Self-Regulatory Organizations; New York Stock Exchange, LLC; Order Approving Proposed Rule Change To Make Permanent a Unit-of-Count Metric Alternative for NYSE OpenBook Products, 26825-26827 [2010-11258]
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
remedy for this misconduct with the
remedy provided in its by-laws.
NASDAQ is proposing to incorporate all
the changes made by FINRA to its
expedited proceedings rules into the
analogous NASDAQ Rules 9552, 9554,
and 9559.
2. Statutory Basis
NASDAQ believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,5 in
general and with Section 6(b)(5) of the
Act,6 in particular in that it is designed
to prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest. The
proposed changes will conform
NASDAQ’s rules to recent changes
made to corresponding FINRA rules,
which will promote the application of
consistent regulatory standards.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
NASDAQ 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, as amended.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) 7 of the Act and Rule 19b–
4(f)(6) thereunder.8
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
5 15
U.S.C. 78f.
6 15 U.S.C. 78f(b)(5).
7 15 U.S.C. 78s(b)(3)(A).
8 17 CFR 240.19b–4(f)(6).
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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. NASDAQ has
provided the Commission written notice
of its intent to file the proposed rule
change, along with a brief description
and text of the proposed rule change, at
least five business days prior to the date
of filing of the proposed rule change.
NASDAQ believes that the proposed
rule change does not significantly affect
the protection of investors or the public
interest because it merely eliminates
erroneous citations that, if left in the
rule text, would cause investor
confusion.9
NASDAQ asks that the Commission
waive the 30-day pre-operative waiting
period contained in Exchange Act Rule
19b–4(f)(6)(iii).10 NASDAQ requests this
waiver so that these corrections can be
both immediately effective and
operative, thus minimizing any
confusion that may be caused by the
differing rule sets.
The Commission acknowledges that
the proposal presents no novel issues,
and that it will provide a benefit to
market participants by aligning
Nasdaq’s rules with those of FINRA. For
these reasons, the Commission believes
it is consistent with the protection of
investors and the public interest to
waive the 30-day operative delay, and
hereby grants such waiver.11
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
Number SR–NASDAQ–2010–057 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
9 The Commission believes that this statement is
incorrect. The proposed rule change does not
simply eliminate erroneous citations; instead, the
proposed rule change makes specific changes to
align Nasdaq’s rules with that of FINRA.
10 17 CFR 240.19b–4(f)(6)(iii).
11 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule change’s impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
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26825
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2010–057. 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. Copies of the 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–
NASDAQ–2010–057 and should be
submitted on or before June 2, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–11255 Filed 5–11–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62038; File No. SR–NYSE–
2010–22]
Self-Regulatory Organizations; New
York Stock Exchange, LLC; Order
Approving Proposed Rule Change To
Make Permanent a Unit-of-Count
Metric Alternative for NYSE OpenBook
Products
May 5, 2010.
I. Introduction
On March 11, 2010, the New York
Stock Exchange, LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
12 17
E:\FR\FM\12MYN1.SGM
CFR 200.30–3(a)(12).
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26826
Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
make the unit-of-count metric a
permanent alternative to the traditional
device fee. The proposed rule change
was published for comment in the
Federal Register on April 1, 2010.3 The
Commission received one comment
letter on the proposal.4 This order
approves the proposed rule change.
II. Description of the Proposal
A. Unit-of-Count
The Exchange proposes to
permanently implement the ‘‘Subscriber
Entitlement’’ unit-of-count methodology
in accordance with the terms set forth
in the Pilot Program.5 Under the Pilot
Program, instead of defining the
Vendor-subscriber relationship based on
how the Data Feed Recipient or
subscriber receives data (i.e., through
controlled displays or through data
feeds), the Exchange proposed to adopt
a more objective billing criteria. The
following basic principles underlie this
proposal.
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 permitting a Subscriber to
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 61779
(March 25, 2010), 75 FR 16537 (‘‘Notice’’).
