[Federal Register Volume 75, Number 18 (Thursday, January 28, 2010)]
[Notices]
[Pages 4600-4602]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1696]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61406; File No. SR-NYSE-2009-120]


Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change Relating to Changes in NYSE Realtime 
Reference Prices Service

January 22, 2010.

I. Introduction

    On November 27, 2009, the New York Stock Exchange LLC (``NYSE'' 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 add data elements to its ``NYSE Realtime 
Reference Prices'' service, to reduce the fixed monthly fee that 
applies to that service, and to add a usage-based fee alternative 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. 61145 (December 10, 
2009), 74 FR 67287.
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II. Description of the Proposal

    The Exchange proposes several changes to the NYSE Realtime 
Reference Prices service. In a recent filing,\4\ the Exchange 
established a fixed monthly fee for its NYSE-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 Exchange 
has found that the NYSE 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. The 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\ 
NYSE Realtime Reference Prices information includes last sale prices 
for all securities that are traded on the Exchange.
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    \4\ See Securities Exchange Act Release No. 60004 (May 29, 
2009), 74 FR 26905 (June 4, 2009) (SR-NYSE-2009-42).
    \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.
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    The Exchange proposes to make the following changes to the service 
and its fees:

a. Data Elements

    Currently, the NYSE 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 states that it anticipates that it would update these 
data elements every second, though initially it would update them once 
per minute. A security's high (low) price would 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 would 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 would make the product more attractive to the customers 
of NYSE-Only Vendors.

b. Reduction in the Fixed Monthly Fee

    Currently, the NYSE Realtime Reference Price service features a 
flat, fixed monthly vendor fee of $70,000 and no user-based fees. For 
that fee, a NYSE-Only Vendor may provide unlimited NYSE Realtime 
Reference Prices to an unlimited number of the NYSE-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 states that it has now had experience with the product 
and has received feedback from its customers. As a result of the 
comments of the Exchange's customers, the response to the product from 
the vendors most likely to subscribe to the product, and the past 
year's market corrections, the Exchange is now proposing to reduce the 
fixed monthly fee to $60,000. In addition, in combination with the 
proposed usage-based fee and the proposed addition of new data elements 
to the product, the Exchange hopes that the fee reduction would allow 
the Exchange to broaden the universe of vendors that would find the 
product appropriate for their business models.
    The Exchange believes that the proposed reduced fee would enable 
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. The Exchange further believes that the 
proposed reduction in the fixed monthly fee for the NYSE Realtime 
Reference Prices service would make the product more attractive to 
vendors and that an increase in the number of vendors that determine to 
provide free access to NYSE Realtime Reference prices to their Internet 
users would benefit the investment community. The Exchange states that 
the fee reduction would also respond to the price competition provided 
by alternative exchanges, ECNs and the market for delayed data and 
would better reflect the perceived value of the NYSE product and 
provide a more equitable allocation of the Exchange's overall costs to 
users of its facilities.

c. Usage-Based Fee

    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-Only

[[Page 4601]]

Vendor disseminates to its customers. The Exchange proposes to limit a 
NYSE-Only Vendor's exposure under this alternative fee by setting 
$60,000, the same amount as the proposed fixed monthly rate, as the 
maximum fee that an NYSE-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-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-Only Vendors may 
provide delayed data services in the same manner as they do today.
    The per-query charge would be imposed on NYSE-Only Vendors, not 
end-users, and would be payable on a monthly basis. Because it would 
represent a new and additional alternative to the monthly fixed fee, 
NYSE-Only Vendors may elect to disseminate NYSE Realtime Reference 
Prices pursuant to the per-query fee rather than the fixed monthly fee.

d. Justification of Fees

    The Exchange believes that the 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. According to the Exchange, reducing the flat monthly fee 
and adding a per-query payment option would reduce the costs of the 
service to those Internet service providers and traditional vendors. 
The Exchange believes that this would enable NYSE Realtime Reference 
Prices vendors to make a more appropriate contribution to the 
Exchange's operating costs.
    In re-setting the level of the NYSE Realtime Reference Prices flat 
monthly fee and in establishing the per-query fee, the Exchange took 
into consideration several factors, including:
    (1) The fees that Nasdaq and NYSE Arca 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 
would 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 would provide to NYSE-Only Vendors; 
and
    (6) The fact that the proposed fees provide even more attractive 
alternatives to existing fees under the CTA Plan than the current flat 
fee, 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.\6\ 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 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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    \6\ 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 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.

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.\7\ In particular, the Commission finds 
that the proposal is consistent with Section 6(b)(4) of the Act,\8\ 
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,\9\ 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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    \7\ 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).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 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,\10\ 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,\11\ 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.\12\
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    \10\ 15 U.S.C. 78f(b)(8).
    \11\ 17 CFR 242.603(a).
    \12\ NYSE is an exclusive processor of NYSE 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) add high price, low 
price, and cumulative volume data elements to its ``NYSE Realtime 
Reference Prices'' service, (2) reduce the fixed monthly fee for the 
service to $60,000, and (3) add 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). 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

[[Page 4602]]

market data fees.\13\ 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.'' \14\ 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.'' \15\ 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.'' \16\
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    \13\ See supra note 6. 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.
    \14\ Id. at 74781.
    \15\ Id. at 74781-82.
    \16\ 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's 
compelling need to attract order flow, imposed significant 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,\17\ that the proposed rule change (SR-NYSE-2009-120) is hereby 
approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-1696 Filed 1-27-10; 8:45 am]
BILLING CODE 8011-01-P