Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Make Permanent a Unit-of-Count Metric Alternative for NYSE OpenBook, 16537-16540 [2010-7365]
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Federal Register / Vol. 75, No. 62 / Thursday, April 1, 2010 / Notices
should refer to File Number SR–NYSE–
2010–21 and should be submitted on or
before April 22, 2010.
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IV. Commission’s Findings and Order
Granting Accelerated Approval of the
Proposed Rule Change
After careful consideration, the
Commission finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder applicable to
a national securities exchange.6 In
particular, it is consistent with Section
6(b)(4) of the Act,7 which requires that
the rules of a national securities
exchange provide for the equitable
allocation of reasonable dues, fees, and
other charges among its members and
issuers and other parties using its
facilities, and Section 6(b)(5) of the
Act,8 which requires, among other
things, that the rules of a national
securities 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, and
not be designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Commission also finds that the
proposed rule change is consistent with
the provisions of Section 6(b)(8) of the
Act,9 which requires that the rules of an
exchange not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act. Finally, the
Commission finds that the proposed
rule change is consistent with Rule
603(a) of Regulation NMS,10 adopted
under Section 11A(c)(1) of the Act,
which requires an exclusive processor
that distributes information with respect
to quotations for or transactions in an
NMS stock to do so on terms that are
fair and reasonable and that are not
unreasonably discriminatory.11
This proposal would extend the
expiration date of the Unit of Count
pilot program to July 30, 2010. The
Commission has reviewed the proposal
6 In approving this rule change, the Commission
notes that it has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
7 15 U.S.C. 78f(b)(4).
8 15 U.S.C. 78f(b)(5).
9 15 U.S.C. 78f(b)(8).
10 17 CFR 242.603(a).
11 NYSE is an exclusive processor of NYSE depthof-book data under Section 3(a)(22)(B) of the Act,
15 U.S.C. 78c(a)(22)(B), which defines an exclusive
processor as, among other things, an exchange that
distributes information with respect to quotations
or transactions on an exclusive basis on its own
behalf.
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using the approach set forth in the
NYSE Arca Order for non-core market
data fees.12 The Commission recently
found that NYSE was subject to
significant competitive forces in setting
fees for its depth-of-book order data in
the Unit of Count Filing.13 There are a
variety of alternative sources of
information that impose significant
competitive pressures on the NYSE in
setting the terms for distributing its
depth-of-book order data. The
Commission believes that the
availability of those alternatives, as well
as the NYSE’s compelling need to attract
order flow, imposed significant
competitive pressure on the NYSE to act
equitably, fairly, and reasonably in
setting the terms of its proposal.
Because the NYSE was subject to
significant competitive forces in setting
the terms of the proposal, the
Commission will approve the proposal
in the absence of a substantial
countervailing basis to find that its
terms nevertheless fail to meet an
applicable requirement of the Act or the
rules thereunder. An analysis of the
proposal does not provide such a basis.
The Commission finds good cause for
approving this proposal before the 30th
day after the publication of notice
thereof in the Federal Register. The
Commission believes that accelerating
approval of this proposal is appropriate
and would ensure that the Exchange
could continue to offer Unit of Count
billing on their market data products
under the existing pilot program.14
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,15 that the
proposed rule change (SR–NYSE–2010–
21), be, and it hereby is, approved on an
accelerated basis.
12 Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (SR–NYSEArca–2006–21) (‘‘NYSE Arca
Order’’). In the NYSE Arca Order, the Commission
describes in great detail the competitive factors that
apply to non-core market data products. The
Commission hereby incorporates by reference the
data and analysis from the NYSE Arca Order into
this order.
13 See Securities Exchange Act Release No. 59544
(March 9, 2009), 74 FR 11162 (March 16, 2009) (SR–
NYSE–2008–131).
14 The Commission notes that that the Exchange
has also recently filed a proposed rule change
seeking permanent approval of the pilot program for
the Unit of Count billing methodology for NYSE
OpenBook. See Securities Exchange Act Release No.
61779 (March 25, 2010) (SR–NYSE–2010–22).
