Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Proprietary Market Data Fee Schedule, 47672-47678 [2024-12041]
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Federal Register / Vol. 89, No. 107 / Monday, June 3, 2024 / Notices
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for services they did not use, or late fees
they did not actually incur.
Intermarket Competition. The
Exchange believes that the proposed
fees do not impose a burden on
competition or on other SROs that is not
necessary or appropriate. As noted
above, exchanges are platforms for
market data and trading. In setting the
proposed fees, the Exchange was
constrained by the availability of
numerous substitute platforms also
offering market data products and
trading, and low barriers to entry mean
new exchange platforms are frequently
introduced. The fact that exchanges are
platforms ensures that no exchange can
make pricing decisions for one side of
its platform without considering, and
being constrained by, the effects that
price will have on the other side of the
platform. In setting fees for the NYSE
American Agg Lite data feed, the
Exchange is constrained by the fact that,
if its pricing across the platform is
unattractive to customers, customers
will have its pick of an increasing
number of alternative platforms to use
instead of the Exchange. Given this
intense competition between platforms,
no one exchange’s market data fees can
impose an unnecessary burden on
competition, and the Exchange’s
proposed fees do not do so here.
In addition, the Exchange believes
that the proposed fees do not impose a
burden on competition or on other
exchanges that is not necessary or
appropriate because of the availability
of numerous substitute market data
products. Many other exchanges offer
proprietary data feeds like the NYSE
American Agg Lite data feed, supplying
depth of book order data, security status
updates, stock summary messages, and
the exchange’s best bid and offer at any
given time, on a real-time basis. Because
market data users can find suitable
substitute feeds, an exchange that
overprices its market data products
stands a high risk that users may
substitute another platform, in which
case the platform would stand to lose
both market data and trading fees. These
competitive pressures ensure that no
one exchange’s market data fees can
impose an unnecessary burden on
competition, and the Exchange’s
proposed fees do not do so here.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 51 of the Act and
subparagraph (f)(2) of Rule 19b–4 52
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily 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
under Section 19(b)(2)(B) 53 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSEAMER–2024–31 and should
be submitted on or before June 24, 2024.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.54
Sherry R. Haywood,
Assistant Secretary.
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–
NYSEAMER–2024–31 on the subject
line.
SECURITIES AND EXCHANGE
COMMISSION
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSEAMER–2024–31. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
[FR Doc. 2024–12040 Filed 5–31–24; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–100232; File No. SR–NYSE–
2024–30]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
NYSE Proprietary Market Data Fee
Schedule
May 28, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on May 13,
2024, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I 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.
54 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
51 15
U.S.C. 78s(b)(3)(A).
52 17 CFR 240.19b–4(f)(2).
53 15 U.S.C. 78s(b)(2)(B).
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Federal Register / Vol. 89, No. 107 / Monday, June 3, 2024 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Proprietary Market Data Fee
Schedule to establish an Access Fee for
the NYSE Pillar Depth data feed. The
Exchange proposes to implement the
proposed fee change on May 13, 2024.
The proposed rule change is available
on the Exchange’s website at
www.nyse.com, at the principal office of
the Exchange, and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
NYSE Proprietary Market Data Fee
Schedule (‘‘Fee Schedule’’).
Specifically, the Exchange proposes to
establish an Access Fee for the NYSE
Pillar Depth (‘‘Pillar Depth’’) data feed,
effective May 13, 2024. The proposed
fee for Pillar Depth would be $250 per
month, provided that the market data
recipient separately pays the applicable
fees for the five existing market data
products underlying the Pillar Depth
data feed, consistent with the existing
fee structures for those market data
products.
The Pillar Depth data feed is a
frequency-based depth of book market
data feed that provides a consolidated
view of the ten (10) best price levels on
both the bid and offer sides across the
NYSE Group’s combined limit order
books for securities traded on the NYSE
Group equities markets, i.e., NYSE,
NYSE American LLC (‘‘NYSE
American’’), NYSE Arca, Inc. (‘‘NYSE
Arca’’), NYSE Chicago, Inc. (‘‘NYSE
Chicago’’) and NYSE National, Inc.
(‘‘NYSE National’’), for which the NYSE
Group equities markets report quotes
and trades under the Consolidated Tape
Association (‘‘CTA’’) Plan or the
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Nasdaq/UTP Plan.4 In other words,
Pillar Depth would be a compilation of
limit order data that the Exchange
provides to vendors and subscribers,
updated no less frequently than once
per second. Specifically, the Pillar
Depth data feed consists of certain data
elements from five market data feeds 5—
NYSE Aggregated Lite,6 NYSE American
Aggregated Lite,7 NYSE Arca
Aggregated Lite,8 NYSE Chicago
Aggregated Lite 9 and NYSE National
Aggregated Lite.10
The Exchange, NYSE American,
NYSE Arca, NYSE Chicago and NYSE
National are the exclusive distributors
of the five Aggregated Lite feeds from
which certain data elements are taken to
create the Pillar Depth data feed. By
contrast, the Exchange would not be the
exclusive distributor of the aggregated
and consolidated information that
comprises the Pillar Depth data feed.
Any entity that receives, or elects to
receive, the five underlying Aggregated
Lite data feeds would be able, if it so
chooses, to create a data feed with the
same information included in Pillar
Depth and sell and distribute it to its
clients so that it could be received by
those clients as quickly as the Pillar
4 See Securities Exchange Act Release No. 100030
(April 25, 2024), 89 FR 35260 (May 1, 2024) (Notice
of Filing and Immediate Effectiveness of Proposed
Rule Change To Establish the NYSE Pillar Depth
Data Feed) (SR–NYSE–2024–24) (‘‘Pillar Depth
Product Filing’’).
5 Each of these data feeds are offered pursuant to
preexisting and effective rules and fees filed with
the Commission. This filing does not affect those
rules, or the fees associated with these underlying
data feeds or the ability for the Exchange, NYSE
American, NYSE Arca, NYSE Chicago or NYSE
National to amend the data feeds or fees associated
with those data feeds pursuant to a separate rule
filing.
6 See Securities Exchange Act Release No. 99689
(March 7, 2024) 89 FR 18466 (March 13, 2024)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Establish the NYSE
Aggregated Lite Market Data Feed) (SR–NYSE–
2024–12).
7 See Securities Exchange Act Release No. 99690
(March 7, 2024) 89 FR 18445 (March 13, 2024)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Establish the NYSE
American Aggregated Lite Market Data Feed) (SR–
NYSEAMER–2024–14).
8 See Securities Exchange Act Release No. 99713
(March 12, 2024) 89 FR 19381 (March 18, 2024)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Establish the NYSE Arca
Aggregated Lite Market Data Feed) (SR–
NYSEARCA–2024–22).
9 See Securities Exchange Act Release No. 99691
(March 7, 2024) 89 FR 18468 (March 13, 2024)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Establish the NYSE
Chicago Aggregated Lite Market Data Feed) (SR–
NYSECHX–2024–08).
10 See Securities Exchange Act Release No. 99715
(March 12, 2024) 89 FR 19383 (March 18, 2024)
(Notice of Filing and Immediate Effectiveness of
Proposed Rule Change To Establish the NYSE
National Aggregated Lite Market Data Feed) (SR–
NYSENAT–2024–06).
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47673
Depth data feed would be received by
those same clients.11
As proposed, the Exchange would
charge a $250 per month Access Fee for
Pillar Depth, which reflects the value of
the aggregation and consolidation
function that the Exchange performs in
creating Pillar Depth. To obtain Pillar
Depth, a market data recipient would
need to pay any applicable fees for the
five data feeds underlying Pillar Depth,
consistent with the existing fee
schedules for those market data
products as previously filed with the
Commission and which may be
amended from time to time, including
any applicable Access, Redistribution,
Professional User, Non-Professional
User, Non-Display or Enterprise fees.
The Exchange proposes to denote the
requirement for market data recipients
to pay the applicable fees for the five
data feeds underlying Pillar Depth in
proposed footnote 3 on the Fee
Schedule.
When subscribing to Pillar Depth, the
underlying data feeds would be
delivered in the Pillar Depth
consolidated format, as described above,
but charged for as if the recipient were
receiving the underlying feeds directly.
The Exchange notes that if a subscriber
chooses to receive the five underlying
feeds both separately and in the Pillar
Depth format, such subscriber may be
subject to additional Professional User
or Non-Professional User fees to reflect
the distribution of both Pillar Depth
(which incorporates the five underlying
data feeds) and any separate
dissemination of the underlying data
feeds. The Exchange believes that the
proposed fees for Pillar Depth would
not be lower than the cost to a vendor
of creating a comparable product,
including the cost of receiving the
underlying data feeds.
The Exchange notes that another
market participant seeking to distribute
a competing product to Pillar Depth
might engage in a different analysis of
assessing the cost of a competing
product, which may incorporate passing
through fees associated with co-location
at the Mahwah, New Jersey data center.
However, the incremental co-location
cost to a particular vendor might be
inconsequential if such vendor is
already co-located and is able to allocate
its co-location costs over numerous
product and customer relationships.
The Exchange therefore believes that a
vendor could create and offer a product
similar to Pillar Depth on a costcompetitive basis.
