Consolidated Tape Association; Notice of Filing and Immediate Effectiveness of the Sixteenth Charges Amendment to the Second Restatement of the CTA Plan and Eighth Charges Amendment to the Restated CQ Plan, 17946-17952 [2013-06730]
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17946
Federal Register / Vol. 78, No. 57 / Monday, March 25, 2013 / Notices
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SECURITIES AND EXCHANGE
COMMISSION
Dated: March 14, 2013.
Antonio Dias,
Technical Advisor, Advisory Committee on
Reactor Safeguards.
Consolidated Tape Association; Notice
of Filing and Immediate Effectiveness
of the Sixteenth Charges Amendment
to the Second Restatement of the CTA
Plan and Eighth Charges Amendment
to the Restated CQ Plan
[FR Doc. 2013–06734 Filed 3–22–13; 8:45 am]
BILLING CODE 7590–01–P
Sunshine Act Meetings
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, March 28, 2013 at 2:00
p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matters at the Closed
Meeting.
Commissioner Aguilar, as duty
officer, voted to consider the items
listed for the Closed Meeting in a closed
session.
The subject matter of the Closed
Meeting will be:
Institution and settlement of injunctive
actions;
Institution and settlement of
administrative proceedings;
Other matters relating to enforcement
proceedings.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: March 21, 2013.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–06928 Filed 3–21–13; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69157; File No. SR–CTA/
CQ–2013–01]
March 18, 2013.
Pursuant to Section 11A of the
Securities Exchange Act of 1934
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(‘‘Act’’),1 and Rule 608 thereunder,2
notice is hereby given that on March 11,
2013,3 the Consolidated Tape
Association (‘‘CTA’’) Plan and
Consolidated Quotation (‘‘CQ’’) Plan
participants (‘‘Participants’’) 4 filed with
the Securities and Exchange
Commission (‘‘Commission’’) a proposal
to amend the Second Restatement of the
CTA Plan and Restated CQ Plan
(collectively, the ‘‘Plans’’).5 The
proposal represents the sixteenth
charges amendment to the CTA Plan
(‘‘Sixteenth Charges Amendment to the
CTA Plan’’) and the eighth charges
amendment to the CQ Plan (‘‘Eighth
Charges Amendment to the CQ Plan’’),
and reflects changes unanimously
adopted by the Participants.
The purpose of the Sixteenth Charges
Amendment to the CTA Plan and Eighth
Charges Amendment to the CQ Plan
(collectively, the ‘‘Amendments’’), is to
simplify the Plans’ existing market data
fee schedules by compressing the
current 14-tier Network A device rate
schedule into four tiers, by
consolidating the Plans’ eight fee
schedules into one, and by realigning
the Plans’ charges more closely with the
services the Plans provide, without
materially changing the revenues the
current fee schedules generate. The
Participants’ goal is to achieve greater
simplicity and a reduction of
administrative burdens.
1 15
U.S.C. 78k–1.
CFR 242.608.
3 The proposal was originally submitted on
January 30, 2013. It was resubmitted on February
5, 2013, February 28, 2013, and on March 11, 2013.
4 Each participant executed the proposed
amendment. The Participants are: BATS Exchange,
Inc., BATS–Y Exchange, Inc., Chicago Board
Options Exchange, Incorporated, Chicago Stock
Exchange, Inc., EDGA Exchange, Inc. (‘‘EDGA’’),
EDGX Exchange, Inc. (‘‘EDGX’’), Financial Industry
Regulatory Authority, Inc. (‘‘FINRA’’), International
Securities Exchange, LLC, NASDAQ OMX BX, Inc.
(‘‘Nasdaq BX’’), NASDAQ OMX PHLX, Inc.
(‘‘Nasdaq PSX’’), Nasdaq Stock Market LLC,
National Stock Exchange, New York Stock
Exchange LLC (‘‘NYSE’’), NYSE MKT LLC (formerly
NYSE Amex, Inc.), and NYSE Arca, Inc. (‘‘NYSE
Arca’’).
5 See Securities Exchange Act Release Nos. 10787
(May 10, 1974), 39 FR 17799 (May 20, 1974)
(declaring the CTA Plan effective); 15009 (July 28,
1978), 43 FR 34851 (August 7, 1978) (temporarily
authorizing the CQ Plan); and 16518 (January 22,
1980), 45 FR 6521 (January 28, 1980) (permanently
authorizing the CQ Plan). The most recent
restatement of both Plans was in 1995. The CTA
Plan, pursuant to which markets collect and
disseminate last sale price information for nonNASDAQ listed securities, is a ‘‘transaction
reporting plan’’ under Rule 601 under the Act, 17
CFR 242.601, and a ‘‘national market system plan’’
under Rule 608 under the Act, 17 CFR 242.608. The
CQ Plan, pursuant to which markets collect and
disseminate bid/ask quotation information for listed
securities, is a ‘‘national market system plan’’ under
Rule 608 under the Act, 17 CFR 242.608.
2 17
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Pursuant to Rule 608(b)(3)(i) under
Regulation NMS,6 the Participants
designated the Amendments as
establishing or changing a fee or other
charge collected on their behalf in
connection with access to, or use of, the
facilities contemplated by the Plans. As
a result, the Amendments became
effective upon filing with the
Commission. At any time within 60
days of the filing of the Amendments,
the Commission may summarily
abrogate the Amendments and require
that the Amendments be refiled in
accordance with paragraph (a)(1) of Rule
608 and reviewed in accordance with
paragraph (b)(2) of Rule 608, if it
appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or the maintenance of fair and
orderly markets, to remove impediments
to, and perfect the mechanisms of, a
national market system or otherwise in
furtherance of the purposes of the Act.
The Commission is publishing this
notice to solicit comments from
interested persons on the proposed
Amendments.
I. Rule 608(a)
A. Description and Purpose of the
Amendments
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1. In General
The Participants filed the last
significant fee structure change in 1986.
Since then, however, significant change
has characterized the industry,
stemming in large measure from
technological advances, the advent of
trading algorithms and automated
trading, new investment patterns, new
securities products, unprecedented
levels of trading, internationalization
and developments in portfolio analysis
and securities research.
Industry representatives who sit on
the Plans’ Advisory Committee have
noted these changes and have urged
adoption of a modernized, simpler,
easier to read fee schedule. They have
noted the desirability of reducing the
rate spread inherent in the 14-tier
Network A device rate structure and the
need for reducing administrative
burdens. The Participants have
discussed these goals with those
industry representatives. The proposed
changes respond to the industry
representatives’ comments and seek to
establish a simplified pricing structure
that is consistent with current
technology, that reduces administrative
burdens and that promotes the use of
real-time market data.
6 17
CFR 242.608(b)(3)(i).
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The Amendments also move in the
direction of harmonizing fees between
Network A and Network B and of
harmonizing fees under the Plans with
fees under two other transaction
reporting plans: the Joint SelfRegulatory Organization Plan Governing
the Collection, Consolidation and
Dissemination of Quotation and
Transaction Information for NasdaqListed Securities Traded on Exchanges
on an Unlisted Trading Privileges Basis
(the ‘‘Nasdaq/UTP Plan’’) and the
Options Price Reporting Authority Plan
(‘‘OPRA Plan’’). This would reduce
administrative burdens for brokerdealers and other market data users and
simplify fee calculations.
The Amendments also propose to
consolidate, simplify and update the
market data fee schedules under both
Plans to arrive at a single, consolidated
CTA/CQ Fee Schedule. This should
make it easier for market data users to
understand and apply the fee schedule.
The Participants anticipate that the
fee changes would not materially
change the market data revenues
generated under the Plans.
The text of the proposed Amendments
is available on the CTA’s Web site
(https://www.nysedata.com/cta), at the
principal office of the CTA, and at the
Commission’s Public Reference Room.
2. The Proposed Fee Schedule Changes
a. Professional Subscriber Charges
i. Network A
A principal purpose of the proposed
fee schedule changes is to address the
14-tier fee structure that the Participants
have in place for Network A
professional subscribers. That structure
has been in place for more than 25
years. Under the tiered structure, a firm
reports how many display devices its
professional subscribers use and that
number then is used to determine the
tier within which the firm falls.
For reporting purposes, a display
device is any device capable of
displaying market data. Where a
professional subscriber receives market
data services from multiple vendors,
separate device fees apply for each
vendor’s service. Where a vendor
provides market data to a professional
subscriber by means of multiple
applications, separate device fees apply
for each application.