15 15 U.S.C. 78s(b)(2).
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16537
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–7363 Filed 3–31–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61779; File No. SR–NYSE–
2010–22]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change To
Make Permanent a Unit-of-Count
Metric Alternative for NYSE OpenBook
March 25, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’)1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 11,
2010, 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Last March, the New York Stock
Exchange LLC (the ‘‘Exchange’’)
introduced as a pilot program (the ‘‘Pilot
Program’’) a revised unit-of-count metric
for determining the fees payable by data
recipients.3 It is now proposing to make
that revised unit-of-count metric a
permanent alternative to the traditional
device fee. The text of the proposed rule
change is available on the Exchange’s
Web site at https://www.nyse.com, on the
Commission’s Web site at https://
www.sec.gov, at NYSE, 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
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Release No. 34–59544 (March 9, 2009); 74
FR 11162 (March 16, 2009); File No. SR–NYSE–
2008–131 (the ‘‘Pilot Program Filing’’).
1 15
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and discussed any comments it received
on the proposed rule change. The text
of those 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 parts of such
statements.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
a. Subscribers and Data Feed
Recipients.
After consultation with the
Exchange’s market data customers,
including large and small redistributors
and broker-dealers, the Exchange found
that the marketplace desires a simplified
fee structure for its products, especially
regarding the methodology for counting
the ‘‘devices’’ that are the subject of the
device fee. As technology has made it
increasingly difficult to define ‘‘device’’
and to control who has access to
devices, the markets have struggled to
make device counts uniform among
their customers.
i. The Original Model.
The markets created the ‘‘device fee’’
metric in 1960, when market data
vendors first made interrogation
services available to their subscribers.
During the 1960s, 1970s and 1980s, a
vendor would typically link its servers
to display devices that the vendor
provided to its subscribers. The linkages
allowed the subscriber to interrogate the
vendor’s database for vendor-prepared
displays of stock prices and quotes. The
subscriber could do no more than view
the vendor-provided displays of prices
and quotes. The vendor reported the
number of display devices through
which each subscriber could receive the
vendor’s displays and the exchanges
imposed fees on the subscribers based
on that number of devices.
The markets deemed any party that
received access to the price and quote
data feeds to constitute something other
than a subscriber. Access to a data feed
meant the receipt of prices and quotes
in a manner that allowed the recipient
to manipulate and re-format the data (as
opposed to a subscriber’s receipt of the
vendor’s read-only controlled displays).
Such parties (‘‘Data Feed Recipients’’)
used their data feed access:
A. To create interrogation services
that they would vend to their
subscribers;
B. To make the data feeds available to
other parties; or
C. To use the data internally for
display, analysis, portfolio valuation or
other purposes other than display.
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The markets imposed access fees on
such parties, fees that the markets have
never imposed on subscribers’ receipt of
controlled display services.
ii. The Impact of Technology.
During and after the 1980s, the
markets and supporting technology
evolved dramatically. Networks of
personal computers replaced direct
links between the vendor and each
subscriber device as the standard means
for distributing a vendor’s interrogation
service to subscribers. Vendors and
subscribers applied ‘‘user id and
password’’ entitlements to control access
to the vendor’s interrogation services. In
time, controlled display devices became
more sophisticated and enabled the
subscriber to use the data for analysis
and other non-display functions,
functions previously reserved only for
Data Feed Recipients. Vendors began to
provide services in which they
controlled access, but no longer
provided pre-set displays of data. This
evolutionary process blurred the
historic distinctions between Data Feed
Recipients’ uses of data and subscribers’
uses of data. As a result, the traditional
measures for billing purposes (i.e.,
device fees for subscribers; access,
program classification and device fees
for Data Feed Recipients) became
difficult to apply. This has resulted in
unnecessary burdens and costs to
customers and exchanges alike.
b. The Pilot Program’s Solution.
Under the Pilot Program and a wider
initiative to simplify and modernize
market data administration, the
Exchange provided an alternative to
traditional ‘‘device’’ counts. Under the
alternative, the Exchange redefined
some of the basic ‘‘units of measure’’ that
Vendors are required to report to the
Exchange and on which the Exchange
bases its fees for its NYSE OpenBook
product packages.
