[Federal Register Volume 75, Number 18 (Thursday, January 28, 2010)]
[Notices]
[Pages 4598-4600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1695]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61403; File No. SR-NYSE Amex-2009-85]


Self-Regulatory Organizations; NYSE Amex, Inc.; Order Approving 
Proposed Rule Change To Establish the NYSE Amex Realtime Reference 
Prices Service

January 22, 2010.

I. Introduction

    On November 30, 2009, the NYSE Amex, Inc. (``NYSE Amex'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to establish the NYSE Amex Realtime Reference 
Prices service and to establish a flat monthly fee and a per-query fee 
for that service. The proposed rule change was published for comment in 
the Federal Register on December 18, 2009.\3\ The Commission received 
no comments on the proposal. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61144 (December 10, 
2009), 74 FR 67275.
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II. Description of the Proposal

a. The Service

    The Exchange proposes to establish the NYSE Amex Realtime Reference 
Prices service and to establish a flat monthly fee and a per-query fee 
for that service. The Exchange believes that the NYSE Amex Realtime 
Reference Prices service would provide 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 Exchange states that the product 
would respond 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.
    The NYSE Amex Realtime Reference Prices service would allow 
internet service providers, traditional market data vendors, and others 
(``NYSE Amex-Only Vendors'') to make available NYSE Amex Realtime 
Reference Prices on a real-time basis.\4\ The NYSE Amex Realtime 
Reference Price information includes last sale prices for all 
securities that trade on the Exchange, updated in real-time. In 
addition, the product also includes open, high and low prices and 
cumulative volume. The Exchange anticipates that it would update these 
data elements every second, though initially it would update them once 
per minute. The product does not include bid/ask quotations or the size 
of each trade.
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    \4\ The Exchange notes that it will make the NYSE Amex Realtime 
Reference Prices available to vendors no earlier than it makes those 
prices available to the processor under the CTA and Nasdaq/UTP 
Plans.
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    The Exchange would not permit NYSE Amex-Only Vendors to provide 
NYSE Amex Realtime Reference Prices in a context in which a trading or 
order-routing decision can be implemented unless the NYSE Amex-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 states that the service would eliminate some of the 
administrative burdens associated with the distribution of real-time 
CTA prices. The service would feature a flat, fixed monthly vendor fee, 
no user-based fees, no vendor reporting requirements, and no 
professional or non-professional subscriber agreements.

b. The Fees

    The Exchange proposes to establish a $10,000 monthly flat fee that 
entitles an NYSE Amex-Only Vendor to receive access to the NYSE Amex 
Realtime Reference Prices datafeed. For that fee, the NYSE Amex-Only 
Vendor could provide unlimited NYSE Amex Realtime Reference Prices to 
an unlimited number of the NYSE Amex-Only Vendor's subscribers and 
customers. The Exchange does not propose to impose any device or end-
user fee for the NYSE Amex-Only Vendors' distribution of NYSE Amex 
Realtime Reference Prices.
    In addition, 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 Amex-Only Vendor disseminates to its customers. The 
Exchange proposes to limit a NYSE Amex-Only Vendor's exposure under 
this alternative fee by setting $10,000, the same amount as the 
proposed fixed monthly rate, as the maximum fee that an NYSE Amex-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 Amex-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 states that it would impose the per-query fee only on 
the dissemination of real-time reference prices. NYSE Amex-Only Vendors 
may provide delayed data services in the same manner as they do today.
    The per-query charge would be imposed on NYSE Amex-Only Vendors, 
not end-users, and would be payable on a monthly basis. NYSE Amex-Only 
Vendors may elect to disseminate NYSE Amex Realtime Reference Prices 
pursuant to the per-query fee rather than the fixed monthly fee.

c. Justification of Fees

    The Exchange believes that the proposed flat monthly fee and per-
query fee for the NYSE Amex Realtime Reference Prices service enable 
Internet service providers and traditional vendors to contribute to the 
Exchange's operating costs in a manner that is

[[Page 4599]]

