Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Establish the NYSE BBO Service, 21077-21080 [2010-9274]

Download as PDF Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Notices apply to any of the strategies identified and/or defined in Footnote 13. (b) Statutory Basis The Exchange believes the proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934 (‘‘Act’’),6 in general, and furthers the objectives of Section 6(b)(4) 7 of the Act in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. The Exchange believes excluding member firm transaction fees from the proposed fee cap is consistent with the Act because member firm transaction fees are reduced under the Member Firm Proprietary Sliding Scale program. Market-maker transaction fees are reduced under the Liquidity Provider Sliding Scale, however market-makers are required to prepay annual fees for the first two tiers of the sliding scale in order to be eligible for the fee rates in the lowest tiers while there is no similar requirement for firms under the Member Firm Proprietary Sliding Scale. Also, member firm transaction fees are lower than broker-dealer transaction fees. In addition, the Exchange believes expansion of the Strategy Fee Cap program would benefit market participants who trade these strategies by lowering their fees and allow the Exchange to remain competitive with other exchanges that offer similar fee cap programs. A. Self-Regulatory Organization’s Statement on Burden on Competition CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of purposes of the Act. B. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others No written comments were solicited or received with respect to the proposed rule change. srobinson on DSKHWCL6B1PROD with NOTICES III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and subparagraph (f)(2) of Rule 19b–4 9 thereunder. At any time within 60 days of the filing of the 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). 8 15 U.S.C. 78s(b)(3)(A). 9 17 CFR 240.19b–4(f)(2). 7 15 VerDate Nov<24>2008 18:25 Apr 21, 2010 Jkt 220001 proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 21077 should refer to File Number SR–CBOE– 2010–033 and should be submitted on or before May 13, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. 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: [FR Doc. 2010–9275 Filed 4–21–10; 8:45 am] Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–CBOE–2010–033 on the subject line. Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Establish the NYSE BBO Service BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61914; File No. SR–NYSE– 2010–30] April 15, 2010. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’) 1 and Rule 19b–4 thereunder,2 Paper Comments notice is hereby given that on April 1, 2010, the New York Stock Exchange • Send paper comments in triplicate LLC (‘‘NYSE’’ or ‘‘Exchange’’), filed with to Elizabeth M. Murphy, Secretary, the Securities and Exchange Securities and Exchange Commission, Commission ‘‘Commission’’) the 100 F Street, NE., Washington, DC proposed rule change as described in 20549–1090. Items I, II, and III below, which Items All submissions should refer to File have been prepared by the Exchange. Number SR–CBOE–2010–033. This file The Commission is publishing this number should be included on the subject line if e-mail is used. To help the notice to solicit comments on the proposed rule change from interested Commission process and review your persons. comments more efficiently, please use only one method. The Commission will I. Self-Regulatory Organization’s post all comments on the Commission’s Statement of the Terms of Substance of Internet Web site (https://www.sec.gov/ the Proposed Rule Change rules/sro.shtml). Copies of the NYSE proposes to establish the NYSE submission, all subsequent BBO Service, a service that will make amendments, all written statements available the Exchange’s best bids and with respect to the proposed rule offers and to establish fees for that change that are filed with the service. The text of the proposed rule Commission, and all written change is available on the Exchange’s communications relating to the Web site at https://www.nyse.com, on the proposed rule change between the Commission’s Web site at https:// Commission and any person, other than www.sec.gov, at NYSE, and at the those that may be withheld from the Commission’s Public Reference Room. public in accordance with the II. Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be Statement of the Purpose of, and available for Web site viewing and Statutory Basis for, the Proposed Rule printing in the Commission’s Public Change Reference Room, 100 F Street, NE., Washington, DC 20549, on official In its filing with the Commission, the business days between the hours of 10 self-regulatory organization included a.m. and 3 p.m. Copies of such filing statements concerning the purpose of, also will be available for inspection and and basis for, the proposed rule change copying at the principal office of the and discussed any comments it received Exchange. All comments received will on the proposed rule change. The text be posted without change; the of those statements may be examined at Commission does not edit personal the places specified in Item IV below. identifying information from submissions. You should sbmit only 10 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). information that you wish to make 2 17 CFR 240.19b–4. publicly available. All submissions PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\22APN1.SGM 22APN1 21078 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Notices 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 The NYSE BBO Service is a new NYSE-only market data service that allows a vendor to redistribute on a realtime