYSE
OpenBook Information shall constitute
‘‘NYSE Market Information’’ for all
purposes of the Agreement and its
exhibits. Customer may use NYSE
OpenBook Information, and may
provide displays of NYSE OpenBook
Information to Subscribers, but may do
so:
(i) only as and to the extent described,
and in the manner specified, in Exhibit
A; and
(ii) only for so long as the Agreement
and this Exhibit C are in effect.
Customer’s provision of displays of
NYSE OpenBook Information to
Subscribers shall constitute ‘‘Subscriber
Services’’ under the Agreement. Each
display of NYSE OpenBook Information
that Customer provides to Subscribers
shall indicate that NYSE is the source of
the information included in the display.
([b]c) DISPLAY SERVICES—As an
additional Subscriber Service
requirement under clause (iii) of
Paragraph 5(b) of the Agreement,
Customer shall not commence to
provide displays of NYSE OpenBook
Information to a Subscriber unless:
(i) Customer has first presented the
Subscriber with such form of notice or
agreement as NYSE may specify; and
(ii) If NYSE specifies that the
Subscriber must acknowledge its receipt
of that notice, or manifest its assent to
that agreement, the Subscriber has first
complied with that requirement in such
manner as NYSE may direct.
[(c) INDIRECT ACCESS
PROHIBITED—Except as NYSE may
specifically permit in writing and
notwithstanding anything to the
contrary in Paragraph 5(c) of the
Agreement, Customer shall not provide
to any other Person any Indirect Access
Service that includes OpenBook
Information.]
[(d) CONSOLIDATED DISPLAYS
PROHIBITED—Notwithstanding
anything to the contrary in Exhibit A or
elsewhere, Customer shall not cause, or
permit any other Person to cause, the
displays of OpenBook Information that
Customer provides to Subscribers to be
integrated with limit orders or other
market information that any source
other than NYSE makes available. This
means, for instance, that Customer shall
not permit the displays of OpenBook
Information that it provides to
Subscribers to be consolidated with
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limit orders that any other market, or
any electronic communications network
or broker-dealer, makes available.
However, this prohibition does not
prevent Vendor from enabling a
Subscriber to view one or more other
entities’ limit orders side-by-side with,
or on the same page as, displays of
OpenBook Information. In addition, this
prohibition shall not apply insofar as
Customer provides displays to its
officers, partners and employees or to
those of its Customer Affiliates.]
[(e) SHARING OF RESEARCH—
Customer and NYSE shall meet
periodically to discuss the results,
progress and status of the OpenBookTM
Service and to share any market
research that Customer has generated,
subject to Customer’s obligation or
reasonable need to maintain
confidentiality in respect of certain
information.]
(d) NYSE OPENBOOK DISPLAY
RULES
(i) ATTRIBUTION—Customer shall
associate the identifier ‘‘NYSE’’ with
each element or line of NYSE OpenBook
Information that it includes in an
Integrated Display or Montage.
(ii) AGGREGATED DISPLAYS—
Insofar as Customer incorporates NYSE
OpenBook Information with Other Data
in its displays (an ‘‘Integrated Display’’),
Customer shall cause the Integrated
Display to indicate at each price level
the number of shares attributable to
each NYSE OpenBook bid or offer.
(iii) NYSE OPENBOOK-ONLY
DISPLAYS—Customer may integrate
NYSE OpenBook Information with other
market information as the Agreement,
as modified by this Exhibit C, may
provide. However, Customer shall also
make NYSE OpenBook Information
available as a stand-alone product that
is separate and apart from information
products that include other market
centers’ information (a ‘‘Stand-Alone
NYSE OpenBook Product’’). Customer
may include other NYSE market data in
Stand-Alone NYSE OpenBook Products,
subject to compliance with such
contract and fee requirements as may
apply to that other NYSE market data.
Customer shall make its subscribers
aware of the availability of the StandAlone NYSE OpenBook Product in the
same manner and to the same extent as
it makes its subscribers aware of the
product that integrates NYSE OpenBook
Information with other market
information.
(iv) SCREEN SHOTS—No later than
at the time that Customer commences to
provide to others displays of NYSE
OpenBook Information, or modifies
those displays, Customer shall submit to
NYSE for inclusion in Exhibit A sample
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Federal Register / Vol. 70, No. 126 / Friday, July 1, 2005 / Notices
screen shots that demonstrate each
manner of display and each
modification.
