Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change to Introduce a NYSE Order Imbalance Information Fee, 1744-1746 [E9-414]
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Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices
option or other equity compensation
plans under the same terms and
conditions as other Nasdaq listed
companies, the new rule will ensure
that shareholders of all Nasdaq
companies will have the same
protections against the potential dilutive
effects of such plans.
The Commission also believes that the
proposed clarifying changes specifying
that an auditor of a listed LP must be
registered with the PCAOB and that an
LP must notify Nasdaq of any material
non-compliance with the corporate
governance rules should eliminate any
confusion regarding the requirements
for LPs. As noted above, Nasdaq asserts
that LPs are already subject to these
requirements, but these proposed
changes will ensure that such
requirements are part of Nasdaq’s
rulebook governing the listing
requirements for LPs and thus are
transparent to issuers.14 Accordingly,
the Commission finds that the proposed
rule change is consistent with the Act.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,15 that the
proposed rule change (SR–NASDAQ–
2008–084) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–437 Filed 1–12–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59202; File No. SR–NYSE–
2008–132]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change to
Introduce a NYSE Order Imbalance
Information Fee
January 6, 2009.
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 December
19, 2008, the New York Stock Exchange
LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
14 See
supra notes 8 and 9 and accompanying
text.
15 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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 is proposing to
introduce a fee for access to its NYSE
Order Imbalance Information datafeed.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NYSE 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. NYSE 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
(a) The Service.
In June 2008, the Exchange added
Order Imbalance Information to the
NYSE OpenBook® package of products.3
For no additional charge, the Exchange
decided to make available to recipients
of NYSE OpenBook an additional
datafeed containing Order Imbalance
Information.
NYSE Order Imbalance Information is
a datafeed of real-time order imbalances
that accumulate prior to the opening of
trading on the Exchange and prior to the
close of trading on the Exchange. These
orders are subject to execution at the
market’s opening or closing price, as the
case may be, and represent issues that
are likely to be of particular trading
interest at the opening or closing.
The Exchange distributes information
about these imbalances in real-time at
specified intervals prior to the opening
and closing auctions. Initially, the
Exchange proposes to make order
imbalance information available at the
following intervals.
For opening order imbalances:
• Every five minutes between 8:30
a.m. EST and 9 a.m. EST.
• Every one minute between 9 a.m.
EST and 9:20 a.m. EST.
16 17
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19:10 Jan 12, 2009
3 See Release No. 34–59039 (December 2, 2008);
File No. SR–NYSEArca–2006–21.
Jkt 217001
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
• Every 15 seconds between 9:20 a.m.
EST and the opening (or 9:35 a.m. EST
if the opening is delayed).
For closing order imbalances:
• Every fifteen seconds between 3:40
p.m. EST and 3:50 p.m. EST.
• Every five seconds between 3:50
p.m. EST and 4 p.m. EST.
If the Exchange were to change these
intervals, it would notify NYSE Order
Imbalance Information recipients in
advance and/or post the changes on the
Exchange’s Web site.
NYSE Order Imbalance Information
also includes the imbalance information
that the Exchange is required to
disseminate under NYSE Rule 123C(5),
as well as automated real-time
streaming order imbalance information
at specified intervals.
After consultation with its customers,
the Exchange has determined to make
the NYSE Order Imbalance Information
datafeed available as a stand-alone
market data product, separate and apart
from NYSE OpenBook. This would
enable all investors to gain access to
information regarding opening and
closing imbalances on the Exchange,
especially because the Exchange is not
imposing end-user fees, is not requiring
end-users to sign contracts and is
making vendor receipt and use of the
information inexpensive and very few
administrative burdens (e.g., no
reporting requirements and no end-user
contracts).
Many investors have not been able to
access this data. However, as a result of
the Commission’s NYSE ArcaBook
Approval Order, the Exchange may now
bring the NYSE order Imbalance
Information product to market. The
Exchange anticipates that this will
provide important information to
millions of investors.
