[Federal Register Volume 76, Number 105 (Wednesday, June 1, 2011)]
[Notices]
[Pages 31668-31670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13420]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64544; File No. SR-NYSEArca-2011-12]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Establishing a 
Revenue Sharing Program With Correlix, Inc. and a Free Trial Period for 
New Users of the Correlix Service

May 25, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on May 20, 2011, NYSE Arca, Inc. (the ``Exchange''

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or ``NYSE Arca'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II 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 a revenue sharing program with 
Correlix, Inc. (``Correlix'') and a free trial period for new users of 
the Correlix service. The text of the proposed rule change is available 
at the Exchange, the Commission's Public Reference Room and http://www.nyse.com.

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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is filing a proposed rule change to establish a 
revenue sharing program with Correlix effective upon filing with the 
Commission. The Exchange has entered into an agreement with Correlix to 
provide to users \3\ of the Exchange real-time analytical tools to 
measure the latency of orders to and from the Exchange's system as well 
as the latency of market data updates transmitted from the Exchange 
systems to the user. Under the agreement, the Exchange will receive 30 
percent of the total monthly subscription fees received by Correlix 
from parties who have contracted directly with Correlix to use their 
RaceTeam latency measurement service for the Exchange. The Exchange 
will not bill or contract with any Correlix RaceTeam customer directly.
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    \3\ For the purposes of this filing, the term ``users'' includes 
any ETP Holder or Sponsored Participant who is authorized to obtain 
access to the NYSE Arca Marketplace pursuant to NYSE Arca Equities 
Rule 7.29 (see NYSE Arca Equities Rule 1.1(yy)), or any OTP Holder, 
OTP Firm or Sponsored Participant that is authorized to obtain 
access to OX pursuant to NYSE Arca Options Rule 6.2A (see NYSE Arca 
Options Rule 6.1A(a)(19)).
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    Pricing for the Correlix RaceTeam product for users of the Exchange 
will be based on the number of ports requested by the user for 
monitoring by Correlix; each ``port'' is a FIX or binary protocol 
connection to the Common Customer Gateway (``CCG'') of NYSE Euronext, 
which provides connectivity to the national securities exchanges 
operated by NYSE Euronext (i.e., NYSE Arca, New York Stock Exchange LLC 
(``NYSE''), and NYSE Amex LLC (``NYSE Amex'')).\4\ The fee for equities 
users of the Exchange will be an initial $2,500 monthly base fee for 
the first 25 ports requested by the user for latency monitoring, and an 
additional $1,000 per month for each additional 25 ports (or portion 
thereof) requested by the user for latency monitoring. The fee for 
options users of the Exchange will be an initial $1,500 monthly fee for 
the first 25 ports requested by the user for latency monitoring, and an 
additional $750 per month for each additional 25 ports (or portion 
thereof).
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    \4\ NYSE and NYSE Amex have submitted similar rule filings. See 
SR-NYSE-2011-13 and SR-NYSEAmex-2011-20.
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    Correlix will charge for services based on the number of ports 
because of the CCG technology, which is unique to the NYSE Euronext 
exchanges. Specifically, the use of ports as the basis of charging will 
permit order-related messages transmitted through the CCG to the 
various NYSE Euronext markets (e.g., NYSE Arca equities vs. NYSE or 
NYSE Arca equities vs. NYSE Arca options) to be differentiated and kept 
separate. For these purposes, the combination of port and user ID 
provides the mechanism for users to receive latency data for their 
transactions on a particular NYSE Euronext market. The Correlix 
RaceTeam product will include controls such that users will not be able 
to obtain latency information about options orders through an equities 
port connection and vice versa.
    Under the program, Correlix will see an individualized unique NYSE 
Arca generated identifier that will allow Correlix RaceTeam to 
determine round trip order time,\5\ from the time the order reaches the 
Exchange extranet, through the Exchange matching engine, and back out 
of the Exchange extranet. The RaceTeam product offering does not 
measure latency outside of the Exchange extranet. The unique identifier 
serves as a technological information barrier so that the RaceTeam data 
collector will only be able to view data for Correlix RaceTeam 
subscribing users related to latency. Correlix will not see 
subscriber's individual order detail such as security, price or size. 
Individual RaceTeam subscribers' logins will restrict access to only 
their own latency data. Correlix will see no specific information 
regarding the trading activity of non-subscribers. The Exchange 
believes that the above arrangement will provide users of the Exchange 
with greater transparency into the processing of their trading activity 
and allow them to make more efficient trading decisions.
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    \5\ The product measures latency of orders whether the orders 
are rejected, executed, or partially executed.
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    In addition, the Exchange proposes to establish a flexible 60-day 
free trial so parties will be eligible for one free 60-day trial period 
of Correlix services whenever they initially elect to sign-up for the 
service, now or in the future. The Exchange is proposing the flexible 
trial to ensure that all Correlix users have an equal opportunity to 
take advantage of an initial free trial period.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\7\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, 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. The Exchange believes the 
proposed rule will provide greater transparency into trade and 
information processing and thus allow market participants to make 
better-informed and more efficient trading decisions.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    In addition, the Exchange believes that the proposed rule change is 
consistent with the provisions of Section 6 of the Act,\8\ in general, 
and with Section 6(b)(4) of the Act,\9\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system that the Exchange operates or controls. In 
particular, NYSE Arca notes that it operates in a highly

[[Page 31670]]

competitive market in which market participants can readily direct 
orders to competing venues and that use of the Correlix RaceTeam 
product is completely voluntary. Further, NYSE Arca makes the RaceTeam 
product uniformly available pursuant to a standard non-discriminatory 
pricing schedule offered by Correlix and will offer the free trial 
period on a uniform and non-discriminatory basis.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose 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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-4(f)(6) thereunder.\11\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. The Commission notes that revenue sharing programs 
with Correlix for the provision of latency information have been 
approved previously by the Commission for other markets.\12\ Waiver of 
the 30-day operative delay will ensure that the free period is made 
available to all interested parties without delay. Accordingly, the 
Commission designates the proposed rule change operative upon filing 
with the Commission.\13\
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    \12\ See Exchange Act Release Nos. 62605 (July 30, 2010), 75 FR 
47651 (August 6, 2010) (SR-NASDAQ-2010-068); 62928 (September 17, 
2010), 75 FR 58002 (September 23, 2010) (SR-EDGA-2010-09); 62929 
(September 17, 2010), 75 FR 58003 (September 23, 2010) (SR-EDGX-
2010-09).
    \13\ For the purposes only of waiving the 30-day operative 
delay, the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78(c)(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-NYSEArca-2011-12 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-NYSEArca-2011-12. 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 Web site 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street, NE., Washington, DC 20549, 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. The text of the proposed rule change is available on the 
Commission's Web site at http://www.sec.gov. 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-2011-12 and should be submitted 
on or before June 22, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-13420 Filed 5-31-11; 8:45 am]
BILLING CODE 8011-01-P