(e) INTERNAL DISPLAYS—The NYSE
OpenBook display requirements set
forth in Paragraph 21(d) shall not apply
insofar as Customer provides displays to
its officers, partners and employees or to
those of its Customer Affiliates.
ACCEPTED AND AGREED
[NAME OF VENDOR]
By: llllllllllllllll
Name: lllllllllllllll
Title: lllllllllllllll
Date: llllllllllllllll
NEW YORK STOCK EXCHANGE, INC.
acting solely on its own behalf as
Paragraph 12 describes
By: llllllllllllllll
Name: lllllllllllllll
Title: lllllllllllllll
Date: llllllllllllllll
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change, as amended. The
text of these statements may be
examined at the places specified in Item
IV below. The Exchange has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NYSE OpenBook is a compilation of
limit order data that the Exchange
provides to market data vendors, brokerdealers, private network providers and
other entities through a data feed. For
every limit price, NYSE OpenBook
includes the aggregate volume. NYSE
has made NYSE OpenBook data
available for more than three years. It
updates that limit order data every five
seconds.4 Last August, NYSE submitted
a proposed rule change to the
Commission to provide NYSE
OpenBook data on the basis of real-time
4 The Commission approved the fee applicable to
OpenBook in December 2001. See Release No. 34–
44138 (December 7, 2001); 66 FR 64895 (December
14, 2001) (SR–NYSE–2001–42) (‘‘OpenBook Fees
Approval Order’’).
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updates. (That filing is pending before
the Commission.5)
In order for a vendor to receive NYSE
OpenBook information from the
Exchange for redistribution to its
customers, the Exchange requires the
vendor to enter into its standard form of
‘‘Agreement for Receipt and Use of
Market Data.’’ This form (the
‘‘Consolidated Vendor Form’’) is the
same form that vendors must enter into
in order to receive market data under
the CTA Plan and the CQ Plan. The
participants in the CTA and CQ Plans
first submitted the Consolidated Vendor
Form to the Commission for immediate
effectiveness in 19906 and the
Commission approved a revised version
of it in 1996 in conjunction with the
participants’ restatement of the CTA and
CQ Plans.7
The Exchange designed the
Consolidated Vendor Form as a generic,
one-size-fits-all form of agreement that
consists of a standard set of basic
provisions that apply to all data
recipients. Accordingly, the
Consolidated Vendor Form
accommodates a number of different
types of market data, a number of
different means of receiving access to
market data and a number of different
uses of market data. Because it was
recognized that the Consolidated
Vendor Form could not anticipate every
aspect of a vendor’s receipt and use of
market data or future advances in
technology or new product offerings,
Paragraph 19(a) of the form provides
that ‘‘Exhibit C, if any, contains
additional provisions applicable to any
non-standard aspects of Customer’s
Receipt and Use of Market Data.’’ The
Exhibit C terms and conditions pursuant
to which NYSE currently makes NYSE
OpenBook available prohibit a recipient
of NYSE OpenBook data from externally
distributing that data if the recipient has
integrated that data with limit orders or
other market information from any
source other than the NYSE, although
the recipient may make the integrated
data available to its own officers,
partners and employees or those of its
affiliates.
In light of the Exchange’s experience
with both the NYSE OpenBook product
and its Liquidity Quote product, as
well as comments of vendors and NYSE
OpenBook users, the Exchange has
determined to replace the prohibition
5 See Release No. 34–50275 (August 26, 2004), 69
FR 53760 (September 2, 2004). File No. SR–NYSE–
2004–43 (submitted August 10, 2004), which can be
found on the Exchange’s Web site.
6 See Release No. 34–28407 (September 6, 1990);
55 FR 37276 (September 10, 1990) (File No. 4–281).
7 See Release No. 34–37191 (May 9, 1996); 61 FR
24842 (May 16, 1996) (File No. SR–CTA/CQ–96–1).
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38227
against integrating NYSE OpenBook
data with other data with four display
requirements.
First, any Integrated Display must
associate the identifier ‘‘NYSE’’ with
each element or line of NYSE OpenBook
data that is included in the Integrated
Display.
