Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Relating to the NYSE Retail Trading Product and the NYSE Program Trading Product, 30011-30012 [E6-7915]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 71, Number 100 (Wednesday, May 24, 2006)]
[Notices]
[Pages 30011-30012]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-7915]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53834; File No. SR-NYSE-2006-32]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Relating to the NYSE Retail 
Trading Product and the NYSE Program Trading Product

May 18, 2006.
    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 9, 2006, the New York Stock Exchange LLC (``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. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to establish fees for two new market data 
products: The NYSE Retail Trading Product and the NYSE Program Trading 
Product. The text of the proposed rule change is available on the 
Exchange's Web site (https://www.nyse.com), at the NYSE's Office of the 
Secretary, and 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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Pursuant to a separate proposed rule change that NYSE has filed 
contemporaneously with the proposed rule change (see SR-NYSE-2006-31; 
the ``Pilot Program Filing''), NYSE proposes to make available to 
vendors and investors the following:
    (1) The NYSE Retail Trading Product will consist of (A) a real-time 
datafeed of certain execution report information that has been recorded 
as trades for accounts of ``individual investors'' \3\ and (B) an end-
of-day summary of the retail trading activity on the Exchange for that 
day, including total buy-and-sell retail share volume for each stock 
traded (the ``End-of-Day Retail Trading Summary'').
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    \3\ For this purpose, the ``account of an individual investor'' 
means an account covered by Section 11(a)(1)(E) of the Act. That 
section refers to the ``account of a natural person, or a trust 
created by a natural person for himself or another natural person.''
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    (2) The NYSE Program Trading Product will consist of (A) a real-
time datafeed of certain execution report information that has been 
recorded as program trades \4\ and (B) an end-of-day summary of program 
trading activity on the Exchange for that day, including total index 
arbitrage (as opposed to non-index arbitrage) program trading volume 
(the ``End-of-Day Program Trading Summary'').
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    \4\ For this purpose, ``program trading'' has the definition 
that Supplementary Material .40(b) to NYSE Rule 80A (``Index 
Arbitrage Trading Restrictions'') gives to that term.
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    Each published report of a trade execution that is included in the 
datafeed for either product shall indicate such information as the 
security's symbol, the size of the trade, the time of the trade's 
execution and other related information.\5\ (More information regarding 
the NYSE Retail Trading Product and the NYSE Program Trading Product 
can be found on the NYSE Web site at https://www.nysedata.com/
InfoTools.)
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    \5\ NYSE will only include in the NYSE Retail Trading Product 
and the NYSE Program Trading Product information that is attached to 
execution reports. While the NYSE believes the information contained 
in the NYSE Retail Trading Product and the NYSE Program Trading 
Product is accurate, the NYSE does not guarantee the completeness or 
accuracy of account information submitted by order entry firms on 
which the InfoTools product is based.
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    The Exchange believes the NYSE Retail Trading Product should 
provide investors with increased information regarding individual 
investors' trading activity on the Exchange. Similarly, the NYSE 
Program Trading Product should provide investors with increased 
information regarding program trading activity.
    Pursuant to the proposed rule change, NYSE proposes to establish:
    (1) A monthly access fee of $1,500 for receipt of the NYSE Retail 
Trading Product datafeed (for receipt of the real-time datafeed, the 
end-of-day summaries, or both);
    (2) A monthly access fee of $1,500 for receipt of the NYSE Program 
Trading Product datafeed (for receipt of the real-time datafeed, the 
end-of-day summaries, or both);
    (3) A monthly display fee of $2.00 that the vendor or its 
subscribers are to pay for each display device receiving NYSE Retail 
Product information and/or NYSE Program Trading Product information 
(collectively, ``NYSE Trading Information'') that the vendor makes 
available from the real-time datafeed; and
    (4) A monthly fee of $250 if the vendor makes NYSE Trade 
Information available from the end-of-day summaries, rather than from 
the real-time datafeeds.
    In addition, each vendor of NYSE Trading Information will receive a 
monthly credit of $2 for each device that the vendor has entitled to 
receive displays of NYSE Trading Information, up to a maximum of:
    (1) $3,000 per month if the vendor pays the monthly access fees for 
both the NYSE Retail Trading Product datafeed and the NYSE Program 
Trading Product datafeed (which two monthly access fees total $3,000); 
and
    (2) $1,500 per month if the vendor pays the monthly access fees for 
either the NYSE Retail Trading Product datafeed or the NYSE Program 
Trading Product, but not both (either of which monthly access fees 
equals $1,500).
    The Exchange would commence to impose those fees 30 days after the 
Commission approves them. NYSE believes that the access and device fees 
for the NYSE Retail Trading Product and the NYSE Program Trading 
Product would reflect an equitable allocation of NYSE's overall costs 
to users of its facilities.
    The access fees, the device fees and the device fee credit apply 
equally to every vendor. The Exchange notes that it proposes to set the 
device fee offset of access fees (i.e. the device fee credit) at such 
low levels (i.e., a $1500 access fee is offset in full if only 750 of a 
vendor's customers subscribe to the service) that the vast majority of 
vendors that wish to

