Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Relating to Fees for NYSE Arca Depth-of-Book Data, 70311-70319 [2010-28893]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 75, Number 221 (Wednesday, November 17, 2010)]
[Notices]
[Pages 70311-70319]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28893]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63291; File No. SR-NYSEArca-2010-97]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Relating to 
Fees for NYSE Arca Depth-of-Book Data

November 9, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the

[[Page 70312]]

``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 1, 2010, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE 
Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly owned subsidiary, NYSE Arca 
Equities, Inc. (``NYSE Arca Equities''), is filing a proposed rule 
change to authorize market data fees for the receipt and use of depth-
of-book market data that the Exchange makes available. The text of the 
proposed rule change is available at the Exchange, the Commission's 
Public Reference Room, and the Exchange's Web site at https://www.nyse.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filings with the Commission, the self-regulatory 
organization included statements concerning the purpose of and basis 
for the proposed rule change and discussed any comments it received on 
the proposed rule change. The text of these statements may be examined 
at the places specified in Item IV below. The self-regulatory 
organization has prepared summaries, set forth in sections (A), (B) and 
(C) below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
[i.] The Services and Fees
A. Description
    Through NYSE Arca Equities, the Exchange's equities trading 
facility, the Exchange makes ArcaBook \SM\, a compilation of all limit 
orders resident in the NYSE Arca limit order book, available on a real-
time basis.\3\ In addition, the Exchange makes available real-time 
information relating to transactions and limit orders in debt 
securities that are traded through the Exchange's facilities.
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    \3\ The Exchange notes that it makes available to vendors the 
best bids and offers that are included in ArcaBook data no earlier 
than it makes those best bids and offers available to the processors 
under the CQ Plan and the ``Reporting Plan for Nasdaq/National 
Market System Securities Traded on an Exchange on an Unlisted or 
Listed Basis'' (the ``UTP Plan'').
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    The Exchange makes ArcaBook and the bond trade and limit order 
information (collectively, ``NYSE Arca Data'') available to market data 
vendors, broker-dealers, private network providers and other entities 
by means of data feeds. By making the data it includes available, 
ArcaBook enhances market transparency, fosters competition among orders 
and markets, and enables buyers and sellers to obtain better prices.
B. Procedural Background
    The fees for which the Exchange is filing this proposed rule change 
have a procedural history, including the following:
     On May 23, 2006, NYSE Arca submitted the 2006 Rule Change 
to establish fees for the receipt and use of ArcaBook data.
     On October 12, 2006, the Commission issued an order, by 
delegated authority, approving the 2006 Rule Change (the ``Delegated 
Order'').\4\
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    \4\ Securities Exchange Act Release No. 54597 (October 12, 2006) 
71 FR 62029 (October 20, 2006).
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     On November 15, 2006, NetCoalition submitted a petition 
(the ``Petition'') requesting that the Commission review and set aside 
the Delegated Order.\5\
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    \5\ Petition for Commission Review submitted by Petitioner, 
dated November 14, 2006.
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     On December 27, 2006, the Commission issued an order 
granting NetCoalition's request for the Commission to review the 
Delegated Order.\6\
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    \6\ Securities Exchange Act Release No. 55011 (December 27, 
2006).
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     On June 4, 2008, the Commission published notice of a 
proposed order (the ``Draft Order'') approving the NYSE Arca proposed 
fees to give the public an additional opportunity to comment.\7\
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    \7\ Securities Exchange Act Release No. 57917 (June 4, 2008), 73 
FR 32751 (June 10, 2008).
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     On December 8, 2008, the Commission set aside the 
Delegated Order and approved the 2006 Rule Change directly (the 
``Direct Order'').\8\
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    \8\ Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9 2008).
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     On or about January 1, 2009, the Exchange began charging 
the fees set forth in the 2006 Rule Change.
     On January 30, 2009, NetCoalition and SIFMA petitioned the 
United States Court of Appeals for the DC Circuit (the ``DC Circuit'') 
for review of the Direct Order.
     On July 21, 2010, the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (the ``Dodd-Frank Act'') was signed into law.
     On August 6, 2010, the DC Circuit issued a decision on the 
petitions for review (the ``NetCoalition Decision'').
     On September 17, 2010, the Exchange filed a petition for 
panel rehearing asking the DC Circuit to remand rather than vacate the 
Direct Order.
     On September 24, 2010, the DC Circuit ordered 
NetCoalition, SIFMA, and the Commission to respond to the Exchange's 
petition for panel rehearing.
     On October 12, 2010, NetCoalition, SIFMA, and the 
Commission filed responses to the Exchange's petition for panel 
rehearing.
     On October 25, 2010, the DC Circuit denied the petition 
for panel rehearing.
    In this filing, the Exchange proposes to continue to assess the 
same fees that have been in effect since the Direct Order.
C. Fees
    This filing will enable the Exchange to continue to assess the 
Market Data Fee Schedule set forth in Exhibit 5 hereto for the receipt 
and use of NYSE Arca Data. As the Market Data Fee Schedule details, 
this proposed rule change allows the Exchange to continue to assess 
access fees and professional and nonprofessional subscriber device 
fees. These are categories of fees that are consistent with the fees 
that the New York Stock Exchange (``NYSE'') and the Nasdaq Stock Market 
(``Nasdaq''), and the Participants in the CTA, CQ, UTP and OPRA Plans, 
charge for the receipt and use of their market data. They are the same 
fees that NYSE Arca has charged since it received approval of those 
fees pursuant to the Direct Order.
1. Access Fees
    The Exchange will continue to charge a monthly $750 fee for a data 
recipient to gain direct access to the datafeeds through which the 
Exchange makes NYSE Arca Data available. This fee entitles the datafeed 
recipient to gain access to NYSE Arca Data for a set of up to four 
``Logons.'' A ``Logon'' is activation of a means of direct access to 
any of the NYSE Arca datafeeds. For instance, if a datafeed recipient 
gains access to NYSE Arca Data one or more times during a month using 
an Exchange-provided and approved logon that provides access to the 
ArcaBook datafeed, that would constitute a ``Logon.'' It would 
constitute a second ``Logon'' if, during that month, the datafeed 
recipient uses a different