At one extreme, the current Network
A fee tiered structure imposes a
monthly charge of $18.75 per device for
firms employing professional
subscribers who use more than 10,000
devices. At the other extreme, it
imposes a monthly charge of $127.25
per device for a single professional
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subscriber. (For Network A, the rates
entitle the professional subscriber to
receive both Network A last sale
information under the CTA Plan and
Network A quotation information under
the CQ Plan.)
Market data users have told the
Participants that they find the 14-tier
structure challenging to administer and
the $18.75-to-$127.25 spread between
the highest and lowest tiers too wide.
The proposed changes seek to address
both concerns. The Participants propose
a new four-tier monthly Network A fee
structure for the display units of
professional subscribers, as follows:
1. 1–2 devices: $50.00.
2. 3–999 devices: $30.00.
3. 1,000–9,999 devices: $25.00.
4. 10,000 devices or more: $20.00.
The proposed narrowing of the gap
between the highest rates and the lowest
rates would benefit both individuals
who have not qualified as
nonprofessional subscribers and smaller
firms. In particular, individuals and
firms having one device would see their
monthly Network A rate drop from
$127.25 to $50, and firms having two
devices would see their monthly
Network A rate drop from $79.50 per
device to $50 per device. Firms whose
professional subscriber employees use
between 3 and 29 devices would also
have lower rates.
On the other hand, larger firms would
see higher rates in respect of their
internal distribution of market data to
their employees. For example, the rates
for firms whose employees use between
750 devices and 9,999 devices would
rise from $19.75 or $20.75 per device to
$25 per device, and the rates for firms
whose employees use more than 10,000
devices would rise from $18.75 to
$20.00.
Many firms distribute market data to
‘‘Customers’’ and pay CTA/CQ fees on
behalf of those Customers. Those firms
should pay less for their external
distribution to each Customer because
the rates that they would pay on behalf
of each Customer would drop (assuming
that the firms do not provide service to
more than 29 Customer devices). The
amount of the decrease would depend
on the tier into which the Customer
falls.
‘‘Customer’’ refers to an individual
client of the firm, an independent
contractor who may be associated with
the firm but is not an employee of the
firm, a trading company that receives
market data from the firm for use by its
traders, and any other corporate, brokerdealer or other entity to which the firm
provides data.
A firm may only include its own
employees in determining the tier that
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applies to it. It may not include in that
determination any Customer to which it
provides market data or the employees
of any Customer. The rate applicable to
each Customer is separately determined
based on the tier into which the
Customer falls. The Amendments
propose to add a footnote (proposed
footnote 2) to explain this. This
explanation seeks to prevent efforts to
misuse the tiered rate structure. For the
same reason, the Amendments also
propose to eliminate the reference to a
firm’s officers and partners as
authorized internal distributees of the
firm.
Together with the other proposed
amendments to the fee schedule, the
Participants anticipate that the changes
to the Network A professional
subscriber tiered fee structure would not
result in a material change in overall
revenues under the Plans.
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ii. Network B
Professional subscribers currently pay
one amount for Network B last sale
information and a separate amount for
Network B quotation information. Firms
that are members of a Participant
currently pay slightly less than nonmembers. A member pays $27.25 per
month per device to receive both last
sale and quotation information for
Network B and a non-member pays
$30.20. Network B is the only network
that still distinguishes between
members and non-members.
To simplify Network B professional
subscriber rates and to remove the
differential, the Participants propose a
single monthly rate of $24.00 per
device, applicable to both members and
non-members.
The $24.00 Network B rate would
amount to a savings for most
nonprofessional subscribers, the
majority of which currently receive both
last sale and quotation information.
Network B has a small number of data
recipients who receive last sale
information or quotation information,
but not both. The change would amount
to a fee increase for them. The Network
B Participants note that Network A and
the Participants in the Nasdaq/UTP Plan
and the OPRA Plan have not charged
separately for last sale information and
quotation information for many years.
The Participants believe that a single
fee for Network B devices would prove
administratively efficient for data users
and the network administrators. They
note that the Nasdaq/UTP Plan imposes
a single fee of $20 for each device and
that the OPRA Plan imposes a single fee
(currently $25) for each device.
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iii. Broker-Dealer Enterprise Maximums
b. Nonprofessional Subscriber Charges
Currently, the monthly broker-dealer
enterprise maximums are at $660,000
per month for Network A and $500,000
per month for Network B. For that
amount, the enterprise maximums allow
a broker-dealer to provide last sale and
quotation information to an unlimited
number of its own employees and the
brokerage account customers its
nonprofessional subscribers. The Plans
provide that the amounts of the brokerdealer enterprise maximums increase
each calendar year by an amount equal
to the percentage increase in the annual
composite share volume for the
preceding calendar year, subject to a
maximum annual increase of five
percent.
The Participants propose to modify
the means for determining the increase
in the broker-dealer enterprise
maximums. Under the proposal, the
Participants may increase the brokerdealer enterprise maximums for
Network A and Network B by the
affirmative vote of not less than twothirds of the Participants, provided,
however, that they may not increase
either network’s enterprise maximum by
more than four percent for any calendar
year. The Participants may elect not to
increase the fee for any calendar year.
This proposed means for determining
the increase in the broker-dealer
enterprise maximums would reduce the
amount of any one year’s permissible
increase from five percent to four
percent and would better reflect
inflation than does the current means.
The maximum four percent increase is
consistent with the average cost of
living adjustment (‘‘COLA’’) as
published by the Social Security
Administration for the past 38 years.
The Participants have not increased
the Network A broker-dealer enterprise
maximum for more than five years.
They have not increased the Network B
broker-dealer enterprise maximum since
they first adopted it in 1999. They
propose to increase the amount of both
networks’ enterprise maximums for
2013. As a result, the monthly Network
A broker-dealer enterprise maximum
would increase to $686,400 and the
monthly Network B broker-dealer
enterprise maximum would increase to
$520,000. These changes would not take
effect until the implementation date for
the other charges set forth in these
Amendments. The number of firms
reaching the enterprise caps is minimal
and these firms may benefit from
proposed fee reductions in other areas.
Currently, a firm pays $1.00 per
month in respect of its first 250,000
Network A nonprofessional subscribers
and $0.50 for Network A
nonprofessional subscribers in excess of
250,000. A firm pays $1.00 per month
for each of its Network B
nonprofessional subscribers, regardless
of how many such subscribers a firm
has.
The Participants propose to
harmonize the treatment of large and
small firms by applying the $1.00 per
month rate in respect of all Network A
nonprofessional subscribers, regardless
of the number of nonprofessional
subscribers. This would also harmonize
the Network A nonprofessional
subscriber fee with the Network B
nonprofessional subscriber fee, as well
as the $1.00 nonprofessional subscriber
fee payable under the Nasdaq/UTP Plan.
(The fee applicable to nonprofessional
subscribers under the OPRA Plan is
$1.25.) The Participants note that the
number of firms that have more than
250,000 Network A nonprofessional
subscribers is very small.
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c. Per-Query Charges
Currently, Network A and Network B
impose identical three-tiered per-query
rates as follows:
1 to 20 million quotes $.0075 each
20 to 40 million quotes $.005 each
Over 40 million quotes $.0025 each
The Participants propose to modify
their per-query rate structure by
replacing the three-tier structure with
the same one rate as the Nasdaq/UTP
Plan and the OPRA Plan imposes: $.005
for each inquiry for both Network A and
Network B.
As before, a vendor’s per-query fee
exposure for any nonprofessional
subscriber is limited to $1.00 per month
(i.e., the nonprofessional subscriber
rate.)
The single rate would simplify perquery calculations. It would also
harmonize the Network A and Network
B per-query fees with the Nasdaq/UTP
Plan and the OPRA Plan per-query fees.
d. Access Fees
Current and proposed access fees for
direct access to last sale prices are as
follows:
Current Fees:
Network A: $1,000.00
Network B: $350.00
Proposed Fees:
Network A: $1,250.00
Network B: $750.00
Current and proposed access fees for
indirect access to last sale prices are as
follows:
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Current Fees:
Network A: $500.00
Network B: $200.00
Proposed Fees:
Network A: $750.00
Network B: $400.00
Current and proposed access fees for
direct access to quotation information
are as follows:
Current Fees:
Network A: $1,100.00
Network B: $400.00
Proposed Fees:
Network A: $1,750.00
Network B: $1,250.00
Current and proposed access fees for
indirect access to quotation information
are as follows:
Current Fees:
Network A: $700.00
Network B: $250.00
Proposed Fees:
Network A: $1,250.00
Network B: $600.00
Access fees are charged to those who
obtain Network A and Network B data
feeds. Consistent with current practice,
within each of a firm’s billable accounts,
the Participants only charge one access
fee for last sale information and one
access fee for quotation information,
regardless of the number of data feeds
that the firm receives for that account.