Under the Pilot Program, the
Exchange no longer defines the Vendorsubscriber relationship based on the
manner in which a Data Feed Recipient
or subscriber receives data (i.e., through
controlled displays or through data
feeds). Instead, the Exchange adopted
billing criteria that are more objective.
The following basic principles underlie
the Pilot Program.
i. Vendors.
• ‘‘Vendors’’ are market data vendors,
broker-dealers, private network
providers and other entities that control
Subscribers’ access to data through
Subscriber Entitlement Controls.
ii. Subscribers.
• ‘‘Subscribers’’ are unique individual
persons or devices to which a Vendor
provides data. Any individual or device
that receives data from a Vendor is a
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Subscriber, whether the individual or
device works for or belongs to the
Vendor, or works for or belongs to an
entity other than the Vendor.
• Only a Vendor may control
Subscriber access to data.
• Subscribers may not redistribute
data in any manner.
iii. Subscriber Entitlements.
• A Subscriber Entitlement is a
Vendor’s permissioning of a Subscriber
to receive access to data through an
Exchange-approved Subscriber
Entitlement Control.
• A Vendor may not provide data
access to a Subscriber except through a
unique Subscriber Entitlement.
• The Exchange will require each
Vendor to provide a unique Subscriber
Entitlement to each unique Subscriber.
• At prescribed intervals (normally
monthly), the Exchange will require
each Vendor to report each unique
Subscriber Entitlement.
iv. Subscriber Entitlement Controls.
• A Subscriber Entitlement Control is
the Vendor’s process of permissioning
Subscribers’ access to data.
• Prior to using any Subscriber
Entitlement Control or changing a
previously approved Subscriber
Entitlement Control, a Vendor must
provide the Exchange with a
demonstration and a detailed written
description of the control or change and
the Exchange must have approved it in
writing.
• The Exchange will approve a
Subscriber Entitlement Control if it
allows only authorized, unique endusers or devices to access data or
monitors access to data by each unique
end-user or device.
• Vendors must design Subscriber
Entitlement Controls to produce an
audit report and make each audit report
available to the Exchange upon request.
The audit report must identify:
A. each entitlement update to the
Subscriber Entitlement Control;
B. the status of the Subscriber
Entitlement Control; and
C. any other changes to the Subscriber
Entitlement Control over a given period.
• Only the Vendor may have access to
Subscriber Entitlement Controls.
The Exchange recognizes that each
Vendor and Subscriber will use NYSE
OpenBook data differently and that the
Exchange is one of many markets with
whom Vendors and Subscribers may
enter into arrangements for the receipt
and use of data. In recognition of that,
the Pilot Program does not restrict how
Vendors may use NYSE OpenBook data
in their display services and encourages
Vendors to create and promote
innovative uses of NYSE OpenBook
information. For instance, a Vendor may
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Federal Register / Vol. 75, No. 62 / Thursday, April 1, 2010 / Notices
use NYSE OpenBook data to create
derived information displays, such as
displays that aggregate NYSE OpenBook
data with data from other markets.4
The Pilot Program does not
discriminate among data recipients and
users, as the new ‘‘unit of measure’’
concepts would apply equally to
everyone.
c. Unit-of-Count Rules.
Subject to the rules set forth below,
the Pilot Program requires Vendors to
count every Subscriber Entitlement,
whether it be an individual person or a
device. The Vendor must include in the
count every person and device that has
access to the data, regardless of the
purposes for which the individual or
device uses the data. The Pilot Program
also eliminates exceptions to the devicereporting obligation, thereby subjecting
the count to a more objective process
and simplifying the reporting obligation
for Vendors. Previously, the Exchange
required Vendors to report certain
programmers and other individuals who
receive access to data for certain
specific, non-trading purposes. These
exceptions required the Exchange to
monitor the manner through which endusers consume data and added cost for
both the Exchange and customers. To
simplify the process, the Pilot Program
requires Vendors to report all
entitlements in accordance with the
following rules.