[[Page 70313]]

logon name that allows access to the ArcaBook datafeed.
    The Exchange will continue to charge a monthly $750 fee for a data 
recipient to gain indirect access to the datafeeds through which the 
Exchange makes NYSE Arca Data available for any number of Logons. 
``Indirect access'' refers to access to a NYSE Arca datafeed indirectly 
through one or more intermediaries, rather than by means of a direct 
connection or linkage with the Exchange's facilities.
2. Device Fees
    The Exchange will continue to charge device fees for professional 
and nonprofessional subscribers for the display of ArcaBook. In 
differentiating between professional and nonprofessional subscribers, 
the Exchange applies the same criteria for qualification as a 
nonprofessional subscriber as the CTA and CQ Plan Participants use, as 
more fully set forth in Exhibit 5.
a. For Professional Subscribers
    For professional subscribers, the Exchange will continue to charge 
(i) a monthly fee of $15 per device for the receipt of ArcaBook data 
relating to Exchange-Traded Funds and those equity securities for which 
reporting is governed by the CTA Plan (``CTA Plan and ETF Securities'') 
and (ii) a monthly fee of $15 per device for the receipt of ArcaBook 
data relating to those equity securities for which reporting is 
governed by the UTP Plan (excluding Exchange-Traded Funds; ``UTP Plan 
Securities'').
    The combined monthly professional subscriber device fee of $30 
(i.e., for receipt of NYSE ArcaBook data relating to CTA Plan and ETF 
Securities and to UTP Plan Securities) compares favorably with fees 
charged by other exchanges for similar products. For instance, for 
professional subscribers, Nasdaq charges $76 for its combined TotalView 
\9\ and OpenView \10\ products and NYSE charges $60 for NYSE 
OpenBook.\11\
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    \9\ Through TotalView, Nasdaq provides information relating to 
the displayed quotes and orders of Nasdaq participants in UTP Plan 
Securities. TotalView displays quotes and orders at multiple prices 
and is similar to ArcaBook.
    \10\ Through OpenView, Nasdaq provides information relating to 
the displayed quotes and orders of Nasdaq participants in CTA Plan 
Securities. OpenView displays quotes and orders at multiple prices 
and is similar to ArcaBook.
    \11\ Through NYSE OpenBook, NYSE provides information relating 
to limit orders.
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b. For Nonprofessional Subscribers
    For nonprofessional subscribers, the Exchange will continue to 
charge monthly fees of $5 per device for the receipt of ArcaBook data 
relating to CTA Plan and ETF Securities and $5 per device for the 
receipt of ArcaBook data relating to UTP Plan Securities (i.e., a 
combined fee of $10 for both CTA Plan and ETF Securities and UTP Plan 
Securities).
    The Exchange will continue to limit for any one month the maximum 
amount of device fees payable by any broker-dealers in respect of 
nonprofessional subscribers that maintain brokerage accounts with the 
broker-dealer. Professional subscribers may be included in the 
calculation of the monthly maximum amount, so long as:
    (i) Nonprofessional Subscribers comprise no less than 90 percent of 
the pool of subscribers that are included in the calculation;
    (ii) Each professional subscriber that is included in the 
calculation is not affiliated with the broker-dealer or any of its 
affiliates (either as an officer, partner or employee or otherwise); 
and
    (iii) Each such professional subscriber maintains a brokerage 
account directly with the broker-dealer (that is, with the broker-
dealer rather than with a correspondent firm of the broker dealer).
    When the Exchange first established the maximum amount in 2006, it 
set the maximum amount for any calendar month at $20,000. It provided 
that, for the months falling in a subsequent calendar year, the maximum 
monthly payment shall increase (but not decrease) by the percentage 
increase (if any) in the annual composite share volume \12\ for the 
calendar year preceding that subsequent calendar year, subject to a 
maximum annual increase of five percent.\13\ For example, if the annual 
composite share volume for a calendar year increases by three percent 
over the annual composite share volume for the prior calendar year, 
then the monthly ``Maximum Amount'' for months falling in the next 
subsequent calendar year would increase by three percent. Given that 
the ArcaBook fees did not become effective until 2009 and composite 
share volume did not rise in 2009, the Maximum Amount for 2010 remains 
at $20,000. The Exchange will continue to apply the annual adjustment 
described above.
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    \12\ ``Composite share volume'' for a calendar year refers to 
the aggregate number of shares in all securities that trade over 
NYSE Arca facilities for that calendar year.
    \13\ This is the same annual increase calculation that the 
Commission approved for the CTA Monthly Maximum (discussed below). 
See File No. SR-CTA/CQ-99-01, Release No. 34-41977, October 5, 1999.
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    The Maximum Amount compares favorably with monthly maximums payable 
to Nasdaq and to the CTA Plan Participants. Nasdaq set the maximum at 
$25,000 per month for nonprofessional subscribers' receipt of TotalView 
and OpenView. The CTA Plan Participants currently set the maximum at 
$660,000 per month for internal distribution within a broker-dealer's 
organization and for the broker-dealer's distribution to 
nonprofessional subscribers that maintain brokerage accounts (the ``CTA 
Monthly Maximum'').
D. Free Trial Period
    As an incentive to prospective subscribers, the Exchange will 
continue to offer NYSE Arca Data free of charge for the duration of the 
billable month in which the subscriber first gains access to the data. 
For example, if a subscriber (whether professional or nonprofessional) 
is billed on a calendar-month basis and first gains access to NYSE Arca 
Data on October 10, the device fees set forth in this proposed rule 
change will not apply during that month of October. The Exchange has 
maintained this incentive since the Direct Order was issued.
ii. Justification of Fees
    The market data fees that are the subject of this filing, in 
conjunction with fees for other services, provide for an equitable 
allocation of NYSE Arca's overall costs among users of its services. 
The market data fees are fair and reasonable because they compare 
favorably to fees that other markets charge for similar products and 
because competition provides an effective constraint on the market data 
fees that the Exchange has the ability and incentive to charge.
A. Other Markets' Fees
    The combined monthly professional subscriber device fee of $30 
(i.e., for receipt of NYSE Arca data relating to CTA Plan and ETF 
Securities and to UTP Plan Securities) compares favorably with the $76 
that Nasdaq charges professional subscribers for its combined TotalView 
and OpenView products and the $60 that NYSE charges professional 
subscribers for NYSE OpenBook.
    Nonprofessional subscriber monthly fees of $5 per device for the 
receipt of ArcaBook data relating to CTA Plan and ETF Securities and $5 
per device for the receipt of ArcaBook data relating to UTP Plan 
Securities (a combined $10) compare favorably with the fees NYSE and 
Nasdaq charge for limit order data

