Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Fees for the NYSE Arca Aggregated Lite Data Feed, 62831-62841 [2024-16937]
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Federal Register / Vol. 89, No. 148 / Thursday, August 1, 2024 / Notices
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[FR Doc. 2024–16936 Filed 7–31–24; 8:45 am]
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[Release No. 34–100606; File No. SR–
NYSEARCA–2024–60]
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Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Establish Fees for the
NYSE Arca Aggregated Lite Data Feed
July 26, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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notice is hereby given that on July 11,
2024, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to establish
fees for the NYSE Arca Aggregated Lite
data feed. 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 Arca Equities Proprietary Market
Data Fees Schedule (‘‘Fee Schedule’’)
and establish fees for the NYSE Arca
Aggregated Lite (‘‘NYSE Arca Agg Lite’’)
data feed,4 effective July 11, 2024.5
In summary, the NYSE Arca Agg Lite
is a NYSE Arca-only frequency-based
depth of book market data feed of the
NYSE Arca’s limit order book for up to
ten (10) price levels on both the bid and
offer sides of the order book for
4 The proposed rule change establishing the
NYSE Arca Agg Lite data feed was immediately
effective on February 27, 2024. See Securities
Exchange Act Release No. 99713 (March 12, 2024),
89 FR 19381 (March 18, 2024) (SR–NYSEARCA–
2024–22) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change To Establish
the NYSE Arca Aggregated Lite Market Data Feed).
5 The Exchange originally filed to amend the Fee
Schedule on May 13, 2024 (SR–NYSEARCA–2024–
39). SR–NYSEARCA–2024–39 was subsequently
withdrawn and replaced by this filing.
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62831
securities traded on the Exchange and
for which the Exchange reports quotes
and trades under the Consolidated Tape
Association (‘‘CTA’’) Plan or the
Nasdaq/UTP Plan. The NYSE Arca Agg
Lite is a compilation of limit order data
that the Exchange provides to vendors
and subscribers. The NYSE Arca Agg
Lite includes depth of book order data
as well as security status messages. The
security status message informs
subscribers of changes in the status of a
specific security, such as trading halts,
short sale restriction, etc. In addition,
the NYSE Arca Agg Lite includes order
imbalance information prior to the
opening and closing of trading.
Background
The Exchange operates in a highly
competitive market. The Commission
has repeatedly expressed its preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. 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.’’ 6
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 stock, the
Commission has recognized that ‘‘such
competition can lead to the
fragmentation of order flow in that
stock.’’ 7 Indeed, cash equity trading is
currently dispersed across 16
exchanges,8 numerous alternative
trading systems,9 and broker-dealer
internalizers and wholesalers, all
competing for order flow. Based on
publicly-available information, no
single exchange currently has more than
6 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(File No. S7–10–04) (Final Rule) (‘‘Regulation
NMS’’).
7 See Securities Exchange Act Release No. 61358,
75 FR 3594, 3597 (January 21, 2010) (File No. S7–
02–10) (Concept Release on Equity Market
Structure).
8 See Cboe U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/
equities/market_share. See generally https://
www.sec.gov/fastanswers/
divisionsmarketregmrexchangesshtml.html.
9 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.
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20% market share (whether including or
excluding auction volume).10
Proposed NYSE Arca Agg Lite Data Feed
Fees
To reflect the value of NYSE Arca’s
market data, the Exchange proposes to
establish the fees listed below for the
NYSE Arca Agg Lite data feed. The
Exchange proposes to charge fees for the
same categories of market data use as its
affiliated exchanges (namely, NYSE,
NYSE American and NYSE National)
currently charge. The Exchange believes
that adopting the same fee structure as
its affiliated exchanges would reduce
administrative burdens on market data
subscribers that also currently subscribe
to market data feeds from the
Exchange’s affiliates.
1. Access Fee. For the receipt of
access to the NYSE Arca Agg Lite data
feed, the Exchange proposes to charge
$1,500 per month. This proposed
Access Fee would be charged to any
data recipient that receives the NYSE
Arca Agg Lite data feed. Data recipients
that only use display devices to view
NYSE Arca Agg Lite market data and do
not separately receive a data feed would
not be charged an Access Fee. The
proposed Access Fee would be charged
only once per firm.
2. User Fees. The Exchange proposes
to charge a Professional User Fee (Per
User) of $30 per month and a NonProfessional User Fee (Per User) of $4
per month. These user fees would apply
to each display device that has access to
the NYSE Arca Agg Lite data feed.
3. Redistribution Fee. For
redistribution of the NYSE Arca Agg
Lite data feed, the Exchange proposes to
establish a fee of $250 per month. The
proposed Redistribution Fee would be
charged to any Redistributor of the
NYSE Arca Agg Lite data feed, which is
defined to mean a vendor or any person
that provides a real-time NYSE Arca
market data product externally to a data
recipient that is not its affiliate or
wholly-owned subsidiary, or to any
system that an external data recipient
uses, irrespective of the means of
transmission or access. The proposed
Redistribution Fee would be charged
only once per Redistributor account. As
an incentive to potential Redistributors
to subscribe to the NYSE Arca Agg Lite
data feed, the Exchange proposes to
waive the Access Fee and Redistribution
Fee for a Redistributor if the
Redistributor provides NYSE Arca Agg
Lite externally to at least one data feed
recipient and reports such data feed
10 See Cboe Global Markets, U.S. Equities Market
Volume Summary, available at https://markets.
cboe.com/us/equities/market_share/.
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recipient or recipients to the Exchange.
For example, a Redistributor that
subscribes to the NYSE Arca Agg Lite
data feed will have the Access Fee and
Redistribution Fee waived if such
Redistributor provides NYSE Arca Agg
Lite externally to at least one data feed
recipient and reports such data feed
recipient to the Exchange.
By targeting this proposed fee waiver
to Redistributors that provide external
distribution of NYSE Arca Agg Lite, the
Exchange believes that this would
provide an incentive for Redistributors
to make the NYSE Arca Agg Lite market
data product available to its customers.
Specifically, if a data recipient is
interested in subscribing to NYSE Arca
Agg Lite and relies on a Redistributor to
obtain market data products from the
Exchange, that data recipient would
need its Redistributor to subscribe to
and redistribute NYSE Arca Agg Lite.
The Exchange believes that this
proposed fee waiver for Redistributors
of NYSE Arca Agg Lite would provide
an incentive for Redistributors to make
NYSE Arca Agg Lite available to their
customers, which will increase the
availability of the Exchange’s market
data products to a larger potential
population of data recipients.
Further, the Exchange proposes to
adopt a credit that would be applicable
to Redistributors that provide external
distribution of NYSE Arca Agg Lite to
Professional and Non-Professional
Users. As proposed, such Redistributors
would receive a credit equal to the
amount of the monthly Professional
User and Non-Professional User Fees for
such external distribution, up to a
maximum of the combination of the
Access Fee and Redistribution Fee for
NYSE Arca Agg Lite that the
Redistributor would otherwise be
required to pay to the Exchange. For
example, a Redistributor that reports
external Professional Users and NonProfessional Users in a month totaling
$1,750 or more would receive a
maximum credit of $1,750 for that
month, which could effectively reduce
its monthly fee for access and
redistribution to zero. If that same
Redistributor were to report external
User quantities in a month totaling $600
of monthly usage, that Redistributor
would receive a credit of $600. The
Exchange believes the proposed credit
would provide Redistributors with an
incentive to increase their redistribution
of NYSE Arca Agg Lite because the
credit they would be eligible to receive
would increase if they report additional
external User quantities.
4. Enterprise Fees. The Exchange
proposes to establish an enterprise
license that will reduce Exchange fees
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and administrative costs for subscribers
that disseminate NYSE Arca Agg Lite.
Subscribers that are broker-dealers will
be able to distribute the NYSE Arca Agg
Lite data feed for display usage to an
unlimited number of non-professional
users for a monthly fee of $35,000, with
an opportunity to lower that fee to
$31,500 per month if they contract for
twelve months of service in advance.
Alternatively, subscribers that are
broker-dealers will be able to distribute
the NYSE Arca Agg Lite data feed for
display usage to an unlimited number of
recipients (professional users and nonprofessional users) for a monthly fee of
$110,000, with an opportunity to lower
that fee to $99,000 per month if they
contract for twelve months of service in
advance.
As proposed, the NYSE Arca Agg Lite
data feed may be distributed pursuant to
the proposed market data enterprise
license only for display usage and in the
context of a brokerage relationship with
a broker-dealer through such brokerdealer’s own devices. Purchase of an
enterprise license would eliminate per
User subscriber fees for NYSE Arca Agg
Lite. Further, the Exchange proposes to
waive the Access Fee and the
Redistribution Fee for NYSE Arca Agg
lite for Redistributors that pay either the
Non-Professional Enterprise Fee or the
Professional and Non-Professional
Enterprise Fee. The Exchange believes
the proposed fee waiver would provide
an incentive for Redistributors to
subscribe to the NYSE Arca Agg Lite
market data product at the enterprise
level to reduce the fees it would pay to
the Exchange and without having to
report the number of users that receive
the data feed from the Redistributor.
Subscribers that intend to purchase a
market data enterprise license for at
least twelve months may elect to
purchase this product in advance for a
monthly fee of $31,500 for distribution
of NYSE Arca Agg Lite to an unlimited
number of non-professional users, or
$99,000 per month for distribution to an
unlimited number of professional users
and non-professional users. This feature
is intended to simplify cost projections
and budgeting for both subscribers and
the Exchange. Subscribers that elect not
to purchase this particular feature will
nevertheless be able to obtain all of the
market data information offered by
NYSE Arca Agg Lite by paying the
standard fee of $35,000 per month for
distribution of NYSE Arca Agg Lite to
an unlimited number of nonprofessional users, or $110,000 per
month for distribution to an unlimited
number of professional users and nonprofessional users. Subscribers that elect
to pay the monthly fee will be able to
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switch to the annual fee at any time, and
those that elect to purchase the annual
contract would be able to change to the
monthly contract, with notice, at the
end of the twelve-month period.
The Exchange believes that the
proposed market data enterprise license
will reduce exchange fees, lower
administrative costs for subscribers, and
help expand the availability of market
information to investors, and thereby
increase participation in financial
markets.
5. Non-Display Use Fees. The
Exchange proposes to establish nondisplay fees for the NYSE Arca Agg Lite
data feed that are based on the nondisplay use categories charged by NYSE,
NYSE American, NYSE National, the
CTA, and the UTP Plan for non-display
use.11 Non-display use would mean
accessing, processing, or consuming the
NYSE Arca Agg Lite data feed delivered
directly or through a Redistributor, for
a purpose other than in support of a
data recipient’s display or further
internal or external redistribution
(‘‘Non-Display Use’’). Non-Display Use
would include trading uses such as high
frequency or algorithmic trading as well
as any trading in any asset class,
automated order or quote generation
and/or order pegging, price referencing
for algorithmic trading or smart order
routing, operations control programs,
investment analysis, order verification,
surveillance programs, risk
management, compliance, and portfolio
management.
Under the proposal, for Non-Display
Use of NYSE Arca Agg Lite, there would
be three categories of, and fees
applicable, to data recipients. One, two,
or three categories of Non-Display Use
may apply to a data recipient.
• As proposed, the Category 1 Fee
would be $4,500 per month and would
apply when a data recipient’s Non11 See Endnote 1 to the NYSE Proprietary Market
Data Fees, available here: https://www.nyse.com/
publicdocs/nyse/data/NYSE_Market_Data_Fee_
Schedule.pdf; Endnote 1 to the NYSE American
LLC Equities Proprietary Market Data Fees,
available here: https://www.nyse.com/publicdocs/
nyse/data/NYSE_American_Equities_Market_Data_
Fee_Schedule.pdf; Endnote 1 to the NYSE National
Equities Proprietary Market Data Fees, available
here: https://www.nyse.com/publicdocs/nyse/data/
NYSE_National_Market_Data_Fee_Schedule.pdf;
Endnote 8 to the Schedule of Market Data Charges
for the CTA, available here: https://
www.ctaplan.com/publicdocs/ctaplan/
notifications/trader-update/Schedule%20Of%20
Market%20Data%20Charges%20-%20January
%201,%202015.pdf; and Non-Display Usage Fees as
set forth in the UTP Plan Fee Schedule and NonDisplay Policy, available here: https://utpplan.com/
DOC/Datapolicies.pdf. See, e.g., Securities
Exchange Act Release Nos. 69315 (April 5, 2013),
78 FR 21668 (April 11, 2013) (SR–NYSEArca–2013–
37) and 73011 (September 5, 2014), 79 FR 54315
(September 11, 2014) (SR–NYSEARCA–2014–93).
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Display Use of the NYSE Arca Agg Lite
data feed is on its own behalf, not on
behalf of its clients.
• As proposed, Category 2 Fees
would be $4,500 per month and would
apply to a data recipient’s Non-Display
Use of the NYSE Arca Agg Lite data feed
on behalf of its clients.
• As proposed, Category 3 Fees
would be $4,500 per month and would
apply to a data recipient’s Non-Display
Use of the NYSE Arca Agg Lite data feed
for the purpose of internally matching
buy and sell orders within an
organization, including matching
customer orders for a data recipient’s
own behalf and/or on behalf of its
clients. This category would apply to
Non-Display Use in trading platforms,
such as, but not restricted to, alternative
trading systems (‘‘ATSs’’), broker
crossing networks, broker crossing
systems not filed as ATSs, dark pools,
multilateral trading facilities, exchanges
and systematic internalization systems.
A data recipient will be charged $4,500
per month for each platform on which
it uses the Non-Display data internally
to match buy and sell orders, up to a cap
of $13,500 per month; even if the data
recipient uses the NYSE Arca Agg Lite
data feed for more than three platforms,
it will not pay more than $13,500 for
such Category 3 use per month.