In the Exchange’s view, the
Commission’s recent ‘‘Order Setting
Aside Action by Delegated Authority
and Approving Proposed Rule Change
Relating to NYSE Arca Data’’ (the
‘‘NYSE ArcaBook Approval Order’’)
makes this product offering possible. In
the NYSE ArcaBook Approval Order,
the Commission strongly supported the
right of SROs to expand their market
data offerings outside of the
consolidated products that markets offer
under joint industry plans such as the
CTA Plan and the CQ Plan. It
established fee-setting standards for
market data products for those non-core
offerings. Prior to the NYSE ArcaBook
Approval Order, the Exchange’s ability
to bring the NYSE Order Imbalance
Information product to market was
limited distribution to NYSE OpenBook
subscribers only. That order affirmed
the Commission’s embrace of allowing
E:\FR\FM\13JAN1.SGM
13JAN1
Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices
market forces to determine the fairness
and reasonableness of fees for non-core
products, such as NYSE Order
Imbalance Information. As a result, the
Exchange is now able to make this
important information available to
millions of investors, investors who do
not desire to subscribe to NYSE
OpenBook services in order to receive
NYSE Order Imbalance Information.
(b) The Fee. The Exchange proposes
to charge recipients of the NYSE Order
Imbalance Information datafeed $500
per month. The fee applies whether the
recipient receives the datafeed directly
from the Exchange or indirectly from an
intermediary. The fee entitles the
datafeed recipient to make displays of
that information available to an
unlimited number of subscribers for no
extra charge. The Exchange is not
proposing to impose an end-user or
display device fee on those subscribers.
The fee would allow vendors to
redistribute NYSE Order Imbalance
Information without having to
differentiate between professional
subscribers and nonprofessional
subscribers, without having to account
for the extent of access to the data,
without having to procure contracts
with its subscribers for the benefit of the
Exchange and without having to report
the number of its subscribers.
By establishing the access fee at an
inexpensive rate and declining to
impose an end-user fee on the
consumption of NYSE Order Imbalance
Information, the Exchange seeks to
enable all investors to gain access to
information regarding opening and
closing imbalances on the Exchange.
The fee enables the investment
community that has an interest in the
receipt of order imbalance information
to contribute to the Exchange’s
operating costs in a manner that is
appropriate for this market data
product.
In setting the level of the NYSE Order
Imbalance Information fee, the
Exchange took into consideration
several factors, including:
i. Consultation with some of the
entities that the Exchange anticipates
will be the most likely to take advantage
of the proposed product;
ii. The contribution of market data
revenues that the Exchange believes is
appropriate for the investment
community that has an interest in the
receipt and use of order imbalance
information; and
iii. The fact that the proposed fee
provides an alternative to the receipt of
NYSE Order Imbalance Information as
part of NYSE OpenBook.
In short, the Exchange believes that
the proposed NYSE Order Imbalance
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19:24 Jan 12, 2009
Jkt 217001
Information fee would reflect an
equitable allocation of its overall costs
to users of its facilities.
(c) The Fee is Fair and Reasonable.
The Exchange believes that $500 access
fee for NYSE Order Imbalance
Information comports with the standard
that the Commission established for
determining whether market data fees
relating to non-core market data
products are fair and reasonable. In
NYSE ArcaBook Approval Order, the
Commission reiterated its position from
its release approving Regulation NMS
that it should ‘‘allow market forces,
rather than regulatory requirements, to
determine what, if any, additional
quotations outside the NBBO are
displayed to investors.’’4
The Commission went on to state that:
The Exchange Act and its legislative
history strongly support the Commission’s
reliance on competition, whenever possible,
in meeting its regulatory responsibilities for
overseeing the SROs and the national market
system. Indeed, competition among multiple
markets and market participants trading the
same products is the hallmark of the national
market system.5
The Commission then articulated the
standard that it will apply in assessing
the fairness and reasonableness of
market data fees for non-core products,
as follows:
With respect to non-core data, * * * the
Commission has maintained a market-based
approach that leaves a much fuller
opportunity for competitive forces to work.
This market-based approach to non-core data
has two parts. The first is to ask whether the
exchange was subject to significant
competitive forces in setting the terms of its
proposal for non-core data, including the
level of any fees. If an exchange was subject
to significant competitive forces in setting the
terms of a proposal, the Commission will
approve the proposal unless it determines
that there is a substantial countervailing basis
to find that the terms nevertheless fail to
meet an applicable requirement of the
Exchange Act or the rules thereunder.6
The Exchange believes that the
proposed access fee is fair and
reasonable by this standard or any other
standard. The Exchange is subject to
significant competitive forces and the
low level at which the Exchange
proposes to establish the NYSE Order
Imbalance Information access fee
represents, in part, a response to that
competition. To start, the Exchange
competes intensely for order flow. It
competes with the other 10 national
securities exchanges that currently trade
4 See Regulation NMS Release, 70 FR at 37566–
37567 (addressing differences in distribution
standards between core data and non-core data).
