[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75200-75203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29494]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73816; File No. SR-NYSE-2014-64]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Proposes To Establish an Access Fee for the NYSE Best Quote & Trades 
Data Feed, Operative on December 1, 2014

December 11, 2014.
    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 November 26, 2014, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 an access fee for the NYSE Best 
Quote & Trades (``NYSE BQT'') data feed, operative on December 1, 2014. 
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, the Proposed Rule Change

1. Purpose
    The Exchange proposes to establish an access fee for the NYSE BQT 
data feed, effective December 1, 2014. The proposed fee for NYSE BQT 
would be $1,000 a month, provided that the market data recipient 
separately subscribes to and pays for the six existing market data 
products underlying the NYSE BQT data feed, consistent with the 
existing fee structures for those market data products.
    The NYSE BQT data feed provides best bid and offer (``BBO'') and 
last sale information for the Exchange and its affiliates, NYSE Arca 
Equities, Inc. (``NYSE Arca'') and NYSE MKT LLC (``NYSE MKT'').\3\ 
Specifically, the NYSE BQT data feed consists of certain data elements 
from six market data feeds--NYSE Trades, NYSE BBO, NYSE Arca Trades, 
NYSE Arca BBO, NYSE MKT Trades, and NYSE MKT BBO.\4\ The NYSE BQT data 
feed has three channels: one channel for the last sale data (the ``last 
sale channel''), another channel for the BBO data (the ``best quotes 
channel''), and a third channel for consolidated volume data (the 
``consolidated volume channel'').
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    \3\ See Securities Exchange Act Release No. 34-73553 (Nov. 6, 
2014), 79 FR 67491 (Nov. 13, 2014) (SR-NYSE-2014-40) (``NYSE BQT 
Approval Order'').
    \4\ These data feeds are offered pursuant to preexisting and 
effective rules and fees filed with the Securities and Exchange 
Commission (``Commission''). This filing does not affect those rules 
or the fees associated with these underlying data feeds or the 
ability for the Exchange, NYSE Arca, or NYSE MKT to amend the data 
feeds or fees associated with those data feeds pursuant to a 
separate rule filing. For NYSE Trades, see Securities Exchange Act 
Release Nos. 59290 (Jan. 23, 2009), 74 FR 5707 (Jan. 30, 2009) (SR-
NYSE-2009-05) and 59606 (Mar. 19, 2009), 74 FR 13293 (Mar. 26, 2009) 
(SR-NYSE-2009-04). For NYSE BBO, see Securities Exchange Act Release 
No. 62181 (May 26, 2010), 75 FR 31488 (June 3, 2010) (SR-NYSE-2010-
30). For NYSE Arca Trades, see Securities Exchange Act Release Nos. 
59289 (Jan. 23, 2009), 74 FR 5711 (Jan. 30, 2009) (SR-NYSEArca-2009-
06) and 59598 (Mar. 18, 2009), 74 FR 12919 (Mar. 25, 2009) (SR-
NYSEArca-2009-05). For NYSE Arca BBO, see Securities Exchange Act 
Release No. 62188 (May 27, 2010), 75 FR 31484 (June 3, 2010) (SR-
NYSEArca-2010-23). For NYSE MKT Trades and NYSE MKT BBO, see 
Securities Exchange Act Release No. 62187 (May 27, 2010), 75 FR 
31500 (June 3, 2010) (SR-NYSEAmex-2010-35).
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    The Exchange, NYSE Arca, and NYSE MKT are the exclusive 
distributors of the six BBO and Trades feeds from which certain data 
elements are taken to create the NYSE BQT. By contrast, the Exchange 
would not be the exclusive distributor of the aggregated and 
consolidated information that comprises the NYSE BQT data feed. Any 
entity that receives, or elects to receive, the six underlying data 
feeds would be able, if it so chooses, to create a data feed with the 
same information included in NYSE BQT and sell and distribute it to its 
clients so that it could be received by

