Self-Regulatory Organizations; NYSE Amex LLC; Order Approving Proposed Rule Change To Establish NYSE Amex Trades and NYSE Amex BBO Services and Related Fees, 31500-31505 [2010-13335]
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organized into tables with no changes to
the text. The remainder of the fees in
this section are rearranged in order to
present the fees by topic. The endnotes
were transplanted and words were
added to indicate which fee the note
references within the Fee Schedule. The
Examinations Fee and FINRA fees
remain the same.
Market Access Provider Subsidy,
Options Floor Broker Subsidy, Routing
Fees, Proprietary Data Feed Fees,
NASDAQ OMX PSX
The Exchange did not amend the
following sections of the Fee Schedule:
Market Access Provider Subsidy,
Options Floor Broker Subsidy, Routing
Fees, Proprietary Data Feed Fees and
NASDAQ OMX PSX. As previously
stated the Exchange eliminated the
endnotes section and incorporated those
endnotes into the Fee Schedule instead
by transplanting them into the
corresponding pages of the Fee
Schedule. In addition, the Exchange
also proposes to amend language in
endnote 55 which refers to the monthly
charges for the fees for Trading Floor
Personnel Registration Fee and the Fees
for Certain Stock Exchange Clerks by
removing the dollar amounts from that
text.
These proposed changes, as
previously mentioned, are nonsubstantive amendments and are added
for the sole purpose of creating a
simplified, easily readable format for
displaying the various fees.
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2. Statutory Basis
The Exchange believes that its
proposal to amend its Fee Schedule is
consistent with Section 6(b) of the Act 5
in general, and furthers the objectives of
Section 6(b)(4) of the Act 6 in particular,
in that it is an equitable allocation of
reasonable fees and other charges among
Exchange members. The Exchange
believes that this proposal is both
reasonable and equitable because
providing the members with a more
user-friendly Fee Schedule will better
display the allocation of fees among
Exchange members. The Exchange
believes that this proposed format will
provide additional transparency of
Exchange fees.
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 not
necessary or appropriate in furtherance
of the purposes of the Act.
5 15
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were either
solicited or received.
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 7 and paragraph (f)(3) of Rule
19b–4 8 thereunder. At any time within
60 days of the filing of the 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.
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–Phlx–2010–77 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–Phlx–2010–77. 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
7 15
8 17
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(3).
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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
publicly available. All submissions
should refer to File Number SR–Phlx–
2010–77 and should be submitted on or
before June 24, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–13337 Filed 6–2–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62187; File No. SR–
NYSEAmex–2010–35]
Self-Regulatory Organizations; NYSE
Amex LLC; Order Approving Proposed
Rule Change To Establish NYSE Amex
Trades and NYSE Amex BBO Services
and Related Fees
May 27, 2010.
I. Introduction
On April 1, 2010, the NYSE Amex
LLC (‘‘NYSE Amex’’ or the ‘‘Exchange’’)
filed with the Securities 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 establish two NYSE Amex
market data products, NYSE Amex
Trades and NYSE Amex BBO and to
establish market data fees for the same.
The proposed rule change was
published for comment in the Federal
Register on April 22, 2010.3 The
Commission received no comment
letters on the proposal. This order
approves the proposed rule change.
9 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 61936
(April 16, 2010), 75 FR 21088.
1 15
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II. Description of the Proposal
a. Services
The NYSE Amex Trades service is a
NYSE Amex-only market data service
that allows a vendor to redistribute on
a real-time basis the same last sale
information that NYSE Amex reports
under the CTA Plan and the Reporting
Plan for Nasdaq/National Market
System Securities Traded on an
Exchange on an Unlisted or Listed Basis
(the ‘‘Nasdaq/UTP Plan’’) for inclusion
in those Plans’ consolidated data
streams and certain other related data
elements (‘‘NYSE Amex Last Sale
Information’’). NYSE Amex Last Sale
Information would include last sale
information for all securities that are
traded on the Exchange and for which
NYSE Amex reports quotes under the
CTA Plan or the Nasdaq/UTP Plan. In
addition, NYSE Amex Last Sale
Information will also include a unique
sequence number to each trade that
allows an investor to track the context
of the trade through other Exchange
market data products such as NYSE
Amex OpenBook®. The Exchange will
make NYSE Amex Trades available over
a single datafeed, regardless of the
markets on which the securities are
listed.
NYSE Amex BBO is a NYSE Amexonly market data service that allows a
vendor to redistribute on a real-time
basis the same best-bid-and-offer
information that NYSE Amex reports
under the CQ Plan and the Nasdaq/UTP
Plan for inclusion in the NYSE Amex
BBO Information. NYSE Amex BBO
Information would include the best bids
and offers for all securities that are
traded on the Exchange and for which
NYSE Amex reports quotes under the
CQ Plan or the Nasdaq/UTP Plan. The
Exchange will make NYSE Amex BBO
available over a single datafeed,
regardless of the markets on which the
securities are listed.
Both NYSE Amex Trades and NYSE
Amex BBO (collectively, ‘‘NYSE Amex
Market Data’’) would allow vendors,
broker-dealers, private network
providers and other entities (‘‘NYSE
Amex-Only Vendors’’) to make NYSE
Amex Last Sale Information and NYSE
Amex BBO Information available on a
real-time basis. NYSE Amex-Only
Vendors may distribute the NYSE Amex
Trade and NYSE BBO to both
professional and nonprofessional
subscribers.
The Exchange would make NYSE
Amex Last Sale Information available
through NYSE Amex Trades no earlier
than it provides last sale information to
the processors under the CTA Plan and
Nasdaq/UTP Plan, as appropriate. The
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Exchange would make NYSE Amex
BBO Information available through
NYSE Amex BBO no earlier than it
makes that information available to the
processors under the CQ Plan and the
Nasdaq/UTP Plan.
b. Fees
i. Access Fee
For the receipt of access to the NYSE
Amex Trades and NYSE Amex BBO, the
Exchange proposes to charge $750 per
month. One $750 monthly access fee
entitles an NYSE Amex-Only Vendor to
receive NYSE Amex Trades and NYSE
Amex BBO. The fee applies to receipt of
NYSE Amex Market Data within the
NYSE Amex-Only Vendor’s
organization or outside of it.
ii. Professional Subscriber Fees
For the receipt and use of NYSE
Amex Trades, the Exchange proposes to
charge $10 per month per professional
subscriber device. Similarly, for the
receipt and use of NYSE Amex BBO, the
Exchange proposes to charge $10 per
month per professional subscriber
device.
