[Federal Register Volume 71, Number 111 (Friday, June 9, 2006)]
[Notices]
[Pages 33500-33501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-5301]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53591; File No. SR-NYSEArca-2006-23]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to a Pilot Program for NYSE Arca BBO 
Data

June 7, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 23, 2006, the NYSE Arca, Inc. (``Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the Exchange. The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly owned subsidiary, NYSE Arca 
Equities, Inc. (``NYSE Arca''), proposes to establish as a six-month 
pilot program market data fees for the receipt and use of market data 
relating to the Exchange's best bids and offers. The text of the 
proposed rule change is available on the Exchange's Web site (http://www.archipelago.com), at the Exchange's Office of the Secretary, 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 Exchange included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

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

1. Purpose
    (a) The Service. Through NYSE Arca, L.L.C., the equities trading 
facility of NYSE Arca, the Exchange makes ArcaBook\SM\, a compilation 
of all limit orders resident in the NYSE Arca limit order book, 
available on a real-time basis. The Exchange proposes to permit vendors 
to cull best bids and offers from its ArcaBookSM product to 
create an NYSE Arca Best-Bid-and-Offer service for distribution to its 
professional and nonprofessional subscribers (a ``BBO Service'').\3\
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    \3\ The Exchange notes that it makes available to vendors the 
best bids and offers that are included in ArcaBook data no earlier 
than it makes those best bids and offers available to the processors 
under the Consolidated Quotation System Plan (``CQ Plan'') and the 
Reporting Plan for Nasdaq/National Market System Securities Traded 
on an Exchange on an Unlisted or Listed Basis (``UTP Plan'').
    The Commission made minor clarifications to the description of 
the service contained in this paragraph pursuant to telephone 
conversations between Janet Angstadt, Acting General Counsel, NYSE 
Arca, Inc. and Kelly Riley, Assistant Director, Commission, on June 
6, 2006.
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    (b) Proposed Fees. Contemporaneously with the proposed rule change, 
the Exchange has submitted another proposed rule change that proposes 
to establish market data fees and a Market Data Fee Schedule for the 
receipt and use of certain of the Exchange's market data services, 
including ArcaBook (``ArcaBook Fee Filing'').\4\ The ArcaBook fees 
include access fees and professional and nonprofessional device fees.
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    \4\ See Securities Act Release No. 34-53592, June 7, 2006.
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    With the proposed rule change, the Exchange proposes as a six-month 
pilot program to supplement those fees and that fee schedule with the 
addition of device fees for the Exchange's BBO Service. The Exchange is 
proposing to set the device fee for professional subscribers who 
receive BBO Services for both ``CTA Plan \5\ and ETF Securities'' and 
``UTP Plan Securities'' (but no other bids and offers that are included 
in ArcaBook) at $15, rather than the combined fee of $30 that would 
otherwise apply to the receipt of ArcaBook data for both CTA Plan and 
ETF Securities and UTP Plan Securities.
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    \5\ Consolidated Tape Association Plan (``CTA Plan'').
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    The combined monthly professional subscriber device fee of $15 
compares favorably with comparable device fees in the industry for 
similar products. For instance, the 14-tier rate schedule under the CTA 
Plan imposes device fees ranging from $127.25 for a professional 
subscriber using one device to $18.75 for a professional subscriber 
using more than 10,000 devices. Under the UTP Plan, the comparable fee 
is $20.
    Similarly, the Exchange is proposing to set the device fee for 
nonprofessional subscribers who receive both BBO Services (but no other 
bids and offers that are included in ArcaBook) at $5, rather than the 
combined fee of $10 that would otherwise apply. In differentiating 
between professional and nonprofessional subscribers, the Exchange 
proposes to apply the same criteria for qualification as a 
nonprofessional subscriber as the CTA and CQ Plan Participants use, as 
described in the proposed ArcaBook Fee Filing. The $5 nonprofessional 
subscriber fee is higher than the nonprofessional subscriber fees that 
are payable under the CQ and UTP Plans in recognition of the fact that 
NYSE Arca provides the data to vendors simultaneously with its delivery 
of the data to the processors under the CQ and UTP Plans. This allows 
vendors to receive the best bids and offers, and to distribute that 
data to their subscribers, more quickly than under the CQ and UTP Plans 
because it eliminates the processing time of the Plans' processors.
    The ArcaBook Fee Filing establishes a monthly maximum amount of 
device fees payable by any broker-dealer in respect of certain 
subscribers that maintain brokerage accounts with the broker-dealer. 
The Exchange proposes to subject BBO Service fees payable by any 
broker-dealer in respect of those same subscribers to that monthly 
maximum.
    NYSE Arca believes that the proposed BBO Service fees would reflect 
an equitable allocation of its overall costs to users of its 
facilities.
    (c) Free Trial Period. As an incentive to prospective subscribers, 
the Exchange proposes to offer subscribers the right to receive BBO 
Services free of charge for the duration of the calendar month in which 
the subscriber first becomes authorized to receive the data. For 
example, if a subscriber (whether professional or nonprofessional) 
becomes authorized to receive the NYSE Arca BBO Services on May 10, the 
device fees set forth in the proposed rule change will not apply during 
that month of May.
2. Statutory Basis
    The basis under the Act for the proposed rule change are the

[[Page 33501]]

requirement under Section 6(b)(4) \6\ that an exchange have rules that 
provide for the equitable allocation of reasonable dues, fees and other 
charges among its members and other persons using its facilities and 
the requirements under Section 6(b)(5) \7\ that the rules of an 
exchange be designed to promote just and equitable principles of trade 
and not to permit unfair discrimination between customers, issuers, 
brokers or dealers.
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    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed fee change will not impose 
any burden on competition that is not necessary or appropriate in the 
furtherance of the purposes of the Act.

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

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

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the NYSE consents, the Commission will:
    A. By order approve such proposed rule change; or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NYSEArca-2006-23 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2006-23. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://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 inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make publicly available. All submissions should refer to 
File Number SR-NYSEArca-2006-23 and should be submitted on or before 
June 30, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-5301 Filed 6-7-06; 1:12 pm]
BILLING CODE 8010-01-P