The proposed rule change is intended
to encourage market participants to
11 See
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Federal Register / Vol. 89, No. 107 / Monday, June 3, 2024 / Notices
subscribe to Pillar Depth by making it
more affordable for prospective
customers. The proposed fee change
would allow the Exchange to compete
more effectively with the Cboe One
Premium Feed, which as described
below, is a comparable market data
offering to Pillar Depth.
The Exchange notes that the proposed
change is not otherwise intended to
address any other issues, and the
Exchange is not aware of any problems
that member organizations or others
would have in complying with the
proposed rule change.
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2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,12
in general, and Sections 6(b)(4) and
6(b)(5) of the Act,13 in particular, in that
it provides an equitable allocation of
reasonable fees among users and
recipients of the data and is not
designed to permit unfair
discrimination among customers,
issuers, and brokers. The Exchange also
believes that the proposed rule change
is consistent with Section 11(A) of the
Act 14 in that it is consistent with (i) fair
competition among brokers and dealers,
among exchange markets, and between
exchange markets and markets other
than exchange markets; and (ii) the
availability to brokers, dealers, and
investors of information with respect to
quotations for and transactions in
securities. Furthermore, the proposed
rule change is consistent with Rule 603
of Regulation NMS,15 which provides
that any national securities exchange
that distributes information with respect
to quotations for or transactions in an
NMS stock do so on terms that are not
unreasonably discriminatory.
The Proposed Rule Change Is
Reasonable
In adopting Regulation NMS, the
Commission granted SROs and brokerdealers increased authority and
flexibility to offer new and unique
market data to the public. The
Commission has repeatedly expressed
its preference for competition over
regulatory intervention in determining
prices, products, and services in the
securities markets. Specifically, in
Regulation NMS, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues, and also recognized that
current regulation of the market system
12 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4), (5).
14 15 U.S.C. 78k–1.
15 17 CFR 242.603.
13 15
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‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 16
With respect to market data, the
decision of the United States Court of
Appeals for the District of Columbia
Circuit in NetCoalition v. SEC upheld
the Commission’s reliance on the
existence of competitive market
mechanisms to evaluate the
reasonableness and fairness of fees for
proprietary market data:
In fact, the legislative history indicates that
the Congress intended that the market system
‘‘evolve through the interplay of competitive
forces as unnecessary regulatory restrictions
are removed’’ and that the SEC wield its
regulatory power ‘‘in those situations where
competition may not be sufficient,’’ such as
in the creation of a ‘‘consolidated
transactional reporting system.’’ 17
The court agreed with the
Commission’s conclusion that
‘‘Congress intended that ‘competitive
forces should dictate the services and
practices that constitute the U.S.
national market system for trading
equity securities.’ ’’ 18
More recently, the Commission
confirmed that it applies a ‘‘marketbased’’ test in its assessment of market
data fees, and that under that test:
the Commission considers whether the
exchange was subject to significant
competitive forces in setting the terms of its
proposal for [market data], including the
level of any fees. If an exchange meets this
burden, the Commission will find that its fee
rule is consistent with the Act unless there
is a substantial countervailing basis to find
that the terms of the rule violate the Act or
the rules thereunder.19
An exchange may demonstrate that its
fees are constrained by competitive
forces by showing that platform
competition applies.
As the United States Supreme Court
recognized in Ohio v. American
Express, platforms are firms that act as
intermediaries between two or more sets
of agents, and typically the choices
made on one side of the platform affect
the results on the other side of the
platform via externalities, or ‘‘indirect
16 See Regulation NMS Adopting Release, 70 FR
37495, at 37499.
17 NetCoalition v. SEC, 615 F.3d 525, 535 (D.C.
Cir. 2010) (‘‘NetCoalition I’’) (quoting H.R. Rep. No.
94–229 at 92 (1975), as reprinted in 1975
U.S.C.C.A.N. 323).
18 Id. at 535.
19 See Securities Exchange Act Release No. 34–
90217 (October 16, 2020), 85 FR 67392 (October 22,
2020) (SR–NYSENAT–2020–05) (‘‘National IF
Approval Order’’) (internal quotation marks
omitted), quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74781
(December 9, 2008) (‘‘2008 ArcaBook Approval
Order’’).
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network effects.’’ 20 Externalities are
linkages between the different sides of
a platform such that one cannot
understand pricing and competition for
goods or services on one side of the
platform in isolation; one must also
account for the influence of the other
sides. As the Supreme Court explained:
To ensure sufficient participation, twosided platforms must be sensitive to the
prices that they charge each side. . . .
Raising the price on side A risks losing
participation on that side, which decreases
the value of the platform to side B. If the
participants on side B leave due to this loss
in value, then the platform has even less
value to side A—risking a feedback loop of
declining demand. . . . Two-sided platforms
therefore must take these indirect network
effects into account before making a change
in price on either side.21
The Exchange and its affiliated
exchanges have long maintained that
they function as platforms between
consumers of market data and
consumers of trading services. Proving
the existence of linkages between the
two sides of this platform requires an indepth economic analysis of both public
data and confidential exchange data
about particular customers’ trading
activities and market data purchases.
Exchanges, however, are prohibited
from publicly sharing details about
these specific customer activities and
purchases. For example, pursuant to
Exchange Rule 7.41, transactions
executed on the Exchange are processed
anonymously.
Exchanges function as platforms for
market data and transaction services
mean that exchanges do not set fees for
market data products without
considering, and being constrained by,
the effect the fees will have on the
order-flow side of the platform. As the
D.C. Circuit recognized in NetCoalition
I, ‘‘[n]o one disputes that competition
for order flow is fierce.’’ 22 The court
further noted that ‘‘no exchange
possesses a monopoly, regulatory or
otherwise, in the execution of order
flow from broker dealers,’’ and that an
exchange ‘‘must compete vigorously for
order flow to maintain its share of
trading volume.’’ 23
As noted above, while Regulation
NMS has enhanced competition, it has
also fostered a ‘‘fragmented’’ market
structure where trading in a single stock
can occur across multiple trading
centers. When multiple trading centers
compete for order flow in the same
20 Ohio v. American Express, 138 S. Ct. 2274,
2280–81 (2018).
21 Id. at 2281.
22 NetCoalition I, 615 F.3d at 544 (internal
quotation omitted).
23 Id.
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stock, the Commission has recognized
that ‘‘such competition can lead to the
fragmentation of order flow in that
stock.’’ 24 The Commission’s Division of
Trading and Markets has also
recognized that with so many
‘‘operating equities exchanges and
dozens of ATSs, there is vigorous price
competition among the U.S. equity
markets and, as a result, [transaction]
fees are tailored and frequently
modified to attract particular types of
order flow, some of which is highly
fluid and price sensitive.’’ 25 Indeed,
today, equity trading is currently
dispersed across 16 exchanges,26
numerous alternative trading systems,27
broker-dealer internalizers and
wholesalers, all competing for order
flow. Based on publicly-available
information, no single exchange
currently has more than 20% market
share.28
Further, low barriers to entry mean
that new exchanges may rapidly and
inexpensively enter the market and offer
additional substitute platforms to
compete with the Exchange. For
example, since 2020, three new ones
have entered the market: Long Term
Stock Exchange (LTSE), which began
operations as an exchange on August 28,
2020; 29 Members Exchange (MEMX),
which began operations as an exchange
on September 29, 2020; 30 and Miami
International Holdings (MIAX), which
began operations of its first equities
exchange on September 29, 2020.31
24 See Securities Exchange Act Release No. 61358,
75 3594, 3597 (January 21, 2010) (File No. S7–02–
10) (Concept Release on Equity Market Structure).
25 Commission Division of Trading and Markets,
Memorandum to EMSAC, dated October 20, 2015,
available here: https://www.sec.gov/spotlight/
emsac/memo-maker-taker-fees-on-equitiesexchanges.pdf.
26 See Cboe Global Markets, U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
27 See FINRA ATS Transparency Data, available
at https://otctransparency.finra.org/
otctransparency/AtsIssueData. A list of alternative
trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/
atslist.htm.
28 See Cboe Global Markets, U.S. Equities Market
Volume Summary, available at https://
markets.cboe.com/us/equities/market_share/.
29 See LTSE Market Announcement: MA–2020–
020, dated August 14, 2020, announcing LTSE
production securities phase-in planned for August
28, available here: https://assets-global.websitefiles.com/6462417e8db99f8baa06952c/
6462417e8db99f8baa0698e7_MA-2020-020__
Production_Securities_Launching_August_28_-_
Google_Docs.pdf and LTSE Market Announcement:
MA–2020–025, available here: https://assetsglobal.website-files.com/
6462417e8db99f8baa06952c/
6462417e8db99f8baa069873_MA-2020-025.pdf.
30 As of October 29, 2020, MEMX is trading all
NMS symbols. See https://info.memxtrading.com/
trader-alert-20-10-memx-trading-symbols-update/.