For both NYSE Amex Trades and
NYSE Amex BBO, the Exchange
proposes to offer an alternative
methodology to the traditional device
fee. Instead of charging $10 per month
per device, it proposes to offer NYSE
Amex-Only Vendors the option of
paying $10 per month per ‘‘Subscriber
Entitlement.’’ The fee entitles the enduser to receive and use NYSE Amex
Market Data relating to all securities
traded on NYSE Amex, regardless of the
market on which a security is listed. For
the purpose of calculating Subscriber
Entitlements, the Exchange proposes to
adopt a unit-of-count methodology that
is the same as that approved by the
Commission earlier this year with
respect to its NYSE OpenBook®
service.4
Under a unit-of-count methodology,
the Exchange would 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 billing criteria that
defines ‘‘Vendors,’’ ‘‘Subscribers,’’
‘‘Subscriber Entitlements’’ and
‘‘Subscriber Entitlement Controls’’ as the
basis for setting professional subscriber
fees. The Exchange believes that this
methodology more closely aligns with
current data consumption and will
4 See Securities Exchange Act Release No. 62038
(May 5, 2010), 75 FR 26825 (May 12, 2010) (SR–
NYSE–2010–22) (approving on a permanent basis
the alternative unit-of-count methodology).
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reduce costs for the Exchange’s
customers.
The following basic principles
underlie this proposal.
A. Vendors
• ‘‘Vendors’’ are market data vendors,
broker-dealers, private network
providers and other entities that control
Subscribers’ access to data through
Subscriber Entitlement Controls.
B. Subscribers
• ‘‘Subscribers’’ are unique individual
persons or devices to which a Vendor
provides data. Any person or device that
receives data from a Vendor is a
Subscriber, whether the person 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.
C. 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.
D. 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:
1. Each entitlement update to the
Subscriber Entitlement Control;
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2. The status of the Subscriber
Entitlement Control; and
3. Any other changes to the
Subscriber Entitlement Control over a
given period.
• Only the Vendor may have access to
Subscriber Entitlement Controls.
Subject to the rules described below,
the Exchange will require NYSE AmexOnly Vendors to count every Subscriber
Entitlement, whether it be a person or
a device. This means that the NYSE
Amex-Only Vendor must include in the
count every person and device that has
access to the data, regardless of the
purposes for which the person or device
uses the data. The Exchange will require
NYSE Amex-Only Vendors to report and
count all entitlements in accordance
with the following rules.
A. The count shall be separate for the
NYSE Amex Trades and NYSE Amex
BBO services. This means that a device
that is entitled to receive both NYSE
Amex Last Sale Information and NYSE
Amex BBO Information would count as
a Subscriber Entitlement for the
purposes of the NYSE Amex Trades
service and as a separate Subscriber
Entitlement for the purposes of the
NYSE Amex BBO service.
B. In connection with a Vendor’s
external distribution of either NYSE
Amex Trades or NYSE Amex BBO), the
NYSE Amex-Only Vendor should count
as one Subscriber Entitlement each
unique Subscriber that the NYSE AmexOnly Vendor has entitled to have access
to that type of market data. However,
where a device is dedicated specifically
to a single person, the NYSE Amex-Only
Vendor should count only the person
and need not count the device.
C. In connection with a NYSE AmexOnly Vendor’s internal distribution of a
type of NYSE Amex Market Data, the
NYSE Amex-Only Vendor should count
as one Subscriber Entitlement each
unique person (but not devices) that the
Vendor has entitled to have access to
that type of market data.
D. The NYSE Amex-Only Vendor
should identify and report each unique
Subscriber. If a Subscriber uses the same
unique Subscriber Entitlement to
receive multiple services, the NYSE
Amex-Only Vendor should count that as
one Subscriber Entitlement. However, if
a unique Subscriber uses multiple
Subscriber Entitlements to gain access
to one or more services (e.g., a single
Subscriber has multiple passwords and
user identifications), the Vendor should
report all of those Subscriber
Entitlements.
E. The NYSE Amex-Only Vendor
should report each Subscriber device
serving multiple users individually as
well as each person who may access the
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device. As an example, for a single
device to which the NYSE Amex-Only
Vendor has granted two people access,
the Vendor should report three
Subscriber Entitlements. Only a single,
unique device that is dedicated to a
single, unique person may be counted as
one Subscriber Entitlement.
F. NYSE Amex-Only Vendors should
report each unique person who receives
access through multiple devices as one
Subscriber Entitlement so long as each
device is dedicated specifically to that
person.
G. The NYSE Amex-Only Vendor
should include in the count as one
Subscriber Entitlement devices serving
no users.
For example, if a Subscriber’s device
has no users or multiple users, the
NYSE Amex-Only Vendor should count
that device as one Subscriber
Entitlement. If a NYSE Amex-Only
Vendor entitles five individuals to use
one of a Subscriber’s devices, the
Vendor should count five individual
entitlements and one device
entitlement, for a total of six Subscriber
Entitlements. If a NYSE Amex-Only
Vendor entitles an individual to receive
a type of NYSE Amex Market Data over
a Subscriber device that is dedicated to
that individual, the Vendor should
count that as one Subscriber
Entitlement, not two.
iii. No Program Classification Fee
The Exchange does not propose to
impose any program classification
charges for the use of NYSE Amex Last
Sale Information or NYSE Amex BBO
information. The Exchange recognizes
that each NYSE Amex-Only Vendor and
Subscriber will use NYSE Amex Market
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
Exchange’s proposed unit-of-count
methodology does not restrict how
NYSE Amex-Only Vendors may use
NYSE Amex Market Data in their
display services and encourages
Vendors to create and promote
innovative uses of NYSE Amex Market
Data. For instance, a NYSE Amex-Only
Vendor may use NYSE Amex BBO
information to create derived
information displays, such as displays
that aggregate NYSE Amex BBO
information with quotation information
from other markets.5
5 In the case of derived displays, the Vendor is
required to: (i) Pay the Exchange’s device fees; (ii)
include derived displays in its reports of NYSE
Amex Market Data usage; and (iii) use reasonable
efforts to assure that any person viewing a display
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iv. Nonprofessional Subscriber Fee
The Exchange proposes to charge each
NYSE Amex-Only Vendor $5.00 per
month for each nonprofessional
subscriber to whom it provides NYSE
Amex BBO Information. The Exchange
proposes to impose the charge on the
NYSE Amex-Only Vendor, rather than
on the nonprofessional Subscriber.6 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 Amex-Only
Vendor disseminates to a
nonprofessional Subscriber’s inquiry for
a best bid or offer under NYSE Amex
BBO. The Exchange proposes to limit a
NYSE Amex-Only Vendor’s exposure
under this alternative fee to $5.00 per
month, the same amount as the
proposed fixed monthly
nonprofessional Subscriber flat fee. In
order to take advantage of the per-query
fee, a NYSE Amex-Only Vendor must
document in its Exhibit A that it can: (1)
Accurately measure the number of
queries from each nonprofessional
Subscriber and (2) 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 Amex-Only Vendors,
not end-users, and is payable on a
monthly basis. NYSE Amex-Only
Vendors may elect to disseminate NYSE
Amex BBO pursuant to the per-query
fee rather than the fixed monthly fee.