The Participants believe that increases
in these fees are fair and reasonable
because today’s data feeds provide
significant incremental value in
comparison to the data feeds that the
Participants provided when they first
set the access fees.
For example, the data feeds contain a
vastly larger number of last sale prices
and bids and offers. The growth in
Exchange Traded Products has
contributed to a significant increase in
Network B activity. The data feeds also
contain far more information beyond
prices and quotes, such as the national
best bid and offer (‘‘NBBO’’), short sale
restriction indications, circuit breaker
tabs, retail price improvement
indications, and, coming soon, limit up/
limit down information. In addition to
the vast increase in content, there has
been significant improvement in the
latency of the data feeds.
Further, data feeds have become more
valuable, as recipients now use them to
perform a far larger array of non-display
functions. Some firms even base their
business models on the incorporation of
data feeds into black boxes and
application programming interfaces that
apply trading algorithms to the data, but
that do not require widespread data
access by the firm’s employees. As a
result, these firms pay little for data
usage beyond access fees, yet their data
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access and usage is critical to their
businesses.
The Participants estimate the
revenues resulting from the revised
access fees would increase total
Network A and Network B by six
percent, but this increase would be
largely offset by an estimated five
percent decrease in total revenues
resulting from the revised professional
subscriber device fees and an estimated
two percent decrease resulting from the
revised quote usage fees. The majority of
customers taking data feeds are also
benefiting from lower professional
subscriber fees and/or lower quoteusage fees.
CTA and CQ data feeds include a full
consolidated data set of last sale and
quotation information across all
exchanges and FINRA’s Trade Reporting
Facilities. In contrast, the data feeds
found in the proprietary data products
of individual exchanges contain a far
more limited set of data. The following
chart compares access fees for the
receipt of last sale information and
quotation information:
Proposed CTA Network A:
Direct Access: $3,000
Indirect Access: $2,000
Proposed CQ Network B:
Direct Access: $2,000
Indirect Access: $1,000
NYSE: $5,000
Nasdaq: $2,000
Nasdaq BX: $1,000
Nasdaq PSX: $1,000
NYSE Arca: $750
EDGA: $500
EDGX: $500
e. Data Redistribution Charges
The Participants propose to establish
a new monthly charge of $1,000 for the
redistribution of Network A last sale
price information and/or Network A
quotation information and a similar
$1,000 monthly charge for the
redistribution of Network B last sale
price information and/or Network B
quotation information. This will not
necessitate any additional reporting
obligations.
The redistribution charges would
apply to any entity that makes last sale
information or quotation information
available to any other entity or to any
person other than its own employees,
irrespective of the means of
transmission or access. That is, all firms
that redistribute market data outside of
their organization would be required to
pay the redistribution fee. The fee
would not apply to a firm whose
receipt, use and distribution of market
data are limited to its own employees in
a controlled environment.
The proposed redistribution charge
harmonizes CTA/CQ fees with OPRA
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Plan fees, which impose a redistribution
charge on every vendor that
redistributes OPRA data to any person.
OPRA’s redistribution fee is $1,500 per
month (or $650 for an internet-only
service). Redistribution fees are also
common for exchange proprietary data
products.
Revenues from the redistribution
charge along with the access fees would
help to offset anticipated decreases in
revenues resulting from the proposed
changes to the professional subscriber
device fees. Vendors base their business
models on procuring data from
exchanges and turning around and
redistributing that data to their
subscribers. The costs that market data
vendors incur for acquiring their
inventory (i.e., CTA/CQ market data) are
very low, sometimes amounting only to
their payment of access fees. The
proposed redistribution charges would
require them to contribute somewhat
more, relative to the end-user
community.
f. Television Broadcast Charges
The Participants do not propose to
make any changes to current television
broadcast charges. In the case of
Network A, the Participants do not
propose to change the maximum
amount payable for television
broadcasts. However, the Plans provide
for an annual increase to that maximum
amount. The Network A Participants in
some years have elected not to apply the
annual increase. The Network A
Participants propose to codify the
practice of voting to waive a calendar
year’s maximum increase by adding
footnote language to that effect.
g. Multiple Data Feed Charges
The Participants propose to establish
a new monthly fee for firms that take
more than one primary data feed and
one backup data feed. (This will not
necessitate any additional reporting
obligations.) The fee would be as
follows:
$50 for Network A last sale information
data feeds
$50 for Network A quotation
information data feeds
$50 for Network B last sale information
data feeds
$50 for Network B quotation
information data feeds.
For both last sale and bid-ask data
feeds, this charge would apply to each
data feed that a data recipient receives
in excess of the data recipient’s receipt
of one primary data feed and one
backup data feed.
To date, the Participants have not
required data recipients that receive
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multiple data feeds to pay any more
than data recipients that receive one
primary and one back up data feed. The
Participants believe that it is
appropriate to have them do so. The
Participants note that the OPRA Plan
imposes a charge of $100 per connection
for circuit connections in addition to the
primary and backup connections.
mstockstill on DSK4VPTVN1PROD with NOTICES
h. Late/Clearly Erroneous Reporting
Charges
The Participants propose to establish
a new monthly fee for firms that fail to
comply with their reporting obligations
in a timely manner. The charge is $2500
for each network. The charge would not
be assessed until a firm fails to report
its data usage and entitlements for more
than three months. A report is not
considered to have been provided if the
report is clearly incomplete or
inaccurate, such as a report that fails to
report all data products or a report for
which the reporting party did not make
a good faith effort to assure the accuracy
of data usage and entitlements.
The late reporting charges would be
assessed for each month in which there
is a failure to provide a network’s
required data-usage report, commencing
with reporting failures lasting more than
three months from the date on which
the report is first due. By way of
example, if a network’s data-usage
report is due on May 31, the charge
would commence to apply as of
September 1 and would appear on the
market data invoice for September. The
network administrator would assess the
charge as of September 1, and would
continue to assess the charge each
month until the network administrator
receives the firm’s complete and
accurate data-usage report.
The purpose of the charges is to
provide incentives to those firms that
are delinquent in reporting their datausage activity and to place them on a
level playing field with compliant firms.
i. Network B Ticker Charge
As part of the process of simplifying
the fee structure, the Participants have
determined to eliminate the Network B
ticker charge. This would harmonize
Network B rates with those of Network
A (which phased out its ticker charge
many years ago), and with the Nasdaq/
UTP Plan and the OPRA Plan, neither
of which imposes a ticker charge.
3. Impact of the Proposed Fee Changes
As with any reorganization of a fee
schedule, some data recipients may pay
higher total market data fees and others
may pay less. On balance, if customer
usage were to remain the same, the
Participants estimate that the fee
VerDate Mar<15>2010
17:34 Mar 22, 2013
Jkt 229001
changes would increase consolidated
tape revenue for Network A and
Network B by no more than 2.9 percent.
Customer usage trends, however, have
declined year-over-year since 2008,
including declines in access feeds,
professional and nonprofessional
subscribers, and quote usage. This has
led to a significant decline in revenues
generated under the Plans. (More
information on these declines can be
found in the Participants’ Consolidated
Data Quarterly Operating Metrics
Reports. Those reports can be found at
https://www.nyxdata.com/CTA.)
Additionally, broker-dealers
increasingly have reported their
executions to FINRA’s Trade Reporting
Facilities (‘‘TRFs’’). Because the TRFs
re-allocate a portion of their
consolidated tape revenues back to their
broker-dealer customers, this significant
and growing share of trading reduces
the consolidated tape revenues
remaining with the markets. For these
reasons, the Participants believe that the
proposed fee changes would not result
in a material increase in overall
revenues under the Plans.