31 See MIAX Pearl Press release, dated September
29, 2020, available here: https://
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These low barriers enable existing
exchange customers to disintermediate
and start their own exchanges if they
think the prices charged for exchange
proprietary market data products are too
high. This is precisely the rationale
behind the creation of MEMX, which
was formed by some of the largest and
most well capitalized financial firms
that are also Exchange customers
(including Bank of America, BlackRock,
Charles Schwab, Citadel, Citi, E*Trade,
Fidelity, Goldman Sachs, J.P. Morgan,
Jane Street, Morgan Stanley, TD
Ameritrade, and others).32
For example, one of MEMX’s
founding principles is that exchange
proprietary market data prices are too
high, and that MEMX will benefit its
members by offering ‘‘[l]ower pricing on
market data.’’ 33 Nor is this a new
phenomenon: exchange customers
formed BATS to compete with
incumbent exchanges and once
registered as an exchange in 2008, BATS
did not initially charge for market data.
The BATS venture was a financial
success for its founders, first through
recouping their investment in its initial
public offering and then in the
subsequent sale of BATS to Cboe, which
now charges for market data from those
exchanges. Notably, MEMX has some of
the same founding broker-dealer
customers, leading some to dub MEMX
‘‘BATS 2.0.’’ 34
The fact that this cycle is viable and
repeatable by entities that both trade on
and compete with existing exchanges
confirms that barriers to entry are low
and that these markets are competitive
and contestable.35 And low barriers to
www.miaxoptions.com/sites/default/files/alert-files/
MIAX_Press_Release_09292020.pdf.
32 MEMX Home Page (‘‘Founded by members and
investors, MEMX aims to drive simplicity,
efficiency, and competition in equity markets.’’),
available at https://memx.com/.
33 MEMX home page, available at https://
memx.com/.
34 See ‘‘MEMX turns up the heat on US stock
exchanges,’’ Financial Times, January 9, 2019,
available at https://www.ft.com/content/4908c8b01418-11e9-a581-4ff78404524e; see also ‘‘US
equities exchanges: If you can’t beat them, join
them,’’ Euromoney, February 13, 2019, available at
https://www.euromoney.com/article/
b1d3tfby4p3y4v/us-equities-exchanges-if-you-cantbeat-them-join-them.
35 United States v. SunGard Data Sys., 172 F.
Supp. 2d 172, 186 (D.D.C. 2001) (recognizing that
‘‘[a]s a matter of law, courts have generally
recognized that when a customer can replace the
services of an external product with an internallycreated system, this captive output (i.e. the selfproduction of all or part of the relevant product)
should be included in the same market.’’). In
SunGard, the court rejected the Antitrust Division’s
attempt to block SunGuard’s acquisition of the
disaster recovery assets of Comdisco on the basis
that the acquisition would ‘‘substantially lessen
competition in the market for shared hotsite
disaster recovery services,’’ when the evidence
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47675
entry act as a market check on high
prices.36
In sum, the fierce competition for
order flow thus constrains any exchange
from pricing its market data at a
supracompetitive price and constrains
the Exchange in setting its fees at issue
here.
More specifically, in setting fees for
the Pillar Depth data feed, the Exchange
is constrained by the fact that, if its
pricing across the platform is
unattractive to customers, customers
have their pick of an increasing number
of alternative platforms to use instead of
the Exchange. The Exchange believes
that it has considered all relevant factors
and has not considered irrelevant
factors in order to establish reasonable
fees. The existence of numerous
alternative platforms to the Exchange’s
platform ensures that the Exchange
cannot set unreasonable market data
fees without suffering the negative
effects of that decision in the fiercely
competitive market for trading order
flow.
More specifically, the Exchange
believes that the proposed $250 per
month Access Fee for Pillar Depth is
reasonable because it represents the
value for the data aggregation and
consolidation function that the
Exchange performs. The Exchange
further believes that requiring market
data recipients to separately pay for the
five underlying data feeds to Pillar
Depth is reasonable because by design,
Pillar Depth represents an aggregated
and consolidated version of those
existing five data feeds. The Exchange
notes that it is not seeking with this
filing to establish fees relating to the
underlying five Aggregated Lite data
feeds, as those fees have been
established consistent with Section
19(b)(3)(A) of the Act 37 and Rule 19b–
4(f)(2) 38 thereunder, and which may be
amended from time to time. However,
the Exchange believes it would be unfair
if it did not require Pillar Depth data
feed recipients to separately pay for
those five feeds because otherwise,
Pillar Depth data feed recipients would
showed that ‘‘internal hotsites’’ created by
customers competed with the ‘‘external shared
hotsite business’’ engaged in by the merging parties.
Id. at 173–74, 187.
36 United States v. Baker Hughes, 908 F.2d 981,
987 (1990) (‘‘In the absence of significant barriers
[to entry], a company probably cannot maintain
supracompetitive pricing for any length of time.’’);
see also David S. Evans and Richard Schmalensee,
Markets with Two-Sided Platforms, in 1 Issues in
Competition Law and Policy 667, 685 (ABA Section
of Antitrust Law 2008) (noting that exchange
mergers in 2005 and 2006 were approved by
competition authorities in part in reliance on
planned and likely entry of other firms).
37 15 U.S.C. 78s(b)(3)(A).
38 17 CFR 240.19b–4(f)(2).
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be receiving a data product that
includes such underlying data at a
lower cost than separately subscribing
to the underlying data feeds. Similarly,
the Exchange believes that it would be
reasonable to charge separate
Professional User or Non-Professional
User fees if a market data recipient
chooses to receive both Pillar Depth and
a separate dissemination of the five
underlying data feeds in a nonconsolidated form. The Exchange
believes that such delivery would
constitute two separate uses of the
underlying data feeds and thus should
be charged accordingly, consistent with
the existing fee schedule for those
market data products. The Exchange
therefore believes that the proposed fee
structure for Pillar Depth would not be
lower than the cost to another party to
create a comparable product, including
the cost of receiving the underlying data
feeds.
The Exchange notes that its proposed
fee structure is similar to the fee
structure for the NYSE BQT data feed.39
The NYSE BQT data feed provides best
bid and offer (‘‘BBO’’) and last sale
information (‘‘Trades’’) for the Exchange
and its affiliates, NYSE Arca, NYSE
American, NYSE Chicago and NYSE
National. NYSE BQT consists of certain
data elements from ten market data
feeds—NYSE Trades, NYSE BBO, NYSE
Arca Trades, NYSE Arca BBO, NYSE
American Trades, NYSE American BBO,
NYSE Chicago Trades, NYSE Chicago
BBO, NYSE National Trades and NYSE
National BBO.40 To receive NYSE BQT,
market data recipient must pay the
applicable fee for the ten data feeds
underlying NYSE BQT, and an Access
Fee of $250 per month.41
The Exchange notes that Pillar Depth
is entirely optional. The Exchange is not
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39 See
Securities Exchange Act Release No. 73816
(December 11, 2014), 79 FR 75200 (December 17,
2014) (Notice of Filing and Immediate Effectiveness
of Proposed Rule Change To Establish an Access
Fee for the NYSE Best Quote & Trades Data Feed)
(SR–NYSE–2014–64).
40 See Securities Exchange Act Release Nos.
72750 (August 4, 2014), 79 FR 46494 (August 8,
2014) (notice—NYSE BQT); and 73553 (November
6, 2014), 79 FR 67491 (November 13, 2014)
(approval order—NYSE BQT) (SR–NYSE–2014–40)
(‘‘NYSE BQT Filing’’). In 2018, NYSE BQT was
amended to include NYSE National BBO and NYSE
National Trades. See Securities Exchange Act
Release No. 83359 (June 1, 2018), 83 FR 26507 (June
7, 2018) (SR–NYSE–2018–22). In 2019, NYSE BQT
was amended to include NYSE Chicago BBO and
NYSE Chicago Trades. See Securities Exchange Act
Release No. 87511 (November 12, 2019), 84 FR
63689 (November 18, 2019) (SR–NYSE–2019–60).
41 See Securities Exchange Act Release No. 82121
(November 30, 2017), 82 FR 57627 (December 6,
22017) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Amend
the Fees for NYSE BBO and NYSE Trades To Lower
the Enterprise Fee, and for NYSE BQT To Lower the
Access Fee) (SR–NYSE–2017–60).
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required to make the proprietary data
products that are the subject of this
proposed rule change available or to
offer any specific pricing alternatives to
any customers, nor is any firm or
investor required to purchase the
Exchange’s data products. Unlike some
other data products (e.g., the
consolidated quotation and last-sale
information feeds) that firms are
required to purchase in order to fulfil
regulatory obligations,42 a customer’s
decision whether to purchase any of the
Exchange’s proprietary market data
feeds is entirely discretionary. Most
firms that choose to subscribe to
proprietary market data feeds from the
Exchange and its affiliates do so for the
primary goals of using them to increase
their revenues, reduce their expenses,
and in some instances compete directly
with the Exchange’s trading services.
Such firms are able to determine for
themselves whether or not the products
in question or any other similar
products are attractively priced. If
market data feeds from the Exchange
and its affiliates do not provide
sufficient value to firms based on the
uses those firms may have for it, such
firms may simply choose to conduct
their business operations in ways that
do not use the products.