In establishing a nonprofessional
Subscriber fee for NYSE Amex BBO, the
Exchange proposes to apply the same
criteria for qualification as a
‘‘nonprofessional subscriber’’ as the CTA
and CQ Plan Participants use. Similar to
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,
the Commodities Futures Trading
Commission, any State securities
agency, any securities exchange or
of derived data understands what the display
represents and the manner in which it was derived.
6 The Exchange stated that it did not propose to
establish a nonprofessional subscriber fee for NYSE
Amex Last Sale Information because an alternative
to that product is available. See Securities Exchange
Act Release No. 61403 (January 22, 2010), 75 FR
4598 (January 28, 2010) (SR–NYSEAmex–2009–85)
(approving the NYSE Amex Realtime Reference
Prices service).
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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.
The Exchange believes that the
proposed monthly access fee,
professional subscriber fee and
nonprofessional subscriber fee for NYSE
Amex Trades and NYSE Amex BBO
enable NYSE Amex-Only Vendors and
their subscribers to contribute to the
Exchange’s operating costs in a manner
that is appropriate for the distribution of
NYSE Amex Market Data in the form
taken by the proposed services.
In setting the level of the proposed
fees, the Exchange considered several
factors, including:
(i) NYSE Amex’s expectation that
NYSE Amex Trades and NYSE Amex
BBO are likely to be premium services,
used by investors most concerned with
receiving NYSE Amex Market Data on a
low latency basis;
(ii) The fees that the CTA and CQ Plan
Participants, the Nasdaq/UTP Plan
Participants, Nasdaq, NYSE and NYSE
Arca are charging for similar services (or
that NYSE Amex 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 Amex
Trades and NYSE Amex BBO will
provide to NYSE Amex-Only Vendors
(relative to counterpart services under
the CTA, CQ and Nasdaq/UTP Plans);
and
(vii) The fact that the proposed fees
provide alternatives to existing fees
under the CTA, CQ and Nasdaq/UTP
Plans, alternatives that vendors will
purchase only if they determine that the
perceived benefits outweigh the cost.
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d. Administrative Requirements
The Exchange will require each NYSE
Amex-Only Vendor to enter into a
vendor agreement just as the CTA and
CQ Plans require recipients of the
Network A datafeeds to enter (the
‘‘Consolidated Vendor Form’’). The
agreement will authorize the NYSE
Amex-Only Vendor to provide its NYSE
Amex Market Data service to its
customers or to distribute the data
internally.
In addition, the Exchange will require
each professional end-user that receives
NYSE Amex Market Data 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 NYSE AmexOnly Vendors to subject
nonprofessional subscribers to the same
contract requirements as the CTA and
CQ Plan Participants require of Network
A nonprofessional subscribers.
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
7 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 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).
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31503
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 Commission has reviewed the
proposal using the approach set forth in
the NYSE Arca Order for non-core
market data fees.13 In the NYSE Arca
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.’’ 14 It noted that the
‘‘existence of significant competition
provides a substantial basis for finding
that the terms of an exchange’s fee
proposal are equitable, fair, reasonable,
and not unreasonably or unfairly
discriminatory.’’ 15 If an exchange ‘‘was
subject to significant competitive forces
in setting the terms of a proposal,’’ the
Commission will approve a proposal
unless it determines that ‘‘there is a
substantial countervailing basis to find
that the terms nevertheless fail to meet
an applicable requirement of the
Exchange Act or the rules
thereunder.’’ 16
As noted in the NYSE Arca Order, the
standards in Section 6 of the Act and
Rule 603 of Regulation NMS do not
differentiate between types of data and
therefore apply to exchange proposals to
distribute both core data and non-core
data. Core data is the best-priced
quotations and comprehensive last-sale
reports of all markets that the
Commission, pursuant to Rule 603(b),
requires a central processor to
consolidate and distribute to the public
11 17
CFR 242.603(a).
Amex is an exclusive processor of NYSE
Amex Trades and NYSE Amex BBO services 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.
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 Id. at 74771.
15 Id. at 74782.
16 Id. at 74781.
12 NYSE
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pursuant to joint-SRO plans.17 In
contrast, individual exchanges and
other market participants distribute
non-core data voluntarily.18 The
mandatory nature of the core data
disclosure regime leaves little room for
competitive forces to determine
products and fees.19 Non-core data
products and their fees are, by contrast,
much more sensitive to competitive
forces. The Commission therefore is able
to use competitive forces in its
determination of whether an exchange’s
proposal to distribute non-core data
meets the standards of Section 6 and
Rule 603.20 Because NYSE Amex’s
instant proposal relates to the
distribution of non-core data, the
Commission will apply the marketbased approach set forth in the NYSE
Arca Order.
The Exchange proposes to establish:
(i) A service that would allow a vendor
to redistribute last sale information for
which NYSE Amex reports under the
CTA Plan and the Nasdaq/UTP Plan;
and (ii) a service that would allow a
vendor to redistribute best bids and
offers for all securities that are traded on
the Exchange and for which NYSE
Amex reports quotes under the CQ Plan.
The Exchange proposes to establish a
monthly vendor fee and an alternative
fee rate that uses the unit-of-count
methodology.
The proposal before the Commission
relates to fees for NYSE Amex Trades
and NYSE Amex BBO which are noncore, market data products. As in the
Commission’s NYSE Arca Order
analysis, at least two broad types of
significant competitive forces applied to
NYSE Amex in setting the terms of this
proposal: (i) NYSE Amex’s compelling
need to attract order flow from market
participants; and (ii) the availability to
market participants of alternatives to
purchasing NYSE Amex Market Data.
Attracting order flow is the core
competitive concern of any equity
exchange, including NYSE Amex.