i. In connection with a Vendor’s
external distribution of NYSE
OpenBook data, the Vendor should
count as one Subscriber Entitlement
each unique Subscriber that the Vendor
has entitled to have access to the
Exchange’s market data. However,
where a device is dedicated specifically
to a single individual, the Vendor
should count only the individual and
need not count the device.
ii. In connection with a Vendor’s
internal distribution of NYSE OpenBook
data, the Vendor should count as one
Subscriber Entitlement each unique
individual (but not devices) that the
Vendor has entitled to have access to
the Exchange’s market data.
iii. The Vendor should identify and
report each unique Subscriber. If a
Subscriber uses the same unique
Subscriber Entitlement to gain access to
multiple market data services, the
Vendor should count that as one
Subscriber Entitlement. However, if a
4 In the case of derived displays, the Vendor is
required to: (a) Pay the Exchange’s device fees
(described below); (b) include derived displays in
its reports of NYSE OpenBook usage; and (c) use
reasonable efforts to assure that any person viewing
a display of derived data understands what the
display represents and the manner in which it was
derived.
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unique Subscriber uses multiple
Subscriber Entitlements to gain access
to one or more market data services
(e.g., a single Subscriber has multiple
passwords and user identifications), the
Vendor should report all of those
Subscriber Entitlements.
iv. Vendors should report each unique
individual person who receives access
through multiple devices as one
Subscriber Entitlement so long as each
device is dedicated specifically to that
individual.
v. The Vendor should include in the
count as one Subscriber Entitlement
devices serving no entitled individuals.
However, if the Vendor entitles one or
more individuals to use the same
device, the Vendor should include only
the entitled individuals, and not the
device, in the count.
d. Permanent Approval.
The Pilot Program has provided an
opportunity for the Exchange and its
customers to assess specific usage issues
and to enable the Exchange to solicit
feedback from customers and other
industry participants.
The Exchange believes that its
customers have viewed the ‘‘Subscriber
Entitlement’’ revised unit-of-count
metric favorably and that the revised
metric more closely aligns with current
data consumption for many of them. It
has reduced costs for the Exchange’s
customers, and has simplified and
modernized market data administration.
It has subjected the count to a more
objective process and simplified the
reporting obligation for Vendors. The
Exchange believes that the ‘‘Subscriber
Entitlement’’ metric will serve as a
model for additional pricing
efficiencies.
For these reasons, the Exchange
proposes to make permanent the
‘‘Subscriber Entitlement’’ unit-of-count
methodology in accordance with the
terms set forth in the Pilot Program.
e. Impact of Pilot Program.
Many Vendors have taken advantage
of the ‘‘Subscriber Entitlement’’ unit-ofcount methodology under the Pilot
Program. Because that methodology
reduces their administrative costs and,
in some cases, essentially replaces the
$5,000 monthly NYSE OpenBook fee
with a $60 monthly ‘‘Subscriber
Entitlement’’ fee applicable to certain of
their customers, they have installed the
controls and procedures necessary to
count Subscriber Entitlements. For other
Vendors, the new methodology does not
fit their business models as well and
they have elected to stay with the
traditional ‘‘device’’ counts. The
Exchange believes that the extent to
which Vendors have embraced
‘‘Subscriber Entitlements’’ underscores
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16539
the success of the Pilot Program and
underlies the Exchange’s proposal to
seek permanent approval of the
‘‘Subscriber Entitlement’’ unit-of-count
methodology.
2. Statutory Basis
The basis under the Securities
Exchange Act of 1934 (the ‘‘Act’’) for this
proposed rule change is the requirement
under Section 6(b)(4) 5 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) 6
that the rules of an exchange be
designed to promote just and equitable
principles of trade and not to permit
unfair discrimination between
customers, issuers, brokers or dealers.
The Exchange believes that the
‘‘Subscriber Entitlement’’ unit-of-count
alternative benefits investors because it
is more closely aligned with current
data consumption, reduces costs for the
Exchange’s customers, and potentially
serves as a model for additional pricing
efficiencies.