The description of the three nondisplay use categories is set forth in the
Fee Schedule in endnote 1 and that
endnote would be referenced in the
NYSE Arca Agg Lite data feed fees on
the Fee Schedule. The text in the
endnote would remain unchanged.
Data recipients that receive the NYSE
Arca Agg Lite data feed for Non-Display
Use would be required to complete and
submit a Non-Display Use Declaration
before they would be authorized to
receive the feed. A firm subject to
Category 3 Fees would be required to
identify each platform that uses the
NYSE Arca Agg Lite data feed for a
Category 3 Non-Display Use basis, such
as ATSs and broker crossing systems not
registered as ATSs, as part of the NonDisplay Use Declaration.
6. Non-Display Use Declaration Late
Fee. Data recipients that receive the
NYSE Arca Agg Lite data feed for NonDisplay Use would be required to
complete and submit a Non-Display Use
Declaration before they would be
authorized to receive the feed.
Beginning in 2025, NYSE Arca Agg Lite
data feed recipients would be required
to submit, by January 31 of each year,
the Non-Display Use Declaration. The
requirement to submit a Non-Display
Use Declaration applies to all real-time
NYSE Arca data feed product recipients.
The Exchange proposes to charge a Non-
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62833
Display Use Declaration Late Fee of
$1,000 per month to any data recipient
that pays an Access Fee for the NYSE
Arca Agg Lite data feed that has failed
to timely complete and submit a NonDisplay Use Declaration. Specifically,
with respect to the Non-Display Use
Declaration due by January 31 of each
year, the Non-Display Use Declaration
Late Fee would apply to data recipients
that fail to complete and submit the
Non-Display Use Declaration by the
January 31 due date, and would apply
beginning February 1 and for each
month thereafter until the data recipient
has completed and submitted the
annual Non-Display Use Declaration.
The proposed Non-Display Use
Declaration Late Fee applicable to NYSE
Arca Agg Lite data feed would be set
forth in endnote 2 on the Fee Schedule.
As proposed, endnote 2 would be
amended with the proposed addition of
the following new text: ‘‘The NonDisplay Declaration Late Fee will apply,
beginning in 2025, to NYSE Arca
Aggregated Lite data recipients that fail
to complete and submit the annual NonDisplay Use Declaration by the January
31st due date, and applies beginning
February 1st and for each month
thereafter until the data recipient has
completed and submitted the annual
Non-Display use Declaration.’’
In addition, if a data recipient’s use of
the NYSE Arca Agg Lite data feed
changes at any time after the data
recipient submits a Non-Display Use
Declaration, the data recipient must
inform the Exchange of the change by
completing and submitting at the time
of the change an updated declaration
reflecting the change of use.
7. Multiple Data Feed Fee. The
Exchange proposes to establish a
monthly fee, the ‘‘Multiple Data Feed
Fee,’’ that would apply to data
recipients that take a data feed for a
market data product in more than two
locations. Data recipients taking the
NYSE Arca Agg Lite data feed in more
than two locations would be charged
$200 per additional location per month.
No new reporting would be required.12
8. Three-Month Fee Waiver. The
Exchange currently provides a onemonth free trial to any firm that
subscribes to a particular NYSE Arca
market data product for the first time.
Under the current one-month trial, a
12 Data vendors currently report a unique Vendor
Account Number for each location at which they
provide a data feed to a data recipient. The
Exchange considers each Vendor Account Number
a location. For example, if a data recipient has five
Vendor Account Numbers, representing five
locations, for the receipt of the NYSE Arca Agg Lite
data feed, that data recipient will pay the Multiple
Data Feed fee with respect to three of the five
locations.
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first-time subscriber is not charged the
Access Fee, Non-Display Fee, any
applicable Professional and NonProfessional User Fee and
Redistribution Fee for one calendar
month.13 The Exchange now proposes
an additional three-month fee waiver for
any Redistributor that subscribes to a
particular NYSE Arca market data
product for the first time for external
redistribution. As proposed, a first-time
Redistributor would be any firm that has
not previously subscribed to and
externally redistributed a particular
NYSE Arca market data product listed
on the Fee Schedule. As proposed, a
first-time Redistributor that subscribes
to a particular NYSE Arca market data
product would not be charged the
Access Fee and the Redistribution Fee
for that product for three calendar
months. Any other fees, including but
not limited to, Non-Display Fee, any
applicable Professional and NonProfessional User Fee, and Enterprise
Fee would be billable after the first
calendar month after a first-time
Redistributor subscribes to a particular
NYSE Arca market data product. For
example, a first-time Redistributor that
chooses to subscribe to NYSE Arca Agg
Lite on July 24, 2024 would not be
charged the Access Fee and the
Redistribution Fee for the months of
August, September, and October 2024.
The proposed fee waiver would be for
the three calendar months following the
date a Redistributor is approved to
receive access to the particular NYSE
Arca market data product. The
Exchange would provide the threemonth fee waiver for each particular
product to each Redistributor once.
The Exchange believes that providing
a three-month fee waiver to NYSE Arca
market data products listed on the Fee
Schedule would enable potential
Redistributors to determine whether a
particular NYSE Arca market data
product provides value to their business
models before fully committing to
expend development and
implementation costs related to the
receipt of that product, and is intended
to encourage increased use of the
Exchange’s market data products by
defraying some of the development and
implementation costs Redistributors
would ordinarily have to expend before
using a product. The proposed threemonth fee waiver would also provide
Redistributors with time to begin
onboarding new clients prior to being
liable to the Access Fee and the
Redistribution Fee, allowing time to
choose how to allocate costs and
increase revenues to defray costs
13 See
Fee Schedule.
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associated with providing a new feed to
its customers.
Application of Proposed Fees
The Exchange is not required to make
the NYSE Arca Agg Lite data feed
available or to offer any specific pricing
alternatives to any customers, nor is any
firm required to purchase the NYSE
Arca Agg Lite data feed. Firms that
choose to purchase the NYSE Arca Agg
Lite data feed do so for the primary
goals of using it to increase their
revenues, reduce their expenses, and in
some instances to compete directly with
the Exchange (including for order flow).
Those firms are able to determine for
themselves whether or not the NYSE
Arca Agg Lite data feed or any other
similar products are attractively priced.
The Exchange believes the proposed
rule change would provide an incentive
both for data subscribers to subscribe to
NYSE Arca Agg Lite and for
Redistributors to subscribe to the
product for purposes of providing
external distribution of NYSE Arca Agg
Lite. The Exchange believes that this
proposed rule change also has the
potential to attract new Redistributors
for NYSE Arca Agg Lite.
The proposed fee structure is not
novel as it is based on the fee structure
currently in place for the NYSE
ArcaBook feed. The Exchange is
proposing fees for the NYSE Arca Agg
Lite data feed that are based on the
existing fee structure and rates that data
recipients already pay for the NYSE
ArcaBook feed. Specifically, the fees for
the NYSE ArcaBook feed—which like
the NYSE Arca Agg Lite data feed,
includes depth of book, auction
imbalances, and security status
messages—consist of an Access Fee of
$2,000 per month, a Professional User
Fee (Per User) of $60 per month, a NonProfessional User Fee (Per User) that
ranges between $3 per month to $10 per
month, Non-Display Fees of $6,000 per
month for each of Categories 1, 2 and 3,
and a Redistribution Fee of $2,000 per
month. The Exchange also charges a
Non-Display Use Declaration Late Fee of
$1,000 per month and a Multiple Data
Feed Fee of $200 per month for NYSE
ArcaBook.14
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,15
in general, and Sections 6(b)(4) and
14 See NYSE Arca Equities Proprietary Market
Data Fees at https://www.nyse.com/publicdocs/
nyse/data/NYSE_Arca_Equities_Proprietary_Data_
Fee_Schedule.pdf.
15 15 U.S.C. 78f(b).
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6(b)(5) of the Act,16 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 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
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 17
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.’’ 18
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.’’’ 19
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
16 15
U.S.C. 78f(b)(4), (5).
Regulation NMS Adopting Release, 70 FR
37495, at 37499.
18 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).
19 Id. at 535.
17 See
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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.20
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As discussed below, the Exchange
believes that its proposed fees are
constrained by competitive forces.
As the D.C. Circuit recognized in
NetCoalition I, ‘‘[n]o one disputes that
competition for order flow is fierce.’’ 21
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.’’ 22
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
stock, the Commission has recognized
that ‘‘such competition can lead to the
fragmentation of order flow in that
stock.’’ 23 Indeed, today, equity trading
is currently dispersed across 16
exchanges,24 numerous alternative
trading systems,25 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.26
Further, low barriers to entry mean
that new exchanges may rapidly and
inexpensively enter the market 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,
20 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).
21 NetCoalition I, 615 F.3d at 544 (internal
quotation omitted).
22 Id.
23 See Securities Exchange Act Release No. 61358,
75 3594, 3597 (January 21, 2010) (File No. S7–02–
10) (Concept Release on Equity Market Structure).
24 See Cboe Global Markets, U.S. Equities Market
Volume Summary, available at https://markets.
cboe.com/us/equities/market_share/.
25 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.
26 See Cboe Global Markets, U.S. Equities Market
Volume Summary, available at https://markets.
cboe.com/us/equities/market_share/.
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2020; 27 Members Exchange (MEMX),
which began operations as an exchange
on September 29, 2020; 28 and Miami
International Holdings (MIAX), which
began operations of its first equities
exchange on September 29, 2020.29
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).30
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.’’ 31 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.’’ 32
27 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.
28 As of October 29, 2020, MEMX is trading all
NMS symbols. See https://info.memxtrading.com/
trader-alert-20-10-memx-trading-symbols-update/.
29 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.
30 MEMX Home Page (‘‘Founded by members and
investors, MEMX aims to drive simplicity,
efficiency, and competition in equity markets.’’),
available at https://memx.com/.
31 MEMX home page, available at https://
memx.com/.
32 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
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62835
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.33 And low barriers to
entry act as a market check on high
prices.34
In sum, the fierce competition 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 NYSE Arca Agg Lite data feed, the
Exchange is constrained by the fact that,
if its pricing is unattractive to
customers, customers have their pick of
an increasing number of alternatives to
purchase similar data from instead of
purchasing it from the Exchange. The
existence of alternatives to the
Exchange’s data product ensures that
the Exchange cannot set unreasonable
market data fees without suffering the
negative effects of that decision in the
fiercely competitive market for
proprietary market data.
The Exchange notes that the NYSE
Arca Agg Lite is entirely optional. The
Exchange is not required to make the
NYSE Arca Agg Lite available to any
customers, nor is any customer required
to purchase the NYSE Arca Agg Lite
market data feed. 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,35 a customer’s decision
https://www.euromoney.com/article/
b1d3tfby4p3y4v/us-equities-exchanges-if-you-cantbeat-them-join-them.
33 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
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.
34 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).
35 The Exchange notes that broker-dealers are not
required to purchase proprietary market data to
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whether to purchase any of the
Exchange’s proprietary market data
feeds, including the NYSE Arca Agg
Lite, is entirely discretionary. Most
firms that choose to subscribe to the
proprietary market data feeds from the
Exchange, including NYSE Arca Agg
Lite, would do so for the primary goals
of using it to increase their revenues,
reduce their expenses, and in some
instances to compete directly with the
Exchange for order flow. Such firms are
able to determine for themselves
whether the NYSE Arca Agg Lite data
feed is necessary for their business
needs, and if so, whether or not it is
attractively priced. If the NYSE Arca
Agg Lite data feed does 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 NYSE Arca Agg Lite data
feed.
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 NYSE
Arca Agg Lite available to its customers
unless their customers request it, and
customers will not elect to pay the
proposed fees unless NYSE Arca Agg
Lite 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 the
NYSE Arca Agg Lite data feed, 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 proposed
fees are therefore reasonable because in
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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setting them, the Exchange is
constrained by the availability of
numerous substitute market data
products. The Commission has been
clear that substitute products need not
be identical, but only substantially
similar to the product at hand.36
The NYSE Arca Aggregated Lite
market data feed is subject to significant
competitive forces that constrain its
pricing. Specifically, the NYSE Arca
Agg Lite data feed competes head-tohead with similar market data products
currently offered by 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’’), each of which offers a
market data product called BZX
Summary Depth, BYX Summary Depth,
EDGA Summary Depth and EDGX
Summary Depth, respectively
(collectively, the ‘‘Cboe Summary
Depth’’).37 Similar to Cboe Summary
Depth, NYSE Arca Agg Lite can be
utilized by vendors and subscribers to
quickly access and distribute aggregated
order book data. As noted above, NYSE
Arca Agg Lite, similar to Cboe Summary
Depth, would provide aggregated depth
per security, including the bid, ask and
share quantity for orders received by
NYSE Arca, except unlike Cboe
Summary Depth, which provides
aggregated depth per security for up to
five price levels, NYSE Arca Agg Lite
would provide aggregated depth per
security for up to ten price levels on
both the bid and offer sides of the NYSE
Arca limit order book as well as auction
imbalance data.
The specific fees that the Exchange
proposes for the NYSE Arca Agg Lite
data feed are reasonable for the
following additional reasons.
Overall. The Exchange believes that
the proposed fees for the NYSE Arca
36 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 20, 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)).
37 See BZX Rule 11.22(m) BZX Summary Depth;
BYX Rule 11.22(k) BYX Summary Depth; EDGA
Rule 13.8(f) EDGA Summary Depth; and EDGX Rule
13.8(f) EDGX Summary Depth. The Cboe Summary
Depth offered by BZX, BYX, EDGA and EDGX are
each a data feed that offers aggregated two-sided
quotations for all displayed orders for up to five (5)
price levels and contains the individual last sale
information, market status, trading status and trade
break messages.