[[Page 70314]]

services; \14\ NYSE Arca proposes to continue to assess these fees. For 
nonprofessional subscribers, Nasdaq charges a device fee of $14 per 
month for its TotalView product and $1 per month for its OpenView 
product. NYSE charges nonprofessional subscribers a monthly device fee 
of $15, with a monthly maximum of $25,000.\15\ NYSE Arca subjects its 
monthly maximum for nonprofessional subscribers to the same annual 
escalator as NYSE.
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    \14\ The Exchange does not propose to impose device fees for the 
display of limit order, quotation and last sale price information 
relating to bonds that are traded through the Exchange's facilities.
    \15\ Securities Exchange Act Release No. 34-59544 (March 9, 
2009), 74 FR 11162 (March 16, 2006).
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    For direct access, NYSE Arca will continue to charge $750 per month 
for a set of up to four logons For indirect access, NYSE Arca will 
continue to charge $750 per month for any number of logons. In 
contrast, NYSE charges $5,000 per month for direct or indirect access 
to OpenBook and Nasdaq charges $2,500 per month for access to TotalView 
and another $2,500 per month for access to the OpenView datafeed.
B. Dodd-Frank Act
    Some industry participants have expressed the view that the Dodd-
Frank Act materially alters the scope of the Commission's review of fee 
filings for proprietary market data products.\16\ In the Dodd-Frank 
Act, Congress allowed the Commission to rely upon the forces of 
competition to ensure that fees for market data are fair and 
reasonable. The Dodd-Frank Act creates a presumption that exchange 
fees, including market data fees imposed upon non-members, are to take 
effect immediately. It provides that the Commission should only take 
action to temporarily suspend a fee change (which suspension would then 
be followed by a proceeding to determine whether the fee change should 
be approved or disapproved) in certain specified situations.\17\ There 
is no basis to suspend the immediate effectiveness of this filing.
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    \16\ See Securities Exchange Act Release No. 34-62887 (September 
10, 2010); 75 FR 57092 (September 17, 2010); Securities Exchange Act 
Release No. 34-62907 (September 14, 2010); 75 FR 57314 (September 
20, 2010); and Securities Exchange Act Release No. 34-62908 
(September 14, 2010); 75 FR 57321 (September 20, 2010).
    \17\ The NetCoalition Decision does not address the statutory 
amendments encompassed by the Dodd-Frank Act in any way. No 
questions relating to the operation or effect of those amendments 
were before the D.C. Circuit in connection with the petitions for 
review of the Direct Order. Nor did the D.C. Circuit have any 
occasion to discuss those amendments in connection with the 
NetCoalition Decision.
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C. Competition
    ArcaBook fees are fair and reasonable because competition for order 
flow provides an effective constraint on the level of fees that the 
Exchange has the ability and incentive to charge for its market data 
products.
1. The Direct Order
    In approving the fees in the Direct Order, the Commission adopted a 
``market-based approach'' to assess whether non-core fees, such as the 
ArcaBook fees, satisfy the statutory requirements of fairness and 
reasonableness. Under this two-part approach, the Commission first 
determines ``whether the exchange was subject to significant 
competitive forces in setting the terms of its proposal for non-core 
data, including the level of any fees.'' \18\ If so, the Commission 
approves the proposal ``unless it determines that there is a 
substantial countervailing basis to find that the terms'' violate the 
Exchange Act or Commission rules.\19\
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    \18\ Direct Order at 74,781.
    \19\ Id.
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    In the Direct Order, the Commission approved the ArcaBook fees 
after determining that the market-based approach provided alternative 
indicators of price fairness and reasonableness that made Commission 
consideration of costs unnecessary. It cited the availability to market 
participants of alternatives to purchasing ArcaBook data. The Direct 
Order also cited NYSE Arca's compelling need to attract order flow from 
market participants and the negative effect of higher market data fees 
on order flow. The Commission found no countervailing basis to find 
that the terms of the Exchange's proposal violated the Exchange Act or 
the Commission's rules.\20\
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    \20\ See infra section 3(a)(ii)(C)(4)(c); Direct Order at 
74,782-74,784.
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2. The NetCoalition Decision
    The D.C. Circuit held that the Commission's market-based approach 
does not contravene the Exchange Act, rejecting the Petitioners' claims 
that Congress intended for the Commission to apply a cost-based 
approach in determining whether market data fees are fair and 
reasonable.\21\ However, the Court found that the record did not 
provide adequate support for the Commission's determinations that (i) 
the availability of alternatives to ArcaBook data and (ii) the adverse 
effect of higher ArcaBook fees on order flow and trading revenues 
provide effective constraints on the market data fees that the Exchange 
has the ability and incentive to charge.\22\
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    \21\ NetCoalition Decision at 14-15.
    \22\ Id. at 25-27.
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3. The Competitive Market for Market Data Products
    Several features of the market data business directly indicate that 
it is subject to competition. Investors can find suitable substitutes 
for most proprietary market data products. A market stands a high risk 
that investors may substitute another source of market information for 
its own because securities and investment methodologies are fungible.
    A high correlation exists among the fee levels that NYSE, NYSE 
Arca, Nasdaq, and NASDAQ OMX BX charge and among the characteristics of 
their respective proprietary data products. That itself is consistent 
with the presence of competition in general, and of competition among 
those participants in particular. Similarly, the history and continued 
schedule of product innovation are consistent with the presence of 
competition. Examples include the advent of multicast feeds, format 
improvements, new execution messages, improvements in message 
efficiency, enterprise licensing, unified pricing for multiple 
categories of data, free trials, nonprofessional subscriber discounts, 
and new alternative methodologies for counting usage. These changes and 
innovations, and the fact that other markets adopted similar changes, 
provide strong evidence of competition in the market for depth-of-book 
data products among exchanges.
4. Availability of Alternatives to ArcaBook
    One reason that ArcaBook fees are fair and reasonable is that 
market participants have alternatives to purchasing ArcaBook data. For 
example, market participants can use depth-of-book data from BATS, 
NYSE, and/or Nasdaq to gauge liquidity and place orders at NYSE Arca 
and/or at other markets. Indeed, NYSE Arca's data indicates that ten of 
the top 30 users of intermarket sweep orders (``ISOs'') \23\ on NYSE 
Arca do not subscribe to ArcaBook. They believe they have adequate 
sources of data to submit ISOs without purchasing ArcaBook data.
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    \23\ An intermarket sweep order is a limit order designated for 
automatic execution in a specific market center even when another 
market center is publishing a better quotation; they are typically 
used by institutional algorithmic investors, not retail investors.
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    To illustrate how the availability of alternatives constrains fees 
for depth-of-book data, suppose there were a hypothetical increase in 
the fee for a