Second, any display or montage that
incorporates NYSE OpenBook data with
limit orders or other market information
from any source other than the NYSE
makes available (an ‘‘Integrated
Display’’) must indicate at each price
level the number of shares attributable
to the OpenBook bids and offers.
Third, if a vendor or internal data user
makes Integrated Displays available, it
must also make NYSE OpenBook
Information available as a product that
is separate and apart from information
products that include other market
centers’ information and make its
subscribers aware of the availability of
the stand-alone NYSE OpenBook
product in the same manner as it makes
its subscribers aware of the integrated
product.
Fourth, each vendor must add to
Exhibit A a sample of each new screen
shot to demonstrate the manner of the
display and any modification to
previous displays. The vendor is
required to submit the new screen shot
no later than at the time it first
commences to provide the new or
modified display to others.
The display requirements do not
apply insofar as the data recipient
distributes NYSE OpenBook data to its
officers, partners and employees or to
those of its affiliates.
2. Statutory Basis
The Exchange believes that the
proposed rule change, as amended, is
consistent with Section 6(b) of the Act 8
in general, and furthers the objectives of
Section 6(b)(5) 9 in particular, in that it
is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
processing information with respect to,
and facilitating transactions in,
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change, as amended,
8 15
9 15
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U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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Federal Register / Vol. 70, No. 126 / Friday, July 1, 2005 / Notices
will impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding, or
(ii) as to which the Exchange consents,
the Commission will:
(A) By order approve such proposed
rule change; or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act.
The Commission notes that, unlike
NYSE’s Liquidity Quote, which is a
unique market data product that
represents aggregated NYSE trading
interest at multiple price levels to a
specific price interval outside the NYSE
best bid or offer (‘‘BBO’’), NYSE
OpenBook consists simply of depth-ofbook limit order information. In the
order approving the Exhibit C associated
with NYSE’s Liquidity Quote, the
Commission specifically stated that the
terms therein did not ‘‘apply and have
not been considered or
approved* * *as acceptable for the
distribution of NYSE OpenBook data.’’
In this proposed rule change, the NYSE
proposes to eliminate the restrictions it
places on vendors’ ability to integrate
OpenBook data with data from other
markets. In place of these restrictions,
however, NYSE has proposed terms
substantially identical to those
applicable to the distribution of
Liquidity Quote data. Specifically,
NYSE proposes to require vendors to
identify each element or line of
OpenBook data that is included in a
display that is integrated with other
markets’ data, indicate the number of
shares attributable to the NYSE
OpenBook data in any integrated
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display and provide NYSE OpenBook as
a separate data product.
The Commission recognizes that
OpenBook contains important market
data that provides investors with a view
of available liquidity in the NYSE limit
order book. This data is likely to become
even more pertinent if the NYSE Hybrid
Market Proposal is approved and
implemented. For example, in the
Hybrid Market Proposal, NYSE has
proposed to substantially expand its
automatic execution functionality and
permit investors to sweep the NYSE
limit order book, subject to certain
parameters. Accordingly, the ability of
investors to view and consider the
depth of liquidity on the book is likely
to assume heightened importance in
making trading decisions in this
environment.
Section 11A of the Act generally sets
forth standards under which a selfregulatory organization (‘‘SRO’’) may
distribute information with respect to
quotations, including limit orders.10 In
addition, Section 6(b)(8) of the Act 11
requires that the rules of an exchange
not impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
Accordingly, the Commission
specifically requests commenters to
provide their views on the following:
1. The Commission requests comment
on whether the proposal is consistent
with the Section 11A(c)(1)(C) of the
Act,12 which requires, among other
things, that all securities information
processors be able to obtain information
with respect to quotations and
transactions for the purposes of
distribution and publication on fair and
reasonable terms. Specifically, are the
proposed contract terms that require
vendors to identify NYSE OpenBook
data on displays that also include other
markets’ data and provide a separate
OpenBook product fair and reasonable?
2. Section 11A(c)(1)(B) of the Act 13
requires, among other things, that a SRO
distribute information with respect to
quotations in such a manner as to assure
the prompt, accurate, reliable, and fair
collection, processing, distribution, and
publication of information with respect
to quotations for and transactions in
such securities, and the fairness and
usefulness of the form and content of
such information. The Commission
requests comment on whether the form
and content of the OpenBook data are
useful and fair in light of the proposed
10 See supra note 3, OpenBook Fees Approval
Order note 8.