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Agg Lite data feed are reasonable
because they represent the value of
receiving the data on an aggregated
basis. The Exchange believes that
providing vendors and subscribers with
the option to subscribe to a market data
product that integrates a subset of data
from existing products and where such
aggregated data is published at a predefined interval, thus lowering
bandwidth, infrastructure and
operational requirements, would allow
vendors and subscribers to choose the
best solution for their specific business
needs.
The Exchange believes the proposed
fees for the NYSE Arca Agg Lite data
feed are also reasonable when compared
to fees for comparable products, such as
the Cboe Summary Depth.38
Additionally, the Exchange is proposing
fees for the NYSE Arca Agg Lite data
feed that are based on the existing fee
structure that data recipients already
pay for the NYSE Arca’s other market
data products. The Exchange believes
that adopting the same fee structure
would reduce administrative burdens
on NYSE Arca data subscribers that also
currently subscribe to market data feeds
from NYSE Arca.
Access Fee. The Exchange believes
that the proposed monthly Access Fee
of $1,500 for the NYSE Arca Aggregated
Lite data feed is reasonable because it is
lower than the fees charged by BZX,
BYX, EDGA, and EDGX, each of which
charges between $2,500 per month to
$5,000 per month for both Internal
Distribution and External Distribution of
the Cboe Summary Depth market data
product.39
User Fees. The Exchange believes that
having separate Professional and NonProfessional User fees for the NYSE
Arca Agg Lite data feed is reasonable
because it will make the product more
affordable and result in greater
availability to Professional and NonProfessional Users. Setting a modest
Non-Professional User fee is reasonable
because it provides an additional
method for Non-Professional Users to
access the NYSE Arca Agg Lite data feed
by providing the same data that is
available to Professional Users. The
proposed monthly Professional User Fee
(Per User) of $30 and monthly NonProfessional User Fee (Per User) of $4
are reasonable because they are
comparable to user fees generally
charged by exchanges. For example,
NYSE Arca charges a monthly
Professional User Fee (Per User) of $60
38 See https://cdn.cboe.com/resources/
membership/US_Market_Data_Product_Price_
List.pdf.
39 Id.
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and a monthly Non-Professional User
Fee (Per User) of up to $10 for the NYSE
ArcaBook feed.40 Although the
proposed User Fees for Professional and
Non-Professional Users are higher than
those charged by BZX, BYX, EDGA and
EDGX, the Exchange notes that User fees
are only a subset of the total fees that
vendors and subscribers pay and the
lower fees proposed to access and
redistribute NYSE Arca Agg Lite would
provide such market data recipients
with a more affordable alternative to
existing substitutes offered by the
Exchange and its competitors.
Redistribution Fees. The Exchange
believes that it is reasonable to charge
redistribution fees because vendors
receive value from redistributing the
data in their business products for their
customers. The Exchange believes that
charging a Redistribution Fee is
reasonable because the vendors that
would be charged such a fee profit by
re-transmitting the Exchange’s market
data to their customers. This fee would
be charged only once per month to each
vendor account that redistributes the
NYSE Arca Agg Lite data feed,
regardless of the number of customers to
which that vendor redistributes the
data. The Exchange believes the
proposed monthly Redistribution Fee of
$250 for the NYSE Arca Agg Lite data
feed is reasonable because it is nominal
and lower than the fees charged by BZX,
BYX, EDGA and EDGX, each of which
charges considerably more for both
Internal Distribution and External
Distribution of the Cboe Summary
Depth market data feed.41
Enterprise Fees. The Exchange
believes the proposed enterprise license
is reasonable because it would reduce
exchange fees, lower administrative
costs for subscribers that are brokerdealers and help expand the availability
of market information to investors, and
thereby increase participation in
financial markets. Subscribers that are
broker-dealers would be able to
disseminate the NYSE Arca Agg Lite
data feed for display usage to an
unlimited number of non-professional
users for a monthly fee of $35,000, or
$31,500 if they contract for twelve
months of service in advance.
Alternatively, subscribers that are
broker-dealers would be able to
disseminate the NYSE Arca Agg Lite
data feed for display usage to an
unlimited number of professional users
and non-professional users for a
monthly fee of $110,000, or $99,000 if
they contract for twelve months of
service in advance. The proposed
40 See
41 See
Fee Schedule.
supra, note 38.
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enterprise license would result in lower
fees for subscribers able to reach the
largest audience of investors, including
retail investors. Discounts for broader
dissemination of market data
information have routinely been
adopted by exchanges and permitted by
the Commission as equitable allocations
of reasonable dues, fees and charges.42
Non-Display Use Fees. The Exchange
believes that the proposed Non-Display
Use fees reflect the value of the nondisplay data use to data recipients,
which purchase such data on an entirely
voluntary basis. Non-display data can be
used by data recipients for a wide
variety of uses, including proprietary
and agency trading and smart order
routing, as well as by data recipients
that operate order matching and
execution platforms. Non-display data
also can be used for a variety of nontrading purposes that indirectly support
trading, such as risk management and
compliance. Although some of these
non-trading uses do not directly
generate revenues, they can nonetheless
substantially reduce a recipient’s costs
by automating such functions so that
they can be carried out in a more
efficient and accurate manner and
reduce errors and labor costs, thereby
benefiting recipients. The Exchange
believes that charging for non-trading
uses is reasonable because data
recipients can derive substantial value
from such uses, for example, by
automating tasks so that they can be
performed more quickly and accurately
and less expensively than if they were
performed manually.
Previously, the non-display use data
pricing policies of many exchanges
required customers to count, and the
exchanges to audit the count of, the
number of non-display devices used by
a customer. As non-display use grew
more prevalent and varied, however,
exchanges received an increasing
number of complaints about the
impracticality and administrative
burden associated with that approach.
In response, the Exchange and its
affiliated exchanges developed a nondisplay use pricing structure that does
not require non-display devices to be
counted or those counts to be audited,
and instead looks merely at the three
following categories of potential use of
non-display data: use of the data on the
customer’s own behalf (Category 1), use
on behalf of clients (Category 2), and use
42 For example, the Commission has permitted
pricing discounts for market data under Nasdaq
Rules 7023(c) and 7047(b). See also Securities
Exchange Act Release No. 82182 (November 30,
2017), 82 FR 57627 (December 6, 2017) (SR–NYSE–
2017–60) (changing an enterprise fee for NYSE BBO
and NYSE Trades).
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to internally match buy and sell orders
within an organization (Category 3).
The Exchange believes that it is
reasonable to segment the fee for nondisplay use into these three categories.
As noted above, the uses to which
customers can put the NYSE Arca Agg
Lite data feed are numerous and varied,
and the Exchange believes that charging
separate fees for these separate
categories of use is reasonable because
it reflects the actual value the customer
derives from the data, based upon how
many categories of use the customer
makes of the data. Segmenting the fees
for non-display data in this way avoids
the unreasonable result of customers
that make only limited non-display use
of the data paying the same fees as
customers that use the data for
numerous different purposes.
The Exchange believes that the
proposed fees of $4,500 per month for
each of Categories 1, 2, and 3 is
reasonable. These fees are comparable to
non-display use fees generally charged
by exchanges. For example, the fees for
Non-Display Use of NYSE ArcaBook for
Categories 1, 2 and 3 is $6,000 per
month.43 The Exchange believes that the
proposed fees directly and appropriately
reflect the value of using non-display
data in a wide range of computerautomated functions relating to both
trading and non-trading activities and
that the number and range of these
functions continue to grow through
innovation and technology
developments.
The Exchange believes that it is
reasonable to cap non-display use fees
for Category 3 at $13,500 per month per
data recipient, because a higher monthly
fee may potentially dissuade
competitors from buying the NYSE Arca
Agg Lite data feed.
The proposed Non-Display Use fees
for the NYSE Arca Agg Lite data feed are
also reasonable because they take into
account the value of receiving the data
for Non-Display Use on an integrated
basis. The Exchange believes that the
proposed fees directly and appropriately
reflect the value of using the NYSE Arca
Agg Lite data feed on a non-display
basis in a wide range of computerautomated functions relating to both
trading and non-trading activities and
that the number and range of these
functions continue to grow through
innovation and technology
developments.44
43 See
Fee Schedule.
also Exchange Act Release No. 69157,
March 18, 2013, 78 FR 17946, 17949 (March 25,
2013) (SR–CTA/CQ–2013–01) (‘‘[D]ata feeds have
become more valuable, as recipients now use them
to perform a far larger array of non-display
44 See
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Non-Display Use Declaration Late
Fee. The Exchange believes that it is
reasonable to require annual
submissions of the Non-Display Use
Declaration so that the Exchange will
have current and accurate information
about the use of the NYSE Arca Agg Lite
data feed and can correctly assess fees
for the uses of the NYSE Arca Agg Lite
data feed. Requiring annual submissions
of such declarations is reasonable
because it also allows users to re-assess
their own usage each year.
The Exchange believes that it is
reasonable to impose a late fee in
connection with the submission of the
Non-Display Use Declaration. In order
to correctly assess fees for the nondisplay use of the NYSE Arca Agg Lite
data feed, the Exchange needs to have
current and accurate information about
the use of the NYSE Arca Agg Lite data
feed. The failure of data recipients to
submit the Non-Display Use Declaration
on time leads to potentially incorrect
billing and administrative burdens,
including tracking and obtaining late
Non-Display Use Declarations and
correcting and following up on
payments owed in connection with late
Non-Display Use Declarations. The
purpose of the late fee is to incent data
recipients to submit the Non-Display
Use Declaration promptly to avoid the
administrative burdens associated with
the late submission of Non-Display Use
Declarations.
Multiple Data Feed Fee. The Exchange
believes that it is reasonable to require
data recipients to pay a modest fee for
taking a data feed for a market data
product in more than two locations,
because such data recipients can derive
substantial value from being able to
consume the product in as many
locations as they want. In addition,
there are administrative burdens
associated with tracking each location at
which a data recipient receives the
product. The Multiple Data Feed Fee is
designed to encourage data recipients to
better manage their requests for
additional data feeds and to monitor
their usage of data feeds. The proposed
fee is designed to apply to data feeds
received in more than two locations so
that each data recipient can have one
primary and one backup data location
before having to pay a multiple data
feed fee.
functions. Some firms even base their business
models on the incorporation of data feeds into black
boxes and application programming interfaces that
apply trading algorithms to the data, but that do not
require widespread data access by the firm’s
employees. As a result, these firms pay little for
data usage beyond access fees, yet their data access
and usage is critical to their businesses.’’).
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Three-Month Fee Waiver. The
Exchange believes the proposal to waive
the Access Fee and the Redistribution
Fee for the NYSE Arca Agg Lite data
feed to new Redistributors for three
calendar months is reasonable because
it would enable potential Redistributors
to determine whether a particular NYSE
Arca market data product provides
value to their business models before
fully committing to expend
development and implementation costs
related to the receipt of that product,
and is intended to encourage increased
use of the Exchange’s market data
products by defraying some of the
development and implementation costs
Redistributors would ordinarily have to
expend before using a product. The
proposed fee waiver would also allow
Redistributors to become familiar with
the feed and determine whether it suits
their needs without incurring fees.
Making a new market data product
available without charging a fee for
three months is consistent with
offerings of other exchanges. For
example, BZX offers subscribers of BZX
Summary Depth a three-month credit
for external distribution, which is akin
to the three-month fee waiver proposed
by the Exchange.45
For all of the foregoing reasons, the
Exchange believes that the proposed
fees for the NYSE Arca Agg Lite data
feed are reasonable.
The Proposed Fees Are Equitably
Allocated
The Exchange believes the proposed
fees for the NYSE Arca Agg Lite data
feed are allocated fairly and equitably
among the various categories of users of
the feed, and any differences among
categories of users are justified.
Overall. The Exchange believes that
the proposed fees are equitably
allocated because they will apply to all
data recipients that choose to subscribe
to the NYSE Arca Agg Lite data feed.
Any subscriber or vendor that chooses
to subscribe to the NYSE Arca Agg Lite
data feed is subject to the same Fee
Schedule, regardless of what type of
business they operate or the use they
plan to make of the data feed.
Subscribers and vendors are not
required to purchase the NYSE Arca
Agg Lite data feed and may choose to
receive the data on the NYSE Arca Agg
Lite data feed regardless of what type of
business they operate or the use they
plan to make of the data feed.
45 See e.g., Securities Exchange Act Release No.
94432 (March 16, 2022), 87 FR 16277 (March 22,
2022) (SR–CboeBZX–2022–015) (Notice of Filing
and Immediate Effectiveness of a Proposed Rule
Change To Amend the Fees Applicable to Various
Market Data Products).
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Access Fee. The Exchange believes
the proposed monthly Access Fee of
$1,500 for the NYSE Arca Agg Lite data
feed is equitably allocated because it
would be charged on an equal basis to
all data recipients that receive a data
feed of the NYSE Arca Agg Lite data
feed, regardless of what type of business
they operate or the use they plan to
make of the data feed.
User Fees. The Exchange believes that
the fee structure differentiating
Professional User fees ($30 per month
per user) from Non-Professional User
fees ($4 per month per user) for display
device access to the NYSE Arca Agg Lite
data feed is equitable. This structure has
long been used by the Exchange to
reduce the price of data to NonProfessional Users and make it more
broadly available.46 Offering the NYSE
Arca Agg Lite data feed to NonProfessional Users with the same data as
is available to Professional Users results
in greater equity among data recipients.
These user fees would be charged
uniformly to all display devices that
have access to the NYSE Arca Agg Lite
data feed.