[[Page 75201]]

those clients as quickly as the NYSE BQT data feed would be received by 
those same clients.\5\
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    \5\ See NYSE BQT Approval Order, supra note 4.
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    As proposed, the Exchange would charge a $1,000/month access fee 
for NYSE BQT, which reflects the value of the aggregation and 
consolidation function that the Exchange performs in creating NYSE BQT. 
To obtain NYSE BQT, the market data recipient would need to subscribe 
to and pay for the six data feeds underlying NYSE BQT consistent with 
the existing fee schedules for those market date products as previously 
filed with the Commission and which may be amended from time to time, 
including any applicable Access, Redistribution, Professional User, 
Non-Professional User, or Enterprise fees.\6\ When subscribing to NYSE 
BQT, the underlying data feeds would be delivered in the NYSE BQT 
consolidated format, as described above, but charged for as if the 
recipient were receiving the underlying feeds directly. The Exchange 
notes that if a User chooses to receive the six underlying feeds both 
separately and in the NYSE BQT format, such User may be subject to 
additional Professional User or Non-Professional User fees to reflect 
the distribution of both NYSE BQT (which incorporates the six 
underlying data feeds) and any separate dissemination of the underlying 
data feeds. The Exchange believes that the proposed fees for NYSE BQT 
would not be lower than the cost to a vendor of creating a comparable 
product, including the cost of receiving the underlying data feeds.
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    \6\ See supra note 5.
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    The Exchange notes that another market participant seeking to 
distribute a competing product to NYSE BQT might engage in a different 
analysis of assessing the cost of a competing product, which may 
incorporate passing through fees associated with co-location at the 
Mahwah, New Jersey data center. However, the incremental co-location 
cost to a particular vendor might be inconsequential if such vendor is 
already co-located and is able to allocate its co-location costs over 
numerous product and customer relationships. The Exchange therefore 
believes that a vendor could create and offer a product similar to NYSE 
BQT on a cost-competitive basis.
    The Exchange notes that the proposed change is not otherwise 
intended to address any other issues, and the Exchange is not aware of 
any problems that member organizations or others would have in 
complying with the proposed rule change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\7\ in general, and 
Sections 6(b)(4) and 6(b)(5) of the Act,\8\ in particular, in that it 
provides an equitable allocation of reasonable fees among its members, 
issuers, and other persons using its facilities and is not designed to 
permit unfair discrimination among customers, issuers, brokers, or 
dealers. The Exchange also believes that the proposed rule change is 
consistent with Section 11(A) of the Act \9\ in that it is consistent 
with (i) fair competition among brokers and dealers, among exchange 
markets, and between exchange markets and markets other than exchange 
markets; and (ii) the availability to brokers, dealers, and investors 
of information with respect to quotations for and transactions in 
securities. Furthermore, the proposed rule change is consistent with 
Rule 603 of Regulation NMS,\10\ which provides that any national 
securities exchange that distributes information with respect to 
quotations for or transactions in an NMS stock do so on terms that are 
not unreasonably discriminatory.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4), (5).
    \9\ 15 U.S.C. 78k-1.
    \10\ See 17 CFR 242.603.
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    The Exchange believes that the proposed $1,000/month access fee for 
NYSE BQT is reasonable because it represents the value for the data 
aggregation and consolidation function that the Exchange performs. The 
Exchange further believes that the proposed $1,000/month access fee is 
not designed to permit unfair discrimination because all market data 
recipients that would subscribe to NYSE BQT would be charged the same 
access fee.
    The Exchange further believes that requiring market data recipients 
to separately subscribe to and pay for the six underlying data feeds to 
NYSE BQT is reasonable because by design, NYSE BQT represents an 
aggregated and consolidated version of those existing six data feeds. 
The Exchange notes that it is not seeking with this filing to establish 
fees relating to the underlying six BBO and Trades data feeds, as those 
fees have already been established consistent with Section 19(b)(3)(A) 
of the Act \11\ and Rule 19b-4(f)(2) \12\ thereunder, and which may be 
amended from time to time. However, the Exchange believes it would be 
unfair if it did not require NYSE BQT data feed recipients to 
separately subscribe to and pay for those six feeds because otherwise, 
NYSE BQT data feed recipients would be receiving a data product that 
includes such underlying data at a lower cost than separately 
subscribing to the underlying data feeds. Similarly, the Exchange 
believes that it would be reasonable to charge separate Professional 
User or Non-Professional User fees if a market data recipient chooses 
to receive both NYSE BQT and a separate dissemination of the six 
underlying data feeds in a non-consolidated form. The Exchange believes 
that such delivery would constitute two separate uses of the underlying 
data feeds and thus should be charged accordingly, consistent with the 
existing fee schedule for those market data products. The Exchange 
therefore believes that the proposed fee structure for NYSE BQT would 
not be lower than the cost to another party to create a comparable 
product, including the cost of receiving the underlying data feeds.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(2).
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    The Exchange notes that its proposed fee structure is similar to 
the fee structure for NLS Plus. NLS Plus is a data product that is 
offered by an affiliate of The NASDAQ Stock Market, Inc. (``NASDAQ'') 
that is not a self-regulatory organization. NLS Plus provides access to 
all NASDAQ OMX U.S. markets' last sale data as well as consolidated 
volume, including all trade data from NASDAQ, the FINRA/NASDAQ Trade 
Reporting Facility (``TRF''), NASDAQ OMX BX, and NASDAQ OMX PSX. NLS 
Plus also provides consolidated volume information as part of each 
trade message. To receive NLS Plus, the recipient must pay the fees for 
one or more NASDAQ underlying data feeds, plus an annual administrative 
fees attributable to each affiliated exchange.\13\ In addition, BATS 
Global Markets (``BATS'') has announced that it intends to offer a 
market data product that provides a unified view of the aggregated best 
bid and offer, last sale, and optional depth information (five levels), 
including size, for all four equity exchanges operated by BATS.\14\ The