11 15 U.S.C. 78f(b)(8).
12 15 U.S.C. 78k–1(c)(1)(C).
13 15 U.S.C. 78k–1(c)(1)(B).
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restrictions on the form of display (i.e.,
the requirement that vendors identify
NYSE OpenBook data in integrated
displays and provide a separate
OpenBook product).
3. Section 11A(c)(1)(D) of the Act 14
requires, among other things, that
exchange members, brokers, dealers and
securities information processors be
able to obtain information with respect
to quotations for and transactions in
securities on terms that are not
unreasonably discriminatory. The
Commission requests comment on
whether the NYSE’s proposal is
consistent with this provision.
Specifically, are the proposed Exhibit C
contract terms unfairly discriminatory
because they only apply to vendors that
redisseminate the OpenBook data and
do not apply to broker-dealers’ internal
use of the data.
4. Finally, the Commission requests
comment on the proposed rule change’s
potential impact on competition.
Specifically, the Commission requests
comment on whether the proposal
imposes any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSE–2005–32 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303.
All submissions should refer to File
Number SR–NYSE–2005–32. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
14 15
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U.S.C. 78k––1(c)(1)(D).
01JYN1
Federal Register / Vol. 70, No. 126 / Friday, July 1, 2005 / Notices
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Section, 100 F Street, NE., Washington,
DC 20549. Copies of such filing also will
be available for inspection and copying
at the principal office of the NYSE. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NYSE–2005–32 and should
be submitted on or before July 22, 2005.
For the Commission, by the Division
of Market Regulation, pursuant to
delegated authority.15
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–3457 Filed 6–30–05; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8010–01–P
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51923; File No. SR–NYSE–
2005–13]
Self-Regulatory Organizations; New
York Stock Exchange, Inc.; Notice of
Filing of Proposed Rule Change
Relating to Proposed Uniform Branch
Office Form (‘‘Form BR’’)
June 24, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’ 1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 13,
2005, the New York Stock Exchange,
Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt
proposed new Uniform Branch Office
Form (‘‘Form BR’’). The text of the
proposed Form BR is available on the
NYSE’s Web site
(https://www.nyse.com/), at the
Exchange’s Office of the Secretary, and
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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The purpose of this filing is to
establish a new Form BR that would
enable Exchange members and member
organizations (‘‘NYSE Membership’’) to
electronically submit branch office
application information to the
Exchange, the National Association of
Securities Dealers, Inc. (‘‘NASD’’), and
states through the Central Registration
Depository (‘‘CRD’’ or ‘‘CRD
system’’).3 The NYSE Membership
would be able to use the proposed Form
BR to submit information that is
currently furnished through the NYSE
Branch Office Application form,
Schedule E of the Uniform Application
for Broker-Dealer Registration (‘‘Form
BD’’), and certain state branch office
forms.
Background
A working group (‘‘Working Group’’),
composed of Exchange and NASD staff,
representatives of the North American
Securities Administrators Association
(‘‘NASAA’’), and states, developed the
proposed new Form BR to register and
seek approval of branch offices. Form
BR is one component of a broader
project to provide uniform branch office
definitions and registration procedures.4
3 CRD is a computerized database that contains
information about most brokers, some investment
advisers, their representatives, and the firms for
whom they work. Examples of information in CRD
include brokers’ licenses, regulatory violations,
educational backgrounds, employment histories,
and records of serious investor complaints.
4 Although adoption of the proposed Form BR
would not be dependent on the adoption of a
uniform definition of branch office, both the
Exchange and NASD have submitted rule filings to
the Commission proposing to adopt definitions of
branch office that would be substantially similar in
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38229
The Exchange believes that the
integration of branch registration into
CRD through Form BR would create
efficiencies for the NYSE Membership
by, among other things, making it easier
for them to register branch offices with
the Exchange, NASD, and states, and to
manage their ongoing registration
responsibilities regarding those branch
offices (e.g., changes and withdrawals).
The NYSE Membership would also
benefit from centralized on-line work
queues, electronic notifications, and the
ability to designate and identify the
branch office where a particular
registered representative works.