Further, in the case of products that
are also redistributed through market
data vendors such as Bloomberg and
Refinitiv, the vendors themselves
provide additional price discipline for
proprietary data products because they
control the primary means of access to
certain end users. These vendors impose
price discipline based upon their
business models. For example, vendors
that assess a surcharge on data they sell
are able to refuse to offer proprietary
products that their end users do not or
will not purchase in sufficient numbers.
Vendors may elect not to make Pillar
Depth available to its customers unless
their customers request it, and
customers will not elect to pay the
proposed fees unless Pillar Depth can
provide value by sufficiently increasing
revenues or reducing costs in the
customer’s business in a manner that
will offset the fees. All of these factors
operate as constraints on pricing
proprietary data products.
42 The Exchange notes that broker-dealers are not
required to purchase proprietary market data to
comply with their best execution obligations. See In
the Matter of the Application of Securities Industry
and Financial Markets Association for Review of
Actions Taken by Self-Regulatory Organizations,
Release Nos. 34–72182; AP–3–15350; AP–3–15351
(May 16, 2014). Similarly, there is no requirement
in Regulation NMS or any other rule that
proprietary data be utilized for order routing
decisions, and some broker-dealers and ATSs have
chosen not to do so.
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In setting the proposed fees for Pillar
Depth, the Exchange considered the
competitiveness of the market for
proprietary data and all of the
implications of that competition. The
Exchange believes that it has considered
all relevant factors and has not
considered irrelevant factors in order to
establish reasonable fees. The existence
of alternatives to the Exchange’s
platform ensures that the Exchange
cannot set unreasonable market data
fees without suffering the negative
effects of that decision in the fiercely
competitive market for trading order
flow.
The proposed fees are therefore
reasonable because in setting them, the
Exchange is constrained by the
availability of numerous substitute
platforms offering market data products
and trading. Such substitutes need not
be identical, but only substantially
similar to the product at hand.43
The four U.S. equities exchanges
operated by Cboe Exchange, Inc.—Cboe
BZX Exchange, Inc. (‘‘BZX’’), Cboe BYX
Exchange, Inc. (‘‘BYX’’), Cboe EDGA
Exchange, Inc. (‘‘EDGA’’), and Cboe
EDGX Exchange, Inc. (‘‘EDGX’’),
currently offer a market data product
called the Cboe One Premium Feed,44
which competes with the Pillar Depth
data feed. Similar to the Cboe One
Premium Feed, Pillar Depth can be
utilized by vendors and subscribers to
quickly access and distribute aggregated
order book data. As noted above, Pillar
Depth, similar to Cboe One Premium
Feed, would provide aggregated depth
per security, including the bid, ask and
share quantity for orders received by the
NYSE Group markets. The Exchange
believes that Pillar Depth will offer a
43 For example, in the National IF Approval
Order, the Commission recognized that for some
customers, the best bid and offer information from
consolidated data feeds may function as a substitute
for the NYSE National Integrated Feed product,
which contains order by order information. See
National IF Approval Order, supra note 19, at 67397
[release p. 21] (‘‘[I]nformation provided by NYSE
National demonstrates that a number of executing
broker-dealers do not subscribe to the NYSE
National Integrated Feed and executing brokerdealers can otherwise obtain NYSE National best
bid and offer information from the consolidated
data feeds.’’ (internal quotations omitted)).
44 See BZX Rule 11.22(j); BYX Rule 11.22(i);
EDGA Rule 13.8(b); and EDGX Rule 13.8(b). The
Cboe One Feed offered by BZX, BYX, EDGA and
EDGX is a data feed that contains the aggregate best
bid and offer of all displayed orders for securities
traded on the Cboe exchanges. The Cboe One Feed
also contains the individual last sale information,
consolidated volume, the primary listing market’s
official opening and closing price, and the current
day consolidated high and low price for all listed
equity securities. Cboe One Feed recipients may
also elect to receive aggregated two-sided
quotations from the Cboe exchanges for five (5)
price levels (‘‘Cboe One Premium Feed’’).
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competitive alternative to the Cboe One
Premium Feed.45
In addition, the fees that are the
subject of this rule filing are constrained
by competition. As explained below in
the Exchange’s Statement on Burden on
Competition, the existence of
alternatives to these data products
further ensures that the Exchange
cannot set unreasonable fees, or fees
that are unreasonably discriminatory,
when vendors and subscribers can elect
such alternatives. That is, the Exchange
competes with other exchanges (and
their affiliates) that provide similar
market data products. If another
exchange (or its affiliate) were to charge
less to consolidate and distribute its
similar product than the Exchange
charges to consolidate and distribute
Pillar Depth, prospective users likely
would not subscribe to, or would cease
subscribing to, Pillar Depth. In addition,
the Exchange would compete with
unaffiliated market data vendors who
would be in a position to consolidate
and distribute the same data that
comprises the Pillar Depth data feed
into the vendor’s own comparable
market data product. If the third-party
vendor is able to provide the exact same
data for a lower cost, prospective users
would avail themselves of that lower
cost and elect not to take Pillar Depth.
The Proposed Fees Are Equitably
Allocated and Are Not Unfairly
Discriminatory
The Exchange believes that the
proposed fee is equitable and nondiscriminatory in that it would apply
uniformly to all recipients of Exchange
data. The Exchange also believes the
proposed fee is competitive with those
charged by other venues and, therefore,
reasonable and equitably allocated to
recipients. The Exchange also notes that
the proposed fee is not designed to
permit unfair discrimination because all
market data recipients that subscribe to
Pillar Depth would be charged the same
fee. The Exchange further believes that
the proposed Pillar Depth fee structure
is equitable and not unfairly
discriminatory because all vendors and
subscribers that elect to purchase Pillar
Depth would be charged the same fees.
In addition, vendors and subscribers
that do not wish to purchase Pillar
Depth may separately purchase the five
individual underlying products, and if
they so choose, perform a similar
aggregation and consolidation function
that the Exchange performs in creating
Pillar Depth. To enable such
45 Fees for the Cboe One Premium Feed are
available at https://www.cboe.com/market_data_
services/us/equities/cboe_one/.
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competition, the Exchange is offering
Pillar Depth on terms that a subscriber
of those five feeds could offer a
competing product if it so chooses.
For these reasons, the Exchange
believes that the proposed fees are
reasonable, equitable, and not unfairly
discriminatory.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
In accordance with Section 6(b)(8) 46
of the Act, the Exchange does not
believe that the proposed rule change
will impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
As noted above, the Pillar Depth data
feed represents aggregated and
consolidated information from five
existing market data feeds. Although the
Exchange, NYSE American, NYSE Arca,
NYSE Chicago and NYSE National are
the exclusive distributors of the five
Aggregated Lite data feeds from which
certain data elements are taken to create
Pillar Depth, the Exchange may not be
the exclusive distributor of the
aggregated and consolidated
information that comprises the Pillar
Depth data feed. Any other market
participant recipient of the five
Aggregated Lite feeds would be able, if
they chose, to create a data feed with the
same information as Pillar Depth and
distribute it to their clients on a levelplaying field with respect to latency and
cost as compared to the Exchange’s
product.47
Intramarket Competition. The
Exchange believes that the proposed
fees do not put any market participant
at a relative disadvantage compared to
other market participant. As noted
above, the proposed fees would apply
equally to all subscribers of Pillar
Depth, and subscribers may not only
choose whether to subscribe to Pillar
Depth at all, but also may tailor their
subscription to include only the
products offered by the Exchange that
they deem suitable for their business
needs. The Exchange also believes that
the proposed fees neither favor nor
penalize one or more categories of
market participants in a manner that
would impose an undue market on
competition.
Intermarket Competition. The
Exchange believes that the proposed
monthly Access Fee the Exchange
proposes to charge subscribers for Pillar
Depth would be pro-competitive
because another market data recipient
could perform a similar aggregating and
consolidating function and similarly
46 78
U.S.C. 78f(b)(8).
Pillar Depth Product Filing, supra note 4.
47 See
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47677
charge for such service. The Exchange
notes that a competing vendor might
engage in a different analysis of
assessing the cost of a competing
product, which may incorporate passing
through fees associated with co-location
at the Mahwah, New Jersey data center.
However, the incremental co-location
costs to a particular vendor may be
inconsequential of such vendor is
already co-located and is able to allocate
its co-location costs over numerous
product and customer relationships.
The Exchange therefore believes that a
competing vendor could create and offer
a product similar to the Pillar Depth
data feed at a similar cost. For these
reasons, the Exchange believes that
vendors could readily offer a product
similar to Pillar Depth on a competitive
basis.
In addition, the Exchange believes
that the proposed fees do not impose a
burden on competition or on other
exchanges that is not necessary or
appropriate because of the availability
of numerous substitute market data
products. Specifically, as described
above, Pillar Depth would compete with
the Cboe One Premium Feed.48 These
products each serve as reasonable
substitutes for one another as they are
each designed to provide investors with
a unified view of quotes in all Tape A,
B, and C securities. Each product
provides subscribers with aggregated
and consolidated quotes from multiple
U.S. equities markets. Pillar Depth
provides depth of book data from five
NYSE-affiliated U.S. equities exchanges,
while Cboe One Premium Feed
similarly provides depth of book data
from Cboe’s four U.S. equities
exchanges. Pillar Depth and Cboe One
Premium Feed are intended to provide
indicative pricing and therefore, are
reasonable substitutes for one another.