4. Changes to the Form of the CTA/CQ
Fee Schedule
The Amendments propose to
simplify, consolidate, and update the
market data fee schedules under both
Plans to arrive at a single, consolidated
CTA/CQ Fee Schedule that sets forth the
applicable charges from time to time in
effect under both Plans. The
Participants propose to set forth the
CTA/CQ Fee Schedule in Exhibit E to
the CTA Plan. It would replace the eight
CTA/CQ fee schedules currently in
effect: Schedules A–1 through A–4 of
Exhibit E to the CTA Plan and
Schedules A–1 through A–4 of Exhibit
E to the CQ Plan. As a result, Exhibit E
to the CTA Plan would contain the
entire CTA/CQ Fee Schedule and
Exhibit E to the CQ Plan would be
eliminated.
The simplifications and updates that
the consolidated CTA/CQ Fee Schedule
proposes include the following:
• Adopting changes that make feedisclosure more transparent, such as the
addition of descriptions of what
constitutes internal and external
distribution;
• removing the Network B
communications facilities and line
splitter charges, which no longer apply;
• removing outdated footnotes that no
longer apply;
• posting the amounts of the broker/
dealer enterprise charge and the
maximum television broadcast charge
on the CTA Web site (although the
PO 00000
Frm 00031
Fmt 4703
Sfmt 4703
amounts would also remain on the
CTA/CQ Fee Schedule);
• granting the Participants the
authority to waive the annual increase
for any calendar year for the Network A
and Network B broker-dealer enterprise
charges and the Network A maximum
television broadcast charge; and
• changing references to the ‘‘high
speed line’’ to read ‘‘output feed.’’
B. Additional Information Required by
Rule 608(a)
1. Governing or Constituent Documents
Not applicable.
2. Implementation of the Amendments
The Participants anticipate
implementing the proposed fee changes
in 2013, after giving notice to data
recipients and end users of the proposed
fee changes.
3. Development and Implementation
Phases
See Item I(B)(2) above.
4. Analysis of Impact on Competition
The proposed Amendments do not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
The proposed fee changes respond to
the suggestions of industry
representatives and reflect the
Participants’ own views that it is
appropriate to establish a simplified
pricing structure that is consistent with
current technology, that reduces
administrative burdens and that
promotes the use of real-time market
data.
The Participants have not
significantly revised the CTA and CQ
market data fee schedules in many
years. They adopted the 14-tier Network
A professional subscriber rate structure
in 1986 and that structure has changed
very little ever since. Numerous
technological advances, the advent of
trading algorithms and automated
trading, different investment patterns, a
plethora of new securities products,
unprecedented levels of trading,
internationalization and developments
in portfolio analysis and securities
research warrant the revision.
In general, the proposed fee changes
would cause Network A fees to sync
more closely with Network B fees and
would cause Network A and Network B
fees to sync more closely with fees
payable under the Nasdaq/UTP Plan
and the OPRA Plan. The proposed fees
would compare reasonably with the fees
payable under those other Plans.
As a result, these Amendments
promote consistency in price structures
among the national market system
E:\FR\FM\25MRN1.SGM
25MRN1
Federal Register / Vol. 78, No. 57 / Monday, March 25, 2013 / Notices
plans, as well as consistency with the
preponderance of other market data
providers. This would make market data
fees easier to administer. It would
enable data recipients to compare their
charges under the respective national
market system plans more easily. It also
would make for a more straightforward
and streamlined administrative process
for both the network administrator and
market data users.
In the Participants’ view, the
proposed fee schedule would allow
each category of data recipient and data
user to contribute an appropriate
amount for their receipt and use of
market data under the Plans. The
proposed fee schedule would provide
for an equitable allocation of dues, fees,
and other charges among broker-dealers,
vendors, end users and others receiving
and using market data made available
under the Plans.
The Participants propose to apply the
revised fee schedule uniformly to all
constituents (including members of the
Participant markets and non-members).
The Participants do not believe that the
proposed fee changes introduce terms
that are unreasonably discriminatory.
5. Written Understanding or Agreements
Relating to Interpretation of, or
Participation in, Plan
Not applicable.
6. Approval by Sponsors in Accordance
with Plan
In accordance with Section XII(b)(iii)
of the CTA Plan and Section IX(b)(iii) of
the CQ Plan, each of the Participants has
approved the rate changes.
7. Description of Operation of Facility
Contemplated by the Proposed
Amendments
Not applicable.
II. Rule 601(a) (solely in its application
to the Amendments to the CTA Plan)
Not applicable.
b. Method of Determination and
Imposition, and Amount of, Fees and
Charges
mstockstill on DSK4VPTVN1PROD with NOTICES
d. Dispute Resolution
B. Reporting Requirements
See Item I(A) above.
The Participants took a number of
factors into account in deciding to
propose the Amendments.
Most significantly, they listened to the
information needs and suggestions of
industry representatives. In particular,
the Participants received input from
members of their Advisory Committee.
The CTA and CQ Plans require the
Advisory Committee to include, at a
minimum, a broker-dealer with a
substantial retail investor customer
base, a broker-dealer with a substantial
institutional investor customer base, an
alternative trading system, a data
Jkt 229001
Not applicable.
Not applicable.
a. Terms and Conditions of Access
17:34 Mar 22, 2013
c. Method of Frequency of Processor
Evaluation
A. Equity Securities for Which
Transaction Reports Shall Be Required
by the Plan
Not applicable.
VerDate Mar<15>2010
vendor, and an investor. Advisory
Committee members attend and
participate in meetings of the
Participants and receive meeting
materials. Members of the Advisory
Committee gave valuable input that the
Participants used in crafting the
proposed fee changes.
The Participants also took into
consideration a number of other factors
in addition to the views of its
constituents, including:
(A) crafting fee changes that will not
have a significant impact on total
revenues generated under the Plans;
(B) setting fees that compare favorably
with fees that participants in the
Nasdaq/UTP Plan and the OPRA Plan
charge for similar services;
(C) setting fees that allow each
category of market data recipient and
user to contribute market data revenues
that the Participants believe is
appropriate for that category;
(D) crafting fee changes that
appropriately differentiate between
constituents in today’s environment
(e.g., large firms vs. small firms;
redistributors vs. end users); and
(E) crafting a fee schedule that is easy
to read and use and minimizes
administrative burdens.
C. Manner of Collecting, Processing,
Sequencing, Making Available and
Disseminating Last Sale Information
Not applicable.
D. Manner of Consolidation
Not applicable.
E. Standards and Methods Ensuring
Promptness, Accuracy and
Completeness of Transaction Reports
Not applicable.
F. Rules and Procedures Addressed to
Fraudulent or Manipulative
Dissemination
Not applicable.
PO 00000
Frm 00032
Fmt 4703
Sfmt 4703
17951
G. Terms of Access to Transaction
Reports
See Item I(A) above.
H. Identification of Marketplace of
Execution
Not applicable.
III. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed
Amendments to the CTA Plan are
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 email to rulecomments@sec.gov. Please include File
Number SR–CTA/CQ–2013–01 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–CTA/CQ–2013–01. This file
number should be included on the
subject line if email 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 Amendments that
are filed with the Commission, and all
written communications relating to the
Amendments between the Commission
and any person, other than those that
may be withheld from the public in
accordance with the provisions of 5
U.S.C. 552, will be available for Web
site viewing and printing in the
Commission’s Public Reference Room,
100 F Street NE., Washington, DC
20549, on official business days
between the hours of 10:00 a.m. and
3:00 p.m. Copies of the Amendments
also will be available for inspection and
copying at the principal office of the
CTA.
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
E:\FR\FM\25MRN1.SGM
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17952
Federal Register / Vol. 78, No. 57 / Monday, March 25, 2013 / Notices
submissions should refer to File
Number SR–CTA/CQ–2013–01 and
should be submitted on or before April
15, 2013.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–06730 Filed 3–22–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69179; File No. SR–BX–
2013–024]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Relating to the
Elimination of SPY Position Limits
March 19, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 11,
2013, NASDAQ OMX BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
mstockstill on DSK4VPTVN1PROD with NOTICES
The Exchange proposes to eliminate
position limits for options on the SPDR®
S&P 500® exchange-traded fund (‘‘SPY
ETF’’),3 which list and trade under the
symbol SPY.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
7 17
CFR 200.30–3(a)(27).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 ‘‘SPDR®,’’ ‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P
500®,’’ and ‘‘Standard & Poor’s 500’’ are registered
trademarks of Standard & Poor’s Financial Services
LLC. The SPY ETF represents ownership in the
SPDR S&P 500 Trust, a unit investment trust that
generally corresponds to the price and yield
performance of the SPDR S&P 500 Index.