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 Exchange 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 this 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.
5 15
6 15
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U.S.C. 78f(b)(4).
U.S.C. 78f(b)(5).
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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–2010–22 on the subject
line.
Paper Comments
mstockstill on DSKH9S0YB1PROD with NOTICES
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–7365 Filed 3–31–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61781; File No. SR–NSX–
2010–02]
Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Adopt
Rules on Self Trade Prevention Order
Modifiers
March 25, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 1 and Rule 19b–4 thereunder,2
All submissions should refer to File
notice is hereby given that, on March
Number SR–NYSE–2010–22. This file
23, 2010, National Stock Exchange, Inc.
number should be included on the
(‘‘NSX’’ or the ‘‘Exchange’’) filed with the
subject line if e-mail is used. To help the Securities and Exchange Commission
Commission process and review your
(the ‘‘Commission’’) the proposed rule
comments more efficiently, please use
change as described in Items I, II, and
only one method. The Commission will III below, which Items have been
post all comments on the Commission’s substantially prepared by the selfInternet Web site (https://www.sec.gov/
regulatory organization. The Exchange
rules/sro.shtml). Copies of the
filed the proposal as a ‘‘nonsubmission, all subsequent
controversial’’ proposed rule change
amendments, all written statements
pursuant to Section 19(b)(3)(A)(iii) of
with respect to the proposed rule
the Act 3 and Rule 19b-4(f)(6)
change that are filed with the
thereunder.4 The Commission is
Commission, and all written
publishing this notice to solicit
communications relating to the
comments on the proposed rule change
proposed rule change between the
from interested persons.
Commission and any person, other than
I. Self-Regulatory Organization’s
those that may be withheld from the
Statement of the Terms of Substance of
public in accordance with the
the Proposed Rule Change
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
The Exchange proposes to adopt a
printing in the Commission’s Public
new Rule 11.11(c)(1) ‘‘Self Trade
Reference Room, 100 F Street, NE.,
Prevention’’ Order Modifier that allows
Washington, DC 20549, on official
an ETP Holder to submit orders that
business days between the hours of 10
may avoid trading against other orders
a.m. and 3 p.m. Copies of such filing
of the same ETP Holder.
also will be available for inspection and
The text of the proposed rule change
copying at the principal office of the
is available on the Exchange’s Web site
Exchange. All comments received will
at https://www.nsx.com, on the
be posted without change; the
Commission’s Web site at https://
Commission does not edit personal
www.sec.gov, at NSX, and at the
identifying information from
Commission’s Public Reference Room.
submissions. You should submit only
information that you wish to make
7 17 CFR 200.30–3(a)(12).
available publicly. All submissions
1 15 U.S.C.78s(b)(1).
should refer to File Number SR–NYSE–
2 17 CFR 240.19b–4.
2010–22 and should be submitted on or
3 15 U.S.C. 78s(b)(3)(A)(iii).
before April 22, 2010.
4 17
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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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to adopt a
new Rule 11.11(c)(1) to make available
to ETP Holders an order modifier that
allows an ETP Holder to submit orders
that may avoid trading against other
orders of the same ETP Holder. The
proposed changes are more fully
discussed below.
Background
The proposed ‘‘Self Trade Prevention’’
(‘‘STP’’) modifiers are instructions
designed to prevent two orders with the
same designated Unique Identifier (as
defined below) from executing against
each other. The ETP Holder elects at the
time an STP modified order is
submitted whether the new order, an
existing order (which must also have
been submitted with an STP modifier)
or both orders will be cancelled (or
rejected, as applicable) instead of
otherwise interacting.
The Exchange proposes adding three
STP modifiers that will be implemented
and can be set at one of three
identification levels: the market
participant level (pursuant to the
‘‘MPID’’), the FIX session level (pursuant
to ‘‘FIX Session ID’’) or an ETP Holder’s
user level (pursuant to the ‘‘Party ID’’)
(any such identifier, a ‘‘Unique
Identifier’’).5 The STP instruction on the
incoming order controls the interaction
between two orders marked with STP
modifiers from the same Unique
Identifier. The three new STP modifiers
are discussed more thoroughly below.