basis the same best-bid-and-offer information that NYSE reports under the CQ Plan for inclusion in the CQ Plan’s consolidated quotation information data stream (‘‘NYSE BBO Information’’). NYSE BBO Information would include the best bids and offers for all securities that are traded on the Exchange and for which NYSE reports quotes under the CQ Plan. NYSE will make the NYSE BBO service available over a single datafeed, regardless of the markets on which the securities are listed. The NYSE BBO Service would allow vendors, broker-dealers, private network providers and other entities (‘‘NYSEOnly Vendors’’) to make available NYSE BBO Information on a real-time basis. NYSE-Only Vendors may distribute the NYSE BBO Service to both professional and nonprofessional subscribers. The Exchange would make NYSE BBO Information available through its new NYSE BBO Service no earlier than it makes that information available to the processor under the CQ Plan. srobinson on DSKHWCL6B1PROD with NOTICES b. Fees i. Access Fee. For the receipt of access to the NYSE BBO datafeed, the Exchange proposes to charge $1500 per month. One $1500 monthly access fee entitles an NYSEOnly Vendor to receive both the NYSE BBO datafeed as well as the Exchange’s NYSE Trades datafeed.3 The fee applies to receipt of NYSE market data within the Vendor’s organization or outside of it. ii. Professional Subscriber Fees. For the receipt and use of NYSE BBO Information, the Exchange proposes to charge $15 per month per professional subscriber device. 3 On March 19, 2009, the Commission approved the Exchange’s NYSE Trades service, a NYSE-only market data service that allows a vendor to redistribute on a real-time basis the same last sale information that the Exchange reports to the Consolidated Tape Association (‘‘CTA’’) for inclusion in CTA’s consolidated data stream and certain other related data elements. See Release No. 34–59606; 74 FR 13293 (March 26, 2009); File No. SR–NYSE–2009–04. VerDate Nov<24>2008 18:25 Apr 21, 2010 Jkt 220001 In addition, the Exchange proposes to offer an alternative methodology to the traditional device fee. Instead of charging $15 per month per device, it proposes to offer Vendors the option of paying $15 per month per ‘‘Subscriber Entitlement’’. The fee entitles the end-user to receive and use NYSE BBO Information relating to all securities traded on NYSE, regardless of the market on which a security is listed. For the purpose of calculating Subscriber Entitlements, the Exchange proposes to adopt the unit-of-count methodology that the Commission approved earlier this year for the proposed rule change that the New York Stock Exchange, LLC (‘‘NYSE’’) submitted in respect of its NYSE OpenBook® service (the ‘‘Unit-of-Count Filing’’).4 Under that unit-of-count methodology, the Exchange does not define the Vendor-subscriber relationship based on the manner in which a datafeed recipient or subscriber receives data (i.e., through controlled displays or through data feeds). Instead, the Exchange uses more subjective billing criteria. Those criteria define ‘‘Vendors,’’ ‘‘Subscribers,’’ ‘‘Subscriber Entitlements’’ and ‘‘Subscriber Entitlement Controls’’ as the basis for setting professional subscriber fees. The Exchange believes that these changes more closely align with current data consumption and will reduce costs for the Exchange’s customers. iii. Nonprofessional Subscriber Fee. The Exchange proposes to charge each NYSE-Only Vendor $5.00 per month for each nonprofessional subscriber to whom it provides NYSE BBO Information. The Exchange proposes to impose the charge on the NYSE-Only Vendor, rather than on the nonprofessional Subscriber. In addition, the Exchange proposes to establish as an alternative to the fixed $5.00 monthly fee a fee of $.005 for each response that a NYSE-Only Vendor disseminates to a nonprofessional Subscriber’s inquiry for a best bid or offer under the NYSE BBO service. The Exchange proposes to limit a NYSEOnly Vendor’s exposure under this alternative fee. It proposes to set at $5.00 per month, the same amount as the proposed fixed monthly nonprofessional Subscriber flat fee, as the maximum fee that a NYSE-Only Vendor would have to pay in respect of each nonprofessional Subscriber for the receipt of the NYSE BBO service in any calendar month. 4 See Release No. 34–59544; 74 FR 11162 (March 16, 2009); File No. SR–NYSE–2008–131. PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 In order to take advantage of the perquery fee, a NYSE-Only Vendor must document in its Exhibit A that it has the ability to measure accurately the number of queries from each nonprofessional Subscriber and must have the ability to report aggregate query quantities on a monthly basis. The Exchange will impose the perquery fee only on the dissemination of best bids and offers to nonprofessional Subscribers. The per-query charge is imposed on NYSE-Only Vendors, not end-users, and is payable on a monthly basis. NYSE-Only Vendors may elect to disseminate the NYSE BBO service pursuant to the per-query fee rather than the fixed monthly fee. In establishing a nonprofessional Subscriber fee for the NYSE BBO Service, the Exchange proposes to apply the same criteria for qualification as a ‘‘nonprofessional subscriber’’ as the CTA and CQ Plan Participants use. As is true under the CTA and CQ Plans, classification as a nonprofessional subscriber is subject to Exchange review and requires the subscriber to attest to his or her nonprofessional subscriber status. A ‘‘nonprofessional subscriber’’ is a natural person who uses the data solely for his personal, non-business use and who is neither: A. Registered or qualified with the Securities and Exchange Commission, (‘‘SEC’’), the Commodities Futures Trading Commission, any State securities agency, any securities exchange