1 15
VerDate Mar<15>2010
17:34 Mar 22, 2013
Jkt 229001
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange 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
Exchange 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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to add new rule text in a new
section entitled ‘‘Supplementary
Material’’ at the end of Chapter III,
Section 7 (Position Limits) to
specifically state that there shall be no
position limits for SPY options subject
to a Pilot Program.
Background
Position limits serve as a regulatory
tool designed to address potential
manipulative schemes and adverse
market impact surrounding the use of
options. The Exchange understands that
the Commission, when considering the
appropriate level at which to set option
position and exercise limits, has
considered the concern that the limits
be sufficient to prevent investors from
disrupting the market in the security
underlying the option.4 This
consideration has been balanced by the
concern that the limits ‘‘not be
established at levels that are so low as
to discourage participation in the
options market by institutions and other
investors with substantial hedging
needs or to prevent specialists and
market-makers from adequately meeting
their obligations to maintain a fair and
orderly market.’’ 5
SPY options are currently the most
actively traded option class in terms of
average daily volume (‘‘ADV’’).6 The
4 See Securities Exchange Act Release No. 40969
(January 22, 1999), 64 FR 4911, 4912–4913
(February 1, 1999) (SR–CBOE–98–23) (citing H.R.
No. IFC–3, 96th Cong., 1st Sess. at 189–91 (Comm.
Print 1978)).
5 Id. at 4913.
6 SPY ADV was 2,156,482 contracts in April 2012.
ADV for the same period for the next four most
actively traded options was: Apple Inc. (option
symbol AAPL)—1,074,351; S&P 500 Index (option
symbol SPX)—656,250; PowerShares QQQ TrustSM,
Series 1 (option symbol QQQ)—573,790; and
PO 00000
Frm 00033
Fmt 4703
Sfmt 4703
Exchange believes that, despite the
popularity of SPY options as evidenced
by their significant volume, the current
position limits on SPY options could be
a deterrent to the optimal use of this
product as a hedging tool. The Exchange
further believes that position limits on
SPY options may inhibit the ability of
certain large market participants, such
as mutual funds and other institutional
investors with substantial hedging
needs, to utilize SPY options and gain
meaningful exposure to the hedging
function they provide.
The Exchange believes that current
experience with the trading of SPY
options, as well as the Exchange’s
surveillance capabilities, has made it
appropriate to consider other, less
prophylactic alternatives to regulating
SPY options, while still seeking to
ensure that large positions in SPY
options will not unduly disrupt the
options or underlying cash markets.
Generally with respect to position limits
for options traded on CBOE and BX, the
CBOE position limits are the applicable
position limits pursuant to the
Exchange’s Rules at Chapter III, Section
7(a). CBOE recently filed to eliminate
SPY position limits.7 Accordingly, the
Exchange’s position limits on SPY
options shall also be eliminated in
accordance with CBOE’s Rules. The
Exchange is memorializing the
elimination of SPY options [sic], which
is subject to a Pilot Program, in the
Supplementary Material at Chapter III,
Section 7.
In proposing the elimination of
position limits on SPY options, the
Exchange has considered several factors,
including (1) the availability of
economically equivalent products and
their respective position limits, (2) the
liquidity of the option and the
underlying security, (3) the market
capitalization of the underlying security
and the related index, (4) the reporting
of large positions and requirements
surrounding margin, and (5) the
potential for market on close volatility.
Economically Equivalent Products
The Exchange has considered the
existence of economically equivalent or
similar products, and their respective
position limits, if any, in assessing the
appropriateness of proposing an
elimination of position limits for SPY
options.
iShares® Russell 2000® Index Fund (option symbol
IWM)—550,316.
7 See Securities Exchange Act Release No. 67937
(September 27, 2012), 77 FR 60489 (October 3,
2012) (SR–CBOE–2012–091). Prior to this filing
CBOE’s position limit for SPY options was 900,000
contracts on the same side of the market.
E:\FR\FM\25MRN1.SGM
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]]>Agencies
[Federal Register Volume 78, Number 57 (Monday, March 25, 2013)]
[Notices]
[Pages 17946-17952]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-06730]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69157; File No. SR-CTA/CQ-2013-01]
Consolidated Tape Association; Notice of Filing and Immediate
Effectiveness of the Sixteenth Charges Amendment to the Second
Restatement of the CTA Plan and Eighth Charges Amendment to the
Restated CQ Plan
March 18, 2013.
Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that
on March 11, 2013,\3\ the Consolidated Tape Association (``CTA'') Plan
and Consolidated Quotation (``CQ'') Plan participants
(``Participants'') \4\ filed with the Securities and Exchange
Commission (``Commission'') a proposal to amend the Second Restatement
of the CTA Plan and Restated CQ Plan (collectively, the ``Plans'').\5\
The proposal represents the sixteenth charges amendment to the CTA Plan
(``Sixteenth Charges Amendment to the CTA Plan'') and the eighth
charges amendment to the CQ Plan (``Eighth Charges Amendment to the CQ
Plan''), and reflects changes unanimously adopted by the Participants.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78k-1.
\2\ 17 CFR 242.608.
\3\ The proposal was originally submitted on January 30, 2013.
It was resubmitted on February 5, 2013, February 28, 2013, and on
March 11, 2013.
\4\ Each participant executed the proposed amendment. The
Participants are: BATS Exchange, Inc., BATS-Y Exchange, Inc.,
Chicago Board Options Exchange, Incorporated, Chicago Stock
Exchange, Inc., EDGA Exchange, Inc. (``EDGA''), EDGX Exchange, Inc.
(``EDGX''), Financial Industry Regulatory Authority, Inc.
(``FINRA''), International Securities Exchange, LLC, NASDAQ OMX BX,
Inc. (``Nasdaq BX''), NASDAQ OMX PHLX, Inc. (``Nasdaq PSX''), Nasdaq
Stock Market LLC, National Stock Exchange, New York Stock Exchange
LLC (``NYSE''), NYSE MKT LLC (formerly NYSE Amex, Inc.), and NYSE
Arca, Inc. (``NYSE Arca'').
\5\ See Securities Exchange Act Release Nos. 10787 (May 10,
1974), 39 FR 17799 (May 20, 1974) (declaring the CTA Plan
effective); 15009 (July 28, 1978), 43 FR 34851 (August 7, 1978)
(temporarily authorizing the CQ Plan); and 16518 (January 22, 1980),
45 FR 6521 (January 28, 1980) (permanently authorizing the CQ Plan).
The most recent restatement of both Plans was in 1995. The CTA Plan,
pursuant to which markets collect and disseminate last sale price
information for non-NASDAQ listed securities, is a ``transaction
reporting plan'' under Rule 601 under the Act, 17 CFR 242.601, and a
``national market system plan'' under Rule 608 under the Act, 17 CFR
242.608. The CQ Plan, pursuant to which markets collect and
disseminate bid/ask quotation information for listed securities, is
a ``national market system plan'' under Rule 608 under the Act, 17
CFR 242.608.
---------------------------------------------------------------------------
The purpose of the Sixteenth Charges Amendment to the CTA Plan and
Eighth Charges Amendment to the CQ Plan (collectively, the
``Amendments''), is to simplify the Plans' existing market data fee
schedules by compressing the current 14-tier Network A device rate
schedule into four tiers, by consolidating the Plans' eight fee
schedules into one, and by realigning the Plans' charges more closely
with the services the Plans provide, without materially changing the
revenues the current fee schedules generate. The Participants' goal is
to achieve greater simplicity and a reduction of administrative
burdens.
[[Page 17947]]
Pursuant to Rule 608(b)(3)(i) under Regulation NMS,\6\ the
Participants designated the Amendments as establishing or changing a
fee or other charge collected on their behalf in connection with access
to, or use of, the facilities contemplated by the Plans. As a result,
the Amendments became effective upon filing with the Commission. At any
time within 60 days of the filing of the Amendments, the Commission may
summarily abrogate the Amendments and require that the Amendments be
refiled in accordance with paragraph (a)(1) of Rule 608 and reviewed in
accordance with paragraph (b)(2) of Rule 608, if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or the maintenance of fair
and orderly markets, to remove impediments to, and perfect the
mechanisms of, a national market system or otherwise in furtherance of
the purposes of the Act.