Additional CRD enhancements would
provide what amounts to a relational
‘‘link’’ between the Form BR and the
Uniform Application for Securities
Industry Registration or Transfer (‘‘Form
U4’’).5
The proposed Form BR would be a
‘‘uniform’’ form, similar to the Form U4
and the Uniform Termination Notice for
Securities Industry Registration (‘‘Form
U5’’). As with Forms U4 and U5, by
electronically filing a single Form BR
through CRD, the NYSE Membership
would be able to update branch
application information and seek
approval for branch offices from the
Exchange, NASD, and states that require
branch registration.6 Form BR would
reconcile inconsistencies among
existing branch office forms, eliminate
duplicative questions, and elicit
information to facilitate the branch
office registration/approval process.
Form BR is intended to combine the
current Exchange Branch Office
Application form, the existing state
branch office forms, and Schedule E of
Form BD.7
Previously, branch application
information was submitted through the
Exchange’s Electronic Filing Platform
all material respects. See SR–NYSE–2002–34 and
SR–NASD–2003–104 and amendments thereto.
5 For example, while firms would continue to
report changes to an individual registered person’s
branch office assignment by filing an amended
Form U4, firms would also be able to report a new
office of employment address for multiple
registered persons assigned to a particular branch
office that has moved to a new location by filing
an amended Form BR (rather than filing multiple
Form U4 amendments for the registered persons
affected). The Exchange and NASD expect to make
the appropriate technical changes to Form U4 to
support this functionality and to facilitate the
overall implementation of the branch office
registration project.
6 Currently, Connecticut, Florida, Nevada, and
Vermont have separate forms that firms must
submit to register a branch office in each of those
states.
7 States that currently require branch office
registration or reporting have indicated that they
would use the proposed Form BR for those
purposes.
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]]>Agencies
[Federal Register Volume 70, Number 126 (Friday, July 1, 2005)]
[Notices]
[Pages 38226-38229]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3457]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51925; File No. SR-NYSE-2005-32]
Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto
Relating to NYSE OpenBook[reg] Exhibit C
June 24, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 13, 2005, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the NYSE. On June 16,
2005, the NYSE submitted Amendment No. 1 to the proposed rule
change.\3\ The Commission is publishing this notice, as amended, to
solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 2 17 CFR 240.19b-4.
\3\ In Amendment No. 1, NYSE submitted an Exhibit 4 to indicate
the proposed changes to the existing Exhibit C that governs the
receipt of OpenBook data.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NYSE proposes to amend display requirements pursuant to which
vendors may distribute to their customers NYSE OpenBook information.
The Exchange has set forth the display requirements in an Exhibit C to
the standard form of ``Agreement for the Receipt and Use of Market
Data'' (the ``OpenBook Exhibit C''). Below is the text of the proposed
rule change, as amended. Proposed new language is italicized; proposed
deletions are in [brackets].
* * * * *
EXHIBIT C Agreement for Receipt and Use of Market Data: Additional
Provisions
21. NYSE [OPENBOOKTM]OPENBOOK[reg]
(a) [AUTHORIZATION--Exhibit A describes Customer's receipt of the
NYSE OpenBook\TM\ Service and]DEFINITIONS
(i) ``NYSE OpenBook Information'' means the limit order and other
information [included in that service. (This Exhibit C refers to that
information,]that NYSE makes available pursuant to the NYSE OpenBook
Service and any modified version of that information and any
information derived from that information.
(ii) ``Other Data'' means limit order and other information that
other market centers make available.
(b) AUTHORIZATION--Exhibit A describes Customer's receipt of NYSE
OpenBook Information. NYSE OpenBook Information shall constitute ``NYSE
Market Information'' for all purposes of the Agreement and its
exhibits. Customer may use NYSE OpenBook Information, and may provide
displays of NYSE OpenBook Information to Subscribers, but may do so:
(i) only as and to the extent described, and in the manner
specified, in Exhibit A; and
(ii) only for so long as the Agreement and this Exhibit C are in
effect.
Customer's provision of displays of NYSE OpenBook Information to
Subscribers shall constitute ``Subscriber Services'' under the
Agreement. Each display of NYSE OpenBook Information that Customer
provides to Subscribers shall indicate that NYSE is the source of the
information included in the display.