Redistribution Fees. The Exchange
believes the proposed monthly fee of
$250 for redistributing the NYSE Arca
Agg Lite data feed is equitably allocated
because it would be charged on an equal
basis to those Redistributors that choose
to redistribute the feed.
Enterprise Fees. The Exchange
believes the proposed enterprise license
is equitably allocated because it would
be available on an equal basis to all
subscribers that are broker-dealers, each
of whom would benefit from reduced
exchange fees and from lower
administrative costs. Moreover, the
specific feature of the proposed
enterprise license that will allow
subscribers to lower fees by subscribing
to a twelve-month contract is also an
equitable allocation because all
subscribers will have the same option of
choosing between the stability of a
fixed, lower rate, and the more flexible
option of maintaining the ability to
change market data products after a
month of service. Subscribers will be
free to move from the monthly to the
annual rate at any time, or from annual
to a monthly fee, with notice, at the
expiration of the twelve-month period.
46 See, e.g., Securities Exchange Act Release No.
72560 (July 8, 2014), 79 FR 40801 (July 14, 2014)
(SR–NYSEARCA–2014–72) (establishing tiered
Non-Professional User Fees (Per User) for NYSE
ArcaBook); Securities Exchange Act Release No.
20002, File No. S7–433 (July 22, 1983), 48 FR 34552
(July 29, 1983) (establishing Non-Professional fees
for CTA data); NASDAQ BX Equity 7 Pricing
Schedule, Section 123.
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Non-Display Use Fees. The Exchange
believes the proposed Non-Display Use
fees are equitably allocated because they
would require subscribers to pay fees
only for the uses they actually make of
the data. As noted above, non-display
data can be used by data recipients for
a wide variety of purposes (including
trading, risk management, and
compliance) as well as purposes that
reduce the recipient’s costs by
automating certain functions. The
Exchange believes that it is equitable to
charge non-display data subscribers a
$4,500 fee for each category of use they
make of such data—namely, using the
data on their own behalf (Category 1),
on behalf of their clients (Category 2),
and to internally match buy and sell
orders within an organization (Category
3)—because this fee structure results in
subscribers with greater uses of the data
paying higher fees, and subscribers with
fewer uses of the data paying lower fees.
This segmented fee structure is also
equitable because no subscriber of nondisplay data would be charged a fee for
a category of use in which it did not
actually engage.
The Exchange believes that it is
equitable to cap non-display use fees for
Category 3 at $13,500 per month per
data recipient, because a higher monthly
fee may potentially dissuade
competitors from buying the NYSE Arca
Agg Lite data feed.
Non-Display Use Declaration Late
Fee. The Exchange believes that the
proposed fee of $1,000 per month for a
late Non-Display Use Declaration is
equitably allocated because it applies to
any data recipient that pays an Access
Fee for the NYSE Arca Agg Lite data
feed but has failed to complete and
submit a Non-Display Use Declaration.
In addition, the Exchange believes that
it is equitable to charge a late fee to
subscribers who fail to timely submit
their Non-Display Use Declarations
because their failure to do so leads to
potentially incorrect billing and
administrative burdens on the part of
the Exchange. The Exchange believes it
is equitable to defray these
administrative costs by imposing a late
fee only on subscribers’ whose
declarations were late, as opposed to all
subscribers.
Multiple Data Feed Fee. The Exchange
believes that the $200 per month per
location fee to data recipients taking the
NYSE Arca Agg Lite data feed in more
than two locations is equitable because
it would apply to all such customers,
regardless of what type of business they
operate or the use they make of the data
feed. In addition, the Exchange believes
that it is equitable to charge a fee to
subscribers for taking a data feed in
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more than two locations because there
are administrative burdens on the part
of the Exchange associated with tracking
each location at which a data recipient
receives the product. The Exchange
believes that it is equitable for it to
defray these administrative costs by
imposing a modest fee only on
subscribers who seek to take the feed in
more than two locations, as opposed to
all subscribers.
Three-Month Fee Waiver. The
Exchange believes the proposal to waive
the Access Fee and the Redistribution
Fee for the NYSE Arca Agg Lite data
feed to new Redistributors for three
calendar months is equitable because it
would apply to any first-time
Redistributor, regardless of the use they
plan to make of the feed. As proposed,
any first-time Redistributor of the NYSE
Arca Agg Lite data feed would not be
charged the Access Fee and the
Redistribution Fee for three calendar
months. The Exchange believes it is
equitable to restrict the availability of
this three-month fee waiver to
Redistributors that have not previously
subscribed to and redistributed the
NYSE Arca Agg Lite data feed, since
customers who are current or previous
subscribers of the feed are already
familiar with it and are able to
determine whether it suits their needs.
For all of the foregoing reasons, the
Exchange believes that the proposed
fees for the NYSE Arca Agg Lite data
feed are equitably allocated.
The Proposed Fees Are Not Unfairly
Discriminatory
The Exchange believes the proposed
fees for the NYSE Arca Agg Lite data
feed are not unfairly discriminatory
because any differences in the
application of the fees are based on
meaningful distinctions between
customers, and those meaningful
distinctions are not unfairly
discriminatory between customers.
Overall. The Exchange believes that
the proposed fees are not unfairly
discriminatory because they would
apply to all data recipients that choose
to subscribe to the NYSE Arca Agg Lite
data feed. Any subscriber, including
Redistributor, that chooses to subscribe
to the NYSE Arca Agg Lite data feed is
subject to the same Fee Schedule,
regardless of what type of business they
operate or the use they plan to make of
the data feed. Subscribers, including
Redistributors, may choose to receive
the data on the NYSE Arca Agg Lite data
feed regardless of what type of business
they operate or the use they plan to
make of the data feed.
Access Fee. The Exchange believes
the proposed monthly Access Fee of
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Fmt 4703
Sfmt 4703
62839
$1,500 for the NYSE Arca Agg Lite data
feed is not unfairly discriminatory
because it would be charged on an equal
basis to all data recipients that receive
a data feed of the NYSE Arca Agg Lite,
regardless of what type of business they
operate or the use they plan to make of
the data feed.
User Fees. The Exchange believes that
the fee structure differentiating
Professional User fees ($30 per month
per user) from Non-Professional User
fees ($4 per month per user) for display
device access to the NYSE Arca Agg Lite
data feed is not unfairly discriminatory.
This structure has long been used by the
Exchange to reduce the price of data to
Non-Professional Users and make it
more broadly available.47 Offering the
NYSE Arca Agg Lite data feed to NonProfessional Users with the same data as
is available to Professional Users results
in greater equity among data recipients.
These user fees would be charged
uniformly to all display devices that
have access to the NYSE Arca Agg Lite
data feed.
Redistribution Fees. The Exchange
believes the proposed monthly fee of
$250 for redistributing the NYSE Arca
Agg Lite data feed is not unfairly
discriminatory because it would be
charged on an equal basis to those
Redistributors that choose to
redistribute the feed.
Enterprise Fees. The Exchange
believes the proposed enterprise license
will not unfairly discriminate between
customers, issuers, brokers or dealers.
The Act does not prohibit all
distinctions among customers, but only
discrimination that is unfair, and it is
not unfair discrimination to charge
those subscribers that are able to reach
the largest audiences of investors,
including retail investors, a lower fee for
incremental investors in order to
encourage the widespread distribution
of market data. This principle has been
repeatedly endorsed by the
Commission, as evidenced by the
approval of enterprise licenses for other
market data products.48 Moreover, the
proposed enterprise license will be
subject to significant competition, and
that competition will ensure that there
is no unfair discrimination. Each
subscriber will be able to accept or
reject the license depending on whether
it will or will not lower costs for that
47 Id.
48 See e.g., Securities Exchange Act Release No.
83751 (July 31, 2018), 83 FR 38428 (August 6, 2018)
(SR–NASDAQ–2018–058) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To Lower Fees and Administrative Costs for
Distributors of Nasdaq Basic, Nasdaq Last Sale, NLS
Plus and the Nasdaq Depth-of-Book Products
Through a Consolidated Enterprise License).
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particular subscriber, and, if the license
is not sufficiently competitive, the
Exchange may lose market share. The
proposed enterprise license will
compete with other enterprise licenses
of the Exchange, underlying fee
schedules promulgated by the
Exchange, and enterprise licenses and
fee structures implemented by other
exchanges. As such, it is a voluntary
product for which market participants
can readily find substitutes.
Accordingly, the Exchange is
constrained from introducing a fee that
would be inequitable or unfairly
discriminatory.
Non-Display Use Fees. The Exchange
believes the proposed Non-Display Use
fees are not unfairly discriminatory
because they would require subscribers
for non-display use to pay fees only for
the categories of use they actually make
of the data. As noted above, non-display
data can be used by data recipients for
a wide variety of purposes (including
trading, risk management, and
compliance) as well as purposes that
reduce the recipient’s costs by
automating certain functions. The
Exchange believes that it is not unfairly
discriminatory to charge non-display
data subscribers a $4,500 per month fee
for each category of use they make of
such data—namely, using the data on
their own behalf (Category 1), on behalf
of their clients (Category 2), and to
internally match buy and sell orders
within an organization (Category 3)—
because this fee structure results in
subscribers with greater uses for the
data paying higher fees, while
subscribers with fewer uses of the data
pay lower fees. This segmented fee
structure is not unfairly discriminatory
because no subscriber of non-display
data would be charged a fee for a
category of use in which it did not
actually engage.
The Exchange believes that it is not
unreasonably discriminatory to cap nondisplay use fees for Category 3 at
$13,500 per month per data recipient,
because a higher monthly fee may
potentially dissuade competitors from
buying the NYSE Arca Agg Lite data
feed.
Non-Display Use Declaration Late
Fee. The Exchange believes that the
proposed fee of $1,000 per month for a
late Non-Display Use Declaration is not
unfairly discriminatory because it
applies to any data recipient that pays
an Access Fee for the NYSE Arca Agg
Lite data feed but has failed to complete
and submit a Non-Display Use
Declaration. In addition, the Exchange
believes that it is not unfairly
discriminatory to charge a late fee to
subscribers who fail to timely submit
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their Non-Display Use Declarations
because their failure to do so leads to
potentially incorrect billing and
administrative burdens on the part of
the Exchange. Nor is it unfairly
discriminatory for the Exchange to
defray these administrative costs by
imposing a late fee only on subscribers’
whose declarations were late, as
opposed to all subscribers.
Multiple Data Feed Fee. The Exchange
believes that the $200 per month per
location fee to data recipients taking the
NYSE Arca Agg Lite data feed in more
than two locations is not unfairly
discriminatory because it would apply
to all such customers, regardless of what
type of business they operate or the use
they make of the data feed. In addition,
the Exchange believes that it is not
unfairly discriminatory to charge a fee
to subscribers for taking a data feed in
more than two locations because there
are administrative burdens on the part
of the Exchange associated with tracking
each location at which a data recipient
receives the product. The Exchange
believes that it is not unfairly
discriminatory for it to defray these
administrative costs by imposing a
modest fee only on subscribers who
seek to take the feed in more than two
locations, as opposed to all subscribers.
Three-Month Fee Waiver. The
Exchange believes the proposal to waive
the Access Fee and the Redistribution
Fee for the NYSE Arca Agg Lite data
feed to new Redistributors for three
months is not unfairly discriminatory
because it would apply to any first-time
Redistributor, regardless of the use they
plan to make of the feed. As proposed,
any first-time Redistributor of the NYSE
Arca Agg Lite data feed would not be
charged the Access Fee and the
Redistribution Fee for three calendar
months. The Exchange believes it is not
unfairly discriminatory to restrict the
availability of this three-month fee
waiver to Redistributors that have not
previously subscribed to the NYSE Arca
Agg Lite data feed, since Redistributors
who are current or previous subscribers
of the feed are already familiar with it
and are able to determine whether it
suits their needs.
For all of the foregoing reasons, the
Exchange believes that the proposed
fees for the NYSE Arca Agg Lite data
feed are not unfairly discriminatory.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed fees will impose any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
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Sfmt 4703
Intramarket Competition. The
Exchange believes that the proposed
fees do not put any market participants
at a relative disadvantage compared to
other market participants. As noted
above, the proposed fees would apply to
all subscribers, including Redistributors,
of the NYSE Arca Agg Lite data feed,
and customers may not only choose
whether to subscribe to the feed 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. As shown
above, to the extent that particular
proposed fees apply to only a subset of
subscribers (e.g., Category 2 fees apply
only to those making non-display use on
behalf of clients; late fees apply only to
customers who fail to timely submit
their declarations), those distinctions
are not unfairly discriminatory and do
not unfairly burden one set of customers
over another. To the contrary, by
tailoring the proposed fees in this
manner, the Exchange believes that it
has eliminated the potential burden on
competition that might result from
unfairly asking subscribers to pay fees
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. In setting the
proposed fees, the Exchange is
constrained by the availability of
numerous substitute platforms also
offering market data products, and low
barriers to entry mean new exchanges
are frequently introduced. In setting fees
for the NYSE Arca Agg Lite data feed,
the Exchange is constrained by the fact
that if its pricing for the NYSE Arca Agg
Lite data feed is unattractive to
customers, customers will have their
pick of an increasing number of
alternative market data products to
purchase instead of purchasing the
Exchange’s products.
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
Arca 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
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market data users can find suitable
substitute feeds, an exchange that
overprices its market data products
stands a high risk that users may
purchase another market’s market data
product. 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.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing pursuant to Section
19(b)(3)(A) 49 of the Act and paragraph
(f) thereunder. At any time within 60
days of the filing of the 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.