Additionally, market data vendors are
also able to offer close substitutes to
Pillar Depth. Because market data users
can find suitable substitute feeds, an
exchange that overprices its market data
products stands a high risk that users
may substitute another source of market
data information for its own. These
competitive pressures ensure that no
one exchange’s market data fees can
impose an unnecessary burden on
competition, and the Exchange’s
proposed fees do not do so here.
As such, in establishing the proposed
fees, the Exchange considered the
competitiveness of the market for
proprietary data and all of the
implications of that competition. The
Exchange believes that it has considered
all relevant factors and has not
48 See
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considered irrelevant factors in order to
establish fair, reasonable, and not
unreasonably discriminatory fees and an
equitable allocation of fees among all
users. The existence of alternatives to
Pillar Depth, including the five
underlying feeds, consolidated data, and
proprietary data from other sources,
ensures that the Exchange cannot set
unreasonable fees, or fees that are
unreasonably discriminatory, when
vendors and subscribers can elect these
alternatives or choose not to purchase a
specific proprietary data product if its
cost to purchase is not justified by the
returns any particular vendor or
subscriber would achieve through the
purchase.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 49 of the Act and
subparagraph (f)(2) of Rule 19b–4 50
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily 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
under Section 19(b)(2)(B) 51 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
lotter on DSK11XQN23PROD with NOTICES1
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:
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
51 15 U.S.C. 78s(b)(2)(B).
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–
NYSE–2024–30 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–NYSE–2024–30. 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 website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NYSE–2024–30 and should be
submitted on or before June 24, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.52
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–12041 Filed 5–31–24; 8:45 am]
BILLING CODE 8011–01–P
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50 17
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
35205; 812–15553]
Eagle Point Enhanced Income Trust,
Eagle Point Institutional Income Fund,
Eagle Point Credit Management LLC,
and Eagle Point Enhanced Income
Management LLC
May 28, 2024.
Securities and Exchange
Commission (‘‘Commission’’ or ‘‘SEC’’).
ACTION: Notice.
AGENCY:
Notice of an application for an order
pursuant to section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
18(a)(2), 18(c), and 18(i) of the Act,
pursuant to sections 6(c) and 23(c) of
the Act for an exemption from rule 23c–
3 under the Act, and pursuant to section
17(d) of the Act and rule 17d–1
thereunder.
Summary of Application: Applicants
request an order to permit certain
registered closed-end investment
companies to issue multiple classes of
shares and to impose early withdrawal
charges and asset-based distribution
and/or service fees.
Applicants: Eagle Point Enhanced
Income Trust, Eagle Point Institutional
Income Fund, Eagle Point Credit
Management LLC, and Eagle Point
Enhanced Income Management LLC
Filing Dates: The application was filed
on March 4, 2024, and amended on
April 9, 2024.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing on any application by
emailing the SEC’s Secretary at
Secretarys-Office@sec.gov and serving
the Applicants with a copy of the
request by email, if an email address is
listed for the relevant Applicant below,
or personally or by mail, if a physical
address is listed for the relevant
Applicant below. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 24, 2024, and
should be accompanied by proof of
service on the Applicants, in the form
of an affidavit, or, for lawyers, a
certificate of service. Pursuant to rule 0–
5 under the Act, hearing requests should
state the nature of the writer’s interest,
any facts bearing upon the desirability
of a hearing on the matter, the reason for
the request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
emailing the Commission’s Secretary.
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]]>Agencies
[Federal Register Volume 89, Number 107 (Monday, June 3, 2024)]
[Notices]
[Pages 47672-47678]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12041]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100232; File No. SR-NYSE-2024-30]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the NYSE Proprietary Market Data Fee Schedule
May 28, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on May 13, 2024, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I
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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 47673]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the NYSE Proprietary Market Data Fee
Schedule to establish an Access Fee for the NYSE Pillar Depth data
feed. The Exchange proposes to implement the proposed fee change on May
13, 2024. The proposed rule change is available on the Exchange's
website at www.nyse.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the NYSE Proprietary Market Data Fee
Schedule (``Fee Schedule''). Specifically, the Exchange proposes to
establish an Access Fee for the NYSE Pillar Depth (``Pillar Depth'')
data feed, effective May 13, 2024. The proposed fee for Pillar Depth
would be $250 per month, provided that the market data recipient
separately pays the applicable fees for the five existing market data
products underlying the Pillar Depth data feed, consistent with the
existing fee structures for those market data products.
The Pillar Depth data feed is a frequency-based depth of book
market data feed that provides a consolidated view of the ten (10) best
price levels on both the bid and offer sides across the NYSE Group's
combined limit order books for securities traded on the NYSE Group
equities markets, i.e., NYSE, NYSE American LLC (``NYSE American''),
NYSE Arca, Inc. (``NYSE Arca''), NYSE Chicago, Inc. (``NYSE Chicago'')
and NYSE National, Inc. (``NYSE National''), for which the NYSE Group
equities markets report quotes and trades under the Consolidated Tape
Association (``CTA'') Plan or the Nasdaq/UTP Plan.\4\ In other words,
Pillar Depth would be a compilation of limit order data that the
Exchange provides to vendors and subscribers, updated no less
frequently than once per second. Specifically, the Pillar Depth data
feed consists of certain data elements from five market data feeds
\5\--NYSE Aggregated Lite,\6\ NYSE American Aggregated Lite,\7\ NYSE
Arca Aggregated Lite,\8\ NYSE Chicago Aggregated Lite \9\ and NYSE
National Aggregated Lite.\10\
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\4\ See Securities Exchange Act Release No. 100030 (April 25,
2024), 89 FR 35260 (May 1, 2024) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Establish the NYSE Pillar
Depth Data Feed) (SR-NYSE-2024-24) (``Pillar Depth Product
Filing'').
\5\ Each of these data feeds are offered pursuant to preexisting
and effective rules and fees filed with the Commission. This filing
does not affect those rules, or the fees associated with these
underlying data feeds or the ability for the Exchange, NYSE
American, NYSE Arca, NYSE Chicago or NYSE National to amend the data
feeds or fees associated with those data feeds pursuant to a
separate rule filing.
\6\ See Securities Exchange Act Release No. 99689 (March 7,
2024) 89 FR 18466 (March 13, 2024) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Establish the NYSE
Aggregated Lite Market Data Feed) (SR-NYSE-2024-12).
\7\ See Securities Exchange Act Release No. 99690 (March 7,
2024) 89 FR 18445 (March 13, 2024) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Establish the NYSE American
Aggregated Lite Market Data Feed) (SR-NYSEAMER-2024-14).
\8\ See Securities Exchange Act Release No. 99713 (March 12,
2024) 89 FR 19381 (March 18, 2024) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Establish the NYSE Arca
Aggregated Lite Market Data Feed) (SR-NYSEARCA-2024-22).
\9\ See Securities Exchange Act Release No. 99691 (March 7,
2024) 89 FR 18468 (March 13, 2024) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Establish the NYSE Chicago
Aggregated Lite Market Data Feed) (SR-NYSECHX-2024-08).
\10\ See Securities Exchange Act Release No. 99715 (March 12,
2024) 89 FR 19383 (March 18, 2024) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Establish the NYSE National
Aggregated Lite Market Data Feed) (SR-NYSENAT-2024-06).
---------------------------------------------------------------------------
The Exchange, NYSE American, NYSE Arca, NYSE Chicago and NYSE
National are the exclusive distributors of the five Aggregated Lite
feeds from which certain data elements are taken to create the Pillar
Depth data feed. By contrast, the Exchange would not be the exclusive
distributor of the aggregated and consolidated information that
comprises the Pillar Depth data feed. Any entity that receives, or
elects to receive, the five underlying Aggregated Lite data feeds would
be able, if it so chooses, to create a data feed with the same
information included in Pillar Depth and sell and distribute it to its
clients so that it could be received by those clients as quickly as the
Pillar Depth data feed would be received by those same clients.\11\
---------------------------------------------------------------------------
\11\ See Pillar Depth Product Filing, supra note 4.
---------------------------------------------------------------------------
As proposed, the Exchange would charge a $250 per month Access Fee
for Pillar Depth, which reflects the value of the aggregation and
consolidation function that the Exchange performs in creating Pillar
Depth. To obtain Pillar Depth, a market data recipient would need to
pay any applicable fees for the five data feeds underlying Pillar
Depth, consistent with the existing fee schedules for those market data
products as previously filed with the Commission and which may be
amended from time to time, including any applicable Access,
Redistribution, Professional User, Non-Professional User, Non-Display
or Enterprise fees. The Exchange proposes to denote the requirement for
market data recipients to pay the applicable fees for the five data
feeds underlying Pillar Depth in proposed footnote 3 on the Fee
Schedule.
When subscribing to Pillar Depth, the underlying data feeds would
be delivered in the Pillar Depth consolidated format, as described
above, but charged for as if the recipient were receiving the
underlying feeds directly. The Exchange notes that if a subscriber
chooses to receive the five underlying feeds both separately and in the
Pillar Depth format, such subscriber may be subject to additional
Professional User or Non-Professional User fees to reflect the
distribution of both Pillar Depth (which incorporates the five
underlying data feeds) and any separate dissemination of the underlying
data feeds. The Exchange believes that the proposed fees for Pillar
Depth would not be lower than the cost to a vendor of creating a
comparable product, including the cost of receiving the underlying data
feeds.