5 NYSE ArcaBook Approval Order at pp 46–47.
6 Id. at pp. 48–49.
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
1745
equities, with electronic communication
networks, with quotes posted in
FINRA’s Alternative Display Facility
and Trade Reporting Facilities, with
alternative trading systems, and with
securities firms that primarily trade as
principal with their customer order flow
‘‘and the competition is fierce.’’ 7
The Exchange believes that making
the NYSE Order Imbalance Information
datafeed available to vendors at $500
per month and allowing the vendors to
redistribute that data to an unlimited
number of their customers at no
additional charge would help the
Exchange to compete for order flow by
making the Exchange’s order imbalance
information freely available to millions
of investors. The Exchange hopes that
some of those investors may favor the
Exchange with order flow as a result of
access to the imbalance information.
In addition, the Exchange believes
that no substantial countervailing basis
exists to support a finding that the
NYSE Order Imbalance Information
access fee fails to meet the requirement
of the Exchange Act.
In sum, NYSE’s compelling need to
attract order flow imposes significant
competitive pressure on NYSE to act
equitably, fairly, and reasonably in
setting the NYSE Order Imbalance
Information access fee. Making that data
readily available to investors is a
response to that pressure.
(d) Continued Distribution Through
NYSE OpenBook. The Exchange would
continue to permit NYSE OpenBook
datafeed recipients to receive the NYSE
Order Imbalance Information datafeed
as part of the NYSE OpenBook package
without having to pay the $500 fee or
any other additional charge. Those
NYSE OpenBook datafeed recipients
may then redistribute the NYSE Order
Imbalance Information to any of their
subscribers, whether or not the
subscriber also receives NYSE
OpenBook information. The Exchange
imposes no end-user charge on those
subscribers.
(e) Contracts. The Exchange proposes
to provide the NYSE Order Imbalance
Information datafeed available under
the same contracting arrangement that
the Commission has approved for the
receipt and use of market datafeeds
under the CTA and CQ Plans. That
arrangement contemplates that each
datafeed recipient enter into the
Commission-approved standard form of
‘‘Agreement for Receipt and Use of
Market Data’’ that Network A uses for
data redistributors and other parties that
use the data for purposes other than
7 Id.
E:\FR\FM\13JAN1.SGM
at p 52.
13JAN1
1746
Federal Register / Vol. 74, No. 8 / Tuesday, January 13, 2009 / Notices
interrogation.8 Exhibit A to each of
those agreements would need to be
updated to reflect the receipt and use of
NYSE Order Imbalance Information.
The arrangement does not require an
end-user of the information (other than
a data feed recipient) to enter into any
agreement.
2. Statutory Basis
The bases under the Securities
Exchange Act of 1934 (the ‘‘1934 Act’’)
for the proposed rule change are the
requirement under section 6(b)(4) 9 that
an exchange have rules that provide for
the equitable allocation of reasonable
dues, fees and other charges among its
members and other persons using its
facilities and the requirements under
section 6(b)(5) 10 that the rules of an
exchange be designed to promote just
and equitable principles of trade, 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. The Exchange believes
that the proposal benefits investors by
facilitating their prompt access to
widespread, free NYSE Order Imbalance
Information.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change 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
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
members 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
8 The Participants in the CTA and CQ Plans first
submitted the Consolidated Vendor Form to the
Commission for immediate effectiveness in 1990.
See Release No. 34–28407 (September 6, 1990); 55
FR 37276 (September 10, 1990) (File No. 4–281).
The Commission approved a revised version of it
in 1996 in conjunction with the participants’
restatement of the CTA and CQ Plans. See Release
No. 34–37191 (May 9, 1996); 61 FR 24842 (May 16,
1996) (File No. SR–CTA/CQ–96–1).
9 15 U.S.C. 78f(b)(4).
10 15 U.S.C. 78f(b)(5).