4 Letter to Elizabeth M. Murphy, Secretary,
Commission, from Melissa MacGregor, Managing
Director and Associate General Counsel, SIFMA,
dated May 5, 2010.
5 See Securities Exchange Act Release No. 59544
(March 9, 2009), 74 FR 11162 (March 16, 2009) (SR–
NYSE–2008–131) (approving the one-year pilot
program that revises the unit-of-count methodology
to determine the device fees payable by data
recipients (‘‘Pilot Program’’)). The Commission
subsequently approved an extension of the Pilot
Program. See Securities Exchange Act Release No.
61780 (March 25, 2010), 75 FR 16535 (April 1,
2010) (SR–NYSE–2010–21).
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
2 17
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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 permitting
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 proposal does not restrict how
Vendors use NYSE OpenBook data in
their display services. In fact, the
Exchange believes that proposal could
encourage Vendors to create and
promote innovative uses of NYSE
OpenBook information. For instance, a
Vendor may use NYSE OpenBook data
to create derived information displays,
such as displays that aggregate NYSE
OpenBook data with data from other
markets.6 In addition, the proposal’s
unit-of-count concepts would apply
equally to all data recipients and users.
Under the proposed rule change, the
Exchange would require Vendors to
6 In the case of derived displays, the Vendor is
required to: (1) Pay the Exchange’s device fees
(described below); (2) include derived displays in
its reports of NYSE OpenBook usage; and (3) 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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Sfmt 4703
count every Subscriber Entitlement,
whether it be an individual person or a
device. Thus, the Vendor’s count would
include every person and device that
accesses the data regardless of the
purpose for which the individual or
device uses the data. The proposal is
designed to subject the count to a more
objective process and simplify the
reporting obligation for Vendors by
eliminating current exceptions to the
device-reporting obligation. For
instance, the Exchange noted that
Vendors were not previously required to
report certain programmers and other
individuals who receive access to data
for certain specific, non-trading
purposes but that these exceptions
required the Exchange to monitor the
manner end-users consume data, which
adds cost for both the Exchange and
customers.
To simplify the process, the Exchange
proposes that Vendors would be
required to report all entitlements in
accordance with the following:
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
E:\FR\FM\12MYN1.SGM
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Federal Register / Vol. 75, No. 91 / Wednesday, May 12, 2010 / Notices
device, the Vendor should include only
the entitled individuals, and not the
device, in the count.
III. Discussion
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.7 In
particular, it is consistent with Section
6(b)(4) of the Act,8 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,9 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,10 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,11 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.12
The Exchange proposes to
permanently implement the Subscriber
Entitlement unit-of-count methodology
in accordance with the terms set forth
in the Pilot Program. According to the
Exchange, the proposed rule change
WReier-Aviles on DSKGBLS3C1PROD with NOTICES
7 In
approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
8 15 U.S.C. 78f(b)(4).
9 15 U.S.C. 78f(b)(5).
10 15 U.S.C. 78f(b)(8).
11 17 CFR 242.603(a).
12 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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15:00 May 11, 2010
Jkt 220001
would simplify the way it charges for
NYSE OpenBook by changing the
methodology for the unit-of-count, and
this change should reduce the fees and
administrative costs related to the
receipt and distribution of NYSE
OpenBook packages. The Exchange has
indicated that its experience with the
Pilot Program has been successful. The
Commission has reviewed the proposal
using the approach set forth in the
NYSE Arca Order for non-core market
data fees.13 The Commission has
previously found that NYSE was subject
to significant competitive forces in
setting fees for its depth-of-book order
data in the proposed rule changes that
established and extended the Pilot
Program’s revised unit-of-count
methodology.14 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.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,15 that the
proposed rule change (SR–NYSE–2010–
22) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–11258 Filed 5–11–10; 8:45 am]
BILLING CODE 8010–01–P
13 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.
14 See note 5, supra.
15 15 U.S.C. 78s(b)(2).
16 17 CFR 200.30–3(a)(12).
