[Federal Register Volume 74, Number 78 (Friday, April 24, 2009)]
[Notices]
[Pages 18755-18758]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-9387]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59791; File No. SR-NYSE-2009-42]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Implementing NYSE Realtime 
Reference Price Service on a Permanent Basis

April 20, 2009.
    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 April 16, 2009, the New York Stock Exchange LLC (``NYSE'' or the 
``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 proposes to establish the NYSE Realtime Reference 
Prices

[[Page 18756]]

service and to establish a flat monthly fee for that service. The 
Exchange currently provides this service pursuant to a pilot program 
\3\ and now proposes to make the service permanent. The service allows 
a vendor to redistribute on a real-time basis last sale prices of 
transactions that take place on the Exchange (``NYSE Realtime Reference 
Prices''). The text of the proposed rule change is available at the 
Exchange, the Commission's Public Reference Room, and http://www.nyse.com.
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    \3\ See Release No. 34-57966 (June 16, 2008), 73 FR 35182 (June 
20, 2008) (File No. SR-NYSE-2007-04) and Release No. 34-58443 
(August 29, 2008), 73 FR 52436 (September 9, 2008) (File No. SR-
NYSE-2008-79; the ``Fee-Reduction Filing'').
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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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
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
    The Exchange currently conducts a pilot program that has tested the 
viability of NYSE Realtime Reference Prices. In its filing, the 
Exchange stated that prior to the end of the pilot period, the Exchange 
would assess its experience with the service and either submit a 
proposed rule change that seeks to modify or eliminate the pilot 
program or to make it permanent.\4\
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    \4\ The Exchange initially proposed to end the pilot program on 
November 1, 2008. The Exchange has submitted three extensions of the 
end date for the pilot program on Forms 19b-4. (See Securities 
Exchange Act Release No. 34-58893 (October 31, 2008), 73 FR 66093 
(November 6, 2008) (File No. SR-NYSE-2008-113), Securities Exchange 
(sic) Release No. 34-59185 (December 30, 2008), 74 FR 749 (January 
7, 2009) (File No. SR-NYSE-2008-141) and Securities Exchange Act 
Release No. 34-59653 (March 30, 2009), 74 FR 15536 (April 6, 2009) 
(File No. SR-NYSE-2009-34)). The pilot program is currently 
scheduled to end on June 30, 2009.
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    The Exchange has found that the pilot program provides a low-cost 
service that makes real-time prices widely available to casual 
investors, provides vendors with a useful real-time substitute for 
delayed prices; and relieves vendors of administrative burdens. The 
product responds to the requirements for distribution of real-time last 
sale prices over the internet for reference purposes, rather than as a 
basis for making trading decisions. For those reasons, the Exchange is 
now proposing to make it a permanent part of the Exchange's market data 
offerings.
    The NYSE Realtime Reference Prices service allows internet service 
providers, traditional market data vendors, and others (``NYSE-Only 
Vendors'') to make available NYSE Realtime Reference Prices on a real-
time basis.\5\ The NYSE Realtime Reference Price information includes 
last sale prices for all securities that trade on the Exchange. The 
product includes only prices; it does not include the size of each 
trade or bid/asked quotations.
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    \5\ The Exchange notes that it will make the NYSE Realtime 