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:
ddrumheller on DSK120RN23PROD with NOTICES1
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–
NYSEARCA–2024–60 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–NYSEARCA–2024–60. 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
49 15
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–NYSEARCA–2024–60 and should be
submitted on or before August 22, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.50
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–16937 Filed 7–31–24; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
Notice of Availability, Notice of Public
Comment Period, Notice of Public
Meetings, and Request for Comment
on the Draft Tiered Environmental
Assessment for SpaceX Starship/
Super Heavy Vehicle Increased
Cadence at the Boca Chica Launch
Site in Cameron County, Texas
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Notice of availability, notice of
public comment period, notice of public
meetings, and request for comment.
AGENCY:
In accordance with the
National Environmental Policy Act of
1969, as amended (NEPA), Council on
Environmental Quality NEPAimplementing regulations, and FAA
Order 1050.1F, Environmental Impacts:
SUMMARY:
U.S.C. 78s(b)(3)(A).
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62841
Policies and Procedures, the FAA is
announcing the availability of and
requesting comment on the draft Tiered
Environmental Assessment for SpaceX
Starship/Super Heavy Vehicle Increased
Cadence at the Boca Chica Launch Site
in Cameron County, Texas (Draft EA).
The Draft EA will analyze SpaceX’s
proposal to increase the cadence of
operations up to 25 annual Starship/
Super Heavy orbital launches, up to 25
annual landings of Starship, up to 25
annual landings of Super Heavy, and
addresses vehicle upgrades.
DATES: No registration is required for the
four in-person public meetings that will
be held at the following dates and times
(Central):
• Tuesday, August 13, 2024; 1 p.m.–3
p.m. & 5:30–7:30 p.m. CDT, City of
South Padre Island Convention
Center, 7355 Padre Blvd., South Padre
Island, TX 78597
• Thursday, August 15, 2024; 1 p.m.–3
p.m. & 5:30 p.m.–7:30 M CDT, Port
Isabel Event & Cultural Center, 309 E
Railroad Ave., Port Isabel, TX 78578
Registration is required for the virtual
public meeting that will be held on the
following date and time (Central):
• Tuesday, August 20, 2023; 5:30 p.m.–
7:30 p.m. CDT, Registration Link:
https://us02web.zoom.us/webinar/
register/WN_
XiuGxJWtTkK3a84d8yFhVw, Dial-in
phone number: 888–778–0099 (Toll
Free), Webinar ID: 857 9139 8585,
Passcode: 864394
The public comment period for the
Draft EA will close on August 29, 2024.
ADDRESSES: The FAA invites interested
parties to submit comments on the Draft
EA. Public comments can be submitted
electronically to www.regulations.gov
under Docket No. FAA–2024–2006, by
postal mail to Ms. Amy Hanson, SpaceX
EA, c/o ICF 1902 Reston Metro Plaza
Reston, VA 20190, or delivered in
written or verbal form at a public
meeting.
FOR FURTHER INFORMATION CONTACT:
Amy Hanson at (847) 243–7609 or
SpaceXBocaChica@icf.com.
SUPPLEMENTARY INFORMATION: The FAA
will provide a pre-recorded presentation
during the first half hour of all of the
public meetings. The public will also
have an opportunity to submit written
and oral comments during the meetings.
English-Spanish translation services
will be provided. Both English and
Spanish versions of the presentation
will be made available to the public on
August 13, 2024, on this website listed
above.
More information on the public
meetings can be found at: https://
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]]>Agencies
[Federal Register Volume 89, Number 148 (Thursday, August 1, 2024)]
[Notices]
[Pages 62831-62841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16937]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100606; File No. SR-NYSEARCA-2024-60]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Establish Fees
for the NYSE Arca Aggregated Lite Data Feed
July 26, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on July 11, 2024, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to establish fees for the NYSE Arca
Aggregated Lite data feed. 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 Arca Equities Proprietary
Market Data Fees Schedule (``Fee Schedule'') and establish fees for the
NYSE Arca Aggregated Lite (``NYSE Arca Agg Lite'') data feed,\4\
effective July 11, 2024.\5\
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\4\ The proposed rule change establishing the NYSE Arca Agg Lite
data feed was immediately effective on February 27, 2024. See
Securities Exchange Act Release No. 99713 (March 12, 2024), 89 FR
19381 (March 18, 2024) (SR-NYSEARCA-2024-22) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Establish the
NYSE Arca Aggregated Lite Market Data Feed).
\5\ The Exchange originally filed to amend the Fee Schedule on
May 13, 2024 (SR-NYSEARCA-2024-39). SR-NYSEARCA-2024-39 was
subsequently withdrawn and replaced by this filing.
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In summary, the NYSE Arca Agg Lite is a NYSE Arca-only frequency-
based depth of book market data feed of the NYSE Arca's limit order
book for up to ten (10) price levels on both the bid and offer sides of
the order book for securities traded on the Exchange and for which the
Exchange reports quotes and trades under the Consolidated Tape
Association (``CTA'') Plan or the Nasdaq/UTP Plan. The NYSE Arca Agg
Lite is a compilation of limit order data that the Exchange provides to
vendors and subscribers. The NYSE Arca Agg Lite includes depth of book
order data as well as security status messages. The security status
message informs subscribers of changes in the status of a specific
security, such as trading halts, short sale restriction, etc. In
addition, the NYSE Arca Agg Lite includes order imbalance information
prior to the opening and closing of trading.
Background
The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. 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.'' \6\
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\6\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final
Rule) (``Regulation NMS'').
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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 stock, the Commission has recognized
that ``such competition can lead to the fragmentation of order flow in
that stock.'' \7\ Indeed, cash equity trading is currently dispersed
across 16 exchanges,\8\ numerous alternative trading systems,\9\ and
broker-dealer internalizers and wholesalers, all competing for order
flow. Based on publicly-available information, no single exchange
currently has more than
[[Page 62832]]
20% market share (whether including or excluding auction volume).\10\
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\7\ See Securities Exchange Act Release No. 61358, 75 FR 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\8\ See Cboe U.S. Equities Market Volume Summary, available at
https://markets.cboe.com/us/equities/market_share. See generally
https://www.sec.gov/fastanswers/divisionsmarketregmrexchangesshtml.html.
\9\ 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.
\10\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/.
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Proposed NYSE Arca Agg Lite Data Feed Fees
To reflect the value of NYSE Arca's market data, the Exchange
proposes to establish the fees listed below for the NYSE Arca Agg Lite
data feed. The Exchange proposes to charge fees for the same categories
of market data use as its affiliated exchanges (namely, NYSE, NYSE
American and NYSE National) currently charge. The Exchange believes
that adopting the same fee structure as its affiliated exchanges would
reduce administrative burdens on market data subscribers that also
currently subscribe to market data feeds from the Exchange's
affiliates.
1. Access Fee. For the receipt of access to the NYSE Arca Agg Lite
data feed, the Exchange proposes to charge $1,500 per month. This
proposed Access Fee would be charged to any data recipient that
receives the NYSE Arca Agg Lite data feed. Data recipients that only
use display devices to view NYSE Arca Agg Lite market data and do not
separately receive a data feed would not be charged an Access Fee. The
proposed Access Fee would be charged only once per firm.
2. User Fees. The Exchange proposes to charge a Professional User
Fee (Per User) of $30 per month and a Non-Professional User Fee (Per
User) of $4 per month. These user fees would apply to each display
device that has access to the NYSE Arca Agg Lite data feed.
3. Redistribution Fee. For redistribution of the NYSE Arca Agg Lite
data feed, the Exchange proposes to establish a fee of $250 per month.
The proposed Redistribution Fee would be charged to any Redistributor
of the NYSE Arca Agg Lite data feed, which is defined to mean a vendor
or any person that provides a real-time NYSE Arca market data product
externally to a data recipient that is not its affiliate or wholly-
owned subsidiary, or to any system that an external data recipient
uses, irrespective of the means of transmission or access. The proposed
Redistribution Fee would be charged only once per Redistributor
account. As an incentive to potential Redistributors to subscribe to
the NYSE Arca Agg Lite data feed, the Exchange proposes to waive the
Access Fee and Redistribution Fee for a Redistributor if the
Redistributor provides NYSE Arca Agg Lite externally to at least one
data feed recipient and reports such data feed recipient or recipients
to the Exchange. For example, a Redistributor that subscribes to the
NYSE Arca Agg Lite data feed will have the Access Fee and
Redistribution Fee waived if such Redistributor provides NYSE Arca Agg
Lite externally to at least one data feed recipient and reports such
data feed recipient to the Exchange.
By targeting this proposed fee waiver to Redistributors that
provide external distribution of NYSE Arca Agg Lite, the Exchange
believes that this would provide an incentive for Redistributors to
make the NYSE Arca Agg Lite market data product available to its
customers. Specifically, if a data recipient is interested in
subscribing to NYSE Arca Agg Lite and relies on a Redistributor to
obtain market data products from the Exchange, that data recipient
would need its Redistributor to subscribe to and redistribute NYSE Arca
Agg Lite. The Exchange believes that this proposed fee waiver for
Redistributors of NYSE Arca Agg Lite would provide an incentive for
Redistributors to make NYSE Arca Agg Lite available to their customers,
which will increase the availability of the Exchange's market data
products to a larger potential population of data recipients.
Further, the Exchange proposes to adopt a credit that would be
applicable to Redistributors that provide external distribution of NYSE
Arca Agg Lite to Professional and Non-Professional Users. As proposed,
such Redistributors would receive a credit equal to the amount of the
monthly Professional User and Non-Professional User Fees for such
external distribution, up to a maximum of the combination of the Access
Fee and Redistribution Fee for NYSE Arca Agg Lite that the
Redistributor would otherwise be required to pay to the Exchange. For
example, a Redistributor that reports external Professional Users and
Non-Professional Users in a month totaling $1,750 or more would receive
a maximum credit of $1,750 for that month, which could effectively
reduce its monthly fee for access and redistribution to zero. If that
same Redistributor were to report external User quantities in a month
totaling $600 of monthly usage, that Redistributor would receive a
credit of $600. The Exchange believes the proposed credit would provide
Redistributors with an incentive to increase their redistribution of
NYSE Arca Agg Lite because the credit they would be eligible to receive
would increase if they report additional external User quantities.
4. Enterprise Fees. The Exchange proposes to establish an
enterprise license that will reduce Exchange fees and administrative
costs for subscribers that disseminate NYSE Arca Agg Lite. Subscribers
that are broker-dealers will be able to distribute the NYSE Arca Agg
Lite data feed for display usage to an unlimited number of non-
professional users for a monthly fee of $35,000, with an opportunity to
lower that fee to $31,500 per month if they contract for twelve months
of service in advance. Alternatively, subscribers that are broker-
dealers will be able to distribute the NYSE Arca Agg Lite data feed for
display usage to an unlimited number of recipients (professional users
and non-professional users) for a monthly fee of $110,000, with an
opportunity to lower that fee to $99,000 per month if they contract for
twelve months of service in advance.
As proposed, the NYSE Arca Agg Lite data feed may be distributed
pursuant to the proposed market data enterprise license only for
display usage and in the context of a brokerage relationship with a
broker-dealer through such broker-dealer's own devices. Purchase of an
enterprise license would eliminate per User subscriber fees for NYSE
Arca Agg Lite. Further, the Exchange proposes to waive the Access Fee
and the Redistribution Fee for NYSE Arca Agg lite for Redistributors
that pay either the Non-Professional Enterprise Fee or the Professional
and Non-Professional Enterprise Fee. The Exchange believes the proposed
fee waiver would provide an incentive for Redistributors to subscribe
to the NYSE Arca Agg Lite market data product at the enterprise level
to reduce the fees it would pay to the Exchange and without having to
report the number of users that receive the data feed from the
Redistributor.
Subscribers that intend to purchase a market data enterprise
license for at least twelve months may elect to purchase this product
in advance for a monthly fee of $31,500 for distribution of NYSE Arca
Agg Lite to an unlimited number of non-professional users, or $99,000
per month for distribution to an unlimited number of professional users
and non-professional users. This feature is intended to simplify cost
projections and budgeting for both subscribers and the Exchange.
Subscribers that elect not to purchase this particular feature will
nevertheless be able to obtain all of the market data information
offered by NYSE Arca Agg Lite by paying the standard fee of $35,000 per
month for distribution of NYSE Arca Agg Lite to an unlimited number of
non-professional users, or $110,000 per month for distribution to an
unlimited number of professional users and non-professional users.
Subscribers that elect to pay the monthly fee will be able to
[[Page 62833]]
switch to the annual fee at any time, and those that elect to purchase
the annual contract would be able to change to the monthly contract,
with notice, at the end of the twelve-month period.
The Exchange believes that the proposed market data enterprise
license will reduce exchange fees, lower administrative costs for
subscribers, and help expand the availability of market information to
investors, and thereby increase participation in financial markets.
5. Non-Display Use Fees. The Exchange proposes to establish non-
display fees for the NYSE Arca Agg Lite data feed that are based on the
non-display use categories charged by NYSE, NYSE American, NYSE
National, the CTA, and the UTP Plan for non-display use.\11\ Non-
display use would mean accessing, processing, or consuming the NYSE
Arca Agg Lite data feed delivered directly or through a Redistributor,
for a purpose other than in support of a data recipient's display or
further internal or external redistribution (``Non-Display Use''). Non-
Display Use would include trading uses such as high frequency or
algorithmic trading as well as any trading in any asset class,
automated order or quote generation and/or order pegging, price
referencing for algorithmic trading or smart order routing, operations
control programs, investment analysis, order verification, surveillance
programs, risk management, compliance, and portfolio management.
