[Federal Register Volume 77, Number 169 (Thursday, August 30, 2012)]
[Notices]
[Pages 52769-52771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-21386]


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SECURITIES AND EXCHANGE COMMISSION


 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Proposing To Offer 
Certain Proprietary Options Data Products

August 23, 2012.
    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 August 16, 2012, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. 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\ 15 U.S.C. 78a.
    \3\ 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 rule change will have any direct effect, 
or any significant indirect effect, on any other Exchange rule in 
effect at the time of this filing. [sic] The text of the proposed rule 
change is available on the Exchange's Web site at www.nyse.com, at the 
principal office of the Exchange, 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, Proposed Rule Change

1. Purpose
    The Exchange proposes to offer certain proprietary options data 
products. Specifically, the products are ArcaBook for Arca Options--
Trades, ArcaBook for Arca Options--Top of Book, ArcaBook for Arca 
Options--Depth of Book, ArcaBook for Arca Options--Complex, ArcaBook 
for Arca Options--Series Status, and ArcaBook for Arca Options--Order 
Imbalance. Each of these products, which are described in more detail 
below, is either identical or substantially similar to products offered 
by other exchanges.
    ArcaBook for Arca Options--Trades would make available NYSE Arca 
Options last sale information on a real-time basis as it is reported to 
the Options Price
    Reporting Authority (``OPRA'') and disseminated on a consolidated 
basis

[[Page 52770]]