The Exchange notes that another market participant seeking to
distribute a competing product to Pillar Depth might engage in a
different analysis of assessing the cost of a competing product, which
may incorporate passing through fees associated with co-location at the
Mahwah, New Jersey data center. However, the incremental co-location
cost to a particular vendor might be inconsequential if such vendor is
already co-located and is able to allocate its co-location costs over
numerous product and customer relationships. The Exchange therefore
believes that a vendor could create and offer a product similar to
Pillar Depth on a cost-competitive basis.
The proposed rule change is intended to encourage market
participants to
[[Page 47674]]
subscribe to Pillar Depth by making it more affordable for prospective
customers. The proposed fee change would allow the Exchange to compete
more effectively with the Cboe One Premium Feed, which as described
below, is a comparable market data offering to Pillar Depth.
The Exchange notes that the proposed change is not otherwise
intended to address any other issues, and the Exchange is not aware of
any problems that member organizations or others would have in
complying with the proposed rule change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\12\ in general, and
Sections 6(b)(4) and 6(b)(5) of the Act,\13\ in particular, in that it
provides an equitable allocation of reasonable fees among users and
recipients of the data and is not designed to permit unfair
discrimination among customers, issuers, and brokers. The Exchange also
believes that the proposed rule change is consistent with Section 11(A)
of the Act \14\ in that it is consistent with (i) fair competition
among brokers and dealers, among exchange markets, and between exchange
markets and markets other than exchange markets; and (ii) the
availability to brokers, dealers, and investors of information with
respect to quotations for and transactions in securities. Furthermore,
the proposed rule change is consistent with Rule 603 of Regulation
NMS,\15\ which provides that any national securities exchange that
distributes information with respect to quotations for or transactions
in an NMS stock do so on terms that are not unreasonably
discriminatory.
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\12\ 15 U.S.C. 78f(b).
\13\ 15 U.S.C. 78f(b)(4), (5).
\14\ 15 U.S.C. 78k-1.
\15\ 17 CFR 242.603.
---------------------------------------------------------------------------
The Proposed Rule Change Is Reasonable
In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique
market data to the public. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues, and also recognized that
current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \16\
---------------------------------------------------------------------------
\16\ See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
---------------------------------------------------------------------------
With respect to market data, the decision of the United States
Court of Appeals for the District of Columbia Circuit in NetCoalition
v. SEC upheld the Commission's reliance on the existence of competitive
market mechanisms to evaluate the reasonableness and fairness of fees
for proprietary market data:
In fact, the legislative history indicates that the Congress
intended that the market system ``evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed'' and that the SEC wield its regulatory power ``in those
situations where competition may not be sufficient,'' such as in the
creation of a ``consolidated transactional reporting system.'' \17\
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\17\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010)
(``NetCoalition I'') (quoting H.R. Rep. No. 94-229 at 92 (1975), as
reprinted in 1975 U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that ``Congress
intended that `competitive forces should dictate the services and
practices that constitute the U.S. national market system for trading
equity securities.' '' \18\
---------------------------------------------------------------------------
\18\ Id. at 535.
---------------------------------------------------------------------------
More recently, the Commission confirmed that it applies a ``market-
based'' test in its assessment of market data fees, and that under that
test:
the Commission considers whether the exchange was subject to
significant competitive forces in setting the terms of its proposal
for [market data], including the level of any fees. If an exchange
meets this burden, the Commission will find that its fee rule is
consistent with the Act unless there is a substantial countervailing
basis to find that the terms of the rule violate the Act or the
rules thereunder.\19\
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\19\ See Securities Exchange Act Release No. 34-90217 (October
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05)
(``National IF Approval Order'') (internal quotation marks omitted),
quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74781 (December 9, 2008) (``2008 ArcaBook
Approval Order'').
An exchange may demonstrate that its fees are constrained by
competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in Ohio v. American
Express, platforms are firms that act as intermediaries between two or
more sets of agents, and typically the choices made on one side of the
platform affect the results on the other side of the platform via
externalities, or ``indirect network effects.'' \20\ Externalities are
linkages between the different sides of a platform such that one cannot
understand pricing and competition for goods or services on one side of
the platform in isolation; one must also account for the influence of
the other sides. As the Supreme Court explained:
---------------------------------------------------------------------------
\20\ Ohio v. American Express, 138 S. Ct. 2274, 2280-81 (2018).
To ensure sufficient participation, two-sided platforms must be
sensitive to the prices that they charge each side. . . . Raising
the price on side A risks losing participation on that side, which
decreases the value of the platform to side B. If the participants
on side B leave due to this loss in value, then the platform has
even less value to side A--risking a feedback loop of declining
demand. . . . Two-sided platforms therefore must take these indirect
network effects into account before making a change in price on
either side.\21\
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\21\ Id. at 2281.
The Exchange and its affiliated exchanges have long maintained that
they function as platforms between consumers of market data and
consumers of trading services. Proving the existence of linkages
between the two sides of this platform requires an in-depth economic
analysis of both public data and confidential exchange data about
particular customers' trading activities and market data purchases.
Exchanges, however, are prohibited from publicly sharing details about
these specific customer activities and purchases. For example, pursuant
to Exchange Rule 7.41, transactions executed on the Exchange are
processed anonymously.
Exchanges function as platforms for market data and transaction
services mean that exchanges do not set fees for market data products
without considering, and being constrained by, the effect the fees will
have on the order-flow side of the platform. As the D.C. Circuit
recognized in NetCoalition I, ``[n]o one disputes that competition for
order flow is fierce.'' \22\ The court further noted that ``no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers,'' and that an exchange ``must compete
vigorously for order flow to maintain its share of trading volume.''
\23\
---------------------------------------------------------------------------
\22\ NetCoalition I, 615 F.3d at 544 (internal quotation
omitted).
\23\ Id.
---------------------------------------------------------------------------
As noted above, while Regulation NMS has enhanced competition, it
has also fostered a ``fragmented'' market structure where trading in a
single stock can occur across multiple trading centers. When multiple
trading centers compete for order flow in the same
[[Page 47675]]
stock, the Commission has recognized that ``such competition can lead
to the fragmentation of order flow in that stock.'' \24\ The
Commission's Division of Trading and Markets has also recognized that
with so many ``operating equities exchanges and dozens of ATSs, there
is vigorous price competition among the U.S. equity markets and, as a
result, [transaction] fees are tailored and frequently modified to
attract particular types of order flow, some of which is highly fluid
and price sensitive.'' \25\ Indeed, today, equity trading is currently
dispersed across 16 exchanges,\26\ numerous alternative trading
systems,\27\ broker-dealer internalizers and wholesalers, all competing
for order flow. Based on publicly-available information, no single
exchange currently has more than 20% market share.\28\
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\24\ See Securities Exchange Act Release No. 61358, 75 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\25\ Commission Division of Trading and Markets, Memorandum to
EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
\26\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/.
\27\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
\28\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------
Further, low barriers to entry mean that new exchanges may rapidly
and inexpensively enter the market and offer additional substitute
platforms to compete with the Exchange. For example, since 2020, three
new ones have entered the market: Long Term Stock Exchange (LTSE),
which began operations as an exchange on August 28, 2020; \29\ Members
Exchange (MEMX), which began operations as an exchange on September 29,
2020; \30\ and Miami International Holdings (MIAX), which began
operations of its first equities exchange on September 29, 2020.\31\
---------------------------------------------------------------------------
\29\ See LTSE Market Announcement: MA-2020-020, dated August 14,
2020, announcing LTSE production securities phase-in planned for
August 28, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf and
LTSE Market Announcement: MA-2020-025, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf.
\30\ As of October 29, 2020, MEMX is trading all NMS symbols.
See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
\31\ See MIAX Pearl Press release, dated September 29, 2020,
available here: https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf.
---------------------------------------------------------------------------
These low barriers enable existing exchange customers to
disintermediate and start their own exchanges if they think the prices
charged for exchange proprietary market data products are too high.
This is precisely the rationale behind the creation of MEMX, which was
formed by some of the largest and most well capitalized financial firms
that are also Exchange customers (including Bank of America, BlackRock,
Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P.
Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others).\32\
---------------------------------------------------------------------------
\32\ MEMX Home Page (``Founded by members and investors, MEMX
aims to drive simplicity, efficiency, and competition in equity
markets.''), available at https://memx.com/.
---------------------------------------------------------------------------
For example, one of MEMX's founding principles is that exchange
proprietary market data prices are too high, and that MEMX will benefit
its members by offering ``[l]ower pricing on market data.'' \33\ Nor is
this a new phenomenon: exchange customers formed BATS to compete with
incumbent exchanges and once registered as an exchange in 2008, BATS
did not initially charge for market data. The BATS venture was a
financial success for its founders, first through recouping their
investment in its initial public offering and then in the subsequent
sale of BATS to Cboe, which now charges for market data from those
exchanges. Notably, MEMX has some of the same founding broker-dealer
customers, leading some to dub MEMX ``BATS 2.0.'' \34\
---------------------------------------------------------------------------
\33\ MEMX home page, available at https://memx.com/.