---------------------------------------------------------------------------
\6\ 17 CFR 242.608(b)(3)(i).
---------------------------------------------------------------------------
The Commission is publishing this notice to solicit comments from
interested persons on the proposed Amendments.
I. Rule 608(a)
A. Description and Purpose of the Amendments
1. In General
The Participants filed the last significant fee structure change in
1986. Since then, however, significant change has characterized the
industry, stemming in large measure from technological advances, the
advent of trading algorithms and automated trading, new investment
patterns, new securities products, unprecedented levels of trading,
internationalization and developments in portfolio analysis and
securities research.
Industry representatives who sit on the Plans' Advisory Committee
have noted these changes and have urged adoption of a modernized,
simpler, easier to read fee schedule. They have noted the desirability
of reducing the rate spread inherent in the 14-tier Network A device
rate structure and the need for reducing administrative burdens. The
Participants have discussed these goals with those industry
representatives. The proposed changes respond to the industry
representatives' comments and seek to establish a simplified pricing
structure that is consistent with current technology, that reduces
administrative burdens and that promotes the use of real-time market
data.
The Amendments also move in the direction of harmonizing fees
between Network A and Network B and of harmonizing fees under the Plans
with fees under two other transaction reporting plans: the Joint Self-
Regulatory Organization Plan Governing the Collection, Consolidation
and Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privileges
Basis (the ``Nasdaq/UTP Plan'') and the Options Price Reporting
Authority Plan (``OPRA Plan''). This would reduce administrative
burdens for broker-dealers and other market data users and simplify fee
calculations.
The Amendments also propose to consolidate, simplify and update the
market data fee schedules under both Plans to arrive at a single,
consolidated CTA/CQ Fee Schedule. This should make it easier for market
data users to understand and apply the fee schedule.
The Participants anticipate that the fee changes would not
materially change the market data revenues generated under the Plans.
The text of the proposed Amendments is available on the CTA's Web
site (https://www.nysedata.com/cta), at the principal office of the CTA,
and at the Commission's Public Reference Room.
2. The Proposed Fee Schedule Changes
a. Professional Subscriber Charges
i. Network A
A principal purpose of the proposed fee schedule changes is to
address the 14-tier fee structure that the Participants have in place
for Network A professional subscribers. That structure has been in
place for more than 25 years. Under the tiered structure, a firm
reports how many display devices its professional subscribers use and
that number then is used to determine the tier within which the firm
falls.
For reporting purposes, a display device is any device capable of
displaying market data. Where a professional subscriber receives market
data services from multiple vendors, separate device fees apply for
each vendor's service. Where a vendor provides market data to a
professional subscriber by means of multiple applications, separate
device fees apply for each application.
At one extreme, the current Network A fee tiered structure imposes
a monthly charge of $18.75 per device for firms employing professional
subscribers who use more than 10,000 devices. At the other extreme, it
imposes a monthly charge of $127.25 per device for a single
professional subscriber. (For Network A, the rates entitle the
professional subscriber to receive both Network A last sale information
under the CTA Plan and Network A quotation information under the CQ
Plan.)
Market data users have told the Participants that they find the 14-
tier structure challenging to administer and the $18.75-to-$127.25
spread between the highest and lowest tiers too wide. The proposed
changes seek to address both concerns. The Participants propose a new
four-tier monthly Network A fee structure for the display units of
professional subscribers, as follows:
1. 1-2 devices: $50.00.
2. 3-999 devices: $30.00.
3. 1,000-9,999 devices: $25.00.
4. 10,000 devices or more: $20.00.
The proposed narrowing of the gap between the highest rates and the
lowest rates would benefit both individuals who have not qualified as
nonprofessional subscribers and smaller firms. In particular,
individuals and firms having one device would see their monthly Network
A rate drop from $127.25 to $50, and firms having two devices would see
their monthly Network A rate drop from $79.50 per device to $50 per
device. Firms whose professional subscriber employees use between 3 and
29 devices would also have lower rates.
On the other hand, larger firms would see higher rates in respect
of their internal distribution of market data to their employees. For
example, the rates for firms whose employees use between 750 devices
and 9,999 devices would rise from $19.75 or $20.75 per device to $25
per device, and the rates for firms whose employees use more than
10,000 devices would rise from $18.75 to $20.00.
Many firms distribute market data to ``Customers'' and pay CTA/CQ
fees on behalf of those Customers. Those firms should pay less for
their external distribution to each Customer because the rates that
they would pay on behalf of each Customer would drop (assuming that the
firms do not provide service to more than 29 Customer devices). The
amount of the decrease would depend on the tier into which the Customer
falls.
``Customer'' refers to an individual client of the firm, an
independent contractor who may be associated with the firm but is not
an employee of the firm, a trading company that receives market data
from the firm for use by its traders, and any other corporate, broker-
dealer or other entity to which the firm provides data.
A firm may only include its own employees in determining the tier
that
[[Page 17948]]
applies to it. It may not include in that determination any Customer to
which it provides market data or the employees of any Customer. The
rate applicable to each Customer is separately determined based on the
tier into which the Customer falls. The Amendments propose to add a
footnote (proposed footnote 2) to explain this. This explanation seeks
to prevent efforts to misuse the tiered rate structure. For the same
reason, the Amendments also propose to eliminate the reference to a
firm's officers and partners as authorized internal distributees of the
firm.
Together with the other proposed amendments to the fee schedule,
the Participants anticipate that the changes to the Network A
professional subscriber tiered fee structure would not result in a
material change in overall revenues under the Plans.
ii. Network B
Professional subscribers currently pay one amount for Network B
last sale information and a separate amount for Network B quotation
information. Firms that are members of a Participant currently pay
slightly less than non-members. A member pays $27.25 per month per
device to receive both last sale and quotation information for Network
B and a non-member pays $30.20. Network B is the only network that
still distinguishes between members and non-members.
To simplify Network B professional subscriber rates and to remove
the differential, the Participants propose a single monthly rate of
$24.00 per device, applicable to both members and non-members.
The $24.00 Network B rate would amount to a savings for most
nonprofessional subscribers, the majority of which currently receive
both last sale and quotation information. Network B has a small number
of data recipients who receive last sale information or quotation
information, but not both. The change would amount to a fee increase
for them. The Network B Participants note that Network A and the
Participants in the Nasdaq/UTP Plan and the OPRA Plan have not charged
separately for last sale information and quotation information for many
years.
The Participants believe that a single fee for Network B devices
would prove administratively efficient for data users and the network
administrators. They note that the Nasdaq/UTP Plan imposes a single fee
of $20 for each device and that the OPRA Plan imposes a single fee
(currently $25) for each device.
iii. Broker-Dealer Enterprise Maximums
Currently, the monthly broker-dealer enterprise maximums are at
$660,000 per month for Network A and $500,000 per month for Network B.
For that amount, the enterprise maximums allow a broker-dealer to
provide last sale and quotation information to an unlimited number of
its own employees and the brokerage account customers its
nonprofessional subscribers. The Plans provide that the amounts of the
broker-dealer enterprise maximums increase each calendar year by an
amount equal to the percentage increase in the annual composite share
volume for the preceding calendar year, subject to a maximum annual
increase of five percent.
The Participants propose to modify the means for determining the
increase in the broker-dealer enterprise maximums. Under the proposal,
the Participants may increase the broker-dealer enterprise maximums for
Network A and Network B by the affirmative vote of not less than two-
thirds of the Participants, provided, however, that they may not
increase either network's enterprise maximum by more than four percent
for any calendar year. The Participants may elect not to increase the
fee for any calendar year.
This proposed means for determining the increase in the broker-
dealer enterprise maximums would reduce the amount of any one year's
permissible increase from five percent to four percent and would better
reflect inflation than does the current means. The maximum four percent
increase is consistent with the average cost of living adjustment
(``COLA'') as published by the Social Security Administration for the
past 38 years.
The Participants have not increased the Network A broker-dealer
enterprise maximum for more than five years. They have not increased
the Network B broker-dealer enterprise maximum since they first adopted
it in 1999. They propose to increase the amount of both networks'
enterprise maximums for 2013. As a result, the monthly Network A
broker-dealer enterprise maximum would increase to $686,400 and the
monthly Network B broker-dealer enterprise maximum would increase to
$520,000. These changes would not take effect until the implementation
date for the other charges set forth in these Amendments. The number of
firms reaching the enterprise caps is minimal and these firms may
benefit from proposed fee reductions in other areas.
b. Nonprofessional Subscriber Charges
Currently, a firm pays $1.00 per month in respect of its first
250,000 Network A nonprofessional subscribers and $0.50 for Network A
nonprofessional subscribers in excess of 250,000. A firm pays $1.00 per
month for each of its Network B nonprofessional subscribers, regardless
of how many such subscribers a firm has.