[[Page 70315]]

market's depth-of-book data from $10 to $15, where $10 is the fair and 
reasonable level. Suppose that at $10 the depth-of-book data would have 
1,000 subscribers, and thus total revenue of $10,000. Suppose that an 
increase in the fee to $15 would cause 400 users to cancel their 
subscriptions in favor of available alternatives (which might include 
not purchasing depth-of-book data at all), leaving 600 subscribers and 
total revenue of $9,000. Assuming there are no variable costs that 
depend on the number of subscribers, the hypothetical fee increase 
would reduce net revenue by $1,000, and hence the Exchange would not 
have an incentive to raise the price from $10 to $15.
    NYSE Arca's experience also demonstrates that its proprietary 
market data customers are sensitive to the price charged for access to 
ArcaBook, and that the elasticity of demand for access to ArcaBook 
would deter the Exchange from requesting a fee unconstrained by 
competitive forces. The Commission issued the Direct Order in December 
2008, and NYSE Arca started charging for ArcaBook soon after. As Table 
8 \24\ shows, there was an immediate and significant reduction in the 
number of accounts with at least one subscription for ArcaBook after 
the Exchange started charging for ArcaBook.\25\ One can infer that any 
unreasonable increase in the fee would cause a loss in subscribers, and 
therefore a loss of the fee revenue that NYSE Arca would earn from 
these subscribers.
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    \24\ Copies of all charts and tables referenced herein are 
included in Exhibit 3 B.
    \25\ It should also be noted that before NYSE Arca began 
charging for ArcaBook, many users were not required to report their 
ArcaBook usage to the Exchange. Table 8's pre-2009 figures thus 
likely understate both the number of users before the Exchange began 
to charge and the magnitude of the decline in users after NYSE Arca 
began to charge.
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    Another way to examine this issue is to examine the nature of the 
market for depth-of-book data. The D.C. Circuit noted that depth-of-
book data might be of more use for certain types of market participants 
than others, and NYSE Arca agrees. One important category of users of 
depth-of-book data are those who use ISOs. The primary type of ISO on 
NYSE Arca is the ``PNP ISO'' order type. In July 2010, 30 firms 
generated approximately 99% of the PNP ISO orders on NYSE Arca (by both 
trade and order volume).\26\ There are several important pieces of 
information that go with that statistic: First, ten of the firms 
(approximately 33.3% of the firms, representing approximately 7.4% of 
the PNP ISO orders) did not subscribe to ArcaBook in June 2010, 
indicating that they believed they had viable alternative sources of 
the data necessary to submit large ISOs on NYSE Arca).
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    \26\ Together, these 30 firms accounted for approximately 56% of 
NYSE Arca's Tape A and Tape B volume for June 2010.
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    Second, the top 20 firms that used ISOs on NYSE Arca and did 
subscribe to ArcaBook accounted for 54.72% of NYSE Arca's Tape A and 
Tape B volume for June 2010.\27\
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    \27\ These statistics likely understate the comparative 
contributions of sophisticated users of depth-of-book data. Because 
of the way market participants submit, execute, and report trades, 
the data the Exchange used to derive these statistics does not 
include all trades that are attributable to these firms. (For 
example, ``Firm A'' may purchases ArcaBook data under the name 
``Firm A'' but submit trades under many different names. This data 
would not capture trades by entities other than ``Firm A''.)
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    This confirms that users of depth-of-book data account for 
significant trading volume, even though they only amount to a small 
percentage of all traders.\28\
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    \28\ See NetCoalition Decision at 26 n.14.
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    In assessing the competitive landscape for depth-of-book data, one 
must determine whether the availability of alternative depth-of-book 
products would make this subset of market participants sensitive to one 
market's unreasonable depth-of-book product pricing. We believe that it 
is self-evident that it does. All of the investors within this subset 
make rapid decisions regarding what market data to purchase and where 
to direct their orders. They base those decisions on all their costs to 
trade (including the costs of market data they choose to purchase). 
They invest significant amounts of capital based on those decisions.
    In contrast, the primary objectors to the 2006 Rule Change were 
data vendors (as opposed to market participants) whose business 
interests lie firmly rooted in reselling the exchanges' market data at 
significant mark-ups (or in attracting ``eyeballs'' to their sites to 
generate advertising revenue). For acting as middlemen in distributing 
the exchanges' market data to investors, traditional market data 
vendors, such as several that are SIFMA members, receive from investors 
a large multiple of the amounts that those vendors pay the exchanges 
for the right to distribute the data. No statutory standard constrains 
the amounts that those vendors may charge investors. Obviously, 
protesting the exchanges' fees is in their business interests because, 
if successful, it would increase their profit margins.
5. Competition for Orders and Trades
    In addition, ArcaBook fees are fair and reasonable because 
competition for order flow and trade executions provides an effective 
constraint on the level of fees that the Exchange has the ability and 
incentive to charge for its market data products. NYSE Arca competes 
for orders, which represent liquidity, by offering liquidity rebates 
and by advertising those orders through dissemination of depth-of-book 
data. NYSE Arca competes for trades by offering liquidity, competitive 
trading fees, and high quality, efficient trading services.
a. Hypothetical
    The hypothetical discussed above can be adapted to demonstrate how 
(i) the availability of alternatives to an exchange's depth-of-book 
data, combined with (ii) the adverse effect of a higher fee for depth-
of-book data on net revenue from execution of trades, together 
constrain the fee for depth-of-book data to a fair and reasonable 
level. As before, suppose there were a hypothetical increase in the fee 
for depth-of-book data from $10 to $15, where $10 is the fair and 
reasonable level. Suppose that at $10, the depth-of-book data product 
would have 1,000 subscribers, and thus total revenue of $10,000. 
Suppose that an increase in the fee to $15 would cause 200 users 
(rather than 400, as in the preceding hypothetical) to cancel their 
subscriptions, leaving 800 subscribers and total revenue of $12,000. 
Assuming no variable costs that depend on number of subscribers, the 
hypothetical fee increase would increase net revenue by $2,000, and 
hence the exchange would have an incentive to raise the price from $10 
to $15. However, suppose that the increase in the price of depth-of-
book data caused a reduction in order flow and net trading revenue 
(above variable costs) from $25,000 to $21,000. In that case, the sum 
of net revenues from the depth-of-book data and execution of trades 
would decline from $35,000 to $33,000 as a result of the increase in 
the fee for depth of book data, and the exchange would not have an 
incentive to raise the fee. This hypothetical is consistent with the 
record evidence regarding the linkage between market data and order 
flow.
b. The Record Regarding Order Flow Competition
    Considerable evidence exists to support the conclusion that 
competition for order flow and the availability of suitable 
alternatives constrain fees for non-core market data to levels that are 
fair and reasonable, both within the existing record and as 
supplemented herein.