Attracting order flow is an essential part
of NYSE Amex’s competitive success. If
NYSE Amex cannot attract order flow to
its market, it will not be able to execute
transactions. If NYSE Amex cannot
execute transactions on its market, it
will not generate transaction revenue. If
NYSE Amex cannot attract orders or
execute transactions on its market, it
will not have market data to distribute,
for a fee or otherwise, and will not earn
market data revenue and thus not be
competitive with other exchanges that
have this ability. Table 1 below provides
a useful recent snapshot of the state of
competition in the U.S. equity markets
in the month of September 2009: 21
TABLE 1—TRADING CENTERS AND ESTIMATED % OF SHAREVOLUME IN NMS STOCKS SEPTEMBER 2009
Share
volume in
NMS stocks
(Percent)
Trading venue
Registered Exchanges:
NASDAQ .................................................................................................................................................................
NYSE .......................................................................................................................................................................
NYSE Arca ..............................................................................................................................................................
BATS .......................................................................................................................................................................
NASDAQ OMX BX ..................................................................................................................................................
Other Registered Exchanges ..................................................................................................................................
ECNs ..................... 5 ECNS ...................................................................................................................................................................
Dark Pools ............ 32 Dark Pools (Estimated) ......................................................................................................................................
Broker-Dealer ........ 200+ Broker-Dealers (Estimated) ...........................................................................................................................
Internalization.
19.4
14.7
13.2
9.5
3.3
3.7
10.8
7.9
17.5
sroberts on DSKD5P82C1PROD with NOTICES
The market share percentages in Table
1 strongly indicate that NYSE Amex
must compete vigorously for order flow
to maintain its share of trading volume.
This compelling need to attract order
flow imposes significant pressure on
NYSE Amex to act reasonably in setting
its fees for NYSE Amex market data,
particularly given that the market
participants that must pay such fees
often will be the same market
participants from whom NYSE Amex
must attract order flow. These market
participants particularly include the
large broker-dealer firms that control the
handling of a large volume of customer
and proprietary order flow. Given the
portability of order flow from one
trading venue to another, any exchange
that seeks to charge unreasonably high
data fees would risk alienating many of
the same customers on whose orders it
depends for competitive survival.22
In addition to the need to attract order
flow, the availability of alternatives to
NYSE Amex Market Data significantly
affect the terms on which NYSE Amex
can distribute this market data.23 In
setting the fees for NYSE Amex Market
Data, NYSE Amex must consider the
extent to which market participants
would choose one or more alternatives
instead of purchasing the exchange’s
data.24 Of course, the most basic source
of information generally available at an
17 See 17 CFR 242.603(b). (‘‘Every national
securities exchange on which an NMS stock is
traded and national securities association shall act
jointly pursuant to one or more effective national
market system plans to disseminate consolidated
information, including a national best bid and
national best offer, on quotations for and
transactions in NMS stocks. Such plan or plans
shall provide for the dissemination of all
consolidated information for an individual NMS
stock through a single plan processor.’’)
18 See NYSE Arca Order at 74779.
19 Id.
20 Id.
21 The Commission recently published estimated
trading percentages in NMS Stocks in its Concept
Release on Equity Market Structure. See Securities
Exchange Act Release No. 61358 (January 14, 2010),
75 FR 3594, 3597 n. 21 (January 21, 2010) (File No.
S7–02–10).
22 See NYSE Arca Order at 74783.
23 See Richard Posner, Economic Analysis of Law
§ 9.1 (5th ed. 1998) (discussing the theory of
monopolies and pricing). See also U.S. Dep’t of
Justice & Fed’l Trade Comm’n, Horizontal Merger
Guidelines § 1.11 (1992), as revised (1997)
(explaining the importance of alternatives to the
presence of competition and the definition of
markets and market power). Courts frequently refer
to the Department of Justice and Federal Trade
Commission merger guidelines to define product
markets and evaluate market power. See, e.g., FTC
v. Whole Foods Market, Inc., 502 F. Supp. 2d 1
(D.D.C. 2007); FTC v. Arch Coal, Inc., 329 F. Supp.
2d 109 (D.D.C. 2004). In considering antitrust
issues, courts have recognized the value of
competition in producing lower prices. See, e.g.,
Leegin Creative Leather Products v. PSKS, Inc., 127
S. Ct. 2705 (2007); Atlanta Richfield Co. v. United
States Petroleum Co., 495 U.S. 328 (1990);
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574 (1986); State Oil Co. v. Khan, 522 U.S.
3 (1997); Northern Pacific Railway Co. v. U.S., 356
U.S. 1 (1958).
24 See NYSE Arca Order at 74783.
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Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Notices
exchange is the complete record of an
exchange’s transactions that is provided
in the core data feeds.25 In this respect,
the core data feeds that include an
exchange’s own transaction information
are a significant alternative to the
exchange’s market data product.26 The
various self-regulatory organizations,
the several Trade Reporting Facilities of
FINRA, and ECNs that produce
proprietary data are all sources of
competition.
In sum, there are a variety of
alternative sources of information that
impose significant competitive
pressures on NYSE Amex in setting the
terms for distributing its NYSE Amex
Market Data. The Commission believes
that the availability of those
alternatives, as well as NYSE Amex’s
compelling need to attract order flow,
imposed significant competitive
pressure on NYSE Amex to act
equitably, fairly, and reasonably in
setting the terms of its proposal.
Because NYSE Amex 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.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,27 that the
proposed rule change (SR–NYSEAmex2010–35) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.28
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–13335 Filed 6–2–10; 8:45 am]
BILLING CODE 8010–01–P
DEPARTMENT OF STATE
[Public Notice: 7035]
sroberts on DSKD5P82C1PROD with NOTICES
Defense Trade Advisory Group; Notice
of Open Meeting
SUMMARY: The Defense Trade Advisory
Group (DTAG) will meet in open
session from 1:30 p.m. to 5 p.m. on
Wednesday, July 07, 2010, in the East
Auditorium at the U.S. Department of
State, Harry S. Truman Building,
Washington DC. Entry and registration
25 Id.
26 Id.
27 15
28 17
will begin at 12:30 p.m. Please use the
building entrance located at 21st Street,
NW., Washington, DC, between C & D
Streets. The membership of this
advisory committee consists of private
sector defense trade representatives,
appointed by the Assistant Secretary of
State for Political-Military Affairs, who
advise the Department on policies,
regulations, and technical issues
affecting defense trade. The purpose of
the meeting will be to discuss current
defense trade issues and topics for
further study. Agenda topics will be
posted on the Directorate of Defense
Trade Controls’ Web site, at https://
www.pmddtc.state.gov 2 weeks prior to
the meeting.