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26827
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62037; File No. 4–595]
Self-Regulatory Organizations; Order
Approving Minor Rule Violation Plan
for EDGA Exchange, Inc.
May 5, 2010.
On March 19, 2010, EDGA Exchange,
Inc. (‘‘EDGA Exchange’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) a proposed minor rule
violation plan (‘‘MRVP’’) pursuant to
Section 19(d)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’)1 and Rule
19d–1(c)(2) thereunder.2 The proposed
MRVP was published for public
comment on March 29, 2010.3 The
Commission received no comments on
the proposal. This order approves EDGA
Exchange’s proposed MRVP.
EDGA Exchange’s MRVP specifies
those uncontested minor rule violations
with sanctions not exceeding $2,500
which would not be subject to the
provisions of Rule 19d–1(c)(1) under the
Act4 requiring that a self-regulatory
organization promptly file notice with
the Commission of any final
disciplinary action taken with respect to
any person or organization.5 In
accordance with Rule 19d–1(c)(2), the
Exchange proposed to designate certain
rule violations as minor rule violations,
and requested that it be relieved of the
reporting requirements regarding such
violations, provided it gives notice of
such violations to the Commission on a
quarterly basis. EDGA Exchange
included in its proposed MRVP the
policies and procedures currently
included in EDGA Exchange Rule 8.15
(‘‘Imposition of Fines for Minor
Violation(s) of Rules’’) and the rule
violations included in EDGA Exchange
Rule 8.15.01.6
1 15
U.S.C. 78s(d)(1).
CFR 240.19d–1(c)(2).
3 See Securities Exchange Act Release No. 61753
(March 22, 2010), 75 FR 15471.
4 17 CFR 240.19d–1(c)(1).
5 The Commission adopted amendments to
paragraph (c) of Rule 19d–1 to allow self-regulatory
organizations (‘‘SROs’’) to submit for Commission
approval plans for the abbreviated reporting of
minor disciplinary infractions. See Securities
Exchange Act Release No. 21013 (June 1, 1984), 49
FR 23828 (June 8, 1984). Any disciplinary action
taken by an SRO against any person for violation
of a rule of the SRO which has been designated as
a minor rule violation pursuant to such a plan shall
not be considered ‘‘final’’ for purposes of Section
19(d)(1) of the Act if the sanction imposed consists
of a fine not exceeding $2,500 and the sanctioned
person has not sought an adjudication, including a
hearing, or otherwise exhausted his or her
administrative remedies.
6 On March 12, 2010, the Commission approved
EDGA Exchange’s application for registration as a
2 17
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Continued
12MYN1
]]>Agencies
[Federal Register Volume 75, Number 91 (Wednesday, May 12, 2010)]
[Notices]
[Pages 26825-26827]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-11258]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62038; File No. SR-NYSE-2010-22]
Self-Regulatory Organizations; New York Stock Exchange, LLC;
Order Approving Proposed Rule Change To Make Permanent a Unit-of-Count
Metric Alternative for NYSE OpenBook Products
May 5, 2010.
I. Introduction
On March 11, 2010, the New York Stock Exchange, LLC (``NYSE'' or
the ``Exchange'') filed with the Securities
[[Page 26826]]
and Exchange Commission (``Commission''), pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to make the unit-of-count metric
a permanent alternative to the traditional device fee. The proposed
rule change was published for comment in the Federal Register on April
1, 2010.\3\ The Commission received one comment letter on the
proposal.\4\ This order approves the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 61779 (March 25,
2010), 75 FR 16537 (``Notice'').
\4\ Letter to Elizabeth M. Murphy, Secretary, Commission, from
Melissa MacGregor, Managing Director and Associate General Counsel,
SIFMA, dated May 5, 2010.