[[Page 70316]]

i. Hendershott & Jones
    Prior studies provide evidence that order flow on a market depends 
directly and substantially on the availability of depth-of-book data 
for that market. Of particular importance is an empirical study by 
Terrence Hendershott & Charles M. Jones, Island Goes Dark: 
Transparence, Fragmentation, and Regulation (``Hendershott & 
Jones'').\29\ Hendershott & Jones is an independent, exhaustive, 
refereed, published, and publicly available study, based on substantial 
empirical data and economic and statistical analysis, of the effects of 
one market's decision to stop displaying depth-of-book data entirely 
for certain products (because it did not wish to comply with the then-
current version of Regulation ATS). The Commission previously relied on 
this study in concluding that order flow competition constrains market 
data fees \30\ (although the NetCoalition Decision did not refer to 
it). Hendershott and Jones are well-respected academics.
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    \29\ 18 Review of Financial Studies 743 (2005). A copy of 
Hendershott & Jones is attached hereto as Exhibit 3 A.
    \30\ Direct Order at 74,784 n. 218.
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    Hendershott and Jones studied the impact of Island ECN ceasing to 
display its limit order book in the three most active ETFs for which it 
was the dominant venue; this occurred in late 2002. Hendershott and 
Jones found that Island's share of trading activity in each of these 
three ETFs fell when Island ceased displaying its limit order book for 
those ETFs. The following are among the elements of this empirical 
study that support the Commission's conclusion in the Direct Order that 
competition for order flow provides an effective constraint on the 
market data fees that the Exchange has the ability and incentive to 
charge:
     Hendershott & Jones examined ``all trades and quotes'' for 
the three ETFs. Their analysis of these data demonstrate the direct and 
substantial relationship between order flow and the availability of 
market data. Island's decision to cease displaying depth-of-book and 
other market data caused a 40% to 55% decline in trading in each of 
these ETFs on Island, and a comparable increase in trading in these 
ETFs at other venues, and those effects were immediate and 
statistically significant at a high level.\31\ Hendershott & Jones make 
clear that they found ``order flow migration'' to other venues after 
Island ceased displaying depth-of-book and other market data.\32\ 
Indeed, they concluded that the date Island went dark represented a 
``shift in regime'' that not only caused order flow to migrate 
``substantially'' from Island to other markets, but also from ETFs to 
E-mini futures (a different product entirely).\33\ Hendershott & Jones 
also specifically addressed the point that even non-professional 
traders are likely to direct their order flow to venues in which more 
information about the likely terms of a trade is available.\34\
---------------------------------------------------------------------------

    \31\ Id. at 755-58.
    \32\ Id. at 764. See also id. at 765 (``Given that Island's 
going dark is a change in transparency that leads to order flow 
migration * * *.'').
    \33\ Id. at 769.
    \34\ Id. at 779.
---------------------------------------------------------------------------

     Hendershott & Jones also analyzed what happened to order 
flow when Island eventually re-displayed depth-of-book and other market 
data. When Island did so, it regained some (but not all) of the order 
flow it had lost.\35\
---------------------------------------------------------------------------

    \35\ Id. at 782-84.
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    Hendershott & Jones thus provides detailed and persuasive evidence 
that availability of depth-of-book and other data relating to one 
trading venue has a substantial effect on the level of order flow at 
that venue.\36\
---------------------------------------------------------------------------

    \36\ In addition, Hendershott & Jones noted that the 
introduction of NYSE's OpenBook real-time limit order book data feed 
was associated with increased order flow to NYSE. Id. at 747.
---------------------------------------------------------------------------