Members of the public may attend
this open session and will be permitted
to participate in the discussion in
accordance with the Chair’s
instructions. Members of the public
may, if they wish, submit a brief
statement to the committee in writing.
As access to the Department of State
facilities is controlled, persons wishing
to attend the meeting must notify the
DTAG Alternate Designated Federal
Officer (DFO) by close of business
Wednesday, June 30, 2010. If notified
after this date, the Department’s Bureau
of Diplomatic Security may not be able
to complete the necessary processing
required to attend the plenary session.
A person requesting reasonable
accommodation should notify the
Alternate DFO by the same date. Each
non-member observer or DTAG member
that wishes to attend this plenary
session should provide: His/her name;
company or organizational affiliation;
phone number; date of birth; and
identifying data such as driver’s license
number, U.S. Government ID, or U.S.
Military ID, to the DTAG Alternate DFO,
Patricia Slygh, via e-mail at
SlyghPC@state.gov. A RSVP list will be
provided to Diplomatic Security. One of
the following forms of valid photo
identification will be required for
admission to the Department of State
building: U.S. driver’s license, passport,
U.S. Government ID or other valid photo
ID.
FOR FURTHER INFORMATION CONTACT:
Patricia Slygh, PM/DDTC, SA–1, 12th
Floor, Directorate of Defense Trade
Controls, Bureau of Political-Military
Affairs, U.S. Department of State,
Washington, DC 20522–0112; telephone
(202) 663–2830; FAX (202) 261–8199; or
e-mail SlyghPC@state.gov.
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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31505
Dated: May 27, 2010.
Robert S. Kovac,
Designated Federal Officer, Defense Trade
Advisory Group, Department of State.
[FR Doc. 2010–13378 Filed 6–2–10; 8:45 am]
BILLING CODE 4710–25–P
DEPARTMENT OF STATE
[Public Notice 7034]
Bureau of Political-Military Affairs:
Directorate of Defense Trade Controls;
Notifications to the Congress of
Proposed Commercial Export Licenses
SUMMARY: Notice is hereby given that
the Department of State has forwarded
the attached Notifications of Proposed
Export Licenses to the Congress on the
dates indicated on the attachments
pursuant to sections 36(c) and 36(d) and
in compliance with section 36(f) of the
Arms Export Control Act (22 U.S.C.
2776).
DATES: Effective Date: As shown on each
of the 14 letters.
FOR FURTHER INFORMATION CONTACT: Mr.
Robert S. Kovac, Managing Director,
Directorate of Defense Trade Controls,
Bureau of Political-Military Affairs,
Department of State (202) 663–2861.
SUPPLEMENTARY INFORMATION: Section
36(f) of the Arms Export Control Act
mandates that notifications to the
Congress pursuant to sections 36(c) and
36(d) must be published in the Federal
Register when they are transmitted to
Congress or as soon thereafter as
practicable.
May 6, 2010 (Transmittal No. DDTC 09–141)
Hon. Nancy Pelosi, Speaker of the House of
Representatives
Dear Madam Speaker: Pursuant to Sections
36(c) and 36(d) of the Arms Export Control
Act, I am transmitting, herewith, certification
of a proposed amendment to a manufacturing
license agreement for the manufacture of
significant military equipment abroad and
the export of firearms abroad in the amount
of $1,000,000 or more.
The transaction contained in the attached
certification involves the transfer of defense
articles, to include technical data, and
defense services to South Korea, Qatar,
United Arab Emirates, United Kingdom, the
Netherlands, Thailand, Chile, and Malaysia
for the manufacture and sale of the
Goalkeeper Gun Mount.
The United States Government is prepared
to license the export of these items having
taken into account political, military,
economic, human rights, and arms control
considerations.
More detailed information is contained in
the formal certification which, though
unclassified, contains business information
submitted to the Department of State by the
applicant, publication of which could cause
competitive harm to the United States firm
concerned.
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]]>Agencies
[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Notices]
[Pages 31500-31505]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-13335]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62187; File No. SR-NYSEAmex-2010-35]
Self-Regulatory Organizations; NYSE Amex LLC; Order Approving
Proposed Rule Change To Establish NYSE Amex Trades and NYSE Amex BBO
Services and Related Fees
May 27, 2010.
I. Introduction
On April 1, 2010, the NYSE Amex LLC (``NYSE Amex'' or the
``Exchange'') filed with the Securities 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 establish two NYSE Amex market data products,
NYSE Amex Trades and NYSE Amex BBO and to establish market data fees
for the same. The proposed rule change was published for comment in the
Federal Register on April 22, 2010.\3\ The Commission received no
comment letters on the proposal. 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. 61936 (April 16,
2010), 75 FR 21088.
---------------------------------------------------------------------------
[[Page 31501]]
II. Description of the Proposal
a. Services
The NYSE Amex Trades service is a NYSE Amex-only market data
service that allows a vendor to redistribute on a real-time basis the
same last sale information that NYSE Amex reports under the CTA Plan
and the Reporting Plan for Nasdaq/National Market System Securities
Traded on an Exchange on an Unlisted or Listed Basis (the ``Nasdaq/UTP
Plan'') for inclusion in those Plans' consolidated data streams and
certain other related data elements (``NYSE Amex Last Sale
Information''). NYSE Amex Last Sale Information would include last sale
information for all securities that are traded on the Exchange and for
which NYSE Amex reports quotes under the CTA Plan or the Nasdaq/UTP
Plan. In addition, NYSE Amex Last Sale Information will also include a
unique sequence number to each trade that allows an investor to track
the context of the trade through other Exchange market data products
such as NYSE Amex OpenBook[supreg]. The Exchange will make NYSE Amex
Trades available over a single datafeed, regardless of the markets on
which the securities are listed.
NYSE Amex BBO is a NYSE Amex-only market data service that allows a
vendor to redistribute on a real-time basis the same best-bid-and-offer
information that NYSE Amex reports under the CQ Plan and the Nasdaq/UTP
Plan for inclusion in the NYSE Amex BBO Information. NYSE Amex BBO
Information would include the best bids and offers for all securities
that are traded on the Exchange and for which NYSE Amex reports quotes
under the CQ Plan or the Nasdaq/UTP Plan. The Exchange will make NYSE
Amex BBO available over a single datafeed, regardless of the markets on
which the securities are listed.