or association, or any commodities or futures contract market or association, B. Engaged as an ‘‘investment adviser’’ as that term is defined in Section 202(a)(11) of the Investment Advisors Act of 1940 (whether or not registered or qualified under that act), nor C. Employed by a bank or other organization exemption from registration under Federal and/or State securities laws to perform functions that would require him/her to be so registered or qualified if he/she were to perform such function for an organization not so exempt. c. Justification of Fees The proposed monthly access fee, professional subscriber fee and nonprofessional subscriber fee for the NYSE BBO Service enable NYSE-Only Vendors and their subscribers to contribute to the Exchange’s operating costs in a manner that is appropriate for the distribution of NYSE BBO Information in the form taken by the proposed services. In setting the level of the proposed fees, the Exchange took into consideration several factors, including: E:\FR\FM\22APN1.SGM 22APN1 srobinson on DSKHWCL6B1PROD with NOTICES Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Notices (i) NYSE’s expectation that the NYSE BBO Service is likely to be a premium service, taken by investors most concerned with receiving NYSE BBO Information on a low latency basis; (ii) The fees that the CQ Plan Participants, Nasdaq, NYSE Amex and NYSE Arca are charging for similar services (or that NYSE anticipates they will soon propose to charge); (iii) Consultation with some of the entities that the Exchange anticipates will be the most likely to take advantage of the proposed service; (iv) The contribution of market data revenues that the Exchange believes is appropriate for entities that are most likely to take advantage of the proposed service; (v) The contribution that revenues accruing from the proposed fee will make to meet the overall costs of the Exchange’s operations; (vi) The savings in administrative and reporting costs that the NYSE BBO Service will provide to NYSE-Only Vendors (relative to counterpart services under the CQ Plan); and (vii) The fact that the proposed fees provide alternatives to existing fees under the CQ Plan, alternatives that vendors will purchase only if they determine that the perceived benefits outweigh the cost. The Exchange believes that the levels of the fees are consistent with the approach set forth in the order by which the Commission approved ArcaBook fees for NYSE Arca.5 In the ArcaBook Approval Order, the Commission stated that ‘‘when possible, reliance on competitive forces is the most appropriate and effective means to assess whether the terms for the distribution of non-core data are equitable, fair and reasonable, and not unreasonably discriminatory.’’ 6 It noted that if significant competitive forces apply to a proposal, the Commission would approve it unless a substantial countervailing basis exists. NYSE BBO Information constitutes ‘‘non-core data.’’ The Exchange does not require a central processor to consolidate and distribute the product to the public pursuant to joint-SRO plans. Rather, the Exchange distributes the product voluntarily. In the case of the NYSE BBO Service, both of the two types of competitive forces that the Commission described in the ArcaBook Approval Order are present: The Exchange has a compelling need to attract order flow and the 5 See Release No. 59039 (December 2, 2008), 73 FR 74770 (December 9, 2008) (SR–NYSEArca– 2006–21) (the ‘‘ArcaBook Approval Order’’). 6 Id. at 74771. VerDate Nov<24>2008 18:25 Apr 21, 2010 Jkt 220001 product competes with a number of alternative products. The Exchange must compete vigorously for order flow to maintain its share of trading volume. This requires the Exchange to act reasonably in setting market data fees for non-core products such as the NYSE BBO Service. The Exchange hopes that the proposed NYSE BBO Service will enable vendors to distribute NYSE BBO Information widely among investors, and thereby provide a means for promoting the Exchange’s visibility in the marketplace. In addition to the need to attract order flow, the availability of alternatives to the NYSE BBO Service significantly constrain the prices at which the Exchange can market those services. All national securities exchanges, the several Trade Reporting Facilities of FINRA, ECNs that produce proprietary data, as well as the core data feed under the CQ Plan, are all sources of competition for the NYSE BBO Service. Currently: (i) The Nasdaq Stock Market offers its best-bid-and-offer information under services that would provide an alternative to the proposed NYSE service; and (ii) The Exchange anticipates that NYSE Amex and NYSE Arca will soon propose to provide best-bid-and-offer services that are substantially similar to the NYSE BBO Service. As a further alternative, investors can receive NYSE BBO Information from NYSE OpenBook. The information available in the NYSE BBO Service is also included in the calculation of the consolidated best-bid-and-offer calculations under the CQ Plan, which comprises a core datafeed. Investors may select the NYSE BBO Service as less expensive alternatives to the CQ Plan’s consolidated data streams for certain purposes. (Rule 603(c) of Regulation NMS requires vendors to make the consolidated, core datafeeds available to customers when trading and order-routing decisions can be implemented.) d. Administrative Requirements The Exchange will require each Vendor to enter into the form of ‘‘vendor’’ agreement into which the CTA and CQ Plans require recipients of the Network A datafeeds to enter (the ‘‘Consolidated Vendor Form’’). That agreement will authorize the Vendor to provide NYSE BBO Information to its customers or to distribute the data internally. In addition, the Exchange will require each professional