\34\ See ``MEMX turns up the heat on US stock exchanges,''
Financial Times, January 9, 2019, available at https://www.ft.com/content/4908c8b0-1418-11e9-a581-4ff78404524e; see also ``US equities
exchanges: If you can't beat them, join them,'' Euromoney, February
13, 2019, available at https://www.euromoney.com/article/b1d3tfby4p3y4v/us-equities-exchanges-if-you-cant-beat-them-join-them.
---------------------------------------------------------------------------
The fact that this cycle is viable and repeatable by entities that
both trade on and compete with existing exchanges confirms that
barriers to entry are low and that these markets are competitive and
contestable.\35\ And low barriers to entry act as a market check on
high prices.\36\
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\35\ United States v. SunGard Data Sys., 172 F. Supp. 2d 172,
186 (D.D.C. 2001) (recognizing that ``[a]s a matter of law, courts
have generally recognized that when a customer can replace the
services of an external product with an internally-created system,
this captive output (i.e. the self-production of all or part of the
relevant product) should be included in the same market.''). In
SunGard, the court rejected the Antitrust Division's attempt to
block SunGuard's acquisition of the disaster recovery assets of
Comdisco on the basis that the acquisition would ``substantially
lessen competition in the market for shared hotsite disaster
recovery services,'' when the evidence showed that ``internal
hotsites'' created by customers competed with the ``external shared
hotsite business'' engaged in by the merging parties. Id. at 173-74,
187.
\36\ United States v. Baker Hughes, 908 F.2d 981, 987 (1990)
(``In the absence of significant barriers [to entry], a company
probably cannot maintain supracompetitive pricing for any length of
time.''); see also David S. Evans and Richard Schmalensee, Markets
with Two-Sided Platforms, in 1 Issues in Competition Law and Policy
667, 685 (ABA Section of Antitrust Law 2008) (noting that exchange
mergers in 2005 and 2006 were approved by competition authorities in
part in reliance on planned and likely entry of other firms).
---------------------------------------------------------------------------
In sum, the fierce competition for order flow thus constrains any
exchange from pricing its market data at a supracompetitive price and
constrains the Exchange in setting its fees at issue here.
More specifically, in setting fees for the Pillar Depth data feed,
the Exchange is constrained by the fact that, if its pricing across the
platform is unattractive to customers, customers have their pick of an
increasing number of alternative platforms to use instead of the
Exchange. The Exchange believes that it has considered all relevant
factors and has not considered irrelevant factors in order to establish
reasonable fees. The existence of numerous alternative platforms to the
Exchange's platform ensures that the Exchange cannot set unreasonable
market data fees without suffering the negative effects of that
decision in the fiercely competitive market for trading order flow.
More specifically, the Exchange believes that the proposed $250 per
month Access Fee for Pillar Depth is reasonable because it represents
the value for the data aggregation and consolidation function that the
Exchange performs. The Exchange further believes that requiring market
data recipients to separately pay for the five underlying data feeds to
Pillar Depth is reasonable because by design, Pillar Depth represents
an aggregated and consolidated version of those existing five data
feeds. The Exchange notes that it is not seeking with this filing to
establish fees relating to the underlying five Aggregated Lite data
feeds, as those fees have been established consistent with Section
19(b)(3)(A) of the Act \37\ and Rule 19b-4(f)(2) \38\ thereunder, and
which may be amended from time to time. However, the Exchange believes
it would be unfair if it did not require Pillar Depth data feed
recipients to separately pay for those five feeds because otherwise,
Pillar Depth data feed recipients would
[[Page 47676]]
be receiving a data product that includes such underlying data at a
lower cost than separately subscribing to the underlying data feeds.
Similarly, the Exchange believes that it would be reasonable to charge
separate Professional User or Non-Professional User fees if a market
data recipient chooses to receive both Pillar Depth and a separate
dissemination of the five underlying data feeds in a non-consolidated
form. The Exchange believes that such delivery would constitute two
separate uses of the underlying data feeds and thus should be charged
accordingly, consistent with the existing fee schedule for those market
data products. The Exchange therefore believes that the proposed fee
structure for Pillar Depth would not be lower than the cost to another
party to create a comparable product, including the cost of receiving
the underlying data feeds.
---------------------------------------------------------------------------
\37\ 15 U.S.C. 78s(b)(3)(A).
\38\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
The Exchange notes that its proposed fee structure is similar to
the fee structure for the NYSE BQT data feed.\39\ The NYSE BQT data
feed provides best bid and offer (``BBO'') and last sale information
(``Trades'') for the Exchange and its affiliates, NYSE Arca, NYSE
American, NYSE Chicago and NYSE National. NYSE BQT consists of certain
data elements from ten market data feeds--NYSE Trades, NYSE BBO, NYSE
Arca Trades, NYSE Arca BBO, NYSE American Trades, NYSE American BBO,
NYSE Chicago Trades, NYSE Chicago BBO, NYSE National Trades and NYSE
National BBO.\40\ To receive NYSE BQT, market data recipient must pay
the applicable fee for the ten data feeds underlying NYSE BQT, and an
Access Fee of $250 per month.\41\
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\39\ See Securities Exchange Act Release No. 73816 (December 11,
2014), 79 FR 75200 (December 17, 2014) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Establish an
Access Fee for the NYSE Best Quote & Trades Data Feed) (SR-NYSE-
2014-64).
\40\ See Securities Exchange Act Release Nos. 72750 (August 4,
2014), 79 FR 46494 (August 8, 2014) (notice--NYSE BQT); and 73553
(November 6, 2014), 79 FR 67491 (November 13, 2014) (approval
order--NYSE BQT) (SR-NYSE-2014-40) (``NYSE BQT Filing''). In 2018,
NYSE BQT was amended to include NYSE National BBO and NYSE National
Trades. See Securities Exchange Act Release No. 83359 (June 1,
2018), 83 FR 26507 (June 7, 2018) (SR-NYSE-2018-22). In 2019, NYSE
BQT was amended to include NYSE Chicago BBO and NYSE Chicago Trades.
See Securities Exchange Act Release No. 87511 (November 12, 2019),
84 FR 63689 (November 18, 2019) (SR-NYSE-2019-60).
\41\ See Securities Exchange Act Release No. 82121 (November 30,
2017), 82 FR 57627 (December 6, 22017) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Amend the Fees
for NYSE BBO and NYSE Trades To Lower the Enterprise Fee, and for
NYSE BQT To Lower the Access Fee) (SR-NYSE-2017-60).
---------------------------------------------------------------------------
The Exchange notes that Pillar Depth is entirely optional. The
Exchange is not required to make the proprietary data products that are
the subject of this proposed rule change available or to offer any
specific pricing alternatives to any customers, nor is any firm or
investor required to purchase the Exchange's data products. Unlike some
other data products (e.g., the consolidated quotation and last-sale
information feeds) that firms are required to purchase in order to
fulfil regulatory obligations,\42\ a customer's decision whether to
purchase any of the Exchange's proprietary market data feeds is
entirely discretionary. Most firms that choose to subscribe to
proprietary market data feeds from the Exchange and its affiliates do
so for the primary goals of using them to increase their revenues,
reduce their expenses, and in some instances compete directly with the
Exchange's trading services. Such firms are able to determine for
themselves whether or not the products in question or any other similar
products are attractively priced. If market data feeds from the
Exchange and its affiliates do not provide sufficient value to firms
based on the uses those firms may have for it, such firms may simply
choose to conduct their business operations in ways that do not use the
products.
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\42\ The Exchange notes that broker-dealers are not required to
purchase proprietary market data to comply with their best execution
obligations. See In the Matter of the Application of Securities
Industry and Financial Markets Association for Review of Actions
Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-
15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement
in Regulation NMS or any other rule that proprietary data be
utilized for order routing decisions, and some broker-dealers and
ATSs have chosen not to do so.
---------------------------------------------------------------------------
Further, in the case of products that are also redistributed
through market data vendors such as Bloomberg and Refinitiv, the
vendors themselves provide additional price discipline for proprietary
data products because they control the primary means of access to
certain end users. These vendors impose price discipline based upon
their business models. For example, vendors that assess a surcharge on
data they sell are able to refuse to offer proprietary products that
their end users do not or will not purchase in sufficient numbers.
Vendors may elect not to make Pillar Depth available to its customers
unless their customers request it, and customers will not elect to pay
the proposed fees unless Pillar Depth can provide value by sufficiently
increasing revenues or reducing costs in the customer's business in a
manner that will offset the fees. All of these factors operate as
constraints on pricing proprietary data products.
In setting the proposed fees for Pillar Depth, the Exchange
considered the competitiveness of the market for proprietary data and
all of the implications of that competition. The Exchange believes that
it has considered all relevant factors and has not considered
irrelevant factors in order to establish reasonable fees. The existence
of alternatives to the Exchange's platform ensures that the Exchange
cannot set unreasonable market data fees without suffering the negative
effects of that decision in the fiercely competitive market for trading
order flow.
