[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Notices]
[Pages 31500-31505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13335]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62187; File No. SR-NYSEAmex-2010-35]


Self-Regulatory Organizations; NYSE Amex LLC; Order Approving 
Proposed Rule Change To Establish NYSE Amex Trades and NYSE Amex BBO 
Services and Related Fees

May 27, 2010.

I. Introduction

    On April 1, 2010, the NYSE Amex LLC (``NYSE Amex'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to establish two NYSE Amex market data products, 
NYSE Amex Trades and NYSE Amex BBO and to establish market data fees 
for the same. The proposed rule change was published for comment in the 
Federal Register on April 22, 2010.\3\ The Commission received no 
comment letters on the proposal. This order approves the proposed rule 
change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61936 (April 16, 
2010), 75 FR 21088.

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

[[Page 31501]]

II. Description of the Proposal

a. Services

    The NYSE Amex Trades service is a NYSE Amex-only market data 
service that allows a vendor to redistribute on a real-time basis the 
same last sale information that NYSE Amex reports under the CTA Plan 
and the Reporting Plan for Nasdaq/National Market System Securities 
Traded on an Exchange on an Unlisted or Listed Basis (the ``Nasdaq/UTP 
Plan'') for inclusion in those Plans' consolidated data streams and 
certain other related data elements (``NYSE Amex Last Sale 
Information''). NYSE Amex Last Sale Information would include last sale 
information for all securities that are traded on the Exchange and for 
which NYSE Amex reports quotes under the CTA Plan or the Nasdaq/UTP 
Plan. In addition, NYSE Amex Last Sale Information will also include a 
unique sequence number to each trade that allows an investor to track 
the context of the trade through other Exchange market data products 
such as NYSE Amex OpenBook[supreg]. The Exchange will make NYSE Amex 
Trades available over a single datafeed, regardless of the markets on 
which the securities are listed.
    NYSE Amex BBO is a NYSE Amex-only market data service that allows a 
vendor to redistribute on a real-time basis the same best-bid-and-offer 
information that NYSE Amex reports under the CQ Plan and the Nasdaq/UTP 
Plan for inclusion in the NYSE Amex BBO Information. NYSE Amex BBO 
Information would include the best bids and offers for all securities 
that are traded on the Exchange and for which NYSE Amex reports quotes 
under the CQ Plan or the Nasdaq/UTP Plan. The Exchange will make NYSE 
Amex BBO available over a single datafeed, regardless of the markets on 
which the securities are listed.
    Both NYSE Amex Trades and NYSE Amex BBO (collectively, ``NYSE Amex 
Market Data'') would allow vendors, broker-dealers, private network 
providers and other entities (``NYSE Amex-Only Vendors'') to make NYSE 
Amex Last Sale Information and NYSE Amex BBO Information available on a 
real-time basis. NYSE Amex-Only Vendors may distribute the NYSE Amex 
Trade and NYSE BBO to both professional and nonprofessional 
subscribers.
    The Exchange would make NYSE Amex Last Sale Information available 
through NYSE Amex Trades no earlier than it provides last sale 
information to the processors under the CTA Plan and Nasdaq/UTP Plan, 
as appropriate. The Exchange would make NYSE Amex BBO Information 
available through NYSE Amex BBO no earlier than it makes that 
information available to the processors under the CQ Plan and the 
Nasdaq/UTP Plan.

b. Fees

i. Access Fee
    For the receipt of access to the NYSE Amex Trades and NYSE Amex 
BBO, the Exchange proposes to charge $750 per month. One $750 monthly 
access fee entitles an NYSE Amex-Only Vendor to receive NYSE Amex 
Trades and NYSE Amex BBO. The fee applies to receipt of NYSE Amex 
Market Data within the NYSE Amex-Only Vendor's organization or outside 
of it.
ii. Professional Subscriber Fees
    For the receipt and use of NYSE Amex Trades, the Exchange proposes 
to charge $10 per month per professional subscriber device. Similarly, 
for the receipt and use of NYSE Amex BBO, the Exchange proposes to 
charge $10 per month per professional subscriber device.
    For both NYSE Amex Trades and NYSE Amex BBO, the Exchange proposes 
to offer an alternative methodology to the traditional device fee. 
Instead of charging $10 per month per device, it proposes to offer NYSE 
Amex-Only Vendors the option of paying $10 per month per ``Subscriber 
Entitlement.'' The fee entitles the end-user to receive and use NYSE 
Amex Market Data relating to all securities traded on NYSE Amex, 
regardless of the market on which a security is listed. For the purpose 
of calculating Subscriber Entitlements, the Exchange proposes to adopt 
a unit-of-count methodology that is the same as that approved by the 
Commission earlier this year with respect to its NYSE OpenBook[supreg] 
service.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 62038 (May 5, 2010), 
75 FR 26825 (May 12, 2010) (SR-NYSE-2010-22) (approving on a 
permanent basis the alternative unit-of-count methodology).
---------------------------------------------------------------------------