end-user that receives NYSE BBO Information from a vendor or broker-dealer to enter into the form PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 21079 of professional subscriber agreement into which the CTA and CQ Plans require end users of Network A data to enter. It will also require Vendors to subject nonprofessional subscribers to the same contract requirements as the CTA and CQ Plan Participants require of Network A nonprofessional subscribers. The Network A Participants submitted the Consolidated Vendor Form and the professional subscriber form to the Commission for comment and notice.7 2. Statutory Basis The bases under the Securities Exchange Act of 1934 (the ‘‘Act’’) for the proposed rule change are the requirement under Section 6(b)(4) 8 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) 9 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 proposed rule change would benefit investors by facilitating their prompt access to real-time best-bid-andoffer information contained in the NYSE BBO Service and by providing a modern methodology alternative for counting fee-liable units. In addition, the Exchange believes that the proposed fee would allow entities that are most likely to take advantage of the proposed service to make an appropriate contribution towards meeting the overall costs of the Exchange’s operations. The Exchange notes that Nasdaq already imposes charges for a service that is similar to the NYSE BBO service. The Exchange anticipates that NYSE Amex and NYSE Arca will soon propose to establish fees for best-bid-and-offer services that are substantially similar to the NYSE BBO Service. Thus, the Exchange’s proposed fees offer any vendor that wishes to provide its customers with a single market’s bestbid-and-offer information (as opposed to a more expensive consolidated quotation information service) an alternative to Nasdaq, NYSE Amex and NYSE Arca. 7 See Securities Exchange Act Release Nos. 34– 22851 (January 31, 1986), 34–28407 (September 10, 1990), 34–49185 (February 4, 2004), and 34–22851 (January 31, 1986). 8 15 U.S.C. 78f(b)(4). 9 15 U.S.C. 78f(b)(5). E:\FR\FM\22APN1.SGM 22APN1 21080 Federal Register / Vol. 75, No. 77 / Thursday, April 22, 2010 / Notices B. Self-Regulatory Organization’s Statement on Burden on Competition The NYSE BBO Service proposes to provide an alternative to existing services that the Participants make available under the CQ Plan. The proposed fees do not alter or rescind any existing fees. In addition, it amounts to a competitive response to the products that Nasdaq, NYSE Amex and NYSE Arca make available or will soon make available. For those reasons, the Exchange does not believe that the proposed rule change will result in 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 discussed this proposed rules change with those entities that the Exchange believes would be the most likely to take advantage of the proposed NYSE BBO Service by becoming NYSE-Only Vendors. While those entities have not submitted formal, written comments on the proposal, the Exchange has incorporated some of their ideas into the proposal and this proposed rule change reflects their input. The Exchange has not received any unsolicited written comments from members or other interested parties. srobinson on DSKHWCL6B1PROD with NOTICES 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 VerDate Nov<24>2008 18:25 Apr 21, 2010 Jkt 220001 • Send an e-mail to rulecomments@sec.gov. Please include File No. SR–NYSE–2010–30 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–2010–30. 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– 2010–30 and should be submitted on or before May 13, 2010. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Florence E. Harmon, Deputy Secretary. [FR Doc. 2010–9274 Filed 4–21–10; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–61913; File No. SR–NYSE– 2010–29] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Implementing an Equity Transaction Fee Schedule for Shares Executed on the NYSE MatchPointSM System April 15, 2010. 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 April 12, 2010, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II and III below, which Items have been prepared by the selfregulatory 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 an equity transaction fee schedule for shares executed on the NYSE MatchPointSM (‘‘NYSE MatchPoint’’ or ‘‘MatchPoint’’) system, effective upon filing with the Securities Exchange Commission (the ‘‘SEC’’ or the ‘‘Commission’’), which will replace the current transaction fee waiver for all MatchPoint executions.4 The proposed transaction fee will include criteria that will permit all users a per share fee reduction for entering specified levels of volume in addition to a scaled fee schedule for shares executed on MatchPoint. The text of the proposed rule change is available at the Exchange, the Commission’s Public Reference Room, and https:// www.nyse.com. 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 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 Currently, MatchPoint charges no transaction fees for MatchPoint executions. See Securities Exchange Act Release No. 61350 (January 14, 2010), 75 FR 3767 (January 22, 2010) (SR–NYSE–2010–01); see also Securities Exchange Act Release No. 61520 (February 16, 2010), 75 FR 8163, (February 23, 2010) (SR–NYSE–2010–06). 2 15 10 17 PO 00000 CFR 200.30–3(a)(12). Frm 00104 Fmt 4703 Sfmt 4703 E:\FR\FM\22APN1.SGM 22APN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 77 (Thursday, April 22, 2010)]
[Notices]
[Pages 21077-21080]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-9274]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61914; File No. SR-NYSE-2010-30]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Establish the NYSE BBO 
Service