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19:10 Jan 12, 2009
Jkt 217001
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 the 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 rulecomments@sec.gov. Please include File
No. SR–NYSE–2008–132 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NYSE–2008–132. 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, on official business days between
the hours of 10 a.m. and 3 p.m. 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
available publicly. All submissions
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Sfmt 4703
should refer to File Number SR–NYSE–
2008–132 and should be submitted on
or before February 3, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–414 Filed 1–12–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59207; File No. SR–NYSE–
2008–134]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Amending
Exchange Rule 1500 (‘‘MatchPoint’’) To
Clarify the Functionality of the IntraDay Matching Sessions in Relation to
Order Entry, Correction and
Cancellation Capabilities, and When
the MatchPoint System Cancels
Unexecuted Orders Back to the User
and Disseminates Intra-Day and After
Hours Trade Reports
January 6, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
22, 2008, 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 and II below, which Items have
been prepared by the self-regulatory
organization. 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 amend
Exchange Rule 1500 (NYSE
MatchPointSM) (‘‘MatchPoint’’) to clarify
the functionality of the intra-day
matching sessions in relation to order
entry, correction and cancellation
capabilities, and when the MatchPoint
system cancels unexecuted orders back
to the User and disseminates intra-day
and after hours trade reports. The text
of the proposed rule change is available
at https://www.nyse.com, NYSE, and the
Commission’s Public Reference Room.
11 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
E:\FR\FM\13JAN1.SGM
13JAN1
]]>Agencies
[Federal Register Volume 74, Number 8 (Tuesday, January 13, 2009)]
[Notices]
[Pages 1744-1746]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-414]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59202; File No. SR-NYSE-2008-132]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change to Introduce a NYSE Order
Imbalance Information Fee
January 6, 2009.
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 December 19, 2008, 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 Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is proposing to introduce a fee for access to its NYSE
Order Imbalance Information datafeed.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NYSE 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. NYSE 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
(a) The Service.
In June 2008, the Exchange added Order Imbalance Information to the
NYSE OpenBook[supreg] package of products.\3\ For no additional charge,
the Exchange decided to make available to recipients of NYSE OpenBook
an additional datafeed containing Order Imbalance Information.
---------------------------------------------------------------------------
\3\ See Release No. 34-59039 (December 2, 2008); File No. SR-
NYSEArca-2006-21.
---------------------------------------------------------------------------
NYSE Order Imbalance Information is a datafeed of real-time order
imbalances that accumulate prior to the opening of trading on the
Exchange and prior to the close of trading on the Exchange. These
orders are subject to execution at the market's opening or closing
price, as the case may be, and represent issues that are likely to be
of particular trading interest at the opening or closing.
The Exchange distributes information about these imbalances in
real-time at specified intervals prior to the opening and closing
auctions. Initially, the Exchange proposes to make order imbalance
information available at the following intervals.
For opening order imbalances:
Every five minutes between 8:30 a.m. EST and 9 a.m. EST.
Every one minute between 9 a.m. EST and 9:20 a.m. EST.
Every 15 seconds between 9:20 a.m. EST and the opening (or
9:35 a.m. EST if the opening is delayed).
For closing order imbalances:
Every fifteen seconds between 3:40 p.m. EST and 3:50 p.m.
EST.
Every five seconds between 3:50 p.m. EST and 4 p.m. EST.
If the Exchange were to change these intervals, it would notify
NYSE Order Imbalance Information recipients in advance and/or post the
changes on the Exchange's Web site.
NYSE Order Imbalance Information also includes the imbalance
information that the Exchange is required to disseminate under NYSE
Rule 123C(5), as well as automated real-time streaming order imbalance
information at specified intervals.
After consultation with its customers, the Exchange has determined
to make the NYSE Order Imbalance Information datafeed available as a
stand-alone market data product, separate and apart from NYSE OpenBook.
This would enable all investors to gain access to information regarding
opening and closing imbalances on the Exchange, especially because the
Exchange is not imposing end-user fees, is not requiring end-users to
sign contracts and is making vendor receipt and use of the information
inexpensive and very few administrative burdens (e.g., no reporting
requirements and no end-user contracts).
Many investors have not been able to access this data. However, as
a result of the Commission's NYSE ArcaBook Approval Order, the Exchange
may now bring the NYSE order Imbalance Information product to market.
The Exchange anticipates that this will provide important information
to millions of investors.