    Hendershott & Jones supports an inference that an increase in the 
price of depth-of-book data for a market will cause a reduction in 
order flow at that market. Therefore, it is clear that, if a market 
were to consider charging a higher price for its depth-of-book data, it 
would need to weigh the increased revenues it would receive from depth-
of-book customers that continue to purchase the product against the 
reduced revenues from (a) subscription cancellations, and (b) fewer 
trade executions. Thus, the effect of availability of depth-of-book 
data on order flow constrains the ability and incentive of a market to 
charge a higher price for its depth-of-book data.
ii. Pricing of Depth-of-Book Data by Exchanges Other Than NYSE and 
Nasdaq
    Observations of past and current behavior of markets support the 
conclusion that because of order flow competition markets do not have 
the ability or incentive to set supra-competitive prices for non-core 
market data. BATS (a recent entrant that has experienced significant 
market share growth) has publicly noted that part of its strategy to 
gain order flow is to provide its depth-of-book data for free, because 
BATS believes that the widest possible dissemination of these data is 
essential to attract order flow at the current stage of BATS's 
development. NYSE Arca notes that it used the same strategy initially 
to attract order flow. If the price charged for depth-of-book data did 
not have a significant effect on order flow and revenue from the 
execution of trades, it would not be rational for BATS to provide its 
depth-of-book data free of charge, and it would not have been rational 
for NYSE Arca to have done so initially.
iii. Effects of Competition on Shares of Trading
    In the Direct Order, the Commission concluded that there is fierce 
competition for order flow. More recent data show that this conclusion 
was correct and that competition has intensified.
    Table 1 shows the monthly trading volume of U.S. equities on NYSE 
Arca from 2001 through July 2010. After initially climbing, volume on 
NYSE Arca has been volatile, and, indeed, since October 2008 has fallen 
significantly. Table 2 shows NYSE Arca's percentage share of U.S. 
equities trading. Together, Tables 1 and 2 show that market 
participants are not wedded to NYSE Arca's platform and that NYSE Arca 
must continually compete to sell its trading services.\37\
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    \37\ This volatility evidences the speed and frequency with 
which market participants change their order routing determinations.
---------------------------------------------------------------------------

    The volatility and trends in the shares of total trading volume on 
each of the various markets demonstrate that competition among these 
markets in the sale of trading services is intense. Tables 3, 4, 5, and 
6 provide graphical decompositions of shares from 2001 through July 
2010 for NYSE Arca, NYSE, Nasdaq, the trade reporting facilities 
(``TRFs''), BATS, and other markets.\38\ Table 3 shows shares for all 
U.S. equities trading. It demonstrates that NYSE, NYSE Arca, and 
Nasdaq's shares of trading have fallen, while the TRFs and BATS have 
taken a larger share of trading. This shows not only that the market 
for trading equities is competitive but also that entry has been 
easy.\39\ Table 4 shows similar results for

[[Page 70317]]

Tape A, and in particular shows that the TRFs have captured a 
significant share of trading from other markets. Table 5 shows shares 
for Tape B. Interestingly, Table 5 shows NYSE Arca coming into the 
market and quickly capturing a share of other exchanges' trading 
activity. It goes on to show the TRFs then coming in and doing the same 
(including capturing a share of NYSE Arca's trading activity), 
eventually achieving a share of nearly 30%. Table 6 shows a similar 
result for Tape C. Table 7 shows data on the same shares for the period 
January 2010-July 2010.
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    \38\ The TRF data includes non-exchange trades through NYSE, 
Nasdaq, BSE, NSX, and FINRA.
    \39\ Ease of entry into this market is further evidenced by the 
recent entry of Direct Edge, which began operating two exchanges in 
July 2010. For the month of July 2010, the Direct Edge exchanges, 
EDGA and EDGX, accounted for 1.69% and 2.57%, respectively, of all 
tape-reported trade volume. For the month of August, those numbers 
increased to 3.79% and 4.75%. This rapid increase in trading volume 
evidences both the ease of entry into this market and the speed with 
which market participants change the venues to which they route 
orders. Direct Edge's rapid market share growth is not unique, NYSE 
Arca experienced a similarly rapid increase in market share when it 
commenced operations in 2004, and, as shown in Tables 4, 5, and 6, 
BATS's trading volume grew quickly, further evidencing ease of 
entry.
---------------------------------------------------------------------------

    Moreover, this data provides additional support for the platform 
competition concept discussed below and further demonstrates that 
individual market depth-of-book products are substitutable to the 
extent market participants might not wish to purchase all such 
products. For example, large market participants place orders on many 
markets simultaneously, so they may not need all markets' depth-of-book 
products or may choose to purchase some but not others based on price 
and/or other features. Table 7 shows that Nasdaq had approximately the 
same share in Tape A and B securities that NYSE Arca did during the 
January-July 2010 period, meaning that a market participant placing 
orders in both markets could choose one depth-of-book product rather 
than the other based on price and/or other features.
iv. Effects of Competition on Trading Revenues
    Since July 2007 NYSE Arca's per share net revenue capture has 
fallen and market share has declined, although its trading volume has 
increased somewhat due to growth in industry volumes. This is the 
result of fierce competition for order flow and is not consistent with 
NYSE Arca being able to set prices for its proprietary market data 
(such as ArcaBook) at its whim; it is also further support for the 
platform competition discussion below. As the Commission is aware, 
transaction fees have generally fallen across markets. The competition 
between those markets is passed through to traders in the form of lower 
net prices for trading services.
D. Pricing for Joint Products
    Other market participants have noted that the liquidity provided by 
the order book, trade execution, core market data, and non-core market 
data are joint products of a joint platform and have common costs.\40\ 
The Exchange agrees with and adopts those discussions and the arguments 
therein. The Exchange also notes that the economics literature confirms 
that there is no way to allocate common costs between joint products 
that would shed any light on competitive or efficient pricing.\41\
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    \40\ See Securities Exchange Act Release No. 34-62887 (September 
10, 2010); 75 FR 57092 (September 17, 2010); Securities Exchange Act 
Release No. 34-62907 (September 14, 2010); 75 FR 57314 (September 
20, 2010); and Securities Exchange Act Release No. 34-62908 
(September 14, 2010); 75 FR 57321 (September 20, 2010); see also 
attachment to August 1, 2008 Comment Letter of Jeffrey S. Davis, 
Vice President and Deputy General Counsel, NASDAQ OMX Group, Inc. 
(Statement of Janusz Ordover and Gustavo Bamberger) (a copy of which 
is attached hereto as Exhibit 3 C.).
    \41\ See generally Mark Hirschey, Fundamentals of Managerial 
Economics at 600 (2009) (``It is important to note, however, that 
although it is possible to determine the separate marginal costs of 
goods produced in variable proportions, it is impossible to 
determine their individual average costs. This is because common 
costs are expenses necessary for manufacture of a joint product. 
Common costs of production--raw material and equipment costs, 
management expenses, and other overhead--cannot be allocated to each 
individual by-product on any economically sound basis. * * * Any 
allocation of common costs is wrong and arbitrary.''). This is not 
new economic theory. See, e.g., F.W. Taussig, ``A Contribution to 
the Theory of Railway Rates,'' Quarterly Journal of Economics V(4) 
438, 465 (July 1891) (``Yet, surely, the division is purely 
arbitrary. These items of cost, in fact, are jointly incurred for 
both sorts of traffic; and I cannot share the hope entertained by 
the statistician of the Commission, Professor Henry C. Adams, that 
we shall ever reach a mode of apportionment that will lead to 
trustworthy results.'').
---------------------------------------------------------------------------