[[Page 75202]]

Exchange believes that NYSE BQT will offer a competitive alternative to 
the NASDAQ product and the proposed BATS product.
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    \13\ The pricing for NLS Plus is available at https://www.nasdaqtrader.com/Trader.aspx?id=nlsplus. The applicable NASDAQ 
underlying data feeds for which a firm are be liable could be NASDAQ 
Last Sale (See NASDAQ Rule 7039) or NASDAQ Basic (see NASDAQ Rule 
7047) market data products.
    \14\ See http://cdn.batstrading.com/resources/press_releases/BATS-One-Announcement-FINAL.pdf. BATS has also submitted rule 
filings to the Commission on behalf of its four exchanges to 
establish its proposed unified feed as a proprietary market data 
product. See also Securities Exchange Act Release Nos. 73594 (Nov. 
14, 2014), 79 FR 69142 (Nov. 20, 2014) (SR-BATS-2014-055); 73595 
(Nov. 14, 2014), 79 FR 69160 (Nov. 20, 2014) (SR-BYX-2014-030); 
73596 (Nov. 14, 2014), 79 FR 69148 (Nov. 20, 2014) (SR-EDGA-2014-
25); and 73597 (Nov. 14, 2014), 79 FR 69180 (Nov. 20, 2014) (SR-
EDGX-2014-25).
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    The Exchange further believes that the proposed NYSE BQT fee 
structure is equitable and not unfairly discriminatory because all 
vendors and subscribers that elect to purchase NYSE BQT would be 
charged the same fees. In addition, vendors and subscribers that do not 
wish to purchase NYSE BQT may separately purchase the six individual 
underlying products, and if they so choose, perform a similar 
aggregation and consolidation function that the Exchange performs in 
creating NYSE BQT. To enable such competition, the Exchange is offering 
NYSE BQT on terms that a subscriber of those six feeds could offer a 
competing product if it so chooses.
    The Exchange also notes that the use of NYSE BQT is entirely 
optional. Firms have a wide variety of alternative market data products 
from which to choose, including the exchanges' own underlying data 
products, the NASDAQ and BATS proprietary data products described in 
this filing, and consolidated data. Moreover, the Exchange is not 
required to make any proprietary data products available or to offer 
any specific pricing alternatives to any customers.
    In addition, the fees that are the subject of this rule filing are 
constrained by competition. As explained below in the Exchange's 
Statement on Burden on Competition, the existence of alternatives to 
these data products further ensures that the Exchange cannot set 
unreasonable fees, or fees that are unreasonably discriminatory, when 
vendors and subscribers can elect such alternatives. That is, the 
Exchange competes with other exchanges (and their affiliates) that 
provide similar ``best quote and trade'' market data products. If 
another exchange (or its affiliate) were to charge less to consolidate 
and distribute its similar product than the Exchange charges to 
consolidate and distribute NYSE BQT, prospective users likely would not 
subscribe to, or would cease subscribing to, NYSE BQT. In addition, the 
Exchange would compete with unaffiliated market data vendors who would 
be in a position to consolidate and distribute the same data that 
comprises the NYSE BQT feed into the vendor's own comparable market 
data product. If the third-party vendor is able to provide the exact 
same data for a lower cost, prospective users would avail themselves of 
that lower cost and elect not to take NYSE BQT.
    The Exchange notes that the Commission is not required to undertake 
a cost-of-service or ratemaking approach. The Exchange believes that, 