In the Exchange's view, the Commission's recent ``Order Setting
Aside Action by Delegated Authority and Approving Proposed Rule Change
Relating to NYSE Arca Data'' (the ``NYSE ArcaBook Approval Order'')
makes this product offering possible. In the NYSE ArcaBook Approval
Order, the Commission strongly supported the right of SROs to expand
their market data offerings outside of the consolidated products that
markets offer under joint industry plans such as the CTA Plan and the
CQ Plan. It established fee-setting standards for market data products
for those non-core offerings. Prior to the NYSE ArcaBook Approval
Order, the Exchange's ability to bring the NYSE Order Imbalance
Information product to market was limited distribution to NYSE OpenBook
subscribers only. That order affirmed the Commission's embrace of
allowing
[[Page 1745]]
market forces to determine the fairness and reasonableness of fees for
non-core products, such as NYSE Order Imbalance Information. As a
result, the Exchange is now able to make this important information
available to millions of investors, investors who do not desire to
subscribe to NYSE OpenBook services in order to receive NYSE Order
Imbalance Information.
(b) The Fee. The Exchange proposes to charge recipients of the NYSE
Order Imbalance Information datafeed $500 per month. The fee applies
whether the recipient receives the datafeed directly from the Exchange
or indirectly from an intermediary. The fee entitles the datafeed
recipient to make displays of that information available to an
unlimited number of subscribers for no extra charge. The Exchange is
not proposing to impose an end-user or display device fee on those
subscribers.
The fee would allow vendors to redistribute NYSE Order Imbalance
Information without having to differentiate between professional
subscribers and nonprofessional subscribers, without having to account
for the extent of access to the data, without having to procure
contracts with its subscribers for the benefit of the Exchange and
without having to report the number of its subscribers.
By establishing the access fee at an inexpensive rate and declining
to impose an end-user fee on the consumption of NYSE Order Imbalance
Information, the Exchange seeks to enable all investors to gain access
to information regarding opening and closing imbalances on the
Exchange. The fee enables the investment community that has an interest
in the receipt of order imbalance information to contribute to the
Exchange's operating costs in a manner that is appropriate for this
market data product.
In setting the level of the NYSE Order Imbalance Information fee,
the Exchange took into consideration several factors, including:
i. Consultation with some of the entities that the Exchange
anticipates will be the most likely to take advantage of the proposed
product;
ii. The contribution of market data revenues that the Exchange
believes is appropriate for the investment community that has an
interest in the receipt and use of order imbalance information; and
iii. The fact that the proposed fee provides an alternative to the
receipt of NYSE Order Imbalance Information as part of NYSE OpenBook.
In short, the Exchange believes that the proposed NYSE Order
Imbalance Information fee would reflect an equitable allocation of its
overall costs to users of its facilities.
(c) The Fee is Fair and Reasonable. The Exchange believes that $500
access fee for NYSE Order Imbalance Information comports with the
standard that the Commission established for determining whether market
data fees relating to non-core market data products are fair and
reasonable. In NYSE ArcaBook Approval Order, the Commission reiterated
its position from its release approving Regulation NMS that it should
``allow market forces, rather than regulatory requirements, to
determine what, if any, additional quotations outside the NBBO are
displayed to investors.''\4\
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\4\ See Regulation NMS Release, 70 FR at 37566-37567 (addressing
differences in distribution standards between core data and non-core
data).
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The Commission went on to state that:
The Exchange Act and its legislative history strongly support
the Commission's reliance on competition, whenever possible, in
meeting its regulatory responsibilities for overseeing the SROs and
the national market system. Indeed, competition among multiple
markets and market participants trading the same products is the
hallmark of the national market system.\5\
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\5\ NYSE ArcaBook Approval Order at pp 46-47.
The Commission then articulated the standard that it will apply in
assessing the fairness and reasonableness of market data fees for non-
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core products, as follows:
With respect to non-core data, * * * the Commission has
maintained a market-based approach that leaves a much fuller
opportunity for competitive forces to work. This market-based
approach to non-core data has two parts. The first is to ask whether
the exchange was subject to significant competitive forces in
setting the terms of its proposal for non-core data, including the
level of any fees. If an exchange was subject to significant
competitive forces in setting the terms of a proposal, the
Commission will approve the proposal unless it determines that there
is a substantial countervailing basis to find that the terms
nevertheless fail to meet an applicable requirement of the Exchange
Act or the rules thereunder.\6\
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\6\ Id. at pp. 48-49.