Reference Prices available to vendors no earlier than it makes those 
prices available to the processor under the CTA Plan.
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    Under the pilot program, the Exchange does not permit NYSE-Only 
Vendors to provide NYSE Realtime Reference Prices in a context in which 
a trading or order-routing decision can be implemented unless the NYSE-
Only Vendor also provides consolidated displays of Network A last sale 
prices available in an equivalent manner, as Rule 603(c)(1) of 
Regulation NMS requires. The Exchange proposes to keep this same 
prohibition in the permanent offering
    As with the pilot program, the permanent service would eliminate 
some of the administrative burdens associated with the distribution of 
real-time CTA prices. The permanent service would feature the same 
flat, fixed monthly vendor fee, no user-based fees, no vendor reporting 
requirements, and no professional or non-professional subscriber 
agreements.
    b. The Fee
    During the pilot program, the Exchange first established a $100,000 
monthly flat fee that entitles an NYSE-Only Vendor to receive access to 
the NYSE Realtime Reference Prices datafeed. In the Fee-Reduction 
Filing, it reduced that fee to $70,000. The Exchange proposes to retain 
the $70,000 fee for the permanent service. For that fee, the NYSE-Only 
Vendor may provide unlimited NYSE Realtime Reference Prices to an 
unlimited number of the NYSE-Only Vendor's subscribers and customers. 
The pilot program does not impose any device or end-user fee for the 
NYSE-Only Vendors' distribution of NYSE Realtime Reference Prices and 
the Exchange is not proposing to add any new fees for the permanent 
service.
    As with the pilot program, the Exchange proposes to require the 
NYSE-Only Vendor to identify the NYSE trade price by placing the text 
``NYSE Data'' in close proximity to the display of each NYSE Realtime 
Reference Price or series of NYSE Realtime Reference Prices, or by 
complying with such other identification requirement as to which NYSE 
may agree.
    The NYSE-Only Vendor may make NYSE Realtime Reference Prices 
available without having to differentiate between professional 
subscribers and nonprofessional subscribers, without having to account 
for the extent of access to the data, and without having to report the 
number of users.
    The flat fee enables internet service providers and traditional 
vendors that have large numbers of casual investors as subscribers and 
customers to contribute to the Exchange's operating costs in a manner 
that is appropriate for their means of distribution.
    In setting the level of the NYSE Realtime Reference Prices fee, the 
Exchange took into consideration several factors, including:
    (1) The fees that Nasdaq and NYSE Arca are charging for similar 
services (sic)
    (2) Consultation with some of the entities that the Exchange 
anticipates will be the most likely to take advantage of the proposed 
service;
    (3) The contribution of market data revenues that the Exchange 
believes is appropriate for entities that provide market data to large 
numbers of investors, which are the entities most likely to take 
advantage of the proposed service;
    (4) The contribution that revenues accruing from the proposed fee 
will make to meet the overall costs of the Exchange's operations;
    (5) The savings in administrative and reporting costs that the NYSE 
Realtime Reference Prices service will provide to NYSE-Only Vendors; 
and
    (6) The fact that the proposed fee provides an alternative to 
existing fees under the CTA Plan, an alternative that vendors will 
purchase only if they determine that the perceived benefits outweigh 
the cost.
    The Exchange believes that the level of the fee is consistent with 
the approach set forth in the order by which the Commission approved 
ArcaBook fees.\6\ In the ArcaBook Approval Order, the Commission stated 
that ``when