5 Each ETP Holder is issued a unique MPID
identifier that allows the Exchange to determine the
ETP Holder for each order and/or execution. The
FIX Session ID is unique to each physical
connection between the Exchange and an ETP
Holder. The Party ID identifies a unique user of an
ETP Holder.
E:\FR\FM\01APN1.SGM
01APN1
]]>Agencies
[Federal Register Volume 75, Number 62 (Thursday, April 1, 2010)]
[Notices]
[Pages 16537-16540]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7365]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61779; File No. SR-NYSE-2010-22]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Make Permanent a Unit-of-
Count Metric Alternative for NYSE OpenBook
March 25, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 11, 2010, 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.
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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
Last March, the New York Stock Exchange LLC (the ``Exchange'')
introduced as a pilot program (the ``Pilot Program'') a revised unit-
of-count metric for determining the fees payable by data recipients.\3\
It is now proposing to make that revised unit-of-count metric a
permanent alternative to the traditional device fee. The text of the
proposed rule change is available on the Exchange's Web site at https://www.nyse.com, on the Commission's Web site at https://www.sec.gov, at
NYSE, and at the Commission's Public Reference Room.
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\3\ See Release No. 34-59544 (March 9, 2009); 74 FR 11162 (March
16, 2009); File No. SR-NYSE-2008-131 (the ``Pilot Program Filing'').
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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 self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change
[[Page 16538]]
and discussed any comments it received on the proposed rule change. The
text of those 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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
a. Subscribers and Data Feed Recipients.
After consultation with the Exchange's market data customers,
including large and small redistributors and broker-dealers, the
Exchange found that the marketplace desires a simplified fee structure
for its products, especially regarding the methodology for counting the
``devices'' that are the subject of the device fee. As technology has
made it increasingly difficult to define ``device'' and to control who
has access to devices, the markets have struggled to make device counts
uniform among their customers.
i. The Original Model.
The markets created the ``device fee'' metric in 1960, when market
data vendors first made interrogation services available to their
subscribers. During the 1960s, 1970s and 1980s, a vendor would
typically link its servers to display devices that the vendor provided
to its subscribers. The linkages allowed the subscriber to interrogate
the vendor's database for vendor-prepared displays of stock prices and
quotes. The subscriber could do no more than view the vendor-provided
displays of prices and quotes. The vendor reported the number of
display devices through which each subscriber could receive the
vendor's displays and the exchanges imposed fees on the subscribers
based on that number of devices.
The markets deemed any party that received access to the price and
quote data feeds to constitute something other than a subscriber.
Access to a data feed meant the receipt of prices and quotes in a
manner that allowed the recipient to manipulate and re-format the data
(as opposed to a subscriber's receipt of the vendor's read-only
controlled displays). Such parties (``Data Feed Recipients'') used
their data feed access:
A. To create interrogation services that they would vend to their
subscribers;
B. To make the data feeds available to other parties; or
C. To use the data internally for display, analysis, portfolio
valuation or other purposes other than display.
The markets imposed access fees on such parties, fees that the
markets have never imposed on subscribers' receipt of controlled
display services.
ii. The Impact of Technology.
During and after the 1980s, the markets and supporting technology
evolved dramatically. Networks of personal computers replaced direct
links between the vendor and each subscriber device as the standard
means for distributing a vendor's interrogation service to subscribers.
Vendors and subscribers applied ``user id and password'' entitlements
to control access to the vendor's interrogation services. In time,
controlled display devices became more sophisticated and enabled the
subscriber to use the data for analysis and other non-display
functions, functions previously reserved only for Data Feed Recipients.
Vendors began to provide services in which they controlled access, but
no longer provided pre-set displays of data. This evolutionary process
blurred the historic distinctions between Data Feed Recipients' uses of
data and subscribers' uses of data. As a result, the traditional
measures for billing purposes (i.e., device fees for subscribers;
access, program classification and device fees for Data Feed
Recipients) became difficult to apply. This has resulted in unnecessary
burdens and costs to customers and exchanges alike.
b. The Pilot Program's Solution.