appropriate for the distribution of last sale price information in the 
form taken by the proposed service.
    In setting the level of the NYSE Amex Realtime Reference Prices 
fee, the Exchange took into consideration several factors, including:
    (1) The fees that Nasdaq, NYSE and NYSE Arca are charging for 
similar services;
    (2) consultation with some of the entities that the Exchange 
anticipates would 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 are most likely to take 
advantage of the proposed service;
    (4) the contribution that revenues accruing from the proposed fee 
would make to meet the overall costs of the Exchange's operations;
    (5) the savings in administrative and reporting costs that the NYSE 
Amex Realtime Reference Prices service would provide to NYSE Amex-Only 
Vendors; and
    (6) the fact that the proposed fees provide alternatives to 
existing fees under the CTA and Nasdaq/UTP Plans, alternatives that 
vendors would purchase only if they determine that the perceived 
benefits outweigh the cost.
    The Exchange believes that the levels of the fixed monthly fee and 
the per-query fee are consistent with the approach set forth in the 
order by which the Commission approved ArcaBook fees.\5\ The Exchange 
submits that the NYSE Realtime Reference Prices constitute ``non-core 
data;'' i.e., 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 states that it distributes the product 
voluntarily. In addition, the Exchange believes that both types of the 
competitive forces that the Commission described in the NYSE Arca Order 
are present in the case of NYSE Amex Realtime Reference Prices: (i) The 
Exchange has a compelling need to attract order flow; and (ii) the 
product competes with a number of alternative products.
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    \5\ See Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21) (``NYSE 
Arca Order'').
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    The Exchange states that it must compete vigorously for order flow 
to maintain its share of trading volume, which requires the Exchange to 
act reasonably in setting market data fees for non-core products such 
as NYSE Amex Realtime Reference Prices. The Exchange hopes that NYSE 
Amex Realtime Reference Prices will enable vendors to distribute NYSE 
Amex last sale price data widely among investors, and thereby provide a 
means for promoting the Exchange's visibility in the marketplace.

III. Discussion and Commission Findings

    The Commission has reviewed carefully the proposed rule change and 
finds that the proposed rule change is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to a 
national securities exchange.\6\ In particular, the Commission finds 
that the proposal is consistent with Section 6(b)(4) of the Act,\7\ 
which requires 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 Section 6(b)(5) 
of the Act,\8\ which requires, among other things, that the rules of an 
exchange be designed to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest, and not be designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.
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    \6\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds that the proposed rule change is 
consistent with the provisions of Section 6(b)(8) of the Act,\9\ which 
requires that the rules of an exchange not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. Finally, the Commission finds that the proposed rule change 
is consistent with Rule 603(a) of Regulation NMS,\10\ adopted under 
Section 11A(c)(1) of the Act, which requires an exclusive processor 
that distributes information with respect to quotations for or 
transactions in an NMS stock to do so on terms that are fair and 
reasonable and that are not unreasonably discriminatory.\11\
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    \9\ 15 U.S.C. 78f(b)(8).
    \10\ 17 CFR 242.603(a).
    \11\ NYSE Amex is an exclusive processor of NYSE Amex depth-of-
book data under Section 3(a)(22)(B) of the Act, 15 U.S.C. 
78c(a)(22)(B), which defines an exclusive processor as, among other 
things, an exchange that distributes information with respect to 
quotations or transactions on an exclusive basis on its own behalf.
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    Under this proposal, the Exchange would (1) establish a $10,000 
monthly flat fee that entitles vendors to receive access to the NYSE 
Amex Realtime Reference Prices datafeed and (2) establish a usage-based 
fee alternative of $.004 for each real-time reference price that a 
vendor disseminates to its customers (capped at the monthly fee level). 
The $10,000 monthly fee would allow vendors to provide unlimited NYSE 
Amex Realtime Reference Prices to an unlimited number of subscribers 
and customers: (1) Without vendor reporting requirements, and (2) 
without professional or non-professional subscriber agreements. In 
order to take advantage of the usage-based fee alternative, a 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 Commission has reviewed the proposal using the approach set 
forth in the NYSE Arca Order for non-core market data fees.\12\ In the 
NYSE Arca 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.'' 
\13\ It noted that the ``existence of significant competition provides 
a substantial basis for finding that the terms of an exchange's fee 
proposal are equitable, fair, reasonable, and not unreasonably or 
unfairly discriminatory.'' \14\ If an exchange ``was subject to 
significant competitive forces in setting the terms of a proposal,'' 
the Commission will approve a proposal unless it determines that 
``there is a substantial countervailing basis to find that the terms 
nevertheless fail to meet an applicable requirement of the Exchange Act 
or the rules thereunder.'' \15\
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    \12\ See supra note 5. In the NYSE Arca Order, the Commission 
describes in great detail the competitive factors that apply to non-
core market data products. The Commission hereby incorporates by 
reference the data and analysis from the NYSE Arca Order into this 
order.
    \13\ Id. at 74781.
    \14\ Id. at 74781-82.
    \15\ Id. at 74781.
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    There are a variety of alternative sources of information that 
impose significant competitive pressures on the Exchange in setting the 
terms for distributing its market data. The Commission believes that 
the availability of those alternatives, as well as the NYSE Amex's 
compelling need to attract order flow, imposed significant

[[Page 4600]]

competitive pressure on the NYSE to act equitably, fairly, and 
reasonably in setting the terms of its proposal.
    Because the NYSE was subject to significant competitive forces in 
setting the terms of the proposal, the Commission will approve the 
proposal in the absence of a substantial countervailing basis to find 
that its terms nevertheless fail to meet an applicable requirement of 
the Act or the rules thereunder. An analysis of the proposal does not 
provide such a basis.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-NYSEAmex-2009-85) is hereby 
approved.
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    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1695 Filed 1-27-10; 8:45 am]
BILLING CODE 8011-01-P