[[Page 18757]]

possible, reliance on competitive forces is the most appropriate and 
effective means to assess whether the terms for the distribution of 
non-core data are equitable, fair and reasonable, and not unreasonably 
discriminatory.'' \7\ It noted that if significant competitive forces 
apply to a proposal, the Commission will approve it unless a 
substantial countervailing basis exists.
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    \6\ See Release No. 34-59039 (December 2, 2008), 73 FR 74770 
(December 9, 2008) (SR-NYSEArca-2006-21) (the ``ArcaBook Approval 
Order'').
    \7\ Id. at 74771.
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    NYSE Realtime Reference Prices constitute ``non-core data.'' The 
Exchange does not require a central processor to consolidate and 
distribute the product to the public pursuant to joint-SRO plans. 
Rather, the Exchange distributes the product voluntarily.
    In the case of NYSE Realtime Reference Prices, both of the two 
types of competitive forces that the Commission described in the 
ArcaBook Approval Order are present: The Exchange has a compelling need 
to attract order flow and the product competes with a number of 
alternative products.
    The Exchange must compete vigorously for order flow to maintain its 
share of trading volume. This requires the Exchange to act reasonably 
in setting market data fees for non-core products such as NYSE Realtime 
Reference Prices. The Exchange hopes that NYSE Realtime Reference 
Prices will enable vendors to distribute NYSE last sale price data 
widely among investors, and thereby provide a means for promoting the 
Exchange's visibility in the marketplace.
    In addition to the need to attract order flow, the availability of 
alternatives to NYSE Realtime Reference Prices significantly constrains 
the prices at which the Exchange can market NYSE Realtime Reference 
Prices. All national securities exchanges, the several Trade Reporting 
Facilities of FINRA, and ECNs that produce proprietary data, as well as 
the core data feed, are all sources of competition for NYSE Realtime 
Reference Prices. Currently, NYSE Arca and Nasdaq offer similar 
services. (The Exchange anticipates that NYSE Arca will soon file for 
permanent approval of the fee for its counterpart product.)
    The information available in NYSE Realtime Reference is included in 
the CTA core data feed, which also includes the size of trades, as well 
as last sale information from other markets. Even though NYSE Realtime 
Reference Prices omits size and provides prices that are not 
consolidated with those of other markets, investors may select it as a 
less expensive alternative to the CTA Plan's consolidated last sale 
price services for certain purposes. (Rule 603(c) of Regulation NMS 
requires vendors to make the core data feeds available to customers 
when trading and order-routing decisions can be implemented.)
    c. Contracts
    As with the pilot program, NYSE proposes to allow NYSE-Only Vendors 
to provide NYSE Realtime Reference Prices without requiring the end-
users to enter into contracts for the benefit of the Exchange.
    Instead, the Exchange proposes to require NYSE-Only Vendors to 
provide a readily visible hyperlink that will send the end-user to a 
warning notice about the end-user's receipt and use of market data. The 
notice would be similar to the notice that vendors provide today when 
providing CTA delayed data services.
    The Exchange will require NYSE-Only Vendors to enter into the form 
of ``vendor'' agreement into which the CTA and CQ Plans require 
recipients of the Network A datafeeds to enter (the ``Network A Vendor 
Form''). The Network A Vendor Form will authorize the NYSE-Only Vendor 
to provide the NYSE Realtime Reference Prices service to its 
subscribers and customers.
    The Network A Participants drafted the Network A Vendor Form as a 
one-size-fits-all form to capture most categories of market data 
dissemination. It is sufficiently generic to accommodate NYSE Realtime 
Reference Prices. The Commission has approved the Network A Vendor 
Form.\8\
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    \8\ See Securities Exchange Act Release Nos. 28407 (September 6, 
1990), 55 FR 37276 (September 10, 1990) (File No. 4-281); 49185 
(February 4, 2004), 69 FR 6704 (February 11, 2004) (SR-CTA/CQ-2003-
01).
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    The Exchange will supplement the Network A Vendor Form with an 
Exhibit C that will provide above-described terms and conditions that 
are unique to the NYSE Realtime Reference Prices service. The proposed 
Exhibit C is substantially similar to the Exhibit C that NYSE uses for 
the pilot program (except for provisions related to the conduct of the 
pilot program) and is attached to this proposed rule change as Exhibit 
5, marked to show changes from the version used for the pilot program. 
The supplemental Exhibit C terms and conditions would govern:
     The restriction against providing the service in the 
context of a trading or order-routing service;
     The replacement of end-user agreements with a hyperlink to 
a notice;
     The substance of the notice; and
     The ``NYSE Data'' labeling requirement.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(4) \9\ 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) \10\ 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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    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change would benefit investors by facilitating 
their prompt access to widespread, free, real-time pricing information 
contained in the NYSE Realtime Reference Prices service. In addition, 
the Exchange believes that the proposed fee would allow entities that 
provide market data to large numbers of investors, which are the 
entities most likely to take advantage of the proposed service, to make 
an appropriate contribution towards meeting the overall costs of the 
Exchange's operations.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NYSE Realtime Reference Prices proposes to provide an alternative 
to existing fees and does not alter or rescind any existing fees. In 
addition, it amounts to a competitive response to the products that 
Nasdaq and NYSE Arca have commenced to make available. For those 
reasons, the Exchange does not believe that this proposed rule change 
will result in any burden on competition that is not necessary or 
appropriate in 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 discussed the proposed rules change with those 
entities that the Exchange believes would be the most likely to take 
advantage of the proposed NYSE Realtime Reference Prices service by 
becoming NYSE-Only Vendors. While those entities have not submitted 
formal, written comments on the proposal, the Exchange has incorporated 
some of their ideas into the proposal and this proposed rule change 
reflects their input. The Exchange has not received any unsolicited 
written comments from members or other interested parties.

[[Page 18758]]

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 self-regulatory organization 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-NYSE-2009-42 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2009-42. 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, 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. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSE-2009-42 and should be submitted on or before May 15, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-9387 Filed 4-23-09; 8:45 am]
BILLING CODE 8010-01-P