Both NYSE Amex Trades and NYSE Amex BBO (collectively, ``NYSE Amex
Market Data'') would allow vendors, broker-dealers, private network
providers and other entities (``NYSE Amex-Only Vendors'') to make NYSE
Amex Last Sale Information and NYSE Amex BBO Information available on a
real-time basis. NYSE Amex-Only Vendors may distribute the NYSE Amex
Trade and NYSE BBO to both professional and nonprofessional
subscribers.
The Exchange would make NYSE Amex Last Sale Information available
through NYSE Amex Trades no earlier than it provides last sale
information to the processors under the CTA Plan and Nasdaq/UTP Plan,
as appropriate. The Exchange would make NYSE Amex BBO Information
available through NYSE Amex BBO no earlier than it makes that
information available to the processors under the CQ Plan and the
Nasdaq/UTP Plan.
b. Fees
i. Access Fee
For the receipt of access to the NYSE Amex Trades and NYSE Amex
BBO, the Exchange proposes to charge $750 per month. One $750 monthly
access fee entitles an NYSE Amex-Only Vendor to receive NYSE Amex
Trades and NYSE Amex BBO. The fee applies to receipt of NYSE Amex
Market Data within the NYSE Amex-Only Vendor's organization or outside
of it.
ii. Professional Subscriber Fees
For the receipt and use of NYSE Amex Trades, the Exchange proposes
to charge $10 per month per professional subscriber device. Similarly,
for the receipt and use of NYSE Amex BBO, the Exchange proposes to
charge $10 per month per professional subscriber device.
For both NYSE Amex Trades and NYSE Amex BBO, the Exchange proposes
to offer an alternative methodology to the traditional device fee.
Instead of charging $10 per month per device, it proposes to offer NYSE
Amex-Only Vendors the option of paying $10 per month per ``Subscriber
Entitlement.'' The fee entitles the end-user to receive and use NYSE
Amex Market Data relating to all securities traded on NYSE Amex,
regardless of the market on which a security is listed. For the purpose
of calculating Subscriber Entitlements, the Exchange proposes to adopt
a unit-of-count methodology that is the same as that approved by the
Commission earlier this year with respect to its NYSE OpenBook[supreg]
service.\4\
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 62038 (May 5, 2010),
75 FR 26825 (May 12, 2010) (SR-NYSE-2010-22) (approving on a
permanent basis the alternative unit-of-count methodology).
---------------------------------------------------------------------------
Under a unit-of-count methodology, the Exchange would 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
billing criteria that defines ``Vendors,'' ``Subscribers,''
``Subscriber Entitlements'' and ``Subscriber Entitlement Controls'' as
the basis for setting professional subscriber fees. The Exchange
believes that this methodology more closely aligns with current data
consumption and will reduce costs for the Exchange's customers.
The following basic principles underlie this proposal.
A. Vendors
``Vendors'' are market data vendors, broker-dealers,
private network providers and other entities that control Subscribers'
access to data through Subscriber Entitlement Controls.
B. Subscribers
``Subscribers'' are unique individual persons or devices
to which a Vendor provides data. Any person or device that receives
data from a Vendor is a Subscriber, whether the person 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.
C. 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.
D. 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:
1. Each entitlement update to the Subscriber Entitlement Control;
[[Page 31502]]
2. The status of the Subscriber Entitlement Control; and
3. Any other changes to the Subscriber Entitlement Control over a
given period.
Only the Vendor may have access to Subscriber Entitlement
Controls.
Subject to the rules described below, the Exchange will require
NYSE Amex-Only Vendors to count every Subscriber Entitlement, whether
it be a person or a device. This means that the NYSE Amex-Only Vendor
must include in the count every person and device that has access to
the data, regardless of the purposes for which the person or device
uses the data. The Exchange will require NYSE Amex-Only Vendors to
report and count all entitlements in accordance with the following
rules.
A. The count shall be separate for the NYSE Amex Trades and NYSE
Amex BBO services. This means that a device that is entitled to receive
both NYSE Amex Last Sale Information and NYSE Amex BBO Information
would count as a Subscriber Entitlement for the purposes of the NYSE
Amex Trades service and as a separate Subscriber Entitlement for the
purposes of the NYSE Amex BBO service.
B. In connection with a Vendor's external distribution of either
NYSE Amex Trades or NYSE Amex BBO), the NYSE Amex-Only Vendor should
count as one Subscriber Entitlement each unique Subscriber that the
NYSE Amex-Only Vendor has entitled to have access to that type of
market data. However, where a device is dedicated specifically to a
single person, the NYSE Amex-Only Vendor should count only the person
and need not count the device.
C. In connection with a NYSE Amex-Only Vendor's internal
distribution of a type of NYSE Amex Market Data, the NYSE Amex-Only
Vendor should count as one Subscriber Entitlement each unique person
(but not devices) that the Vendor has entitled to have access to that
type of market data.
D. The NYSE Amex-Only Vendor should identify and report each unique
Subscriber. If a Subscriber uses the same unique Subscriber Entitlement
to receive multiple services, the NYSE Amex-Only Vendor should count
that as one Subscriber Entitlement. However, if a unique Subscriber
uses multiple Subscriber Entitlements to gain access to one or more
services (e.g., a single Subscriber has multiple passwords and user
identifications), the Vendor should report all of those Subscriber
Entitlements.
E. The NYSE Amex-Only Vendor should report each Subscriber device
serving multiple users individually as well as each person who may
access the device. As an example, for a single device to which the NYSE
Amex-Only Vendor has granted two people access, the Vendor should
report three Subscriber Entitlements. Only a single, unique device that
is dedicated to a single, unique person may be counted as one
Subscriber Entitlement.
F. NYSE Amex-Only Vendors should report each unique person who
receives access through multiple devices as one Subscriber Entitlement
so long as each device is dedicated specifically to that person.
G. The NYSE Amex-Only Vendor should include in the count as one
Subscriber Entitlement devices serving no users.