    Under a unit-of-count methodology, the Exchange would not define 
the Vendor-subscriber relationship based on the manner in which a 
datafeed recipient or subscriber receives data (i.e., through 
controlled displays or through data feeds). Instead, the Exchange uses 
billing criteria that defines ``Vendors,'' ``Subscribers,'' 
``Subscriber Entitlements'' and ``Subscriber Entitlement Controls'' as 
the basis for setting professional subscriber fees. The Exchange 
believes that this methodology more closely aligns with current data 
consumption and will reduce costs for the Exchange's customers.
    The following basic principles underlie this proposal.
A. Vendors
     ``Vendors'' are market data vendors, broker-dealers, 
private network providers and other entities that control Subscribers' 
access to data through Subscriber Entitlement Controls.
B. Subscribers
     ``Subscribers'' are unique individual persons or devices 
to which a Vendor provides data. Any person or device that receives 
data from a Vendor is a Subscriber, whether the person or device works 
for or belongs to the Vendor, or works for or belongs to an entity 
other than the Vendor.
     Only a Vendor may control Subscriber access to data.
     Subscribers may not redistribute data in any manner.
C. Subscriber Entitlements
     A Subscriber Entitlement is a Vendor's permissioning of a 
Subscriber to receive access to data through an Exchange-approved 
Subscriber Entitlement Control.
     A Vendor may not provide data access to a Subscriber 
except through a unique Subscriber Entitlement.
     The Exchange will require each Vendor to provide a unique 
Subscriber Entitlement to each unique Subscriber.
     At prescribed intervals (normally monthly), the Exchange 
will require each Vendor to report each unique Subscriber Entitlement.
D. Subscriber Entitlement Controls
     A Subscriber Entitlement Control is the Vendor's process 
of permissioning Subscribers' access to data.
     Prior to using any Subscriber Entitlement Control or 
changing a previously approved Subscriber Entitlement Control, a Vendor 
must provide the Exchange with a demonstration and a detailed written 
description of the control or change and the Exchange must have 
approved it in writing.
     The Exchange will approve a Subscriber Entitlement Control 
if it allows only authorized, unique end-users or devices to access 
data or monitors access to data by each unique end-user or device.
     Vendors must design Subscriber Entitlement Controls to 
produce an audit report and make each audit report available to the 
Exchange upon request. The audit report must identify:
    1. Each entitlement update to the Subscriber Entitlement Control;

[[Page 31502]]