April 15, 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 April 1, 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.
---------------------------------------------------------------------------

    \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

    NYSE proposes to establish the NYSE BBO Service, a service that 
will make available the Exchange's best bids and offers and to 
establish fees for that service. 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 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.

[[Page 21078]]

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
    The NYSE BBO Service is a new NYSE-only market data service that 
allows a vendor to redistribute on a real-time basis the same best-bid-
and-offer information that NYSE reports under the CQ Plan for inclusion 
in the CQ Plan's consolidated quotation information data stream (``NYSE 
BBO Information''). NYSE BBO Information would include the best bids 
and offers for all securities that are traded on the Exchange and for 
which NYSE reports quotes under the CQ Plan. NYSE will make the NYSE 
BBO service available over a single datafeed, regardless of the markets 
on which the securities are listed.
    The NYSE BBO Service would allow vendors, broker-dealers, private 
network providers and other entities (``NYSE-Only Vendors'') to make 
available NYSE BBO Information on a real-time basis. NYSE-Only Vendors 
may distribute the NYSE BBO Service to both professional and 
nonprofessional subscribers.
    The Exchange would make NYSE BBO Information available through its 
new NYSE BBO Service no earlier than it makes that information 
available to the processor under the CQ Plan.
b. Fees
    i. Access Fee.
    For the receipt of access to the NYSE BBO datafeed, the Exchange 
proposes to charge $1500 per month. One $1500 monthly access fee 
entitles an NYSE-Only Vendor to receive both the NYSE BBO datafeed as 
well as the Exchange's NYSE Trades datafeed.\3\ The fee applies to 
receipt of NYSE market data within the Vendor's organization or outside 
of it.
---------------------------------------------------------------------------

