[Federal Register Volume 74, Number 242 (Friday, December 18, 2009)]
[Notices]
[Pages 67290-67292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30078]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61143; File No. SR-NYSEArca-2009-108]


 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Modifying the NYSE Arca Realtime Reference 
Prices Service

December 10, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on December 1, 2009, NYSE Arca, Inc. (``NYSE Arca'' or 
``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE Arca proposes (1) to add data elements to its ``NYSE Arca 
Realtime Reference Prices'' service and (2) to add a usage-based fee 
alternative for that service. The text of the proposed rule change is 
available at the Exchange, the Commission's Public Reference Room, and 
http://www.nyse.com at the Exchange's principal office 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In File No. SR-NYSEArca-2009-32 (the ``NYSE Arca Realtime Reference 
Prices Filing''),\4\ the Exchange established a fixed monthly fee for 
its NYSE Arca-only market data service that allows a vendor to 
redistribute on a real-time basis last sale prices of transactions that 
take place on the Exchange. The NYSE Arca Realtime Reference Prices 
service provides a low-cost service that makes real-time prices widely 
available to many millions of casual investors, provides vendors with a 
real-time substitute for delayed prices, and relieves vendors of all 
administrative burdens.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 34-60002 (May 29, 
2009), 74 FR 26901 (June 4, 2009) (File No. SR-NYSEArca-2009-32) 
(the ``Approval Order'').
---------------------------------------------------------------------------

    The service allows internet service providers, traditional market 
data vendors, and others (``NYSE Arca-Only Vendors'') to make available 
NYSE Arca

[[Page 67291]]

Realtime Reference Prices on a real-time basis.\5\ NYSE Arca Realtime 
Reference Prices information includes last sale prices for all 
securities that are traded on the Exchange.
---------------------------------------------------------------------------

    \5\ The Exchange notes that it makes the NYSE Realtime Reference 
Prices available to vendors no earlier than it makes those prices 
available to the processor under the CTA Plan.
---------------------------------------------------------------------------

    The Exchange proposes to make the following changes to the service 
and its fees:
a. Data Elements
    Currently, the NYSE Arca Realtime Reference Price service includes 
only prices. It does not include the size of each trade and does not 
include bid/ask quotations. For each security, the Exchange is 
proposing to add the following data elements to the service:

 High price
 Low price
 Cumulative volume

    The Exchange anticipates that it will update these data elements 
every second, though initially it will update them once per minute. A 
security's high (low) price will reflect the highest (lowest) price at 
which the security has traded on the Exchange during the trading 
session through the point in time at which it is disseminated. Further, 
the cumulative volume will reflect a security's aggregate volume during 
a trading session through the point in time at which it is last 
disseminated. The Exchange believes that adding these data elements 
will make the product more attractive to the customers of NYSE Arca-
Only Vendors.
b. Usage-Based Fee
    The NYSE Arca Realtime Reference Price service features a flat, 
fixed monthly vendor fee of $30,000 and no user-based fees. For that 
fee, the NYSE Arca-Only Vendor may provide unlimited NYSE Arca Realtime 
Reference Prices to an unlimited number of the NYSE Arca-Only Vendor's 
subscribers and customers 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 Exchange proposes to establish as an alternative to the fixed 
monthly fee a fee of $.004 for each real-time reference price that a 
NYSE Arca-Only Vendor disseminates to its customers. The Exchange 
proposes to limit a NYSE Arca-Only Vendor's exposure under this 
alternative fee by setting $30,000, the same amount as the fixed 
monthly rate, as the maximum fee that an NYSE Arca-Only Vendor would 
have to pay for real-time reference prices that it disseminates in any 
calendar month pursuant to the per-query fee.
    In order to take advantage of the per-query fee, a NYSE Arca-Only 
Vendor must document in its Exhibit A that it has the ability to 
measure accurately the number of queries and must have the ability to 
report aggregate query quantities on a monthly basis.
    The Exchange will impose the per-query fee only on the 
dissemination of real-time reference prices. NYSE Arca-Only Vendors may 
provide delayed data services in the same manner as they do today.
    The per-query charge is imposed on NYSE Arca-Only Vendors, not end-
users, and is payable on a monthly basis. Because it represents a new 
and additional alternative to the monthly fixed fee, NYSE Arca-Only 
Vendors may elect to disseminate NYSE Arca Realtime Reference Prices 
pursuant to the per-query fee rather than the fixed monthly fee.
c. Justification of Fee
    The NYSE Arca Realtime Reference Prices service 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. Adding a per-query payment option will reduce 
the costs of the service to some of those internet service providers 
and traditional vendors. For the reasons explained above, the Exchange 
believes that this will enable NYSE Arca Realtime Reference Prices 
vendors to make a more appropriate contribution to the Exchange's 
operating costs.
    In establishing the per-query fee, the Exchange took into 
consideration several factors, including:
    (1) The fees that Nasdaq and NYSE are charging for similar services 
and that NYSE Amex has proposed to charge;
    (2) Consultation with some of the entities that currently receive 
the service or that the Exchange anticipates may commence to take 
advantage of the service;
    (3) The contribution of market data revenues that the Exchange 
believes is appropriate for entities that are most likely to take 
advantage of the proposed service;
    (4) The contribution that revenues accruing from the proposed fees 
will make to meet the overall costs of the Exchange's operations;
    (5) The savings in administrative and reporting costs that the NYSE 
Arca Realtime Reference Prices service will provide to NYSE Arca-Only 
Vendors; and
    (6) The fact that the proposed fee would provide an attractive 
alternative to existing fees under the CTA Plan and to NYSE Arca's 
monthly flat fee, 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 per-query fee is 
consistent with the approach set forth in the order by which the 
Commission approved ArcaBook fees for NYSE Arca.\6\ In the ArcaBook 
Approval Order, the Commission stated that ``when 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.
---------------------------------------------------------------------------