    2. The status of the Subscriber Entitlement Control; and
    3. Any other changes to the Subscriber Entitlement Control over a 
given period.
     Only the Vendor may have access to Subscriber Entitlement 
Controls.
    Subject to the rules described below, the Exchange will require 
NYSE Amex-Only Vendors to count every Subscriber Entitlement, whether 
it be a person or a device. This means that the NYSE Amex-Only Vendor 
must include in the count every person and device that has access to 
the data, regardless of the purposes for which the person or device 
uses the data. The Exchange will require NYSE Amex-Only Vendors to 
report and count all entitlements in accordance with the following 
rules.
    A. The count shall be separate for the NYSE Amex Trades and NYSE 
Amex BBO services. This means that a device that is entitled to receive 
both NYSE Amex Last Sale Information and NYSE Amex BBO Information 
would count as a Subscriber Entitlement for the purposes of the NYSE 
Amex Trades service and as a separate Subscriber Entitlement for the 
purposes of the NYSE Amex BBO service.
    B. In connection with a Vendor's external distribution of either 
NYSE Amex Trades or NYSE Amex BBO), the NYSE Amex-Only Vendor should 
count as one Subscriber Entitlement each unique Subscriber that the 
NYSE Amex-Only Vendor has entitled to have access to that type of 
market data. However, where a device is dedicated specifically to a 
single person, the NYSE Amex-Only Vendor should count only the person 
and need not count the device.
    C. In connection with a NYSE Amex-Only Vendor's internal 
distribution of a type of NYSE Amex Market Data, the NYSE Amex-Only 
Vendor should count as one Subscriber Entitlement each unique person 
(but not devices) that the Vendor has entitled to have access to that 
type of market data.
    D. The NYSE Amex-Only Vendor should identify and report each unique 
Subscriber. If a Subscriber uses the same unique Subscriber Entitlement 
to receive multiple services, the NYSE Amex-Only Vendor should count 
that as one Subscriber Entitlement. However, if a unique Subscriber 
uses multiple Subscriber Entitlements to gain access to one or more 
services (e.g., a single Subscriber has multiple passwords and user 
identifications), the Vendor should report all of those Subscriber 
Entitlements.
    E. The NYSE Amex-Only Vendor should report each Subscriber device 
serving multiple users individually as well as each person who may 
access the device. As an example, for a single device to which the NYSE 
Amex-Only Vendor has granted two people access, the Vendor should 
report three Subscriber Entitlements. Only a single, unique device that 
is dedicated to a single, unique person may be counted as one 
Subscriber Entitlement.
    F. NYSE Amex-Only Vendors should report each unique person who 
receives access through multiple devices as one Subscriber Entitlement 
so long as each device is dedicated specifically to that person.
    G. The NYSE Amex-Only Vendor should include in the count as one 
Subscriber Entitlement devices serving no users.
    For example, if a Subscriber's device has no users or multiple 
users, the NYSE Amex-Only Vendor should count that device as one 
Subscriber Entitlement. If a NYSE Amex-Only Vendor entitles five 
individuals to use one of a Subscriber's devices, the Vendor should 
count five individual entitlements and one device entitlement, for a 
total of six Subscriber Entitlements. If a NYSE Amex-Only Vendor 
entitles an individual to receive a type of NYSE Amex Market Data over 
a Subscriber device that is dedicated to that individual, the Vendor 
should count that as one Subscriber Entitlement, not two.
iii. No Program Classification Fee
    The Exchange does not propose to impose any program classification 
charges for the use of NYSE Amex Last Sale Information or NYSE Amex BBO 
information. The Exchange recognizes that each NYSE Amex-Only Vendor 
and Subscriber will use NYSE Amex Market Data differently and that the 
Exchange is one of many markets with whom Vendors and Subscribers may 
enter into arrangements for the receipt and use of data. In recognition 
of that, the Exchange's proposed unit-of-count methodology does not 
restrict how NYSE Amex-Only Vendors may use NYSE Amex Market Data in 
their display services and encourages Vendors to create and promote 
innovative uses of NYSE Amex Market Data. For instance, a NYSE Amex-
Only Vendor may use NYSE Amex BBO information to create derived 
information displays, such as displays that aggregate NYSE Amex BBO 
information with quotation information from other markets.\5\
---------------------------------------------------------------------------

    \5\ In the case of derived displays, the Vendor is required to: 
(i) Pay the Exchange's device fees; (ii) include derived displays in 
its reports of NYSE Amex Market Data usage; and (iii) use reasonable 
efforts to assure that any person viewing a display of derived data 
understands what the display represents and the manner in which it 
was derived.
---------------------------------------------------------------------------

iv. Nonprofessional Subscriber Fee
    The Exchange proposes to charge each NYSE Amex-Only Vendor $5.00 
per month for each nonprofessional subscriber to whom it provides NYSE 
Amex BBO Information. The Exchange proposes to impose the charge on the 
NYSE Amex-Only Vendor, rather than on the nonprofessional 
Subscriber.\6\ In addition, the Exchange proposes to establish as an 
alternative to the fixed $5.00 monthly fee a fee of $.005 for each 
response that a NYSE Amex-Only Vendor disseminates to a nonprofessional 
Subscriber's inquiry for a best bid or offer under NYSE Amex BBO. The 
Exchange proposes to limit a NYSE Amex-Only Vendor's exposure under 
this alternative fee to $5.00 per month, the same amount as the 
proposed fixed monthly nonprofessional Subscriber flat fee. In order to 
take advantage of the per-query fee, a NYSE Amex-Only Vendor must 
document in its Exhibit A that it can: (1) Accurately measure the 
number of queries from each nonprofessional Subscriber and (2) report 
aggregate query quantities on a monthly basis.
---------------------------------------------------------------------------