under the OPRA Plan.\4\ Other exchanges also offer this product.\5\
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    \4\ The OPRA Plan is a national market system plan approved by 
the Securities and Exchange Commission (``Commission'') pursuant to 
Section 11A of the Securities Exchange Act of 1934 (the ``Act'') and 
Rule 608 thereunder (formerly Rule 11Aa3-2). See Securities Exchange 
Act Release No. 17638 (March 18, 1981), 22 SE.C. Docket 484 (March 
31, 1981). The full text of the OPRA Plan is available at http://www.opradata.com.
    The OPRA Plan provides for the collection and dissemination of 
last sale and quotation information on options that are traded on 
the participant exchanges. Section 5.2(c) of the OPRA Plan also 
permits OPRA Plan participants to disseminate unconsolidated market 
information to certain of their members under certain circumstances. 
The manner in which the Exchange proposes to disseminate the 
proposed products would comply with Section 5.2(c).
    \5\ For example, Chicago Board Options Exchange (``CBOE''), 
NASDAQ Options Market (``NOM''), and NASDAQ OMX PHLX LLC (``PHLX'') 
offer proprietary products that include their last sale data as 
reported to OPRA. See Securities Exchange Act Release No. 66486 
(February 28, 2012), 77 FR 13166 (March 5, 2012) (SR-CBOE-2012-016); 
NOM Rules, Chapter VI, Section 1(a)(3) and Securities Exchange Act 
Release No. 64652 (June 13, 2011), 76 FR 35498 (June 17, 2011) (SR-
NASDAQ-2011-075); and Securities Exchange Act Release No. 67352 
(July 5, 2012), 77 FR 40930 (July 11, 2012) (SR-Phlx-2012-83), 
respectively.
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    ArcaBook for Arca Options--Top of Book would make available NYSE 
Arca Options best bids and offers (``BBO'') (including orders and 
quotes) on a real-time basis as it is reported to OPRA and disseminated 
on a consolidated basis under the OPRA Plan. Other exchanges also offer 
this product.\6\
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    \6\ See id. See also Securities Exchange Act Release No. 65000 
(August 1, 2011), 76 FR 47627 (August 5, 2011) (SR-ISE-2011-44).
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    ArcaBook for Arca Options--Depth of Book would make available NYSE 
Arca Options quotes and orders at the first five price levels in each 
series on a real-time basis as it is reported to OPRA and disseminated 
on a consolidated basis under the OPRA Plan. One exchange offers an 
identical product; other exchanges also offer similar products.\7\
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    \7\ International Securities Exchange (``ISE'') currently offers 
ISE Depth of Market Feed, which includes the first five price levels 
on ISE's limit order book. See Securities Exchange Act Release No. 
59949 (May 20, 2009), 74 FR 25593 (May 28, 2009) (SR-ISE-2007-97). 
NOM and PHLX also offer full depth of market feeds. See supra note 
5.
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    ArcaBook for Arca Options--Complex would make available NYSE Arca 
Options quote and trade information (including orders/quotes, requests 
for responses, and trades) for the complex order book on a real-time 
basis.\8\ Other exchanges also offer similar data feeds related to 
their complex order execution facilities.\9\
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    \8\ See Rule 6.62(e), which defines complex orders, and Rule 
6.91, that describes electronic complex order trading, including 
requests for responses.
    \9\ See, e.g., description of ISE Spread Feed in SR-ISE-2011-44, 
supra note 6, and description of TOPO of PHLX Options Plus Orders 
feed in SR-Phlx-2012-83, supra note 5.
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    ArcaBook for Arca Options--Series Status would make available 
series status messages for each individual options series in the event 
of a delayed opening or trading halt. The Exchange's equity trading 
facility currently makes this information available via one of its 
market data products.\10\
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    \10\ See Securities Exchange Act Release No. 65669 (November 2, 
2011), 76 FR 69311 (November 8, 2011) (SR-NYSEArca-2011-78).
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    Finally, ArcaBook for Arca Options--Order Imbalance would make 
available a data feed that includes order imbalance information prior 
to the opening and closing of the market, a data product that is 
offered by the Exchange's equity trading facility \11\ and is similar 
to products offered by other options exchanges.\12\
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    \11\ See id.
    \12\ See, e.g., SR-Phlx-2012-83 and SR-NASDAQ-2011-075, supra 
note 5. PHLX disseminates an Imbalance Message during the PHLX 
Opening Process. See Securities Exchange Act Release No. 66967 (May 
11, 2012); 77 FR 29400 [sic] (May 17, 2012) (SR-Phlx-2012-60). 
NASDAQ's ITTO data product includes the order imbalance information 
relating to the opening as described in NASDAQ Options Market Rules 
Chapter VI, Section 8.
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    Each of these options data products will be offered through the 
Exchange's Liquidity Center Network (``LCN''), a local area network in 
the Exchange's Mahwah, New Jersey data center that is available to 
users of the Exchange's co-location services. The Exchange would also 
offer the products through the Exchange's Secure Financial Transaction 
Infrastructure (``SFTI'') network, through which all other Users and 
member organizations access the Exchange's trading and execution 
systems and other proprietary market data products.
    The Exchange will submit a separate rule filing to establish fees 
for the data products.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \13\ of 
the Act, in general, and furthers the objectives of Section 6(b)(5) 
\14\ of the Act, 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 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, and it is not designed to permit 
unfair discrimination among customers, brokers, or dealers.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to consumers of such data. It was 
believed that this authority would expand the amount of data available 
to users and consumers of such data and also spur innovation and 
competition for the provision of market data. The Exchange believes 
that the options data products proposed herein are precisely the sort 
of market data products that the Commission envisioned when it adopted 
Regulation NMS. The Commission concluded that Regulation NMS--by 
lessening regulation of the market in proprietary data--would itself 
further the Act's goals of facilitating efficiency and competition:
    [E]fficiency is promoted when broker-dealers who do not need the 
data beyond the prices, sizes, market center identifications of the 
NBBO and consolidated last sale information are not required to receive 
(and pay for) such data. The Commission also believes that efficiency 
is promoted when broker-dealers may choose to receive (and pay for) 
additional market data based on their own internal analysis of the need 
for such data.\15\
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    \15\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005).
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    By removing ``unnecessary regulatory restrictions'' on the ability 
of exchanges to sell their own data, Regulation NMS advanced the goals 
of the Act and the principles reflected in its legislative history.
    The Exchange further notes that the existence of alternatives to 
the Exchange's products, including real-time consolidated data, free 
delayed consolidated data, and proprietary data from other sources, 
ensures that the Exchange is not unreasonably discriminatory because 
vendors and subscribers can elect these alternatives.
    The proposed options data products will help to protect a free and 
open market by providing additional data to the marketplace and give 
investors greater choices. In addition, the proposal would not permit 
unfair discrimination because the products will be available to all of 
the Exchange's customers and broker-dealers through both the LCN and 
SFTI.

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

[[Page 52771]]

necessary or appropriate in furtherance of the purposes of the Act. The 
market for proprietary data products is currently competitive and 
inherently contestable because there is fierce competition for the 
inputs necessary to the creation of proprietary data. Numerous 
exchanges compete with each other for listings, trades, and market data 
itself, providing virtually limitless opportunities for entrepreneurs 
who wish to produce and distribute their own market data. This 
proprietary data is produced by each individual exchange, as well as 
other entities (such as internalizing broker-dealers and various forms 
of alternative trading systems, including dark pools and electronic 
communication networks), in a vigorously competitive market. It is 
common for market participants to further and exploit this competition 
by sending their order flow and transaction reports to multiple 
markets, rather than providing them all to a single market.

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 \16\ and Rule 19b-4(f)(6) thereunder.\17\ 
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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    \16\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \17\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \18\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\19\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 17 CFR 240.19b-4(f)(6)(iii).
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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 email to [email protected]. Please include 
File Number SR-NYSE-Arca-2012--89 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.

All submissions should refer to File Number SR-NYSE-Arca-2012-89. This 
file number should be included on the subject line if email 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 NYSE Arca. 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-NYSE-Arca-2012-89 and should 
be submitted on or before September 20, 2012.
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    \20\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21386 Filed 8-29-12; 8:45 am]
BILLING CODE 8011-01-P