The Participants propose to harmonize the treatment of large and
small firms by applying the $1.00 per month rate in respect of all
Network A nonprofessional subscribers, regardless of the number of
nonprofessional subscribers. This would also harmonize the Network A
nonprofessional subscriber fee with the Network B nonprofessional
subscriber fee, as well as the $1.00 nonprofessional subscriber fee
payable under the Nasdaq/UTP Plan. (The fee applicable to
nonprofessional subscribers under the OPRA Plan is $1.25.) The
Participants note that the number of firms that have more than 250,000
Network A nonprofessional subscribers is very small.
c. Per-Query Charges
Currently, Network A and Network B impose identical three-tiered
per-query rates as follows:
1 to 20 million quotes $.0075 each
20 to 40 million quotes $.005 each
Over 40 million quotes $.0025 each
The Participants propose to modify their per-query rate structure
by replacing the three-tier structure with the same one rate as the
Nasdaq/UTP Plan and the OPRA Plan imposes: $.005 for each inquiry for
both Network A and Network B.
As before, a vendor's per-query fee exposure for any
nonprofessional subscriber is limited to $1.00 per month (i.e., the
nonprofessional subscriber rate.)
The single rate would simplify per-query calculations. It would
also harmonize the Network A and Network B per-query fees with the
Nasdaq/UTP Plan and the OPRA Plan per-query fees.
d. Access Fees
Current and proposed access fees for direct access to last sale
prices are as follows:
Current Fees:
Network A: $1,000.00
Network B: $350.00
Proposed Fees:
Network A: $1,250.00
Network B: $750.00
Current and proposed access fees for indirect access to last sale
prices are as follows:
[[Page 17949]]
Current Fees:
Network A: $500.00
Network B: $200.00
Proposed Fees:
Network A: $750.00
Network B: $400.00
Current and proposed access fees for direct access to quotation
information are as follows:
Current Fees:
Network A: $1,100.00
Network B: $400.00
Proposed Fees:
Network A: $1,750.00
Network B: $1,250.00
Current and proposed access fees for indirect access to quotation
information are as follows:
Current Fees:
Network A: $700.00
Network B: $250.00
Proposed Fees:
Network A: $1,250.00
Network B: $600.00
Access fees are charged to those who obtain Network A and Network B
data feeds. Consistent with current practice, within each of a firm's
billable accounts, the Participants only charge one access fee for last
sale information and one access fee for quotation information,
regardless of the number of data feeds that the firm receives for that
account. The Participants believe that increases in these fees are fair
and reasonable because today's data feeds provide significant
incremental value in comparison to the data feeds that the Participants
provided when they first set the access fees.
For example, the data feeds contain a vastly larger number of last
sale prices and bids and offers. The growth in Exchange Traded Products
has contributed to a significant increase in Network B activity. The
data feeds also contain far more information beyond prices and quotes,
such as the national best bid and offer (``NBBO''), short sale
restriction indications, circuit breaker tabs, retail price improvement
indications, and, coming soon, limit up/limit down information. In
addition to the vast increase in content, there has been significant
improvement in the latency of the data feeds.
Further, data feeds have become more valuable, as recipients now
use them to perform a far larger array of non-display functions. Some
firms even base their business models on the incorporation of data
feeds into black boxes and application programming interfaces that
apply trading algorithms to the data, but that do not require
widespread data access by the firm's employees. As a result, these
firms pay little for data usage beyond access fees, yet their data
access and usage is critical to their businesses.
The Participants estimate the revenues resulting from the revised
access fees would increase total Network A and Network B by six
percent, but this increase would be largely offset by an estimated five
percent decrease in total revenues resulting from the revised
professional subscriber device fees and an estimated two percent
decrease resulting from the revised quote usage fees. The majority of
customers taking data feeds are also benefiting from lower professional
subscriber fees and/or lower quote-usage fees.
CTA and CQ data feeds include a full consolidated data set of last
sale and quotation information across all exchanges and FINRA's Trade
Reporting Facilities. In contrast, the data feeds found in the
proprietary data products of individual exchanges contain a far more
limited set of data. The following chart compares access fees for the
receipt of last sale information and quotation information:
Proposed CTA Network A:
Direct Access: $3,000
Indirect Access: $2,000
Proposed CQ Network B:
Direct Access: $2,000
Indirect Access: $1,000
NYSE: $5,000
Nasdaq: $2,000
Nasdaq BX: $1,000
Nasdaq PSX: $1,000
NYSE Arca: $750
EDGA: $500
EDGX: $500
e. Data Redistribution Charges
The Participants propose to establish a new monthly charge of
$1,000 for the redistribution of Network A last sale price information
and/or Network A quotation information and a similar $1,000 monthly
charge for the redistribution of Network B last sale price information
and/or Network B quotation information. This will not necessitate any
additional reporting obligations.
The redistribution charges would apply to any entity that makes
last sale information or quotation information available to any other
entity or to any person other than its own employees, irrespective of
the means of transmission or access. That is, all firms that
redistribute market data outside of their organization would be
required to pay the redistribution fee. The fee would not apply to a
firm whose receipt, use and distribution of market data are limited to
its own employees in a controlled environment.
The proposed redistribution charge harmonizes CTA/CQ fees with OPRA
Plan fees, which impose a redistribution charge on every vendor that
redistributes OPRA data to any person. OPRA's redistribution fee is
$1,500 per month (or $650 for an internet-only service). Redistribution
fees are also common for exchange proprietary data products.
Revenues from the redistribution charge along with the access fees
would help to offset anticipated decreases in revenues resulting from
the proposed changes to the professional subscriber device fees.
Vendors base their business models on procuring data from exchanges and
turning around and redistributing that data to their subscribers. The
costs that market data vendors incur for acquiring their inventory
(i.e., CTA/CQ market data) are very low, sometimes amounting only to
their payment of access fees. The proposed redistribution charges would
require them to contribute somewhat more, relative to the end-user
community.
f. Television Broadcast Charges
The Participants do not propose to make any changes to current
television broadcast charges. In the case of Network A, the
Participants do not propose to change the maximum amount payable for
television broadcasts. However, the Plans provide for an annual
increase to that maximum amount. The Network A Participants in some
years have elected not to apply the annual increase. The Network A
Participants propose to codify the practice of voting to waive a
calendar year's maximum increase by adding footnote language to that
effect.
g. Multiple Data Feed Charges
The Participants propose to establish a new monthly fee for firms
that take more than one primary data feed and one backup data feed.
(This will not necessitate any additional reporting obligations.) The
fee would be as follows:
$50 for Network A last sale information data feeds
$50 for Network A quotation information data feeds
$50 for Network B last sale information data feeds
$50 for Network B quotation information data feeds.
For both last sale and bid-ask data feeds, this charge would apply
to each data feed that a data recipient receives in excess of the data
recipient's receipt of one primary data feed and one backup data feed.
To date, the Participants have not required data recipients that
receive
[[Page 17950]]
multiple data feeds to pay any more than data recipients that receive
one primary and one back up data feed. The Participants believe that it
is appropriate to have them do so. The Participants note that the OPRA
Plan imposes a charge of $100 per connection for circuit connections in
addition to the primary and backup connections.
h. Late/Clearly Erroneous Reporting Charges
The Participants propose to establish a new monthly fee for firms
that fail to comply with their reporting obligations in a timely
manner. The charge is $2500 for each network. The charge would not be
assessed until a firm fails to report its data usage and entitlements
for more than three months. A report is not considered to have been
provided if the report is clearly incomplete or inaccurate, such as a
report that fails to report all data products or a report for which the
reporting party did not make a good faith effort to assure the accuracy
of data usage and entitlements.
The late reporting charges would be assessed for each month in
which there is a failure to provide a network's required data-usage
report, commencing with reporting failures lasting more than three
months from the date on which the report is first due. By way of
example, if a network's data-usage report is due on May 31, the charge
would commence to apply as of September 1 and would appear on the
market data invoice for September. The network administrator would
assess the charge as of September 1, and would continue to assess the
charge each month until the network administrator receives the firm's
complete and accurate data-usage report.