Under the Pilot Program and a wider initiative to simplify and
modernize market data administration, the Exchange provided an
alternative to traditional ``device'' counts. Under the alternative,
the Exchange redefined some of the basic ``units of measure'' that
Vendors are required to report to the Exchange and on which the
Exchange bases its fees for its NYSE OpenBook product packages.
Under the Pilot Program, the Exchange no longer defines the Vendor-
subscriber relationship based on the manner in which a Data Feed
Recipient or subscriber receives data (i.e., through controlled
displays or through data feeds). Instead, the Exchange adopted billing
criteria that are more objective. The following basic principles
underlie the Pilot Program.
i. Vendors.
``Vendors'' are market data vendors, broker-dealers,
private network providers and other entities that control Subscribers'
access to data through Subscriber Entitlement Controls.
ii. Subscribers.
``Subscribers'' are unique individual persons or devices
to which a Vendor provides data. Any individual or device that receives
data from a Vendor is a Subscriber, whether the individual or device
works for or belongs to the Vendor, or works for or belongs to an
entity other than the Vendor.
Only a Vendor may control Subscriber access to data.
Subscribers may not redistribute data in any manner.
iii. Subscriber Entitlements.
A Subscriber Entitlement is a Vendor's permissioning of a
Subscriber to receive access to data through an Exchange-approved
Subscriber Entitlement Control.
A Vendor may not provide data access to a Subscriber
except through a unique Subscriber Entitlement.
The Exchange will require each Vendor to provide a unique
Subscriber Entitlement to each unique Subscriber.
At prescribed intervals (normally monthly), the Exchange
will require each Vendor to report each unique Subscriber Entitlement.
iv. Subscriber Entitlement Controls.
A Subscriber Entitlement Control is the Vendor's process
of permissioning Subscribers' access to data.
Prior to using any Subscriber Entitlement Control or
changing a previously approved Subscriber Entitlement Control, a Vendor
must provide the Exchange with a demonstration and a detailed written
description of the control or change and the Exchange must have
approved it in writing.
The Exchange will approve a Subscriber Entitlement Control
if it allows only authorized, unique end-users or devices to access
data or monitors access to data by each unique end-user or device.
Vendors must design Subscriber Entitlement Controls to
produce an audit report and make each audit report available to the
Exchange upon request. The audit report must identify:
A. each entitlement update to the Subscriber Entitlement Control;
B. the status of the Subscriber Entitlement Control; and
C. any other changes to the Subscriber Entitlement Control over a
given period.
Only the Vendor may have access to Subscriber Entitlement
Controls.
The Exchange recognizes that each Vendor and Subscriber will use
NYSE OpenBook data differently and that the Exchange is one of many
markets with whom Vendors and Subscribers may enter into arrangements
for the receipt and use of data. In recognition of that, the Pilot
Program does not restrict how Vendors may use NYSE OpenBook data in
their display services and encourages Vendors to create and promote
innovative uses of NYSE OpenBook information. For instance, a Vendor
may
[[Page 16539]]
use NYSE OpenBook data to create derived information displays, such as
displays that aggregate NYSE OpenBook data with data from other
markets.\4\
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\4\ In the case of derived displays, the Vendor is required to:
(a) Pay the Exchange's device fees (described below); (b) include
derived displays in its reports of NYSE OpenBook usage; and (c) use
reasonable efforts to assure that any person viewing a display of
derived data understands what the display represents and the manner
in which it was derived.
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The Pilot Program does not discriminate among data recipients and
users, as the new ``unit of measure'' concepts would apply equally to
everyone.
c. Unit-of-Count Rules.