[[Page 30012]]

provide displays of this information are likely, in effect, not to pay 
access fees.
    In arriving at the monthly $1500 access fee, the $2 device fee and 
the $250 redistribution fee, the Exchange took into account the cost of 
collecting, processing and making available NYSE Trading Information, 
and assessed the value of the two products relative to other data 
products that the Exchange makes available, such as NYSE OpenBook and 
NYSE Alerts. The Exchange believes that the fees would enable the users 
of NYSE Trading Information to make an appropriate contribution to the 
recovery of the overall costs of NYSE's operations and that the fees 
are reasonably related to the value that the two products provide to 
those who use them.
    The Exchange is not proposing to impose any attribution 
requirements on vendors displaying NYSE Trading Information. However, 
the Exchange believes that it is incumbent on vendors to identify and 
display information in a manner that avoids investor confusion. This is 
especially true at a time when markets are offering investors, who have 
grown accustomed to viewing consolidated information over the past 
three decades, many new exchange-specific information services.
    Thus, while the Exchange is not proposing to impose any attribution 
requirement, it does propose to have vendors provide, by link or 
otherwise, a description of the NYSE Retail Trading Product and NYSE 
Program Trading Product in a manner that is reasonably transparent and 
accessible to subscribers of the two products. The Exchange will 
require the Exhibit A to each vendor's contract with the Exchange for 
the receipt and redistribution of the NYSE Retail Trading Product and 
NYSE Program Trading Product to describe how the vendor will make the 
description available.
    The description should read substantially as follows:

    NYSE Rule 132B requires each NYSE member firm to record for each 
order that it submits to the Exchange such information as whether 
the firm is placing the order for the account of a retail customer 
or whether the order results from program trade trading activity. 
NYSE uses this information to produce the NYSE Retail Trading 
Product and NYSE Program Trading Product, each of which includes 
real-time information relating to retail trading and program trading 
activity, respectively, as well as daily summaries and historical 
databases of that information.
    While the NYSE believes the information contained in the NYSE 
Retail Trading Product and NYSE Program Trading Product is accurate, 
Customer understands that its agreement with NYSE provides that NYSE 
(1) Reserves all rights to that information, (2) does not guarantee 
the completeness or accuracy of account information submitted by 
order entry firms on which the InfoTools product is based, and (3) 
shall not be liable for any loss due either to their negligence or 
to any cause beyond their reasonable control.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \6\ in general, and furthers the objectives of Section 
6(b)(4) of the Act \7\ in particular, in that it provides for the 
equitable allocation of reasonable fees, dues, and other charges among 
Exchange participants, issuers and other persons using its facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change would 
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

    The Exchange has not solicited, and does not intend to solicit, 
comments regarding the proposed rule change. The Exchange has not 
received any unsolicited written comments from Exchange participants or 
other interested parties.

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 NYSE 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 is consistent with 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-2006-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2006-32. 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 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 Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. 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 publicly available. All submissions should refer to 
File Number SR-NYSE-2006-32 and should be submitted on or before June 
14, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-7915 Filed 5-23-06; 8:45 am]
BILLING CODE 8010-01-P