For example, if a Subscriber's device has no users or multiple
users, the NYSE Amex-Only Vendor should count that device as one
Subscriber Entitlement. If a NYSE Amex-Only Vendor entitles five
individuals to use one of a Subscriber's devices, the Vendor should
count five individual entitlements and one device entitlement, for a
total of six Subscriber Entitlements. If a NYSE Amex-Only Vendor
entitles an individual to receive a type of NYSE Amex Market Data over
a Subscriber device that is dedicated to that individual, the Vendor
should count that as one Subscriber Entitlement, not two.
iii. No Program Classification Fee
The Exchange does not propose to impose any program classification
charges for the use of NYSE Amex Last Sale Information or NYSE Amex BBO
information. The Exchange recognizes that each NYSE Amex-Only Vendor
and Subscriber will use NYSE Amex Market 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 Exchange's proposed unit-of-count methodology does not
restrict how NYSE Amex-Only Vendors may use NYSE Amex Market Data in
their display services and encourages Vendors to create and promote
innovative uses of NYSE Amex Market Data. For instance, a NYSE Amex-
Only Vendor may use NYSE Amex BBO information to create derived
information displays, such as displays that aggregate NYSE Amex BBO
information with quotation information from other markets.\5\
---------------------------------------------------------------------------
\5\ In the case of derived displays, the Vendor is required to:
(i) Pay the Exchange's device fees; (ii) include derived displays in
its reports of NYSE Amex Market Data usage; and (iii) 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.
---------------------------------------------------------------------------
iv. Nonprofessional Subscriber Fee
The Exchange proposes to charge each NYSE Amex-Only Vendor $5.00
per month for each nonprofessional subscriber to whom it provides NYSE
Amex BBO Information. The Exchange proposes to impose the charge on the
NYSE Amex-Only Vendor, rather than on the nonprofessional
Subscriber.\6\ 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 Amex-Only Vendor disseminates to a nonprofessional
Subscriber's inquiry for a best bid or offer under NYSE Amex BBO. The
Exchange proposes to limit a NYSE Amex-Only Vendor's exposure under
this alternative fee to $5.00 per month, the same amount as the
proposed fixed monthly nonprofessional Subscriber flat fee. In order to
take advantage of the per-query fee, a NYSE Amex-Only Vendor must
document in its Exhibit A that it can: (1) Accurately measure the
number of queries from each nonprofessional Subscriber and (2) report
aggregate query quantities on a monthly basis.
---------------------------------------------------------------------------
\6\ The Exchange stated that it did not propose to establish a
nonprofessional subscriber fee for NYSE Amex Last Sale Information
because an alternative to that product is available. See Securities
Exchange Act Release No. 61403 (January 22, 2010), 75 FR 4598
(January 28, 2010) (SR-NYSEAmex-2009-85) (approving the NYSE Amex
Realtime Reference Prices service).
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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 Amex-Only Vendors, not end-
users, and is payable on a monthly basis. NYSE Amex-Only Vendors may
elect to disseminate NYSE Amex BBO pursuant to the per-query fee rather
than the fixed monthly fee.
In establishing a nonprofessional Subscriber fee for NYSE Amex BBO,
the Exchange proposes to apply the same criteria for qualification as a
``nonprofessional subscriber'' as the CTA and CQ Plan Participants use.
Similar to 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, the Commodities Futures Trading Commission, any State
securities agency, any securities exchange or
[[Page 31503]]
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.
The Exchange believes that the proposed monthly access fee,
professional subscriber fee and nonprofessional subscriber fee for NYSE
Amex Trades and NYSE Amex BBO enable NYSE Amex-Only Vendors and their
subscribers to contribute to the Exchange's operating costs in a manner
that is appropriate for the distribution of NYSE Amex Market Data in
the form taken by the proposed services.
In setting the level of the proposed fees, the Exchange considered
several factors, including:
(i) NYSE Amex's expectation that NYSE Amex Trades and NYSE Amex BBO
are likely to be premium services, used by investors most concerned
with receiving NYSE Amex Market Data on a low latency basis;
(ii) The fees that the CTA and CQ Plan Participants, the Nasdaq/UTP
Plan Participants, Nasdaq, NYSE and NYSE Arca are charging for similar
services (or that NYSE Amex 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 Amex Trades and NYSE Amex BBO will provide to NYSE Amex-Only
Vendors (relative to counterpart services under the CTA, CQ and Nasdaq/
UTP Plans); and
(vii) The fact that the proposed fees provide alternatives to
existing fees under the CTA, CQ and Nasdaq/UTP Plans, alternatives that
vendors will purchase only if they determine that the perceived
benefits outweigh the cost.
d. Administrative Requirements
The Exchange will require each NYSE Amex-Only Vendor to enter into
a vendor agreement just as the CTA and CQ Plans require recipients of
the Network A datafeeds to enter (the ``Consolidated Vendor Form'').
The agreement will authorize the NYSE Amex-Only Vendor to provide its
NYSE Amex Market Data service to its customers or to distribute the
data internally.
In addition, the Exchange will require each professional end-user
that receives NYSE Amex Market Data 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 NYSE Amex-Only Vendors to subject nonprofessional
subscribers to the same contract requirements as the CTA and CQ Plan
Participants require of Network A nonprofessional subscribers.
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 has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 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 Amex is an exclusive processor of NYSE Amex Trades and
NYSE Amex BBO services 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 Commission has reviewed the proposal using the approach set
forth in the NYSE Arca Order for non-core market data fees.\13\ In the
NYSE Arca 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.''
\14\ It noted that the ``existence of significant competition provides
a substantial basis for finding that the terms of an exchange's fee
proposal are equitable, fair, reasonable, and not unreasonably or
unfairly discriminatory.'' \15\ If an exchange ``was subject to
significant competitive forces in setting the terms of a proposal,''
the Commission will approve a proposal unless it determines that
``there is a substantial countervailing basis to find that the terms
nevertheless fail to meet an applicable requirement of the Exchange Act
or the rules thereunder.'' \16\
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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\ Id. at 74771.
\15\ Id. at 74782.
\16\ Id. at 74781.
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As noted in the NYSE Arca Order, the standards in Section 6 of the
Act and Rule 603 of Regulation NMS do not differentiate between types
of data and therefore apply to exchange proposals to distribute both
core data and non-core data. Core data is the best-priced quotations
and comprehensive last-sale reports of all markets that the Commission,
pursuant to Rule 603(b), requires a central processor to consolidate
and distribute to the public
[[Page 31504]]
pursuant to joint-SRO plans.\17\ In contrast, individual exchanges and
other market participants distribute non-core data voluntarily.\18\ The
mandatory nature of the core data disclosure regime leaves little room
for competitive forces to determine products and fees.\19\ Non-core
data products and their fees are, by contrast, much more sensitive to
competitive forces. The Commission therefore is able to use competitive
forces in its determination of whether an exchange's proposal to
distribute non-core data meets the standards of Section 6 and Rule
603.\20\ Because NYSE Amex's instant proposal relates to the
distribution of non-core data, the Commission will apply the market-
based approach set forth in the NYSE Arca Order.