([b]c) DISPLAY SERVICES--As an additional Subscriber Service
requirement under clause (iii) of Paragraph 5(b) of the Agreement,
Customer shall not commence to provide displays of NYSE OpenBook
Information to a Subscriber unless:
(i) Customer has first presented the Subscriber with such form of
notice or agreement as NYSE may specify; and
(ii) If NYSE specifies that the Subscriber must acknowledge its
receipt of that notice, or manifest its assent to that agreement, the
Subscriber has first complied with that requirement in such manner as
NYSE may direct.
[(c) INDIRECT ACCESS PROHIBITED--Except as NYSE may specifically
permit in writing and notwithstanding anything to the contrary in
Paragraph 5(c) of the Agreement, Customer shall not provide to any
other Person any Indirect Access Service that includes OpenBook
Information.]
[(d) CONSOLIDATED DISPLAYS PROHIBITED--Notwithstanding anything to
the contrary in Exhibit A or elsewhere, Customer shall not cause, or
permit any other Person to cause, the displays of OpenBook Information
that Customer provides to Subscribers to be integrated with limit
orders or other market information that any source other than NYSE
makes available. This means, for instance, that Customer shall not
permit the displays of OpenBook Information that it provides to
Subscribers to be consolidated with limit orders that any other market,
or any electronic communications network or broker-dealer, makes
available. However, this prohibition does not prevent Vendor from
enabling a Subscriber to view one or more other entities' limit orders
side-by-side with, or on the same page as, displays of OpenBook
Information. In addition, this prohibition shall not apply insofar as
Customer provides displays to its officers, partners and employees or
to those of its Customer Affiliates.]
[(e) SHARING OF RESEARCH--Customer and NYSE shall meet periodically
to discuss the results, progress and status of the OpenBookTM Service
and to share any market research that Customer has generated, subject
to Customer's obligation or reasonable need to maintain confidentiality
in respect of certain information.]
(d) NYSE OPENBOOK DISPLAY RULES
(i) ATTRIBUTION--Customer shall associate the identifier ``NYSE''
with each element or line of NYSE OpenBook Information that it includes
in an Integrated Display or Montage.
(ii) AGGREGATED DISPLAYS--Insofar as Customer incorporates NYSE
OpenBook Information with Other Data in its displays (an ``Integrated
Display''), Customer shall cause the Integrated Display to indicate at
each price level the number of shares attributable to each NYSE
OpenBook bid or offer.
(iii) NYSE OPENBOOK-ONLY DISPLAYS--Customer may integrate NYSE
OpenBook Information with other market information as the Agreement, as
modified by this Exhibit C, may provide. However, Customer shall also
make NYSE OpenBook Information available as a stand-alone product that
is separate and apart from information products that include other
market centers' information (a ``Stand-Alone NYSE OpenBook Product'').
Customer may include other NYSE market data in Stand-Alone NYSE
OpenBook Products, subject to compliance with such contract and fee
requirements as may apply to that other NYSE market data. Customer
shall make its subscribers aware of the availability of the Stand-Alone
NYSE OpenBook Product in the same manner and to the same extent as it
makes its subscribers aware of the product that integrates NYSE
OpenBook Information with other market information.
(iv) SCREEN SHOTS--No later than at the time that Customer
commences to provide to others displays of NYSE OpenBook Information,
or modifies those displays, Customer shall submit to NYSE for inclusion
in Exhibit A sample
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screen shots that demonstrate each manner of display and each
modification.
(e) INTERNAL DISPLAYS--The NYSE OpenBook display requirements set
forth in Paragraph 21(d) shall not apply insofar as Customer provides
displays to its officers, partners and employees or to those of its
Customer Affiliates.
ACCEPTED AND AGREED
[NAME OF VENDOR]
By:-------------------------------------------------------------------
Name:-----------------------------------------------------------------
Title:----------------------------------------------------------------
Date:-----------------------------------------------------------------
NEW YORK STOCK EXCHANGE, INC. acting solely on its own behalf as
Paragraph 12 describes
By:-------------------------------------------------------------------
Name:-----------------------------------------------------------------
Title:----------------------------------------------------------------
Date:-----------------------------------------------------------------
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change, as
amended. The text of these statements may be examined at the places
specified in Item IV below. The Exchange has prepared summaries, set
forth in Sections A, B, and C below, of the most significant aspects of
such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
NYSE OpenBook is a compilation of limit order data that the
Exchange provides to market data vendors, broker-dealers, private
network providers and other entities through a data feed. For every
limit price, NYSE OpenBook includes the aggregate volume. NYSE has made
NYSE OpenBook data available for more than three years. It updates that
limit order data every five seconds.\4\ Last August, NYSE submitted a
proposed rule change to the Commission to provide NYSE OpenBook data on
the basis of real-time updates. (That filing is pending before the
Commission.\5\)
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\4\ The Commission approved the fee applicable to OpenBook in
December 2001. See Release No. 34-44138 (December 7, 2001); 66 FR
64895 (December 14, 2001) (SR-NYSE-2001-42) (``OpenBook Fees
Approval Order'').