    That large market participants, including internalizers handling 
retail order flow, use proprietary exchange feeds (rather than CTS and 
CQS feeds) to make trade and routing decisions further demonstrates the 
joint nature of market data and order flow.\42\ So does the fact that 
some exchanges use certain market data quote revenue as a form of 
direct market maker liquidity provider rebate to drive more liquidity 
to their books in less active stocks. This highlights that market data 
and trade executions are joint products that are linked on a platform 
basis. Charts 3-7 provide additional support for the existence of this 
type of platform competition.
---------------------------------------------------------------------------

    \42\ See Report of the Staffs of the CFTC and SEC to the Joint 
Advisory Committee on Emerging Regulatory Issues--Findings Regarding 
the Market Events of May 6, 2010 at 76-79 (Sept. 30, 2010). That 
report again recognized that most retail order flow is handled by 
internalizers. See id. at 77.
---------------------------------------------------------------------------

E. Pricing Non-Core Data Based on Cost Is Impractical
    The Exchange believes that, even if it were possible as a matter of 
economic theory, cost-based pricing for non-core market data would be 
so complicated that it could not be done practically.\43\ The record 
relating to the 2006 Rule Change includes several documents attesting 
to the difficulty of cost-based pricing in this area. In addition to 
those, we respectfully direct the Commission's attention to two reports 
issued by PHB Hagler Bailly, Inc. (``PHB'').\44\ The New York Stock 
Exchange retained PHB to assist it in connection with its response to 
the Commission's 2000 Concept Release on the Regulation of Market 
Information Fees and Revenues (the ``2000 Concept Release''). The PHB 
reports conclude that cost-based pricing would inevitably stifle 
competition and innovation and entangle both the industry and the 
Commission in time-consuming, expensive, and ultimately fruitless 
proceedings and data analysis. Their conclusions include the following:
---------------------------------------------------------------------------

    \43\ In addition, the evidence of competitive constraints on 
market data pricing (both directly and in the context of joint 
platforms) is so strong that it makes devoting the resources that 
would be necessary to try to incorporate a cost-based pricing model 
unnecessary. Because of the level of competition that already exists 
and the compelling need to devote regulatory resources to other 
issues, the Exchange does not believe there is any need for the 
Commission and markets to become embroiled in what would almost 
certainly become prolonged rate-making proceedings. Indeed, the 
amendment of Section 19 effected by the Dodd-Frank Act is further 
evidence that Congress intended market data fees to be governed by 
the development of competition in the markets rather than cost-based 
ratemaking.
    \44\ See ``Issues Surrounding Cost-Based Regulation of Market 
Data Prices,'' which provides a view of cost-based pricing from a 
historical regulatory perspective, and ``The Economic Perspective on 
Regulation of Market Data,'' which provides an economic assessment 
of cost-based pricing. The two reports constitute Appendix C to 
NYSE's comments to the 2000 Concept Release (``NYSE Comments'') and 
can be found on the Commission's Web site at https://www.sec.gov/rules/concept/s72899/buck1.htm. They are attached hereto as Exhibits 
2 D. and E. for the Commission's convenience.
---------------------------------------------------------------------------

     Enormous Administrative Burdens. The administrative 
burdens that cost-based pricing would place on all parties, in 
particular the Commission, would be ``enormous.'' The Commission would 
have to cost-regulate a large number of participants. Extraordinary 
amounts of information, accounts, and reports would have to be 
standardized and analyzed to make determinations that would stand the 
scrutiny and challenges to which rate-making decisions are often 
subject. This is the source of the Exchange's belief that cost-based 
rate regulation is infeasible.\45\
---------------------------------------------------------------------------

    \45\ Footnote 11 to the NYSE Comments describes the significant 
nature of the burdens associated with cost-based pricing and the 
Exchange incorporates that discussion here by reference.
---------------------------------------------------------------------------

     Joint Products. It is impossible to regulate market data 
prices in isolation from prices charged by markets for other services 
that are joint products. Market data and transaction execution are 
``joint products,'' linked in a way that pricing of one inevitably 
affects pricing of the other. If rate regulation were to reduce the 
revenues that could be realized from