The Exchange believes that the proposed access fee is fair and
reasonable by this standard or any other standard. The Exchange is
subject to significant competitive forces and the low level at which
the Exchange proposes to establish the NYSE Order Imbalance Information
access fee represents, in part, a response to that competition. To
start, the Exchange competes intensely for order flow. It competes with
the other 10 national securities exchanges that currently trade
equities, with electronic communication networks, with quotes posted in
FINRA's Alternative Display Facility and Trade Reporting Facilities,
with alternative trading systems, and with securities firms that
primarily trade as principal with their customer order flow ``and the
competition is fierce.'' \7\
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\7\ Id. at p 52.
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The Exchange believes that making the NYSE Order Imbalance
Information datafeed available to vendors at $500 per month and
allowing the vendors to redistribute that data to an unlimited number
of their customers at no additional charge would help the Exchange to
compete for order flow by making the Exchange's order imbalance
information freely available to millions of investors. The Exchange
hopes that some of those investors may favor the Exchange with order
flow as a result of access to the imbalance information.
In addition, the Exchange believes that no substantial
countervailing basis exists to support a finding that the NYSE Order
Imbalance Information access fee fails to meet the requirement of the
Exchange Act.
In sum, NYSE's compelling need to attract order flow imposes
significant competitive pressure on NYSE to act equitably, fairly, and
reasonably in setting the NYSE Order Imbalance Information access fee.
Making that data readily available to investors is a response to that
pressure.
(d) Continued Distribution Through NYSE OpenBook. The Exchange
would continue to permit NYSE OpenBook datafeed recipients to receive
the NYSE Order Imbalance Information datafeed as part of the NYSE
OpenBook package without having to pay the $500 fee or any other
additional charge. Those NYSE OpenBook datafeed recipients may then
redistribute the NYSE Order Imbalance Information to any of their
subscribers, whether or not the subscriber also receives NYSE OpenBook
information. The Exchange imposes no end-user charge on those
subscribers.
(e) Contracts. The Exchange proposes to provide the NYSE Order
Imbalance Information datafeed available under the same contracting
arrangement that the Commission has approved for the receipt and use of
market datafeeds under the CTA and CQ Plans. That arrangement
contemplates that each datafeed recipient enter into the Commission-
approved standard form of ``Agreement for Receipt and Use of Market
Data'' that Network A uses for data redistributors and other parties
that use the data for purposes other than
[[Page 1746]]
interrogation.\8\ Exhibit A to each of those agreements would need to
be updated to reflect the receipt and use of NYSE Order Imbalance
Information. The arrangement does not require an end-user of the
information (other than a data feed recipient) to enter into any
agreement.
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\8\ The Participants in the CTA and CQ Plans first submitted the
Consolidated Vendor Form to the Commission for immediate
effectiveness in 1990. See Release No. 34-28407 (September 6, 1990);
55 FR 37276 (September 10, 1990) (File No. 4-281). The Commission
approved a revised version of it in 1996 in conjunction with the
participants' restatement of the CTA and CQ Plans. 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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2. Statutory Basis
The bases under the Securities Exchange Act of 1934 (the ``1934
Act'') for the proposed rule change are the requirement under section
6(b)(4) \9\ that an exchange have rules that provide for the equitable
allocation of reasonable dues, fees and other charges among its members
and other persons using its facilities and the requirements under
section 6(b)(5) \10\ that the rules of an exchange be designed to
promote just and equitable principles of trade, 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. The Exchange believes that the proposal benefits investors by
facilitating their prompt access to widespread, free NYSE Order
Imbalance Information.
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\9\ 15 U.S.C. 78f(b)(4).
\10\ 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 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
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 members 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 Exchange consents, the Commission will:
(A) By order approve the 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
No. SR-NYSE-2008-132 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2008-132. 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, on official business
days between the hours of 10 a.m. and 3 p.m. 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
available publicly. All submissions should refer to File Number SR-
NYSE-2008-132 and should be submitted on or before February 3, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-414 Filed 1-12-09; 8:45 am]
BILLING CODE 8011-01-P