    \3\ On March 19, 2009, the Commission approved the Exchange's 
NYSE Trades service, a NYSE-only market data service that allows a 
vendor to redistribute on a real-time basis the same last sale 
information that the Exchange reports to the Consolidated Tape 
Association (``CTA'') for inclusion in CTA's consolidated data 
stream and certain other related data elements. See Release No. 34-
59606; 74 FR 13293 (March 26, 2009); File No. SR-NYSE-2009-04.
---------------------------------------------------------------------------

    ii. Professional Subscriber Fees.
    For the receipt and use of NYSE BBO Information, the Exchange 
proposes to charge $15 per month per professional subscriber device.
    In addition, the Exchange proposes to offer an alternative 
methodology to the traditional device fee. Instead of charging $15 per 
month per device, it proposes to offer Vendors the option of paying $15 
per month per ``Subscriber Entitlement''.
    The fee entitles the end-user to receive and use NYSE BBO 
Information relating to all securities traded on NYSE, regardless of 
the market on which a security is listed.
    For the purpose of calculating Subscriber Entitlements, the 
Exchange proposes to adopt the unit-of-count methodology that the 
Commission approved earlier this year for the proposed rule change that 
the New York Stock Exchange, LLC (``NYSE'') submitted in respect of its 
NYSE OpenBook[supreg] service (the ``Unit-of-Count Filing'').\4\
---------------------------------------------------------------------------

    \4\ See Release No. 34-59544; 74 FR 11162 (March 16, 2009); File 
No. SR-NYSE-2008-131.
---------------------------------------------------------------------------

    Under that unit-of-count methodology, the Exchange does not define 
the Vendor-subscriber relationship based on the manner in which a 
datafeed recipient or subscriber receives data (i.e., through 
controlled displays or through data feeds). Instead, the Exchange uses 
more subjective billing criteria. Those criteria define ``Vendors,'' 
``Subscribers,'' ``Subscriber Entitlements'' and ``Subscriber 
Entitlement Controls'' as the basis for setting professional subscriber 
fees. The Exchange believes that these changes more closely align with 
current data consumption and will reduce costs for the Exchange's 
customers.
    iii. Nonprofessional Subscriber Fee.
    The Exchange proposes to charge each NYSE-Only Vendor $5.00 per 
month for each nonprofessional subscriber to whom it provides NYSE BBO 
Information. The Exchange proposes to impose the charge on the NYSE-
Only Vendor, rather than on the nonprofessional Subscriber.
    In addition, the Exchange proposes to establish as an alternative 
to the fixed $5.00 monthly fee a fee of $.005 for each response that a 
NYSE-Only Vendor disseminates to a nonprofessional Subscriber's inquiry 
for a best bid or offer under the NYSE BBO service. The Exchange 
proposes to limit a NYSE-Only Vendor's exposure under this alternative 
fee. It proposes to set at $5.00 per month, the same amount as the 
proposed fixed monthly nonprofessional Subscriber flat fee, as the 
maximum fee that a NYSE-Only Vendor would have to pay in respect of 
each nonprofessional Subscriber for the receipt of the NYSE BBO service 
in any calendar month.
    In order to take advantage of the per-query fee, a NYSE-Only Vendor 
must document in its Exhibit A that it has the ability to measure 
accurately the number of queries from each nonprofessional Subscriber 
and must have the ability to report aggregate query quantities on a 
monthly basis.
    The Exchange will impose the per-query fee only on the 
dissemination of best bids and offers to nonprofessional Subscribers. 
The per-query charge is imposed on NYSE-Only Vendors, not end-users, 
and is payable on a monthly basis. NYSE-Only Vendors may elect to 
disseminate the NYSE BBO service pursuant to the per-query fee rather 
than the fixed monthly fee.
    In establishing a nonprofessional Subscriber fee for the NYSE BBO 
Service, the Exchange proposes to apply the same criteria for 
qualification as a ``nonprofessional subscriber'' as the CTA and CQ 
Plan Participants use. As is true under the CTA and CQ Plans, 
classification as a nonprofessional subscriber is subject to Exchange 
review and requires the subscriber to attest to his or her 
nonprofessional subscriber status. A ``nonprofessional subscriber'' is 
a natural person who uses the data solely for his personal, non-
business use and who is neither:
    A. Registered or qualified with the Securities and Exchange 
Commission, (``SEC''), the Commodities Futures Trading Commission, any 
State securities agency, any securities exchange or association, or any 
commodities or futures contract market or association,
    B. Engaged as an ``investment adviser'' as that term is defined in 
Section 202(a)(11) of the Investment Advisors Act of 1940 (whether or 
not registered or qualified under that act), nor
    C. Employed by a bank or other organization exemption from 
registration under Federal and/or State securities laws to perform 
functions that would require him/her to be so registered or qualified 
if he/she were to perform such function for an organization not so 
exempt.
c. Justification of Fees
    The proposed monthly access fee, professional subscriber fee and 
nonprofessional subscriber fee for the NYSE BBO Service enable NYSE-
Only Vendors and their subscribers to contribute to the Exchange's 
operating costs in a manner that is appropriate for the distribution of 
NYSE BBO Information in the form taken by the proposed services.
    In setting the level of the proposed fees, the Exchange took into 
consideration several factors, including:

[[Page 21079]]

    (i) NYSE's expectation that the NYSE BBO Service is likely to be a 
premium service, taken by investors most concerned with receiving NYSE 
BBO Information on a low latency basis;
    (ii) The fees that the CQ Plan Participants, Nasdaq, NYSE Amex and 
NYSE Arca are charging for similar services (or that NYSE anticipates 
they will soon propose to charge);
    (iii) Consultation with some of the entities that the Exchange 
anticipates will be the most likely to take advantage of the proposed 
service;
    (iv) The contribution of market data revenues that the Exchange 
believes is appropriate for entities that are most likely to take 
advantage of the proposed service;
    (v) The contribution that revenues accruing from the proposed fee 
will make to meet the overall costs of the Exchange's operations;
    (vi) The savings in administrative and reporting costs that the 
NYSE BBO Service will provide to NYSE-Only Vendors (relative to 
counterpart services under the CQ Plan); and
    (vii) The fact that the proposed fees provide alternatives to 
existing fees under the CQ Plan, alternatives that vendors will 
purchase only if they determine that the perceived benefits outweigh 
the cost.
    The Exchange believes that the levels of the fees are consistent 
with the approach set forth in the order by which the Commission 
approved ArcaBook fees for NYSE Arca.\5\ In the ArcaBook Approval 
Order, the Commission stated that ``when possible, reliance on 
competitive forces is the most appropriate and effective means to 
assess whether the terms for the distribution of non-core data are 
equitable, fair and reasonable, and not unreasonably discriminatory.'' 
\6\ It noted that if significant competitive forces apply to a 
proposal, the Commission would approve it unless a substantial 
countervailing basis exists.
---------------------------------------------------------------------------