\5\ See Release No. 34-50275 (August 26, 2004), 69 FR 53760
(September 2, 2004). File No. SR-NYSE-2004-43 (submitted August 10,
2004), which can be found on the Exchange's Web site.
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In order for a vendor to receive NYSE OpenBook information from the
Exchange for redistribution to its customers, the Exchange requires the
vendor to enter into its standard form of ``Agreement for Receipt and
Use of Market Data.'' This form (the ``Consolidated Vendor Form'') is
the same form that vendors must enter into in order to receive market
data under the CTA Plan and the CQ Plan. The participants in the CTA
and CQ Plans first submitted the Consolidated Vendor Form to the
Commission for immediate effectiveness in 1990\6\ and the Commission
approved a revised version of it in 1996 in conjunction with the
participants' restatement of the CTA and CQ Plans.\7\
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\6\ See Release No. 34-28407 (September 6, 1990); 55 FR 37276
(September 10, 1990) (File No. 4-281).
\7\ See Release No. 34-37191 (May 9, 1996); 61 FR 24842 (May 16,
1996) (File No. SR-CTA/CQ-96-1).
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The Exchange designed the Consolidated Vendor Form as a generic,
one-size-fits-all form of agreement that consists of a standard set of
basic provisions that apply to all data recipients. Accordingly, the
Consolidated Vendor Form accommodates a number of different types of
market data, a number of different means of receiving access to market
data and a number of different uses of market data. Because it was
recognized that the Consolidated Vendor Form could not anticipate every
aspect of a vendor's receipt and use of market data or future advances
in technology or new product offerings, Paragraph 19(a) of the form
provides that ``Exhibit C, if any, contains additional provisions
applicable to any non-standard aspects of Customer's Receipt and Use of
Market Data.'' The Exhibit C terms and conditions pursuant to which
NYSE currently makes NYSE OpenBook available prohibit a recipient of
NYSE OpenBook data from externally distributing that data if the
recipient has integrated that data with limit orders or other market
information from any source other than the NYSE, although the recipient
may make the integrated data available to its own officers, partners
and employees or those of its affiliates.
In light of the Exchange's experience with both the NYSE OpenBook
product and its Liquidity Quote[supreg] product, as well as comments of
vendors and NYSE OpenBook users, the Exchange has determined to replace
the prohibition against integrating NYSE OpenBook data with other data
with four display requirements.
First, any Integrated Display must associate the identifier
``NYSE'' with each element or line of NYSE OpenBook data that is
included in the Integrated Display.
Second, any display or montage that incorporates NYSE OpenBook data
with limit orders or other market information from any source other
than the NYSE makes available (an ``Integrated Display'') must indicate
at each price level the number of shares attributable to the OpenBook
bids and offers.
Third, if a vendor or internal data user makes Integrated Displays
available, it must also make NYSE OpenBook Information available as a
product that is separate and apart from information products that
include other market centers' information and make its subscribers
aware of the availability of the stand-alone NYSE OpenBook product in
the same manner as it makes its subscribers aware of the integrated
product.
Fourth, each vendor must add to Exhibit A a sample of each new
screen shot to demonstrate the manner of the display and any
modification to previous displays. The vendor is required to submit the
new screen shot no later than at the time it first commences to provide
the new or modified display to others.
The display requirements do not apply insofar as the data recipient
distributes NYSE OpenBook data to its officers, partners and employees
or to those of its affiliates.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b) of the Act \8\ in general, and furthers
the objectives of Section 6(b)(5) \9\ in particular, in that it is
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in processing information with
respect to, and facilitating transactions in, securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general, to protect investors and the
public interest.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change, as
amended,
[[Page 38228]]
will impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding, or (ii) as to
which the Exchange consents, the Commission will:
(A) By order approve such proposed rule change; or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act.