    \6\ The Exchange stated that it did not propose to establish a 
nonprofessional subscriber fee for NYSE Amex Last Sale Information 
because an alternative to that product is available. See Securities 
Exchange Act Release No. 61403 (January 22, 2010), 75 FR 4598 
(January 28, 2010) (SR-NYSEAmex-2009-85) (approving the NYSE Amex 
Realtime Reference Prices service).
---------------------------------------------------------------------------

    The Exchange will impose the per-query fee only on the 
dissemination of best bids and offers to nonprofessional Subscribers. 
The per-query charge is imposed on NYSE Amex-Only Vendors, not end-
users, and is payable on a monthly basis. NYSE Amex-Only Vendors may 
elect to disseminate NYSE Amex BBO pursuant to the per-query fee rather 
than the fixed monthly fee.
    In establishing a nonprofessional Subscriber fee for NYSE Amex BBO, 
the Exchange proposes to apply the same criteria for qualification as a 
``nonprofessional subscriber'' as the CTA and CQ Plan Participants use. 
Similar to the CTA and CQ Plans, classification as a nonprofessional 
subscriber is subject to Exchange review and requires the subscriber to 
attest to his or her nonprofessional subscriber status. A 
nonprofessional subscriber is a natural person who uses the data solely 
for his personal, non-business use and who is neither:
    A. Registered or qualified with the Securities and Exchange 
Commission, the Commodities Futures Trading Commission, any State 
securities agency, any securities exchange or

[[Page 31503]]

association, or any commodities or futures contract market or 
association,
    B. Engaged as an ``investment adviser'' as that term is defined in 
Section 202(a)(11) of the Investment Advisors Act of 1940 (whether or 
not registered or qualified under that act), nor
    C. Employed by a bank or other organization exemption from 
registration under Federal and/or State securities laws to perform 
functions that would require him/her to be so registered or qualified 
if he/she were to perform such function for an organization not so 
exempt.
    The Exchange believes that the proposed monthly access fee, 
professional subscriber fee and nonprofessional subscriber fee for NYSE 
Amex Trades and NYSE Amex BBO enable NYSE Amex-Only Vendors and their 
subscribers to contribute to the Exchange's operating costs in a manner 
that is appropriate for the distribution of NYSE Amex Market Data in 
the form taken by the proposed services.
    In setting the level of the proposed fees, the Exchange considered 
several factors, including:
    (i) NYSE Amex's expectation that NYSE Amex Trades and NYSE Amex BBO 
are likely to be premium services, used by investors most concerned 
with receiving NYSE Amex Market Data on a low latency basis;
    (ii) The fees that the CTA and CQ Plan Participants, the Nasdaq/UTP 
Plan Participants, Nasdaq, NYSE and NYSE Arca are charging for similar 
services (or that NYSE Amex anticipates they will soon propose to 
charge);
    (iii) Consultation with some of the entities that the Exchange 
anticipates will be the most likely to take advantage of the proposed 
service;
    (iv) 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;
    (v) The contribution that revenues accruing from the proposed fee 
will make to meet the overall costs of the Exchange's operations;
    (vi) The savings in administrative and reporting costs that the 
NYSE Amex Trades and NYSE Amex BBO will provide to NYSE Amex-Only 
Vendors (relative to counterpart services under the CTA, CQ and Nasdaq/
UTP Plans); and
    (vii) The fact that the proposed fees provide alternatives to 
existing fees under the CTA, CQ and Nasdaq/UTP Plans, alternatives that 
vendors will purchase only if they determine that the perceived 
benefits outweigh the cost.

d. Administrative Requirements

    The Exchange will require each NYSE Amex-Only Vendor to enter into 
a vendor agreement just as the CTA and CQ Plans require recipients of 
the Network A datafeeds to enter (the ``Consolidated Vendor Form''). 
The agreement will authorize the NYSE Amex-Only Vendor to provide its 
NYSE Amex Market Data service to its customers or to distribute the 
data internally.
    In addition, the Exchange will require each professional end-user 
that receives NYSE Amex Market Data from a vendor or broker-dealer to 
enter into the form of professional subscriber agreement into which the 
CTA and CQ Plans require end users of Network A data to enter. It will 
also require NYSE Amex-Only Vendors to subject nonprofessional 
subscribers to the same contract requirements as the CTA and CQ Plan 
Participants require of Network A nonprofessional subscribers.