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\11\ See Endnote 1 to the NYSE Proprietary Market Data Fees,
available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE American
LLC Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf; Endnote 1 to
the NYSE National Equities Proprietary Market Data Fees, available
here: https://www.nyse.com/publicdocs/nyse/data/NYSE_National_Market_Data_Fee_Schedule.pdf; Endnote 8 to the
Schedule of Market Data Charges for the CTA, available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Schedule%20Of%20Market%20Data%20Charges%20-%20January%201,%202015.pdf; and Non-Display Usage Fees as set forth
in the UTP Plan Fee Schedule and Non-Display Policy, available here:
https://utpplan.com/DOC/Datapolicies.pdf. See, e.g., Securities
Exchange Act Release Nos. 69315 (April 5, 2013), 78 FR 21668 (April
11, 2013) (SR-NYSEArca-2013-37) and 73011 (September 5, 2014), 79 FR
54315 (September 11, 2014) (SR-NYSEARCA-2014-93).
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Under the proposal, for Non-Display Use of NYSE Arca Agg Lite,
there would be three categories of, and fees applicable, to data
recipients. One, two, or three categories of Non-Display Use may apply
to a data recipient.
As proposed, the Category 1 Fee would be $4,500 per month
and would apply when a data recipient's Non-Display Use of the NYSE
Arca Agg Lite data feed is on its own behalf, not on behalf of its
clients.
As proposed, Category 2 Fees would be $4,500 per month and
would apply to a data recipient's Non-Display Use of the NYSE Arca Agg
Lite data feed on behalf of its clients.
As proposed, Category 3 Fees would be $4,500 per month and
would apply to a data recipient's Non-Display Use of the NYSE Arca Agg
Lite data feed for the purpose of internally matching buy and sell
orders within an organization, including matching customer orders for a
data recipient's own behalf and/or on behalf of its clients. This
category would apply to Non-Display Use in trading platforms, such as,
but not restricted to, alternative trading systems (``ATSs''), broker
crossing networks, broker crossing systems not filed as ATSs, dark
pools, multilateral trading facilities, exchanges and systematic
internalization systems. A data recipient will be charged $4,500 per
month for each platform on which it uses the Non-Display data
internally to match buy and sell orders, up to a cap of $13,500 per
month; even if the data recipient uses the NYSE Arca Agg Lite data feed
for more than three platforms, it will not pay more than $13,500 for
such Category 3 use per month.
The description of the three non-display use categories is set
forth in the Fee Schedule in endnote 1 and that endnote would be
referenced in the NYSE Arca Agg Lite data feed fees on the Fee
Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE Arca Agg Lite data feed for
Non-Display Use would be required to complete and submit a Non-Display
Use Declaration before they would be authorized to receive the feed. A
firm subject to Category 3 Fees would be required to identify each
platform that uses the NYSE Arca Agg Lite data feed for a Category 3
Non-Display Use basis, such as ATSs and broker crossing systems not
registered as ATSs, as part of the Non-Display Use Declaration.
6. Non-Display Use Declaration Late Fee. Data recipients that
receive the NYSE Arca Agg Lite data feed for Non-Display Use would be
required to complete and submit a Non-Display Use Declaration before
they would be authorized to receive the feed. Beginning in 2025, NYSE
Arca Agg Lite data feed recipients would be required to submit, by
January 31 of each year, the Non-Display Use Declaration. The
requirement to submit a Non-Display Use Declaration applies to all
real-time NYSE Arca data feed product recipients. The Exchange proposes
to charge a Non-Display Use Declaration Late Fee of $1,000 per month to
any data recipient that pays an Access Fee for the NYSE Arca Agg Lite
data feed that has failed to timely complete and submit a Non-Display
Use Declaration. Specifically, with respect to the Non-Display Use
Declaration due by January 31 of each year, the Non-Display Use
Declaration Late Fee would apply to data recipients that fail to
complete and submit the Non-Display Use Declaration by the January 31
due date, and would apply beginning February 1 and for each month
thereafter until the data recipient has completed and submitted the
annual Non-Display Use Declaration.
The proposed Non-Display Use Declaration Late Fee applicable to
NYSE Arca Agg Lite data feed would be set forth in endnote 2 on the Fee
Schedule. As proposed, endnote 2 would be amended with the proposed
addition of the following new text: ``The Non-Display Declaration Late
Fee will apply, beginning in 2025, to NYSE Arca Aggregated Lite data
recipients that fail to complete and submit the annual Non-Display Use
Declaration by the January 31st due date, and applies beginning
February 1st and for each month thereafter until the data recipient has
completed and submitted the annual Non-Display use Declaration.''
In addition, if a data recipient's use of the NYSE Arca Agg Lite
data feed changes at any time after the data recipient submits a Non-
Display Use Declaration, the data recipient must inform the Exchange of
the change by completing and submitting at the time of the change an
updated declaration reflecting the change of use.
7. Multiple Data Feed Fee. The Exchange proposes to establish a
monthly fee, the ``Multiple Data Feed Fee,'' that would apply to data
recipients that take a data feed for a market data product in more than
two locations. Data recipients taking the NYSE Arca Agg Lite data feed
in more than two locations would be charged $200 per additional
location per month. No new reporting would be required.\12\
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\12\ Data vendors currently report a unique Vendor Account
Number for each location at which they provide a data feed to a data
recipient. The Exchange considers each Vendor Account Number a
location. For example, if a data recipient has five Vendor Account
Numbers, representing five locations, for the receipt of the NYSE
Arca Agg Lite data feed, that data recipient will pay the Multiple
Data Feed fee with respect to three of the five locations.
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8. Three-Month Fee Waiver. The Exchange currently provides a one-
month free trial to any firm that subscribes to a particular NYSE Arca
market data product for the first time. Under the current one-month
trial, a
[[Page 62834]]
first-time subscriber is not charged the Access Fee, Non-Display Fee,
any applicable Professional and Non-Professional User Fee and
Redistribution Fee for one calendar month.\13\ The Exchange now
proposes an additional three-month fee waiver for any Redistributor
that subscribes to a particular NYSE Arca market data product for the
first time for external redistribution. As proposed, a first-time
Redistributor would be any firm that has not previously subscribed to
and externally redistributed a particular NYSE Arca market data product
listed on the Fee Schedule. As proposed, a first-time Redistributor
that subscribes to a particular NYSE Arca market data product would not
be charged the Access Fee and the Redistribution Fee for that product
for three calendar months. Any other fees, including but not limited
to, Non-Display Fee, any applicable Professional and Non-Professional
User Fee, and Enterprise Fee would be billable after the first calendar
month after a first-time Redistributor subscribes to a particular NYSE
Arca market data product. For example, a first-time Redistributor that
chooses to subscribe to NYSE Arca Agg Lite on July 24, 2024 would not
be charged the Access Fee and the Redistribution Fee for the months of
August, September, and October 2024. The proposed fee waiver would be
for the three calendar months following the date a Redistributor is
approved to receive access to the particular NYSE Arca market data
product. The Exchange would provide the three-month fee waiver for each
particular product to each Redistributor once.
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\13\ See Fee Schedule.
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The Exchange believes that providing a three-month fee waiver to
NYSE Arca market data products listed on the Fee Schedule would enable
potential Redistributors to determine whether a particular NYSE Arca
market data product provides value to their business models before
fully committing to expend development and implementation costs related
to the receipt of that product, and is intended to encourage increased
use of the Exchange's market data products by defraying some of the
development and implementation costs Redistributors would ordinarily
have to expend before using a product. The proposed three-month fee
waiver would also provide Redistributors with time to begin onboarding
new clients prior to being liable to the Access Fee and the
Redistribution Fee, allowing time to choose how to allocate costs and
increase revenues to defray costs associated with providing a new feed
to its customers.
Application of Proposed Fees
The Exchange is not required to make the NYSE Arca Agg Lite data
feed available or to offer any specific pricing alternatives to any
customers, nor is any firm required to purchase the NYSE Arca Agg Lite
data feed. Firms that choose to purchase the NYSE Arca Agg Lite data
feed do so for the primary goals of using it to increase their
revenues, reduce their expenses, and in some instances to compete
directly with the Exchange (including for order flow). Those firms are
able to determine for themselves whether or not the NYSE Arca Agg Lite
data feed or any other similar products are attractively priced.
The Exchange believes the proposed rule change would provide an
incentive both for data subscribers to subscribe to NYSE Arca Agg Lite
and for Redistributors to subscribe to the product for purposes of
providing external distribution of NYSE Arca Agg Lite. The Exchange
believes that this proposed rule change also has the potential to
attract new Redistributors for NYSE Arca Agg Lite.
The proposed fee structure is not novel as it is based on the fee
structure currently in place for the NYSE ArcaBook feed. The Exchange
is proposing fees for the NYSE Arca Agg Lite data feed that are based
on the existing fee structure and rates that data recipients already
pay for the NYSE ArcaBook feed. Specifically, the fees for the NYSE
ArcaBook feed--which like the NYSE Arca Agg Lite data feed, includes
depth of book, auction imbalances, and security status messages--
consist of an Access Fee of $2,000 per month, a Professional User Fee
(Per User) of $60 per month, a Non-Professional User Fee (Per User)
that ranges between $3 per month to $10 per month, Non-Display Fees of
$6,000 per month for each of Categories 1, 2 and 3, and a
Redistribution Fee of $2,000 per month. The Exchange also charges a
Non-Display Use Declaration Late Fee of $1,000 per month and a Multiple
Data Feed Fee of $200 per month for NYSE ArcaBook.\14\
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\14\ See NYSE Arca Equities Proprietary Market Data Fees at
https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf.
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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,\15\ in general, and
Sections 6(b)(4) and 6(b)(5) of the Act,\16\ 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.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4), (5).
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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.'' \17\
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\17\ See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
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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.'' \18\
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\18\ 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.''' \19\
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\19\ Id. at 535.
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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
[[Page 62835]]
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.\20\
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\20\ 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).
As discussed below, the Exchange believes that its proposed fees
are constrained by competitive forces.
As the D.C. Circuit recognized in NetCoalition I, ``[n]o one
disputes that competition for order flow is fierce.'' \21\ 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.'' \22\
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\21\ NetCoalition I, 615 F.3d at 544 (internal quotation
omitted).
\22\ Id.
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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 stock, the
Commission has recognized that ``such competition can lead to the
fragmentation of order flow in that stock.'' \23\ Indeed, today, equity
trading is currently dispersed across 16 exchanges,\24\ numerous
alternative trading systems,\25\ 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.\26\
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\23\ See Securities Exchange Act Release No. 61358, 75 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\24\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/.
\25\ 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.
\26\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at https://markets.cboe.com/us/equities/market_share/.
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Further, low barriers to entry mean that new exchanges may rapidly
and inexpensively enter the market 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; \27\ Members Exchange (MEMX), which began operations as an
exchange on September 29, 2020; \28\ and Miami International Holdings
(MIAX), which began operations of its first equities exchange on
September 29, 2020.\29\
---------------------------------------------------------------------------
\27\ 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.
\28\ As of October 29, 2020, MEMX is trading all NMS symbols.
See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
\29\ 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).\30\
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\30\ MEMX Home Page (``Founded by members and investors, MEMX
aims to drive simplicity, efficiency, and competition in equity
markets.''), available at https://memx.com/.
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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.'' \31\ 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.'' \32\
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\31\ MEMX home page, available at https://memx.com/.
\32\ 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.
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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.\33\ And low barriers to entry act as a market check on
high prices.\34\
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\33\ 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.
\34\ 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 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 NYSE Arca Agg Lite data
feed, the Exchange is constrained by the fact that, if its pricing is
unattractive to customers, customers have their pick of an increasing
number of alternatives to purchase similar data from instead of
purchasing it from the Exchange. The existence of alternatives to the
Exchange's data product ensures that the Exchange cannot set
unreasonable market data fees without suffering the negative effects of
that decision in the fiercely competitive market for proprietary market
data.
The Exchange notes that the NYSE Arca Agg Lite is entirely
optional. The Exchange is not required to make the NYSE Arca Agg Lite
available to any customers, nor is any customer required to purchase
the NYSE Arca Agg Lite market data feed. 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,\35\ a customer's decision
[[Page 62836]]
whether to purchase any of the Exchange's proprietary market data
feeds, including the NYSE Arca Agg Lite, is entirely discretionary.
Most firms that choose to subscribe to the proprietary market data
feeds from the Exchange, including NYSE Arca Agg Lite, would do so for
the primary goals of using it to increase their revenues, reduce their
expenses, and in some instances to compete directly with the Exchange
for order flow. Such firms are able to determine for themselves whether
the NYSE Arca Agg Lite data feed is necessary for their business needs,
and if so, whether or not it is attractively priced. If the NYSE Arca
Agg Lite data feed does 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 NYSE Arca
Agg Lite data feed.
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\35\ 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 NYSE Arca Agg Lite available to its
customers unless their customers request it, and customers will not
elect to pay the proposed fees unless NYSE Arca Agg Lite 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 the NYSE Arca Agg Lite data feed,
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 proposed fees are therefore reasonable because in setting
them, the Exchange is constrained by the availability of numerous
substitute market data products. The Commission has been clear that
substitute products need not be identical, but only substantially
similar to the product at hand.\36\
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\36\ 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 20, 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)).
---------------------------------------------------------------------------
The NYSE Arca Aggregated Lite market data feed is subject to
significant competitive forces that constrain its pricing.
Specifically, the NYSE Arca Agg Lite data feed competes head-to-head
with similar market data products currently offered by 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''), each of which
offers a market data product called BZX Summary Depth, BYX Summary
Depth, EDGA Summary Depth and EDGX Summary Depth, respectively
(collectively, the ``Cboe Summary Depth'').\37\ Similar to Cboe Summary
Depth, NYSE Arca Agg Lite can be utilized by vendors and subscribers to
quickly access and distribute aggregated order book data. As noted
above, NYSE Arca Agg Lite, similar to Cboe Summary Depth, would provide
aggregated depth per security, including the bid, ask and share
quantity for orders received by NYSE Arca, except unlike Cboe Summary
Depth, which provides aggregated depth per security for up to five
price levels, NYSE Arca Agg Lite would provide aggregated depth per
security for up to ten price levels on both the bid and offer sides of
the NYSE Arca limit order book as well as auction imbalance data.