---------------------------------------------------------------------------
II. Description of the Proposal
A. Unit-of-Count
The Exchange proposes to permanently implement the ``Subscriber
Entitlement'' unit-of-count methodology in accordance with the terms
set forth in the Pilot Program.\5\ Under the Pilot Program, instead of
defining the Vendor-subscriber relationship based on how the Data Feed
Recipient or subscriber receives data (i.e., through controlled
displays or through data feeds), the Exchange proposed to adopt a more
objective billing criteria. The following basic principles underlie
this proposal.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 59544 (March 9,
2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) (approving
the one-year pilot program that revises the unit-of-count
methodology to determine the device fees payable by data recipients
(``Pilot Program'')). The Commission subsequently approved an
extension of the Pilot Program. See Securities Exchange Act Release
No. 61780 (March 25, 2010), 75 FR 16535 (April 1, 2010) (SR-NYSE-
2010-21).
---------------------------------------------------------------------------
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 permitting 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 permitting 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 proposal does not restrict how Vendors use NYSE OpenBook data
in their display services. In fact, the Exchange believes that proposal
could encourage Vendors to create and promote innovative uses of NYSE
OpenBook information. For instance, a Vendor may use NYSE OpenBook data
to create derived information displays, such as displays that aggregate
NYSE OpenBook data with data from other markets.\6\ In addition, the
proposal's unit-of-count concepts would apply equally to all data
recipients and users.
---------------------------------------------------------------------------
\6\ In the case of derived displays, the Vendor is required to:
(1) Pay the Exchange's device fees (described below); (2) include
derived displays in its reports of NYSE OpenBook usage; and (3) 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.
---------------------------------------------------------------------------
Under the proposed rule change, the Exchange would require Vendors
to count every Subscriber Entitlement, whether it be an individual
person or a device. Thus, the Vendor's count would include every person
and device that accesses the data regardless of the purpose for which
the individual or device uses the data. The proposal is designed to
subject the count to a more objective process and simplify the
reporting obligation for Vendors by eliminating current exceptions to
the device-reporting obligation. For instance, the Exchange noted that
Vendors were not previously required to report certain programmers and
other individuals who receive access to data for certain specific, non-
trading purposes but that these exceptions required the Exchange to
monitor the manner end-users consume data, which adds cost for both the
Exchange and customers.
To simplify the process, the Exchange proposes that Vendors would
be required to report all entitlements in accordance with the
following:
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
[[Page 26827]]
device, the Vendor should include only the entitled individuals, and
not the device, in the count.
III. Discussion
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.\7\ In particular, it is consistent with Section 6(b)(4) of
the Act,\8\ 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,\9\ 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.
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\7\ In approving this proposed rule change, the Commission notes
that it has considered the proposed rule's impact on efficiency,
competition, and capital formation. 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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The Commission also finds that the proposed rule change is
consistent with the provisions of Section 6(b)(8) of the Act,\10\ 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,\11\ 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.\12\
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\10\ 15 U.S.C. 78f(b)(8).
\11\ 17 CFR 242.603(a).
\12\ NYSE is an exclusive processor of NYSE depth-of-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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The Exchange proposes to permanently implement the Subscriber
Entitlement unit-of-count methodology in accordance with the terms set
forth in the Pilot Program. According to the Exchange, the proposed
rule change would simplify the way it charges for NYSE OpenBook by
changing the methodology for the unit-of-count, and this change should
reduce the fees and administrative costs related to the receipt and
distribution of NYSE OpenBook packages. The Exchange has indicated that
its experience with the Pilot Program has been successful. The
Commission has reviewed the proposal using the approach set forth in
the NYSE Arca Order for non-core market data fees.\13\ The Commission
has previously found that NYSE was subject to significant competitive
forces in setting fees for its depth-of-book order data in the proposed
rule changes that established and extended the Pilot Program's revised
unit-of-count methodology.\14\ 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.
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\13\ 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.
\14\ See note 5, supra.
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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.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\15\ that the proposed rule change (SR-NYSE-2010-22) be, and hereby
is, approved.
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\15\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-11258 Filed 5-11-10; 8:45 am]
BILLING CODE 8010-01-P