III. Discussion

    After careful consideration, the Commission 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, it is consistent with Section 6(b)(4) of 
the Act,\8\ which requires that the rules of a national securities 
exchange provide for the equitable allocation of reasonable dues, fees, 
and other charges among its members and issuers and other parties using 
its facilities, and Section 6(b)(5) of the Act,\9\ which requires, 
among other things, that the rules of a national securities 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.
---------------------------------------------------------------------------

    \7\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(8).
    \11\ 17 CFR 242.603(a).
    \12\ NYSE Amex is an exclusive processor of NYSE Amex Trades and 
NYSE Amex BBO services 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.
---------------------------------------------------------------------------

    The Commission has reviewed the proposal using the approach set 
forth in the NYSE Arca Order for non-core 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\
---------------------------------------------------------------------------

    \13\ Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21) (``NYSE 
Arca Order''). 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 74771.
    \15\ Id. at 74782.
    \16\ Id. at 74781.
---------------------------------------------------------------------------

    As noted in the NYSE Arca Order, the standards in Section 6 of the 
Act and Rule 603 of Regulation NMS do not differentiate between types 
of data and therefore apply to exchange proposals to distribute both 
core data and non-core data. Core data is the best-priced quotations 
and comprehensive last-sale reports of all markets that the Commission, 
pursuant to Rule 603(b), requires a central processor to consolidate 
and distribute to the public

[[Page 31504]]

pursuant to joint-SRO plans.\17\ In contrast, individual exchanges and 
other market participants distribute non-core data voluntarily.\18\ The 
mandatory nature of the core data disclosure regime leaves little room 
for competitive forces to determine products and fees.\19\ Non-core 
data products and their fees are, by contrast, much more sensitive to 
competitive forces. The Commission therefore is able to use competitive 
forces in its determination of whether an exchange's proposal to 
distribute non-core data meets the standards of Section 6 and Rule 
603.\20\ Because NYSE Amex's instant proposal relates to the 
distribution of non-core data, the Commission will apply the market-
based approach set forth in the NYSE Arca Order.
---------------------------------------------------------------------------

    \17\ See 17 CFR 242.603(b). (``Every national securities 
exchange on which an NMS stock is traded and national securities 
association shall act jointly pursuant to one or more effective 
national market system plans to disseminate consolidated 
information, including a national best bid and national best offer, 
on quotations for and transactions in NMS stocks. Such plan or plans 
shall provide for the dissemination of all consolidated information 
for an individual NMS stock through a single plan processor.'')
    \18\ See NYSE Arca Order at 74779.
    \19\ Id.
    \20\ Id.
---------------------------------------------------------------------------

    The Exchange proposes to establish: (i) A service that would allow 
a vendor to redistribute last sale information for which NYSE Amex 
reports under the CTA Plan and the Nasdaq/UTP Plan; and (ii) a service 
that would allow a vendor to redistribute best bids and offers for all 
securities that are traded on the Exchange and for which NYSE Amex 
reports quotes under the CQ Plan. The Exchange proposes to establish a 
monthly vendor fee and an alternative fee rate that uses the unit-of-
count methodology.
    The proposal before the Commission relates to fees for NYSE Amex 
Trades and NYSE Amex BBO which are non-core, market data products. As 
in the Commission's NYSE Arca Order analysis, at least two broad types 
of significant competitive forces applied to NYSE Amex in setting the 
terms of this proposal: (i) NYSE Amex's compelling need to attract 
order flow from market participants; and (ii) the availability to 
market participants of alternatives to purchasing NYSE Amex Market 
Data.
    Attracting order flow is the core competitive concern of any equity 
exchange, including NYSE Amex. Attracting order flow is an essential 
part of NYSE Amex's competitive success. If NYSE Amex cannot attract 
order flow to its market, it will not be able to execute transactions. 
If NYSE Amex cannot execute transactions on its market, it will not 
generate transaction revenue. If NYSE Amex cannot attract orders or 
execute transactions on its market, it will not have market data to 
distribute, for a fee or otherwise, and will not earn market data 
revenue and thus not be competitive with other exchanges that have this 
ability. Table 1 below provides a useful recent snapshot of the state 
of competition in the U.S. equity markets in the month of September 
2009: \21\
---------------------------------------------------------------------------

    \21\ The Commission recently published estimated trading 
percentages in NMS Stocks in its Concept Release on Equity Market 
Structure. See Securities Exchange Act Release No. 61358 (January 
14, 2010), 75 FR 3594, 3597 n. 21 (January 21, 2010) (File No. S7-
02-10).