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\17\ See 17 CFR 242.603(b). (``Every national securities
exchange on which an NMS stock is traded and national securities
association shall act jointly pursuant to one or more effective
national market system plans to disseminate consolidated
information, including a national best bid and national best offer,
on quotations for and transactions in NMS stocks. Such plan or plans
shall provide for the dissemination of all consolidated information
for an individual NMS stock through a single plan processor.'')
\18\ See NYSE Arca Order at 74779.
\19\ Id.
\20\ Id.
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The Exchange proposes to establish: (i) A service that would allow
a vendor to redistribute last sale information for which NYSE Amex
reports under the CTA Plan and the Nasdaq/UTP Plan; and (ii) a service
that would allow a vendor to redistribute best bids and offers for all
securities that are traded on the Exchange and for which NYSE Amex
reports quotes under the CQ Plan. The Exchange proposes to establish a
monthly vendor fee and an alternative fee rate that uses the unit-of-
count methodology.
The proposal before the Commission relates to fees for NYSE Amex
Trades and NYSE Amex BBO which are non-core, market data products. As
in the Commission's NYSE Arca Order analysis, at least two broad types
of significant competitive forces applied to NYSE Amex in setting the
terms of this proposal: (i) NYSE Amex's compelling need to attract
order flow from market participants; and (ii) the availability to
market participants of alternatives to purchasing NYSE Amex Market
Data.
Attracting order flow is the core competitive concern of any equity
exchange, including NYSE Amex. Attracting order flow is an essential
part of NYSE Amex's competitive success. If NYSE Amex cannot attract
order flow to its market, it will not be able to execute transactions.
If NYSE Amex cannot execute transactions on its market, it will not
generate transaction revenue. If NYSE Amex cannot attract orders or
execute transactions on its market, it will not have market data to
distribute, for a fee or otherwise, and will not earn market data
revenue and thus not be competitive with other exchanges that have this
ability. Table 1 below provides a useful recent snapshot of the state
of competition in the U.S. equity markets in the month of September
2009: \21\
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\21\ The Commission recently published estimated trading
percentages in NMS Stocks in its Concept Release on Equity Market
Structure. See Securities Exchange Act Release No. 61358 (January
14, 2010), 75 FR 3594, 3597 n. 21 (January 21, 2010) (File No. S7-
02-10).
Table 1--Trading Centers and Estimated % of ShareVolume in NMS Stocks
September 2009
------------------------------------------------------------------------
Share
volume in
Trading venue NMS stocks
(Percent)
------------------------------------------------------------------------
Registered Exchanges:
NASDAQ................................... 19.4
NYSE..................................... 14.7
NYSE Arca................................ 13.2
BATS..................................... 9.5
NASDAQ OMX BX............................ 3.3
Other Registered Exchanges............... 3.7
ECNs ..................... 5 ECNS.......................... 10.8
Dark Pools ............ 32 Dark Pools (Estimated).......... 7.9
Broker-Dealer ........ 200+ Broker-Dealers (Estimated)..... 17.5
Internalization.
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The market share percentages in Table 1 strongly indicate that NYSE
Amex must compete vigorously for order flow to maintain its share of
trading volume. This compelling need to attract order flow imposes
significant pressure on NYSE Amex to act reasonably in setting its fees
for NYSE Amex market data, particularly given that the market
participants that must pay such fees often will be the same market
participants from whom NYSE Amex must attract order flow. These market
participants particularly include the large broker-dealer firms that
control the handling of a large volume of customer and proprietary
order flow. Given the portability of order flow from one trading venue
to another, any exchange that seeks to charge unreasonably high data
fees would risk alienating many of the same customers on whose orders
it depends for competitive survival.\22\
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\22\ See NYSE Arca Order at 74783.
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In addition to the need to attract order flow, the availability of
alternatives to NYSE Amex Market Data significantly affect the terms on
which NYSE Amex can distribute this market data.\23\ In setting the
fees for NYSE Amex Market Data, NYSE Amex must consider the extent to
which market participants would choose one or more alternatives instead
of purchasing the exchange's data.\24\ Of course, the most basic source
of information generally available at an
[[Page 31505]]
exchange is the complete record of an exchange's transactions that is
provided in the core data feeds.\25\ In this respect, the core data
feeds that include an exchange's own transaction information are a
significant alternative to the exchange's market data product.\26\ The
various self-regulatory organizations, the several Trade Reporting
Facilities of FINRA, and ECNs that produce proprietary data are all
sources of competition.
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\23\ See Richard Posner, Economic Analysis of Law Sec. 9.1 (5th
ed. 1998) (discussing the theory of monopolies and pricing). See
also U.S. Dep't of Justice & Fed'l Trade Comm'n, Horizontal Merger
Guidelines Sec. 1.11 (1992), as revised (1997) (explaining the
importance of alternatives to the presence of competition and the
definition of markets and market power). Courts frequently refer to
the Department of Justice and Federal Trade Commission merger
guidelines to define product markets and evaluate market power. See,
e.g., FTC v. Whole Foods Market, Inc., 502 F. Supp. 2d 1 (D.D.C.
2007); FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109 (D.D.C. 2004). In
considering antitrust issues, courts have recognized the value of
competition in producing lower prices. See, e.g., Leegin Creative
Leather Products v. PSKS, Inc., 127 S. Ct. 2705 (2007); Atlanta
Richfield Co. v. United States Petroleum Co., 495 U.S. 328 (1990);
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574
(1986); State Oil Co. v. Khan, 522 U.S. 3 (1997); Northern Pacific
Railway Co. v. U.S., 356 U.S. 1 (1958).
\24\ See NYSE Arca Order at 74783.
\25\ Id.
\26\ Id.
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In sum, there are a variety of alternative sources of information
that impose significant competitive pressures on NYSE Amex in setting
the terms for distributing its NYSE Amex Market Data. The Commission
believes that the availability of those alternatives, as well as NYSE
Amex's compelling need to attract order flow, imposed significant
competitive pressure on NYSE Amex to act equitably, fairly, and
reasonably in setting the terms of its proposal.
Because NYSE Amex 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.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\27\ that the proposed rule change (SR-NYSEAmex-2010-35) be, and
hereby is, approved.
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\27\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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\28\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13335 Filed 6-2-10; 8:45 am]
BILLING CODE 8010-01-P