The purpose of the charges is to provide incentives to those firms
that are delinquent in reporting their data-usage activity and to place
them on a level playing field with compliant firms.
i. Network B Ticker Charge
As part of the process of simplifying the fee structure, the
Participants have determined to eliminate the Network B ticker charge.
This would harmonize Network B rates with those of Network A (which
phased out its ticker charge many years ago), and with the Nasdaq/UTP
Plan and the OPRA Plan, neither of which imposes a ticker charge.
3. Impact of the Proposed Fee Changes
As with any reorganization of a fee schedule, some data recipients
may pay higher total market data fees and others may pay less. On
balance, if customer usage were to remain the same, the Participants
estimate that the fee changes would increase consolidated tape revenue
for Network A and Network B by no more than 2.9 percent. Customer usage
trends, however, have declined year-over-year since 2008, including
declines in access feeds, professional and nonprofessional subscribers,
and quote usage. This has led to a significant decline in revenues
generated under the Plans. (More information on these declines can be
found in the Participants' Consolidated Data Quarterly Operating
Metrics Reports. Those reports can be found at https://www.nyxdata.com/CTA.) Additionally, broker-dealers increasingly have reported their
executions to FINRA's Trade Reporting Facilities (``TRFs''). Because
the TRFs re-allocate a portion of their consolidated tape revenues back
to their broker-dealer customers, this significant and growing share of
trading reduces the consolidated tape revenues remaining with the
markets. For these reasons, the Participants believe that the proposed
fee changes would not result in a material increase in overall revenues
under the Plans.
4. Changes to the Form of the CTA/CQ Fee Schedule
The Amendments propose to simplify, consolidate, and update the
market data fee schedules under both Plans to arrive at a single,
consolidated CTA/CQ Fee Schedule that sets forth the applicable charges
from time to time in effect under both Plans. The Participants propose
to set forth the CTA/CQ Fee Schedule in Exhibit E to the CTA Plan. It
would replace the eight CTA/CQ fee schedules currently in effect:
Schedules A-1 through A-4 of Exhibit E to the CTA Plan and Schedules A-
1 through A-4 of Exhibit E to the CQ Plan. As a result, Exhibit E to
the CTA Plan would contain the entire CTA/CQ Fee Schedule and Exhibit E
to the CQ Plan would be eliminated.
The simplifications and updates that the consolidated CTA/CQ Fee
Schedule proposes include the following:
Adopting changes that make fee-disclosure more
transparent, such as the addition of descriptions of what constitutes
internal and external distribution;
removing the Network B communications facilities and line
splitter charges, which no longer apply;
removing outdated footnotes that no longer apply;
posting the amounts of the broker/dealer enterprise charge
and the maximum television broadcast charge on the CTA Web site
(although the amounts would also remain on the CTA/CQ Fee Schedule);
granting the Participants the authority to waive the
annual increase for any calendar year for the Network A and Network B
broker-dealer enterprise charges and the Network A maximum television
broadcast charge; and
changing references to the ``high speed line'' to read
``output feed.''
B. Additional Information Required by Rule 608(a)
1. Governing or Constituent Documents
Not applicable.
2. Implementation of the Amendments
The Participants anticipate implementing the proposed fee changes
in 2013, after giving notice to data recipients and end users of the
proposed fee changes.
3. Development and Implementation Phases
See Item I(B)(2) above.
4. Analysis of Impact on Competition
The proposed Amendments do not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The proposed fee changes respond to the suggestions of
industry representatives and reflect the Participants' own views that
it is appropriate to establish a simplified pricing structure that is
consistent with current technology, that reduces administrative burdens
and that promotes the use of real-time market data.
The Participants have not significantly revised the CTA and CQ
market data fee schedules in many years. They adopted the 14-tier
Network A professional subscriber rate structure in 1986 and that
structure has changed very little ever since. Numerous technological
advances, the advent of trading algorithms and automated trading,
different investment patterns, a plethora of new securities products,
unprecedented levels of trading, internationalization and developments
in portfolio analysis and securities research warrant the revision.
In general, the proposed fee changes would cause Network A fees to
sync more closely with Network B fees and would cause Network A and
Network B fees to sync more closely with fees payable under the Nasdaq/
UTP Plan and the OPRA Plan. The proposed fees would compare reasonably
with the fees payable under those other Plans.
As a result, these Amendments promote consistency in price
structures among the national market system
[[Page 17951]]
plans, as well as consistency with the preponderance of other market
data providers. This would make market data fees easier to administer.
It would enable data recipients to compare their charges under the
respective national market system plans more easily. It also would make
for a more straightforward and streamlined administrative process for
both the network administrator and market data users.
In the Participants' view, the proposed fee schedule would allow
each category of data recipient and data user to contribute an
appropriate amount for their receipt and use of market data under the
Plans. The proposed fee schedule would provide for an equitable
allocation of dues, fees, and other charges among broker-dealers,
vendors, end users and others receiving and using market data made
available under the Plans.
The Participants propose to apply the revised fee schedule
uniformly to all constituents (including members of the Participant
markets and non-members). The Participants do not believe that the
proposed fee changes introduce terms that are unreasonably
discriminatory.
5. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plan
Not applicable.
6. Approval by Sponsors in Accordance with Plan
In accordance with Section XII(b)(iii) of the CTA Plan and Section
IX(b)(iii) of the CQ Plan, each of the Participants has approved the
rate changes.
7. Description of Operation of Facility Contemplated by the Proposed
Amendments
Not applicable.
a. Terms and Conditions of Access
See Item I(A) above.
b. Method of Determination and Imposition, and Amount of, Fees and
Charges
The Participants took a number of factors into account in deciding
to propose the Amendments.
Most significantly, they listened to the information needs and
suggestions of industry representatives. In particular, the
Participants received input from members of their Advisory Committee.
The CTA and CQ Plans require the Advisory Committee to include, at a
minimum, a broker-dealer with a substantial retail investor customer
base, a broker-dealer with a substantial institutional investor
customer base, an alternative trading system, a data vendor, and an
investor. Advisory Committee members attend and participate in meetings
of the Participants and receive meeting materials. Members of the
Advisory Committee gave valuable input that the Participants used in
crafting the proposed fee changes.
The Participants also took into consideration a number of other
factors in addition to the views of its constituents, including:
(A) crafting fee changes that will not have a significant impact on
total revenues generated under the Plans;
(B) setting fees that compare favorably with fees that participants
in the Nasdaq/UTP Plan and the OPRA Plan charge for similar services;
(C) setting fees that allow each category of market data recipient
and user to contribute market data revenues that the Participants
believe is appropriate for that category;
(D) crafting fee changes that appropriately differentiate between
constituents in today's environment (e.g., large firms vs. small firms;
redistributors vs. end users); and
(E) crafting a fee schedule that is easy to read and use and
minimizes administrative burdens.
c. Method of Frequency of Processor Evaluation
Not applicable.
d. Dispute Resolution
Not applicable.
II. Rule 601(a) (solely in its application to the Amendments to the CTA
Plan)
A. Equity Securities for Which Transaction Reports Shall Be Required by
the Plan
Not applicable.
B. Reporting Requirements
Not applicable.
C. Manner of Collecting, Processing, Sequencing, Making Available and
Disseminating Last Sale Information
Not applicable.
D. Manner of Consolidation
Not applicable.
E. Standards and Methods Ensuring Promptness, Accuracy and Completeness
of Transaction Reports
Not applicable.
F. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination
Not applicable.
G. Terms of Access to Transaction Reports
See Item I(A) above.
H. Identification of Marketplace of Execution
Not applicable.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed
Amendments to the CTA Plan are 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 email to rule-comments@sec.gov. Please include
File Number SR-CTA/CQ-2013-01 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-CTA/CQ-2013-01. This
file number should be included on the subject line if email 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 Amendments that are filed with
the Commission, and all written communications relating to the
Amendments between the Commission and any person, other than those that
may be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for Web site viewing and printing in the
Commission's Public Reference Room, 100 F Street NE., Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the Amendments also will be available for
inspection and copying at the principal office of the CTA.
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
[[Page 17952]]
submissions should refer to File Number SR-CTA/CQ-2013-01 and should be
submitted on or before April 15, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(27).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-06730 Filed 3-22-13; 8:45 am]
BILLING CODE 8011-01-P