---------------------------------------------------------------------------
\37\ See BZX Rule 11.22(m) BZX Summary Depth; BYX Rule 11.22(k)
BYX Summary Depth; EDGA Rule 13.8(f) EDGA Summary Depth; and EDGX
Rule 13.8(f) EDGX Summary Depth. The Cboe Summary Depth offered by
BZX, BYX, EDGA and EDGX are each a data feed that offers aggregated
two-sided quotations for all displayed orders for up to five (5)
price levels and contains the individual last sale information,
market status, trading status and trade break messages.
---------------------------------------------------------------------------
The specific fees that the Exchange proposes for the NYSE Arca Agg
Lite data feed are reasonable for the following additional reasons.
Overall. The Exchange believes that the proposed fees for the NYSE
Arca Agg Lite data feed are reasonable because they represent the value
of receiving the data on an aggregated basis. The Exchange believes
that providing vendors and subscribers with the option to subscribe to
a market data product that integrates a subset of data from existing
products and where such aggregated data is published at a pre-defined
interval, thus lowering bandwidth, infrastructure and operational
requirements, would allow vendors and subscribers to choose the best
solution for their specific business needs.
The Exchange believes the proposed fees for the NYSE Arca Agg Lite
data feed are also reasonable when compared to fees for comparable
products, such as the Cboe Summary Depth.\38\ Additionally, the
Exchange is proposing fees for the NYSE Arca Agg Lite data feed that
are based on the existing fee structure that data recipients already
pay for the NYSE Arca's other market data products. The Exchange
believes that adopting the same fee structure would reduce
administrative burdens on NYSE Arca data subscribers that also
currently subscribe to market data feeds from NYSE Arca.
---------------------------------------------------------------------------
\38\ See https://cdn.cboe.com/resources/membership/US_Market_Data_Product_Price_List.pdf.
---------------------------------------------------------------------------
Access Fee. The Exchange believes that the proposed monthly Access
Fee of $1,500 for the NYSE Arca Aggregated Lite data feed is reasonable
because it is lower than the fees charged by BZX, BYX, EDGA, and EDGX,
each of which charges between $2,500 per month to $5,000 per month for
both Internal Distribution and External Distribution of the Cboe
Summary Depth market data product.\39\
---------------------------------------------------------------------------
\39\ Id.
---------------------------------------------------------------------------
User Fees. The Exchange believes that having separate Professional
and Non-Professional User fees for the NYSE Arca Agg Lite data feed is
reasonable because it will make the product more affordable and result
in greater availability to Professional and Non-Professional Users.
Setting a modest Non-Professional User fee is reasonable because it
provides an additional method for Non-Professional Users to access the
NYSE Arca Agg Lite data feed by providing the same data that is
available to Professional Users. The proposed monthly Professional User
Fee (Per User) of $30 and monthly Non-Professional User Fee (Per User)
of $4 are reasonable because they are comparable to user fees generally
charged by exchanges. For example, NYSE Arca charges a monthly
Professional User Fee (Per User) of $60
[[Page 62837]]
and a monthly Non-Professional User Fee (Per User) of up to $10 for the
NYSE ArcaBook feed.\40\ Although the proposed User Fees for
Professional and Non-Professional Users are higher than those charged
by BZX, BYX, EDGA and EDGX, the Exchange notes that User fees are only
a subset of the total fees that vendors and subscribers pay and the
lower fees proposed to access and redistribute NYSE Arca Agg Lite would
provide such market data recipients with a more affordable alternative
to existing substitutes offered by the Exchange and its competitors.
---------------------------------------------------------------------------
\40\ See Fee Schedule.
---------------------------------------------------------------------------
Redistribution Fees. The Exchange believes that it is reasonable to
charge redistribution fees because vendors receive value from
redistributing the data in their business products for their customers.
The Exchange believes that charging a Redistribution Fee is reasonable
because the vendors that would be charged such a fee profit by re-
transmitting the Exchange's market data to their customers. This fee
would be charged only once per month to each vendor account that
redistributes the NYSE Arca Agg Lite data feed, regardless of the
number of customers to which that vendor redistributes the data. The
Exchange believes the proposed monthly Redistribution Fee of $250 for
the NYSE Arca Agg Lite data feed is reasonable because it is nominal
and lower than the fees charged by BZX, BYX, EDGA and EDGX, each of
which charges considerably more for both Internal Distribution and
External Distribution of the Cboe Summary Depth market data feed.\41\
---------------------------------------------------------------------------
\41\ See supra, note 38.
---------------------------------------------------------------------------
Enterprise Fees. The Exchange believes the proposed enterprise
license is reasonable because it would reduce exchange fees, lower
administrative costs for subscribers that are broker-dealers and help
expand the availability of market information to investors, and thereby
increase participation in financial markets. Subscribers that are
broker-dealers would be able to disseminate the NYSE Arca Agg Lite data
feed for display usage to an unlimited number of non-professional users
for a monthly fee of $35,000, or $31,500 if they contract for twelve
months of service in advance. Alternatively, subscribers that are
broker-dealers would be able to disseminate the NYSE Arca Agg Lite data
feed for display usage to an unlimited number of professional users and
non-professional users for a monthly fee of $110,000, or $99,000 if
they contract for twelve months of service in advance. The proposed
enterprise license would result in lower fees for subscribers able to
reach the largest audience of investors, including retail investors.
Discounts for broader dissemination of market data information have
routinely been adopted by exchanges and permitted by the Commission as
equitable allocations of reasonable dues, fees and charges.\42\
---------------------------------------------------------------------------
\42\ For example, the Commission has permitted pricing discounts
for market data under Nasdaq Rules 7023(c) and 7047(b). See also
Securities Exchange Act Release No. 82182 (November 30, 2017), 82 FR
57627 (December 6, 2017) (SR-NYSE-2017-60) (changing an enterprise
fee for NYSE BBO and NYSE Trades).
---------------------------------------------------------------------------
Non-Display Use Fees. The Exchange believes that the proposed Non-
Display Use fees reflect the value of the non-display data use to data
recipients, which purchase such data on an entirely voluntary basis.
Non-display data can be used by data recipients for a wide variety of
uses, including proprietary and agency trading and smart order routing,
as well as by data recipients that operate order matching and execution
platforms. Non-display data also can be used for a variety of non-
trading purposes that indirectly support trading, such as risk
management and compliance. Although some of these non-trading uses do
not directly generate revenues, they can nonetheless substantially
reduce a recipient's costs by automating such functions so that they
can be carried out in a more efficient and accurate manner and reduce
errors and labor costs, thereby benefiting recipients. The Exchange
believes that charging for non-trading uses is reasonable because data
recipients can derive substantial value from such uses, for example, by
automating tasks so that they can be performed more quickly and
accurately and less expensively than if they were performed manually.
Previously, the non-display use data pricing policies of many
exchanges required customers to count, and the exchanges to audit the
count of, the number of non-display devices used by a customer. As non-
display use grew more prevalent and varied, however, exchanges received
an increasing number of complaints about the impracticality and
administrative burden associated with that approach. In response, the
Exchange and its affiliated exchanges developed a non-display use
pricing structure that does not require non-display devices to be
counted or those counts to be audited, and instead looks merely at the
three following categories of potential use of non-display data: use of
the data on the customer's own behalf (Category 1), use on behalf of
clients (Category 2), and use to internally match buy and sell orders
within an organization (Category 3).
The Exchange believes that it is reasonable to segment the fee for
non-display use into these three categories. As noted above, the uses
to which customers can put the NYSE Arca Agg Lite data feed are
numerous and varied, and the Exchange believes that charging separate
fees for these separate categories of use is reasonable because it
reflects the actual value the customer derives from the data, based
upon how many categories of use the customer makes of the data.
Segmenting the fees for non-display data in this way avoids the
unreasonable result of customers that make only limited non-display use
of the data paying the same fees as customers that use the data for
numerous different purposes.
The Exchange believes that the proposed fees of $4,500 per month
for each of Categories 1, 2, and 3 is reasonable. These fees are
comparable to non-display use fees generally charged by exchanges. For
example, the fees for Non-Display Use of NYSE ArcaBook for Categories
1, 2 and 3 is $6,000 per month.\43\ The Exchange believes that the
proposed fees directly and appropriately reflect the value of using
non-display data in a wide range of computer-automated functions
relating to both trading and non-trading activities and that the number
and range of these functions continue to grow through innovation and
technology developments.
---------------------------------------------------------------------------
\43\ See Fee Schedule.
---------------------------------------------------------------------------
The Exchange believes that it is reasonable to cap non-display use
fees for Category 3 at $13,500 per month per data recipient, because a
higher monthly fee may potentially dissuade competitors from buying the
NYSE Arca Agg Lite data feed.
The proposed Non-Display Use fees for the NYSE Arca Agg Lite data
feed are also reasonable because they take into account the value of
receiving the data for Non-Display Use on an integrated basis. The
Exchange believes that the proposed fees directly and appropriately
reflect the value of using the NYSE Arca Agg Lite data feed on a non-
display basis in a wide range of computer-automated functions relating
to both trading and non-trading activities and that the number and
range of these functions continue to grow through innovation and
technology developments.\44\
---------------------------------------------------------------------------
\44\ See also Exchange Act Release No. 69157, March 18, 2013, 78
FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (``[D]ata feeds
have become more valuable, as recipients now use them to perform a
far larger array of non-display functions. Some firms even base
their business models on the incorporation of data feeds into black
boxes and application programming interfaces that apply trading
algorithms to the data, but that do not require widespread data
access by the firm's employees. As a result, these firms pay little
for data usage beyond access fees, yet their data access and usage
is critical to their businesses.'').
---------------------------------------------------------------------------
[[Page 62838]]
Non-Display Use Declaration Late Fee. The Exchange believes that it
is reasonable to require annual submissions of the Non-Display Use
Declaration so that the Exchange will have current and accurate
information about the use of the NYSE Arca Agg Lite data feed and can
correctly assess fees for the uses of the NYSE Arca Agg Lite data feed.
Requiring annual submissions of such declarations is reasonable because
it also allows users to re-assess their own usage each year.
The Exchange believes that it is reasonable to impose a late fee in
connection with the submission of the Non-Display Use Declaration. In
order to correctly assess fees for the non-display use of the NYSE Arca
Agg Lite data feed, the Exchange needs to have current and accurate
information about the use of the NYSE Arca Agg Lite data feed. The
failure of data recipients to submit the Non-Display Use Declaration on
time leads to potentially incorrect billing and administrative burdens,
including tracking and obtaining late Non-Display Use Declarations and
correcting and following up on payments owed in connection with late
Non-Display Use Declarations. The purpose of the late fee is to incent
data recipients to submit the Non-Display Use Declaration promptly to
avoid the administrative burdens associated with the late submission of
Non-Display Use Declarations.
Multiple Data Feed Fee. The Exchange believes that it is reasonable
to require data recipients to pay a modest fee for taking a data feed
for a market data product in more than two locations, because such data
recipients can derive substantial value from being able to consume the
product in as many locations as they want. In addition, there are
administrative burdens associated with tracking each location at which
a data recipient receives the product. The Multiple Data Feed Fee is
designed to encourage data recipients to better manage their requests
for additional data feeds and to monitor their usage of data feeds. The
proposed fee is designed to apply to data feeds received in more than
two locations so that each data recipient can have one primary and one
backup data location before having to pay a multiple data feed fee.
Three-Month Fee Waiver. The Exchange believes the proposal to waive
the Access Fee and the Redistribution Fee for the NYSE Arca Agg Lite
data feed to new Redistributors for three calendar months is reasonable
because it would enable potential Redistributors to determine whether a
particular NYSE Arca market data product provides value to their
business models before fully committing to expend development and
implementation costs related to the receipt of that product, and is
intended to encourage increased use of the Exchange's market data
products by defraying some of the development and implementation costs
Redistributors would ordinarily have to expend before using a product.
The proposed fee waiver would also allow Redistributors to become
familiar with the feed and determine whether it suits their needs
without incurring fees. Making a new market data product available
without charging a fee for three months is consistent with offerings of
other exchanges. For example, BZX offers subscribers of BZX Summary
Depth a three-month credit for external distribution, which is akin to
the three-month fee waiver proposed by the Exchange.\45\
---------------------------------------------------------------------------
\45\ See e.g., Securities Exchange Act Release No. 94432 (March
16, 2022), 87 FR 16277 (March 22, 2022) (SR-CboeBZX-2022-015)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend the Fees Applicable to Various Market Data
Products).
---------------------------------------------------------------------------
For all of the foregoing reasons, the Exchange believes that the
proposed fees for the NYSE Arca Agg Lite data feed are reasonable.
The Proposed Fees Are Equitably Allocated
The Exchange believes the proposed fees for the NYSE Arca Agg Lite
data feed are allocated fairly and equitably among the various
categories of users of the feed, and any differences among categories
of users are justified.
Overall. The Exchange believes that the proposed fees are equitably
allocated because they will apply to all data recipients that choose to
subscribe to the NYSE Arca Agg Lite data feed. Any subscriber or vendor
that chooses to subscribe to the NYSE Arca Agg Lite data feed is
subject to the same Fee Schedule, regardless of what type of business
they operate or the use they plan to make of the data feed. Subscribers
and vendors are not required to purchase the NYSE Arca Agg Lite data
feed and may choose to receive the data on the NYSE Arca Agg Lite data
feed regardless of what type of business they operate or the use they
plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee
of $1,500 for the NYSE Arca Agg Lite data feed is equitably allocated
because it would be charged on an equal basis to all data recipients
that receive a data feed of the NYSE Arca Agg Lite data feed,
regardless of what type of business they operate or the use they plan
to make of the data feed.