The Commission notes that, unlike NYSE's Liquidity Quote, which is
a unique market data product that represents aggregated NYSE trading
interest at multiple price levels to a specific price interval outside
the NYSE best bid or offer (``BBO''), NYSE OpenBook consists simply of
depth-of-book limit order information. In the order approving the
Exhibit C associated with NYSE's Liquidity Quote, the Commission
specifically stated that the terms therein did not ``apply and have not
been considered or approved* * *as acceptable for the distribution of
NYSE OpenBook data.'' In this proposed rule change, the NYSE proposes
to eliminate the restrictions it places on vendors' ability to
integrate OpenBook data with data from other markets. In place of these
restrictions, however, NYSE has proposed terms substantially identical
to those applicable to the distribution of Liquidity Quote data.
Specifically, NYSE proposes to require vendors to identify each element
or line of OpenBook data that is included in a display that is
integrated with other markets' data, indicate the number of shares
attributable to the NYSE OpenBook data in any integrated display and
provide NYSE OpenBook as a separate data product.
The Commission recognizes that OpenBook contains important market
data that provides investors with a view of available liquidity in the
NYSE limit order book. This data is likely to become even more
pertinent if the NYSE Hybrid Market Proposal is approved and
implemented. For example, in the Hybrid Market Proposal, NYSE has
proposed to substantially expand its automatic execution functionality
and permit investors to sweep the NYSE limit order book, subject to
certain parameters. Accordingly, the ability of investors to view and
consider the depth of liquidity on the book is likely to assume
heightened importance in making trading decisions in this environment.
Section 11A of the Act generally sets forth standards under which a
self-regulatory organization (``SRO'') may distribute information with
respect to quotations, including limit orders.\10\ In addition, Section
6(b)(8) of the Act \11\ requires that the rules of an exchange not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Accordingly, the Commission
specifically requests commenters to provide their views on the
following:
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\10\ See supra note 3, OpenBook Fees Approval Order note 8.
\11\ 15 U.S.C. 78f(b)(8).
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1. The Commission requests comment on whether the proposal is
consistent with the Section 11A(c)(1)(C) of the Act,\12\ which
requires, among other things, that all securities information
processors be able to obtain information with respect to quotations and
transactions for the purposes of distribution and publication on fair
and reasonable terms. Specifically, are the proposed contract terms
that require vendors to identify NYSE OpenBook data on displays that
also include other markets' data and provide a separate OpenBook
product fair and reasonable?
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\12\ 15 U.S.C. 78k-1(c)(1)(C).
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2. Section 11A(c)(1)(B) of the Act \13\ requires, among other
things, that a SRO distribute information with respect to quotations in
such a manner as to assure the prompt, accurate, reliable, and fair
collection, processing, distribution, and publication of information
with respect to quotations for and transactions in such securities, and
the fairness and usefulness of the form and content of such
information. The Commission requests comment on whether the form and
content of the OpenBook data are useful and fair in light of the
proposed restrictions on the form of display (i.e., the requirement
that vendors identify NYSE OpenBook data in integrated displays and
provide a separate OpenBook product).
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\13\ 15 U.S.C. 78k-1(c)(1)(B).
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3. Section 11A(c)(1)(D) of the Act \14\ requires, among other
things, that exchange members, brokers, dealers and securities
information processors be able to obtain information with respect to
quotations for and transactions in securities on terms that are not
unreasonably discriminatory. The Commission requests comment on whether
the NYSE's proposal is consistent with this provision. Specifically,
are the proposed Exhibit C contract terms unfairly discriminatory
because they only apply to vendors that redisseminate the OpenBook data
and do not apply to broker-dealers' internal use of the data.
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\14\ 15 U.S.C. 78k--1(c)(1)(D).
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4. Finally, the Commission requests comment on the proposed rule
change's potential impact on competition. Specifically, the Commission
requests comment on whether the proposal imposes any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSE-2005-32 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-NYSE-2005-32. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the
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public in accordance with the provisions of 5 U.S.C. 552, will be
available for inspection and copying in the Commission's Public
Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of
such filing also will be available for inspection and copying at the
principal office of the NYSE. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSE-2005-32 and should be submitted on or before July
22, 2005.
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3457 Filed 6-30-05; 8:45 am]
BILLING CODE 8010-01-P