Subject to the rules set forth below, the Pilot Program requires
Vendors to count every Subscriber Entitlement, whether it be an
individual person or a device. The Vendor must include in the count
every person and device that has access to the data, regardless of the
purposes for which the individual or device uses the data. The Pilot
Program also eliminates exceptions to the device-reporting obligation,
thereby subjecting the count to a more objective process and
simplifying the reporting obligation for Vendors. Previously, the
Exchange required Vendors to report certain programmers and other
individuals who receive access to data for certain specific, non-
trading purposes. These exceptions required the Exchange to monitor the
manner through which end-users consume data and added cost for both the
Exchange and customers. To simplify the process, the Pilot Program
requires Vendors to report all entitlements in accordance with the
following rules.
i. In connection with a Vendor's external distribution of NYSE
OpenBook data, the Vendor should count as one Subscriber Entitlement
each unique Subscriber that the Vendor has entitled to have access to
the Exchange's market data. However, where a device is dedicated
specifically to a single individual, the Vendor should count only the
individual and need not count the device.
ii. In connection with a Vendor's internal distribution of NYSE
OpenBook data, the Vendor should count as one Subscriber Entitlement
each unique individual (but not devices) that the Vendor has entitled
to have access to the Exchange's market data.
iii. The Vendor should identify and report each unique Subscriber.
If a Subscriber uses the same unique Subscriber Entitlement to gain
access to multiple market data services, the Vendor should count that
as one Subscriber Entitlement. However, if a unique Subscriber uses
multiple Subscriber Entitlements to gain access to one or more market
data services (e.g., a single Subscriber has multiple passwords and
user identifications), the Vendor should report all of those Subscriber
Entitlements.
iv. Vendors should report each unique individual person who
receives access through multiple devices as one Subscriber Entitlement
so long as each device is dedicated specifically to that individual.
v. The Vendor should include in the count as one Subscriber
Entitlement devices serving no entitled individuals. However, if the
Vendor entitles one or more individuals to use the same device, the
Vendor should include only the entitled individuals, and not the
device, in the count.
d. Permanent Approval.
The Pilot Program has provided an opportunity for the Exchange and
its customers to assess specific usage issues and to enable the
Exchange to solicit feedback from customers and other industry
participants.
The Exchange believes that its customers have viewed the
``Subscriber Entitlement'' revised unit-of-count metric favorably and
that the revised metric more closely aligns with current data
consumption for many of them. It has reduced costs for the Exchange's
customers, and has simplified and modernized market data
administration. It has subjected the count to a more objective process
and simplified the reporting obligation for Vendors. The Exchange
believes that the ``Subscriber Entitlement'' metric will serve as a
model for additional pricing efficiencies.
For these reasons, the Exchange proposes to make permanent the
``Subscriber Entitlement'' unit-of-count methodology in accordance with
the terms set forth in the Pilot Program.
e. Impact of Pilot Program.
Many Vendors have taken advantage of the ``Subscriber Entitlement''
unit-of-count methodology under the Pilot Program. Because that
methodology reduces their administrative costs and, in some cases,
essentially replaces the $5,000 monthly NYSE OpenBook fee with a $60
monthly ``Subscriber Entitlement'' fee applicable to certain of their
customers, they have installed the controls and procedures necessary to
count Subscriber Entitlements. For other Vendors, the new methodology
does not fit their business models as well and they have elected to
stay with the traditional ``device'' counts. The Exchange believes that
the extent to which Vendors have embraced ``Subscriber Entitlements''
underscores the success of the Pilot Program and underlies the
Exchange's proposal to seek permanent approval of the ``Subscriber
Entitlement'' unit-of-count methodology.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
for this proposed rule change is the requirement under Section 6(b)(4)
\5\ 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) \6\ that the rules of an exchange be designed to
promote just and equitable principles of trade and not to permit unfair
discrimination between customers, issuers, brokers or dealers.
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\5\ 15 U.S.C. 78f(b)(4).
\6\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the ``Subscriber Entitlement'' unit-of-
count alternative benefits investors because it is more closely aligned
with current data consumption, reduces costs for the Exchange's
customers, and potentially serves as a model for additional pricing
efficiencies.
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 Exchange 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 this 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.
[[Page 16540]]
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-2010-22 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-2010-22. 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 Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, 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-2010-22 and should be
submitted on or before April 22, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7365 Filed 3-31-10; 8:45 am]
BILLING CODE 8011-01-P