User Fees. The Exchange believes that the fee structure
differentiating Professional User fees ($30 per month per user) from
Non-Professional User fees ($4 per month per user) for display device
access to the NYSE Arca Agg Lite data feed is equitable. This structure
has long been used by the Exchange to reduce the price of data to Non-
Professional Users and make it more broadly available.\46\ Offering the
NYSE Arca Agg Lite data feed to Non-Professional Users with the same
data as is available to Professional Users results in greater equity
among data recipients. These user fees would be charged uniformly to
all display devices that have access to the NYSE Arca Agg Lite data
feed.
---------------------------------------------------------------------------
\46\ See, e.g., Securities Exchange Act Release No. 72560 (July
8, 2014), 79 FR 40801 (July 14, 2014) (SR-NYSEARCA-2014-72)
(establishing tiered Non-Professional User Fees (Per User) for NYSE
ArcaBook); Securities Exchange Act Release No. 20002, File No. S7-
433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing Non-
Professional fees for CTA data); NASDAQ BX Equity 7 Pricing
Schedule, Section 123.
---------------------------------------------------------------------------
Redistribution Fees. The Exchange believes the proposed monthly fee
of $250 for redistributing the NYSE Arca Agg Lite data feed is
equitably allocated because it would be charged on an equal basis to
those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise
license is equitably allocated because it would be available on an
equal basis to all subscribers that are broker-dealers, each of whom
would benefit from reduced exchange fees and from lower administrative
costs. Moreover, the specific feature of the proposed enterprise
license that will allow subscribers to lower fees by subscribing to a
twelve-month contract is also an equitable allocation because all
subscribers will have the same option of choosing between the stability
of a fixed, lower rate, and the more flexible option of maintaining the
ability to change market data products after a month of service.
Subscribers will be free to move from the monthly to the annual rate at
any time, or from annual to a monthly fee, with notice, at the
expiration of the twelve-month period.
[[Page 62839]]
Non-Display Use Fees. The Exchange believes the proposed Non-
Display Use fees are equitably allocated because they would require
subscribers to pay fees only for the uses they actually make of the
data. As noted above, non-display data can be used by data recipients
for a wide variety of purposes (including trading, risk management, and
compliance) as well as purposes that reduce the recipient's costs by
automating certain functions. The Exchange believes that it is
equitable to charge non-display data subscribers a $4,500 fee for each
category of use they make of such data--namely, using the data on their
own behalf (Category 1), on behalf of their clients (Category 2), and
to internally match buy and sell orders within an organization
(Category 3)--because this fee structure results in subscribers with
greater uses of the data paying higher fees, and subscribers with fewer
uses of the data paying lower fees. This segmented fee structure is
also equitable because no subscriber of non-display data would be
charged a fee for a category of use in which it did not actually
engage.
The Exchange believes that it is equitable to cap non-display use
fees for Category 3 at $13,500 per month per data recipient, because a
higher monthly fee may potentially dissuade competitors from buying the
NYSE Arca Agg Lite data feed.
Non-Display Use Declaration Late Fee. The Exchange believes that
the proposed fee of $1,000 per month for a late Non-Display Use
Declaration is equitably allocated because it applies to any data
recipient that pays an Access Fee for the NYSE Arca Agg Lite data feed
but has failed to complete and submit a Non-Display Use Declaration. In
addition, the Exchange believes that it is equitable to charge a late
fee to subscribers who fail to timely submit their Non-Display Use
Declarations because their failure to do so leads to potentially
incorrect billing and administrative burdens on the part of the
Exchange. The Exchange believes it is equitable to defray these
administrative costs by imposing a late fee only on subscribers' whose
declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per
month per location fee to data recipients taking the NYSE Arca Agg Lite
data feed in more than two locations is equitable because it would
apply to all such customers, regardless of what type of business they
operate or the use they make of the data feed. In addition, the
Exchange believes that it is equitable to charge a fee to subscribers
for taking a data feed in more than two locations because there are
administrative burdens on the part of the Exchange associated with
tracking each location at which a data recipient receives the product.
The Exchange believes that it is equitable for it to defray these
administrative costs by imposing a modest fee only on subscribers who
seek to take the feed in more than two locations, as opposed to all
subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive
the Access Fee and the Redistribution Fee for the NYSE Arca Agg Lite
data feed to new Redistributors for three calendar months is equitable
because it would apply to any first-time Redistributor, regardless of
the use they plan to make of the feed. As proposed, any first-time
Redistributor of the NYSE Arca Agg Lite data feed would not be charged
the Access Fee and the Redistribution Fee for three calendar months.
The Exchange believes it is equitable to restrict the availability of
this three-month fee waiver to Redistributors that have not previously
subscribed to and redistributed the NYSE Arca Agg Lite data feed, since
customers who are current or previous subscribers of the feed are
already familiar with it and are able to determine whether it suits
their needs.
For all of the foregoing reasons, the Exchange believes that the
proposed fees for the NYSE Arca Agg Lite data feed are equitably
allocated.
The Proposed Fees Are Not Unfairly Discriminatory
The Exchange believes the proposed fees for the NYSE Arca Agg Lite
data feed are not unfairly discriminatory because any differences in
the application of the fees are based on meaningful distinctions
between customers, and those meaningful distinctions are not unfairly
discriminatory between customers.
Overall. The Exchange believes that the proposed fees are not
unfairly discriminatory because they would apply to all data recipients
that choose to subscribe to the NYSE Arca Agg Lite data feed. Any
subscriber, including Redistributor, that chooses to subscribe to the
NYSE Arca Agg Lite data feed is subject to the same Fee Schedule,
regardless of what type of business they operate or the use they plan
to make of the data feed. Subscribers, including Redistributors, may
choose to receive the data on the NYSE Arca Agg Lite data feed
regardless of what type of business they operate or the use they plan
to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee
of $1,500 for the NYSE Arca Agg Lite data feed is not unfairly
discriminatory because it would be charged on an equal basis to all
data recipients that receive a data feed of the NYSE Arca Agg Lite,
regardless of what type of business they operate or the use they plan
to make of the data feed.
User Fees. The Exchange believes that the fee structure
differentiating Professional User fees ($30 per month per user) from
Non-Professional User fees ($4 per month per user) for display device
access to the NYSE Arca Agg Lite data feed is not unfairly
discriminatory. This structure has long been used by the Exchange to
reduce the price of data to Non-Professional Users and make it more
broadly available.\47\ Offering the NYSE Arca Agg Lite data feed to
Non-Professional Users with the same data as is available to
Professional Users results in greater equity among data recipients.
These user fees would be charged uniformly to all display devices that
have access to the NYSE Arca Agg Lite data feed.
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\47\ Id.
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Redistribution Fees. The Exchange believes the proposed monthly fee
of $250 for redistributing the NYSE Arca Agg Lite data feed is not
unfairly discriminatory because it would be charged on an equal basis
to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise
license will not unfairly discriminate between customers, issuers,
brokers or dealers. The Act does not prohibit all distinctions among
customers, but only discrimination that is unfair, and it is not unfair
discrimination to charge those subscribers that are able to reach the
largest audiences of investors, including retail investors, a lower fee
for incremental investors in order to encourage the widespread
distribution of market data. This principle has been repeatedly
endorsed by the Commission, as evidenced by the approval of enterprise
licenses for other market data products.\48\ Moreover, the proposed
enterprise license will be subject to significant competition, and that
competition will ensure that there is no unfair discrimination. Each
subscriber will be able to accept or reject the license depending on
whether it will or will not lower costs for that
[[Page 62840]]
particular subscriber, and, if the license is not sufficiently
competitive, the Exchange may lose market share. The proposed
enterprise license will compete with other enterprise licenses of the
Exchange, underlying fee schedules promulgated by the Exchange, and
enterprise licenses and fee structures implemented by other exchanges.
As such, it is a voluntary product for which market participants can
readily find substitutes. Accordingly, the Exchange is constrained from
introducing a fee that would be inequitable or unfairly discriminatory.
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\48\ See e.g., Securities Exchange Act Release No. 83751 (July
31, 2018), 83 FR 38428 (August 6, 2018) (SR-NASDAQ-2018-058) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Lower Fees and Administrative Costs for Distributors of Nasdaq
Basic, Nasdaq Last Sale, NLS Plus and the Nasdaq Depth-of-Book
Products Through a Consolidated Enterprise License).
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Non-Display Use Fees. The Exchange believes the proposed Non-
Display Use fees are not unfairly discriminatory because they would
require subscribers for non-display use to pay fees only for the
categories of use they actually make of the data. As noted above, non-
display data can be used by data recipients for a wide variety of
purposes (including trading, risk management, and compliance) as well
as purposes that reduce the recipient's costs by automating certain
functions. The Exchange believes that it is not unfairly discriminatory
to charge non-display data subscribers a $4,500 per month fee for each
category of use they make of such data--namely, using the data on their
own behalf (Category 1), on behalf of their clients (Category 2), and
to internally match buy and sell orders within an organization
(Category 3)--because this fee structure results in subscribers with
greater uses for the data paying higher fees, while subscribers with
fewer uses of the data pay lower fees. This segmented fee structure is
not unfairly discriminatory because no subscriber of non-display data
would be charged a fee for a category of use in which it did not
actually engage.
The Exchange believes that it is not unreasonably discriminatory to
cap non-display use fees for Category 3 at $13,500 per month per data
recipient, because a higher monthly fee may potentially dissuade
competitors from buying the NYSE Arca Agg Lite data feed.
Non-Display Use Declaration Late Fee. The Exchange believes that
the proposed fee of $1,000 per month for a late Non-Display Use
Declaration is not unfairly discriminatory because it applies to any
data recipient that pays an Access Fee for the NYSE Arca Agg Lite data
feed but has failed to complete and submit a Non-Display Use
Declaration. In addition, the Exchange believes that it is not unfairly
discriminatory to charge a late fee to subscribers who fail to timely
submit their Non-Display Use Declarations because their failure to do
so leads to potentially incorrect billing and administrative burdens on
the part of the Exchange. Nor is it unfairly discriminatory for the
Exchange to defray these administrative costs by imposing a late fee
only on subscribers' whose declarations were late, as opposed to all
subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per
month per location fee to data recipients taking the NYSE Arca Agg Lite
data feed in more than two locations is not unfairly discriminatory
because it would apply to all such customers, regardless of what type
of business they operate or the use they make of the data feed. In
addition, the Exchange believes that it is not unfairly discriminatory
to charge a fee to subscribers for taking a data feed in more than two
locations because there are administrative burdens on the part of the
Exchange associated with tracking each location at which a data
recipient receives the product. The Exchange believes that it is not
unfairly discriminatory for it to defray these administrative costs by
imposing a modest fee only on subscribers who seek to take the feed in
more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive
the Access Fee and the Redistribution Fee for the NYSE Arca Agg Lite
data feed to new Redistributors for three months is not unfairly
discriminatory because it would apply to any first-time Redistributor,
regardless of the use they plan to make of the feed. As proposed, any
first-time Redistributor of the NYSE Arca Agg Lite data feed would not
be charged the Access Fee and the Redistribution Fee for three calendar
months. The Exchange believes it is not unfairly discriminatory to
restrict the availability of this three-month fee waiver to
Redistributors that have not previously subscribed to the NYSE Arca Agg
Lite data feed, since Redistributors who are current or previous
subscribers of the feed are already familiar with it and are able to
determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the
proposed fees for the NYSE Arca Agg Lite data feed are not unfairly
discriminatory.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed fees will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition. The Exchange believes that the proposed
fees do not put any market participants at a relative disadvantage
compared to other market participants. As noted above, the proposed
fees would apply to all subscribers, including Redistributors, of the
NYSE Arca Agg Lite data feed, and customers may not only choose whether
to subscribe to the feed 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. As shown above, to the extent that particular proposed
fees apply to only a subset of subscribers (e.g., Category 2 fees apply
only to those making non-display use on behalf of clients; late fees
apply only to customers who fail to timely submit their declarations),
those distinctions are not unfairly discriminatory and do not unfairly
burden one set of customers over another. To the contrary, by tailoring
the proposed fees in this manner, the Exchange believes that it has
eliminated the potential burden on competition that might result from
unfairly asking subscribers to pay fees 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. In setting the proposed fees, the Exchange is
constrained by the availability of numerous substitute platforms also
offering market data products, and low barriers to entry mean new
exchanges are frequently introduced. In setting fees for the NYSE Arca
Agg Lite data feed, the Exchange is constrained by the fact that if its
pricing for the NYSE Arca Agg Lite data feed is unattractive to
customers, customers will have their pick of an increasing number of
alternative market data products to purchase instead of purchasing the
Exchange's products.
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 Arca 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
[[Page 62841]]
market data users can find suitable substitute feeds, an exchange that
overprices its market data products stands a high risk that users may
purchase another market's market data product. 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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective upon filing pursuant
to Section 19(b)(3)(A) \49\ of the Act and paragraph (f) thereunder. At
any time within 60 days of the filing of the 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.
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\49\ 15 U.S.C. 78s(b)(3)(A).
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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-NYSEARCA-2024-60 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-NYSEARCA-2024-60. 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-NYSEARCA-2024-60 and should
be submitted on or before August 22, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
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\50\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-16937 Filed 7-31-24; 8:45 am]
BILLING CODE 8011-01-P