The proposed fees are therefore reasonable because in setting them,
the Exchange is constrained by the availability of numerous substitute
platforms offering market data products and trading. Such substitutes
need not be identical, but only substantially similar to the product at
hand.\43\
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\43\ For example, in the National IF Approval Order, the
Commission recognized that for some customers, the best bid and
offer information from consolidated data feeds may function as a
substitute for the NYSE National Integrated Feed product, which
contains order by order information. See National IF Approval Order,
supra note 19, at 67397 [release p. 21] (``[I]nformation provided by
NYSE National demonstrates that a number of executing broker-dealers
do not subscribe to the NYSE National Integrated Feed and executing
broker-dealers can otherwise obtain NYSE National best bid and offer
information from the consolidated data feeds.'' (internal quotations
omitted)).
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The four U.S. equities exchanges operated by Cboe Exchange, Inc.--
Cboe BZX Exchange, Inc. (``BZX''), Cboe BYX Exchange, Inc. (``BYX''),
Cboe EDGA Exchange, Inc. (``EDGA''), and Cboe EDGX Exchange, Inc.
(``EDGX''), currently offer a market data product called the Cboe One
Premium Feed,\44\ which competes with the Pillar Depth data feed.
Similar to the Cboe One Premium Feed, Pillar Depth can be utilized by
vendors and subscribers to quickly access and distribute aggregated
order book data. As noted above, Pillar Depth, similar to Cboe One
Premium Feed, would provide aggregated depth per security, including
the bid, ask and share quantity for orders received by the NYSE Group
markets. The Exchange believes that Pillar Depth will offer a
[[Page 47677]]
competitive alternative to the Cboe One Premium Feed.\45\
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\44\ See BZX Rule 11.22(j); BYX Rule 11.22(i); EDGA Rule
13.8(b); and EDGX Rule 13.8(b). The Cboe One Feed offered by BZX,
BYX, EDGA and EDGX is a data feed that contains the aggregate best
bid and offer of all displayed orders for securities traded on the
Cboe exchanges. The Cboe One Feed also contains the individual last
sale information, consolidated volume, the primary listing market's
official opening and closing price, and the current day consolidated
high and low price for all listed equity securities. Cboe One Feed
recipients may also elect to receive aggregated two-sided quotations
from the Cboe exchanges for five (5) price levels (``Cboe One
Premium Feed'').
\45\ Fees for the Cboe One Premium Feed are available at https://www.cboe.com/market_data_services/us/equities/cboe_one/.
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In addition, the fees that are the subject of this rule filing are
constrained by competition. As explained below in the Exchange's
Statement on Burden on Competition, the existence of alternatives to
these data products further ensures that the Exchange cannot set
unreasonable fees, or fees that are unreasonably discriminatory, when
vendors and subscribers can elect such alternatives. That is, the
Exchange competes with other exchanges (and their affiliates) that
provide similar market data products. If another exchange (or its
affiliate) were to charge less to consolidate and distribute its
similar product than the Exchange charges to consolidate and distribute
Pillar Depth, prospective users likely would not subscribe to, or would
cease subscribing to, Pillar Depth. In addition, the Exchange would
compete with unaffiliated market data vendors who would be in a
position to consolidate and distribute the same data that comprises the
Pillar Depth data feed into the vendor's own comparable market data
product. If the third-party vendor is able to provide the exact same
data for a lower cost, prospective users would avail themselves of that
lower cost and elect not to take Pillar Depth.
The Proposed Fees Are Equitably Allocated and Are Not Unfairly
Discriminatory
The Exchange believes that the proposed fee is equitable and non-
discriminatory in that it would apply uniformly to all recipients of
Exchange data. The Exchange also believes the proposed fee is
competitive with those charged by other venues and, therefore,
reasonable and equitably allocated to recipients. The Exchange also
notes that the proposed fee is not designed to permit unfair
discrimination because all market data recipients that subscribe to
Pillar Depth would be charged the same fee. The Exchange further
believes that the proposed Pillar Depth fee structure is equitable and
not unfairly discriminatory because all vendors and subscribers that
elect to purchase Pillar Depth would be charged the same fees. In
addition, vendors and subscribers that do not wish to purchase Pillar
Depth may separately purchase the five individual underlying products,
and if they so choose, perform a similar aggregation and consolidation
function that the Exchange performs in creating Pillar Depth. To enable
such competition, the Exchange is offering Pillar Depth on terms that a
subscriber of those five feeds could offer a competing product if it so
chooses.
For these reasons, the Exchange believes that the proposed fees are
reasonable, equitable, and not unfairly discriminatory.
B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) \46\ of the Act, the Exchange
does not believe that the proposed rule change will impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of the Act. As noted above, the Pillar Depth data feed
represents aggregated and consolidated information from five existing
market data feeds. Although the Exchange, NYSE American, NYSE Arca,
NYSE Chicago and NYSE National are the exclusive distributors of the
five Aggregated Lite data feeds from which certain data elements are
taken to create Pillar Depth, the Exchange may not be the exclusive
distributor of the aggregated and consolidated information that
comprises the Pillar Depth data feed. Any other market participant
recipient of the five Aggregated Lite feeds would be able, if they
chose, to create a data feed with the same information as Pillar Depth
and distribute it to their clients on a level-playing field with
respect to latency and cost as compared to the Exchange's product.\47\
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\46\ 78 U.S.C. 78f(b)(8).
\47\ See Pillar Depth Product Filing, supra note 4.
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Intramarket Competition. The Exchange believes that the proposed
fees do not put any market participant at a relative disadvantage
compared to other market participant. As noted above, the proposed fees
would apply equally to all subscribers of Pillar Depth, and subscribers
may not only choose whether to subscribe to Pillar Depth at all, but
also may tailor their subscription to include only the products offered
by the Exchange that they deem suitable for their business needs. The
Exchange also believes that the proposed fees neither favor nor
penalize one or more categories of market participants in a manner that
would impose an undue market on competition.
Intermarket Competition. The Exchange believes that the proposed
monthly Access Fee the Exchange proposes to charge subscribers for
Pillar Depth would be pro-competitive because another market data
recipient could perform a similar aggregating and consolidating
function and similarly charge for such service. The Exchange notes that
a competing vendor might engage in a different analysis of assessing
the cost of a competing product, which may incorporate passing through
fees associated with co-location at the Mahwah, New Jersey data center.
However, the incremental co-location costs to a particular vendor may
be inconsequential of such vendor is already co-located and is able to
allocate its co-location costs over numerous product and customer
relationships. The Exchange therefore believes that a competing vendor
could create and offer a product similar to the Pillar Depth data feed
at a similar cost. For these reasons, the Exchange believes that
vendors could readily offer a product similar to Pillar Depth on a
competitive basis.
In addition, the Exchange believes that the proposed fees do not
impose a burden on competition or on other exchanges that is not
necessary or appropriate because of the availability of numerous
substitute market data products. Specifically, as described above,
Pillar Depth would compete with the Cboe One Premium Feed.\48\ These
products each serve as reasonable substitutes for one another as they
are each designed to provide investors with a unified view of quotes in
all Tape A, B, and C securities. Each product provides subscribers with
aggregated and consolidated quotes from multiple U.S. equities markets.
Pillar Depth provides depth of book data from five NYSE-affiliated U.S.
equities exchanges, while Cboe One Premium Feed similarly provides
depth of book data from Cboe's four U.S. equities exchanges. Pillar
Depth and Cboe One Premium Feed are intended to provide indicative
pricing and therefore, are reasonable substitutes for one another.
Additionally, market data vendors are also able to offer close
substitutes to Pillar Depth. Because market data users can find
suitable substitute feeds, an exchange that overprices its market data
products stands a high risk that users may substitute another source of
market data information for its own. These competitive pressures ensure
that no one exchange's market data fees can impose an unnecessary
burden on competition, and the Exchange's proposed fees do not do so
here.
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\48\ See supra, note 45.
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As such, in establishing the proposed fees, the Exchange considered
the competitiveness of the market for proprietary data and all of the
implications of that competition. The Exchange believes that it has
considered all relevant factors and has not
[[Page 47678]]
considered irrelevant factors in order to establish fair, reasonable,
and not unreasonably discriminatory fees and an equitable allocation of
fees among all users. The existence of alternatives to Pillar Depth,
including the five underlying feeds, consolidated data, and proprietary
data from other sources, ensures that the Exchange cannot set
unreasonable fees, or fees that are unreasonably discriminatory, when
vendors and subscribers can elect these alternatives or choose not to
purchase a specific proprietary data product if its cost to purchase is
not justified by the returns any particular vendor or subscriber would
achieve through the purchase.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \49\ of the Act and subparagraph (f)(2) of Rule
19b-4 \50\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\49\ 15 U.S.C. 78s(b)(3)(A).
\50\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily 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 under
Section 19(b)(2)(B) \51\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\51\ 15 U.S.C. 78s(b)(2)(B).
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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 email to [email protected]. Please include
file number SR-NYSE-2024-30 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSE-2024-30. 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 website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSE-2024-30 and should be
submitted on or before June 24, 2024.
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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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-12041 Filed 5-31-24; 8:45 am]
BILLING CODE 8011-01-P