  Table 1--Trading Centers and Estimated % of ShareVolume in NMS Stocks
                             September 2009
------------------------------------------------------------------------
                                                                Share
                                                              volume in
                       Trading venue                          NMS stocks
                                                              (Percent)
------------------------------------------------------------------------
Registered Exchanges:
                  NASDAQ...................................         19.4
                  NYSE.....................................         14.7
                  NYSE Arca................................         13.2
                  BATS.....................................          9.5
                  NASDAQ OMX BX............................          3.3
                  Other Registered Exchanges...............          3.7
ECNs ..................... 5 ECNS..........................         10.8
Dark Pools ............ 32 Dark Pools (Estimated)..........          7.9
Broker-Dealer ........ 200+ Broker-Dealers (Estimated).....         17.5
 Internalization.
------------------------------------------------------------------------

    The market share percentages in Table 1 strongly indicate that NYSE 
Amex must compete vigorously for order flow to maintain its share of 
trading volume. This compelling need to attract order flow imposes 
significant pressure on NYSE Amex to act reasonably in setting its fees 
for NYSE Amex market data, particularly given that the market 
participants that must pay such fees often will be the same market 
participants from whom NYSE Amex must attract order flow. These market 
participants particularly include the large broker-dealer firms that 
control the handling of a large volume of customer and proprietary 
order flow. Given the portability of order flow from one trading venue 
to another, any exchange that seeks to charge unreasonably high data 
fees would risk alienating many of the same customers on whose orders 
it depends for competitive survival.\22\
---------------------------------------------------------------------------

    \22\ See NYSE Arca Order at 74783.
---------------------------------------------------------------------------

    In addition to the need to attract order flow, the availability of 
alternatives to NYSE Amex Market Data significantly affect the terms on 
which NYSE Amex can distribute this market data.\23\ In setting the 
fees for NYSE Amex Market Data, NYSE Amex must consider the extent to 
which market participants would choose one or more alternatives instead 
of purchasing the exchange's data.\24\ Of course, the most basic source 
of information generally available at an

[[Page 31505]]

exchange is the complete record of an exchange's transactions that is 
provided in the core data feeds.\25\ In this respect, the core data 
feeds that include an exchange's own transaction information are a 
significant alternative to the exchange's market data product.\26\ The 
various self-regulatory organizations, the several Trade Reporting 
Facilities of FINRA, and ECNs that produce proprietary data are all 
sources of competition.
---------------------------------------------------------------------------

    \23\ See Richard Posner, Economic Analysis of Law Sec.  9.1 (5th 
ed. 1998) (discussing the theory of monopolies and pricing). See 
also U.S. Dep't of Justice & Fed'l Trade Comm'n, Horizontal Merger 
Guidelines Sec.  1.11 (1992), as revised (1997) (explaining the 
importance of alternatives to the presence of competition and the 
definition of markets and market power). Courts frequently refer to 
the Department of Justice and Federal Trade Commission merger 
guidelines to define product markets and evaluate market power. See, 
e.g., FTC v. Whole Foods Market, Inc., 502 F. Supp. 2d 1 (D.D.C. 
2007); FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109 (D.D.C. 2004). In 
considering antitrust issues, courts have recognized the value of 
competition in producing lower prices. See, e.g., Leegin Creative 
Leather Products v. PSKS, Inc., 127 S. Ct. 2705 (2007); Atlanta 
Richfield Co. v. United States Petroleum Co., 495 U.S. 328 (1990); 
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 
(1986); State Oil Co. v. Khan, 522 U.S. 3 (1997); Northern Pacific 
Railway Co. v. U.S., 356 U.S. 1 (1958).
    \24\ See NYSE Arca Order at 74783.
    \25\ Id.
    \26\ Id.
---------------------------------------------------------------------------

    In sum, there are a variety of alternative sources of information 
that impose significant competitive pressures on NYSE Amex in setting 
the terms for distributing its NYSE Amex Market Data. The Commission 
believes that the availability of those alternatives, as well as NYSE 
Amex's compelling need to attract order flow, imposed significant 
competitive pressure on NYSE Amex to act equitably, fairly, and 
reasonably in setting the terms of its proposal.
    Because NYSE Amex 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.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\27\ that the proposed rule change (SR-NYSEAmex-2010-35) be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-13335 Filed 6-2-10; 8:45 am]
BILLING CODE 8010-01-P