    \5\ See Release No. 59039 (December 2, 2008), 73 FR 74770 
(December 9, 2008) (SR-NYSEArca-2006-21) (the ``ArcaBook Approval 
Order'').
    \6\ Id. at 74771.
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    NYSE BBO Information constitutes ``non-core data.'' The Exchange 
does not require a central processor to consolidate and distribute the 
product to the public pursuant to joint-SRO plans. Rather, the Exchange 
distributes the product voluntarily.
    In the case of the NYSE BBO Service, both of the two types of 
competitive forces that the Commission described in the ArcaBook 
Approval Order are present: The Exchange has a compelling need to 
attract order flow and the product competes with a number of 
alternative products.
    The Exchange must compete vigorously for order flow to maintain its 
share of trading volume. This requires the Exchange to act reasonably 
in setting market data fees for non-core products such as the NYSE BBO 
Service. The Exchange hopes that the proposed NYSE BBO Service will 
enable vendors to distribute NYSE BBO Information widely among 
investors, and thereby provide a means for promoting the Exchange's 
visibility in the marketplace.
    In addition to the need to attract order flow, the availability of 
alternatives to the NYSE BBO Service significantly constrain the prices 
at which the Exchange can market those services. All national 
securities exchanges, the several Trade Reporting Facilities of FINRA, 
ECNs that produce proprietary data, as well as the core data feed under 
the CQ Plan, are all sources of competition for the NYSE BBO Service. 
Currently:
    (i) The Nasdaq Stock Market offers its best-bid-and-offer 
information under services that would provide an alternative to the 
proposed NYSE service; and
    (ii) The Exchange anticipates that NYSE Amex and NYSE Arca will 
soon propose to provide best-bid-and-offer services that are 
substantially similar to the NYSE BBO Service.
    As a further alternative, investors can receive NYSE BBO 
Information from NYSE OpenBook. The information available in the NYSE 
BBO Service is also included in the calculation of the consolidated 
best-bid-and-offer calculations under the CQ Plan, which comprises a 
core datafeed. Investors may select the NYSE BBO Service as less 
expensive alternatives to the CQ Plan's consolidated data streams for 
certain purposes. (Rule 603(c) of Regulation NMS requires vendors to 
make the consolidated, core datafeeds available to customers when 
trading and order-routing decisions can be implemented.)
d. Administrative Requirements
    The Exchange will require each Vendor to enter into the form of 
``vendor'' agreement into which the CTA and CQ Plans require recipients 
of the Network A datafeeds to enter (the ``Consolidated Vendor Form''). 
That agreement will authorize the Vendor to provide NYSE BBO 
Information to its customers or to distribute the data internally.
    In addition, the Exchange will require each professional end-user 
that receives NYSE BBO Information from a vendor or broker-dealer to 
enter into the form of professional subscriber agreement into which the 
CTA and CQ Plans require end users of Network A data to enter. It will 
also require Vendors to subject nonprofessional subscribers to the same 
contract requirements as the CTA and CQ Plan Participants require of 
Network A nonprofessional subscribers. The Network A Participants 
submitted the Consolidated Vendor Form and the professional subscriber 
form to the Commission for comment and notice.\7\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release Nos. 34-22851 (January 
31, 1986), 34-28407 (September 10, 1990), 34-49185 (February 4, 
2004), and 34-22851 (January 31, 1986).
---------------------------------------------------------------------------

2. Statutory Basis
    The bases under the Securities Exchange Act of 1934 (the ``Act'') 
for the proposed rule change are the requirement under Section 6(b)(4) 
\8\ 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) \9\ 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change would benefit investors by facilitating 
their prompt access to real-time best-bid-and-offer information 
contained in the NYSE BBO Service and by providing a modern methodology 
alternative for counting fee-liable units. In addition, the Exchange 
believes that the proposed fee would allow entities that are most 
likely to take advantage of the proposed service to make an appropriate 
contribution towards meeting the overall costs of the Exchange's 
operations.
    The Exchange notes that Nasdaq already imposes charges for a 
service that is similar to the NYSE BBO service. The Exchange 
anticipates that NYSE Amex and NYSE Arca will soon propose to establish 
fees for best-bid-and-offer services that are substantially similar to 
the NYSE BBO Service. Thus, the Exchange's proposed fees offer any 
vendor that wishes to provide its customers with a single market's 
best-bid-and-offer information (as opposed to a more expensive 
consolidated quotation information service) an alternative to Nasdaq, 
NYSE Amex and NYSE Arca.

[[Page 21080]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The NYSE BBO Service proposes to provide an alternative to existing 
services that the Participants make available under the CQ Plan. The 
proposed fees do not alter or rescind any existing fees. In addition, 
it amounts to a competitive response to the products that Nasdaq, NYSE 
Amex and NYSE Arca make available or will soon make available. For 
those reasons, the Exchange does not believe that the proposed rule 
change will result in 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 discussed this proposed rules change with those 
entities that the Exchange believes would be the most likely to take 
advantage of the proposed NYSE BBO Service by becoming NYSE-Only 
Vendors. While those entities have not submitted formal, written 
comments on the proposal, the Exchange has incorporated some of their 
ideas into the proposal and this proposed rule change reflects their 
input. 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-2010-30 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-2010-30. 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-2010-30 and should be submitted on or before May 
13, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-9274 Filed 4-21-10; 8:45 am]
BILLING CODE 8011-01-P

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