    \6\ See Release [sic] No. 59039 (December 2, 2008), 73 FR 74770 
(December 9, 2008) (SR-NYSEArca-2006-21) (the ``ArcaBook Approval 
Order'').
    \7\ Id. at 74771.
---------------------------------------------------------------------------

    NYSE Arca 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 Arca 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 Arca 
Realtime Reference Prices. The Exchange hopes that NYSE Arca Realtime 
Reference Prices will enable vendors to distribute NYSE Arca 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 Arca Realtime Reference Prices significantly 
constrain the prices at which the Exchange can market NYSE Arca 
Realtime Reference Prices. All national securities exchanges, the 
several Trade Reporting Facilities of FINRA, and ECNs that produce

[[Page 67292]]

proprietary data, as well as the core data feed, are all sources of 
competition for NYSE Arca Realtime Reference Prices. Currently, NYSE 
and Nasdaq offer similar services. (In addition, the Exchange 
anticipates that NYSE Amex will soon file for approval of a counterpart 
product.)
    The information available in NYSE Arca 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 Arca 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.)
d. Amendment to Exhibit C
    In providing NYSE Arca Realtime Reference Prices, the Exchange 
supplements the standard Network A Vendor Form with an Exhibit C that 
provides certain terms and conditions that are unique to the NYSE Arca 
Realtime Reference Prices service, such as the replacement of end-user 
agreements with a hyperlink to a notice and a labeling requirement. One 
of those supplemental conditions provides that the NYSE Arca-Only 
Vendor will only distribute last sale prices as part of the service. 
Because this filing proposes to expand the permissible universe of data 
elements that a NYSE Arca-Only Vendor may disseminate, the Exchange 
proposes to amend the Exhibit C. The proposed revised version of 
Exhibit C is attached to the proposed rule change as Exhibit 4 and 
Exhibit 5. Exhibit 4 is marked to show the proposed changes to the 
current version of Exhibit C. Exhibit 5 is a clean, unmarked version.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
for the proposed rule change is the requirement under Section 6(b)(4) 
\8\ 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) \9\ 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change would benefit investors by facilitating 
their prompt access to widespread, free, real-time pricing information 
contained in the NYSE Arca Realtime Reference Prices service. In 
addition, the Exchange believes that the proposed per-query fee would 
provide pricing flexibility to entities that determine to provide the 
NYSE Arca Realtime Reference Prices service.

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

    NYSE Arca Realtime Reference Prices proposes to provide an 
alternative fee (the per-query fee) 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 make available. For those 
reasons, the Exchange does not believe that the 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 not received any unsolicited written comments from 
members 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 Exchange consents, the Commission will:
    (A) By order approve the 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 No. SR-NYSEArca-2009-108 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2009-108. 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 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 available publicly. All submissions should refer to 
File Number SR-NYSEArca-2009-108 and should be submitted on or before 
January 8, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30078 Filed 12-17-09; 8:45 am]
BILLING CODE 8011-01-P