[[Page 70318]]

market data fees, then other fees--transaction fees or, in the case of 
the primary markets, listing fees--would have to be increased to 
maintain the total revenue infrastructure and the same level of 
services. However, because the three types of fees fall differently on 
broker-dealers following different business models and differently on 
broker-dealers, investors, and listed companies, the result would be a 
reallocation of market costs based not on competition and constituent 
governance but rather as a side-effect of governmental intervention.
     Litigation. Under cost-based rate regulation, litigation 
is inevitable, if only to delay rate decisions deemed unfavorable by 
one party or another.
     Waste and Negative Incentives. Consistently across 
industries where it has been used, cost-based regulation of pricing has 
been found to distort incentives, including incentives to minimize 
costs and to innovate, and to lead to considerable waste. Making 
arbitrary cost allocations provides disincentives for markets to invest 
in more resilient systems and to make their data services more widely 
available. It encourages padding and cross-subsidization of costs, yet 
provides no incentive to reduce costs through operating or 
administrative efficiencies. It would create incentives to use 
accounting practices to shift the recovery of costs to market data fees 
and away from transaction and listing fees.
     Fee Increases. In contrast to the dramatic decline in 
market data costs over the past quarter century, under cost-based 
regulation of prices, it is quite possible the industry would 
experience over time frequent rate increases based on escalating 
expense levels. Without the demonstration of a strong need to move to 
this form of regulation, such a result cannot be justified.
     Rate of Return. Rate regulation is never aimed solely at 
minimizing rates to consumers, since very low rates may affect the 
attractiveness of the business to competitors and potential 
competitors, or the level of service provided. The regulator must 
determine what rate of return is ``fair'' and provide a suitable 
incentive for service providers while protecting consumers as well. No 
one has demonstrated why the Commission needs to be the arbiter of this 
issue to enforce its responsibilities under Section 19 of the Exchange 
Act.
     Market Forces. Rate regulation implies a belief that an 
industry cannot rely upon market forces. We believe that constituent 
boards and customer control have in fact provided the pricing 
discipline that any government would expect and desire in the area of 
market data services and fees. Indeed, the discussion above 
demonstrates that the competitive constraints that apply to market data 
pricing are formidable.
     Trends. In contrast to cost-based pricing, the 
Commission's market-based approach to approving market data fees is 
currently the goal of many other regulatory bodies in other industries. 
Even in industries historically subject to utility regulation, cost-
based rate making has been discredited and other regulated industries 
are moving away from cost-based rate-making. Proprietary market data 
dissemination is far from an ordinary utility function, and cost-based 
regulation is particularly inappropriate in the proprietary market data 
arena.
    Such results would not be in the best interests of market 
participants and would be inconsistent with Congress's direction that 
the Commission use its authority to foster the development of the 
national market system.
F. Impact on Retail Investors
    Pricing for non-core data products generally does not impact retail 
investors. As the Commission and the Commodities Futures Trading 
Commission recently noted, most retail equities transactions are 
internalized by a broker-dealer.\46\
---------------------------------------------------------------------------

    \46\ See Report of the Staffs of the CFTC and SEC to the Joint 
Advisory Committee on Emerging Regulatory Issues--Findings Regarding 
the Market Events of May 6, 2010 at 77 (Sept. 30, 2010).
---------------------------------------------------------------------------

    That makes depth-of-book data of little relevance to retail 
investors. And retail broker-dealers are not required to purchase 
depth-of-book data to fulfill their duties of best execution.\47\
---------------------------------------------------------------------------

    \47\ See NetCoalition Decision at 6 n.6; Direct Order at 74,788 
& nn. 259-266.
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iii. Contracts
    As before, the Exchange will require or continue to require each 
recipient of a datafeed containing NYSE Arca Data to enter into the 
form of ``vendor'' agreement into which the CTA and CQ Plans require 
recipients of the Network A datafeeds to enter. That agreement will 
authorize the datafeed recipient to provide NYSE Arca Data services to 
its customers or to distribute the data internally.
    In addition, the Exchange will require or continue to require each 
professional end-user that receives NYSE Arca Data displays 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 or continue to require 
vendors and broker-dealers to subject nonprofessional subscribers to 
the same contract requirements as the CTA and CQ Plan Participants 
require of Network A nonprofessional subscribers.
    The Network A Participants drafted the vendor and Network A 
professional subscriber agreements as one-size-fits-all forms to 
capture most categories of market data dissemination. They are 
sufficiently generic to accommodate or continue to accommodate NYSE 
Arca Data. The Participants in the CTA and CQ Plans have submitted the 
vendor form and the professional subscriber form to the Commission on 
Form 19b-4 on multiple occasions. (See Release Nos. 34-22851 (January 
31, 1986), 34-28407 (September 10, 1990), and 34-49185 (February 4, 
2004).
2. Statutory Basis
    For the foregoing reasons, NYSE Arca believes that the proposed 
rule change is consistent with the provisions of Section 6 of the Act, 
in general, and with Section 6(b)(4) \48\ of the Act, in particular, in 
that it provides for the equitable allocation of reasonable dues, fees 
and other charges among members and issuers and other persons using the 
facilities of NYSE Arca. In this regard, the market data fees that are 
the subject of this filing, in conjunction with fees for other 
services, provide for an equitable allocation of NYSE Arca's overall 
costs among users of its services. The market data fees are fair and 
reasonable because they compare favorably to fees that other markets 
charge for similar products and because competition provides an 
effective constraint on the market data fees that the Exchange has the 
ability and incentive to charge.
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    For the reasons described above, the Exchange believes that the re-
proposed fees will not impose any burden on competition that is not 
necessary or appropriate in the furtherance of the purposes of the 
Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit, 
comments regarding the proposed rule change or re-authorization. 
Subsequent to the NetCoaliton Decision, the Exchange has not received 
any unsolicited written comments from Exchange participants or other 
interested parties.

[[Page 70319]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(ii) of the Act \49\ and subparagraph (f)(2) of 
Rule 19b-4 thereunder \50\ because it establishes a due, fee, or other 
charge imposed by the Exchange. At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
suspend 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. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \50\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2010-97 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2010-97. 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,\51\ 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, on official business days between the hours of 10 a.m. 
and 3 p.m. 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-NYSEArca-2010-97 and should 
be submitted on or before December 8, 2010.
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    \51\ The text of the proposed rule change is available on the 
Commission's Web site at https://www.sec.gov/rules/sro.shtml.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\52\
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    \52\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28893 Filed 11-16-10; 8:45 am]
BILLING CODE 8011-01-P