[Federal Register Volume 69, Number 28 (Wednesday, February 11, 2004)]
[Notices]
[Pages 6704-6705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2906]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49185; File No. SR-CTA/CQ-2003-01]


Consolidated Tape Association; Order Approving the Fifth 
Substantive Amendment to the Second Restatement of the Consolidated 
Tape Association Plan and the Third Substantive Amendment to the 
Restated Consolidated Quotation Plan and Amendment No. 1 Thereto

February 4, 2004.

I. Introduction

    On November 28, 2003, the Consolidated Tape Association (``CTA'') 
Plan and Consolidated Quotation (``CQ'') Plan Participants 
(``Participants'')\1\ submitted to the

[[Page 6705]]

Securities and Exchange Commission (``Commission'') a proposal to amend 
the CTA and CQ Plans (collectively, the ``Plans''), pursuant to Rule 
11Aa3-2\2\ under the Securities Exchange Act of 1934 (``Act''). On 
December 23, 2003, the Participants submitted Amendment No. 1 to the 
proposed amendments.\3\ The proposal represents the 5th substantive 
amendment made to the Second Restatement of the CTA Plan (``5th 
Amendment'') and the 3rd substantive amendment to the Restated CQ Plan 
(``3rd Amendment''), and reflects several changes unanimously adopted 
by the Participants. The proposed amendments would delete the 
provisions of the Plans that exempt any Participant in the Plans from 
paying market data fees for the receipt of data on its trading floor 
for regulation or surveillance or for other specifically approved 
purposes (``Participant Fee Exemptions''). Notice of the proposed 
amendments was published in the Federal Register on December 31, 
2003.\4\
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    \1\ Each Participant executed the proposed amendments. The 
Participants are the American Stock Exchange LLC; Boston Stock 
Exchange, Inc.; Chicago Board Options Exchange, Inc.; Chicago Stock 
Exchange, Inc.; Cincinnati Stock Exchange, Inc. (now known as the 
National Securities Exchange, Inc.); National Association of 
Securities Dealers, Inc. (``NASD''); New York Stock Exchange, Inc.; 
Pacific Exchange, Inc.; and Philadelphia Stock Exchange, Inc.
    \2\ 17 CFR 240.11Aa3-2.
    \3\ See letter to Jonathan G. Katz, Secretary, Commission, from 
Thomas E. Haley, Chairman, CTA, dated December 22, 2003 (``Amendment 
No. 1''). Amendment No. 1 makes a technical correction to the 
proposed amendments.
    \4\ See Securities Exchange Act Release No. 48987 (December 23, 
2003), 68 FR 75661 (December 31, 2003).
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    The Commission received no comments on the proposed amendments. 
This order approves the 5th Amendment to the CTA Plan and the 3rd 
Amendment to the CQ Plan.

II. Description of the Proposed Amendments

    Currently, the Plans specify that each Participant is exempt from 
certain market data charges (other than access fees) if it is in 
compliance with the requisite market data contract. According to the 
Participant Fee Exemptions, the market data contract must require the 
Participant (1) to receive market data solely at premises that it 
occupies or on its ``trading floor or trading floors'' (as that term is 
generally understood), and (2) to use the data solely for regulatory, 
surveillance and other approved purposes.
    The Participants propose to amend the Plans to require each 
Participant to pay the same fees for its receipt and use of market data 
as other market participants pay, regardless of whether the Participant 
receives the data on its trading floor or elsewhere or uses the data 
for surveillance or other purposes.
    The Participants believe that eliminating the Participant Fee 
Exemptions will eliminate disputes that have arisen among the 
Participants regarding what constitutes a ``trading floor'' and will 
eliminate a perceived competitive advantage that the Participant Fee 
Exemptions give Participant markets over non-exchange markets (such as 
electronic communications networks and other alternative trading 
systems), over NASD market makers and, in the case of Participants that 
trade options, over non-Participant options markets.
    The Participants have represented that once the proposed amendments 
are approved by the Commission, they will commence payment of the fees 
that were subject to the Participant Fee Exemptions in the billing 
cycle that follows the Commission's approval of the proposed 
amendments.

III. Discussion

    The Commission finds that the proposed amendments to the Plans are 
consistent with the requirements of the Act and the rules and 
regulations thereunder,\5\ and, in particular, section 11A(a)(1)\6\ of 
the Act and Rule 11Aa3-2 thereunder.\7\
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    \5\ In approving the proposed plan amendments, the Commission 
has considered the proposed amendments' impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78k-1(a)(1).
    \7\ 17 CFR 240.11Aa3-2.
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    The Commission notes that, under the proposed amendments, all 
Participants will be required to pay for market data like other market 
participants, regardless of how they receive or use it. The Commission 
believes that deleting the Participant Fee Exemptions from the Plans 
will eliminate any potential disputes over the applicability of the 
Participant Fee Exemptions and should help to eliminate any perceived 
competitive inequities between the Participants who currently benefit 
from the Participant Fee Exemptions and other market participants who 
pay for market data. The Commission notes that payment of fees subject 
to the Participant Fee Exemption will commence in the billing cycle 
that follows Commission approval of the proposed amendments. The 
Commission finds that the proposed amendments to delete the Participant 
Fee Exemptions from the Plans are consistent with section 11A of the 
Act \8\ and the rules and regulations thereunder.
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    \8\ 15 U.S.C. 78k-1.
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IV. Conclusion

    It is therefore ordered, pursuant to section 11A of the Act \9\ and 
paragraph (c)(2) of Rule 11Aa3-2\10\ thereunder, that the proposed 5th 
Amendment to the CTA Plan and the proposed 3rd Amendment to the CQ Plan 
are approved, as amended.
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    \9\ 15 U.S.C. 78k-1.
    \10\ 17 CFR 240.11Aa3-2(c)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(27).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-2906 Filed 2-10-04; 8:45 am]
BILLING CODE 8010-01-P