even if it were possible as a matter of economic theory, cost-based 
pricing for non-core market data would be so complicated that it could 
not be done practically.\15\
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    \15\ The Exchange believes that cost-based pricing would be 
impractical because it would create enormous administrative burdens 
for all parties, including the Commission, to cost-regulate a large 
number of participants and standardize and analyze extraordinary 
amounts of information, accounts, and reports. In addition, it is 
impossible to regulate market data prices in isolation from prices 
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort 
incentives, including those to minimize costs and to innovate, 
leading to further waste. Under cost-based pricing, the Commission 
would be burdened with determining a fair rate of return, and the 
industry could experience frequent rate increases based on 
escalating expense levels. Even in industries historically subject 
to utility regulation, cost-based ratemaking has been discredited. 
As such, the Exchange believes that cost-based ratemaking would be 
inappropriate for proprietary market data and inconsistent with 
Congress's direction that the Commission use its authority to foster 
the development of the national market system, and that market 
forces will continue to provide appropriate pricing discipline. See 
Appendix C to NYSE's comments to the Commission's 2000 Concept 
Release on the Regulation of Market Information Fees and Revenues, 
which can be found on the Commission's Web site at http://www.sec.gov/rules/concept/s72899/buck1.htm.
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    For these reasons, the Exchange believes that the proposed fees are 
reasonable, equitable, and not unfairly discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition

    In accordance with Section 6(b)(8) of the Act,\16\ 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. As noted above, the NYSE BQT data feed 
represents aggregated and consolidated information of six existing 
market data feeds. Although the Exchange, NYSE Arca, and NYSE MKT are 
the exclusive distributors of the six BBO and Trades feeds from which 
certain data elements are taken to create the NYSE BQT, the Exchange 
may not be the exclusive distributor of the aggregated and consolidated 
information that comprises the NYSE BQT data feed. Any other market 
data recipient of the six BBO and Trades feeds would be able, if they 
chose, to create a data feed with the same information as the NYSE BQT 
and distribute it to their clients on a level-playing field with 
respect to latency and cost as compared to the Exchange's product.\17\
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    \16\ 78 U.S.C. 78f(b)(8).
    \17\ See NYSE BQT Approval Order, supra note 4.
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    The Exchange further believes that the proposed monthly access fee 
the Exchange proposes to charge clients for NYSE BQT would be pro-
competitive because another market data recipient could perform a 
similar aggregating and consolidating function and similarly charge for 
such service. The Exchange notes that a competing vendor might engage 
in a different analysis of assessing the cost of a competing product, 
which may incorporate passing through fees associated with co-location 
at the Mahwah, New Jersey data center. However, the incremental co-
location costs to a particular vendor may be inconsequential if such 
vendor is already co-located and is able to allocate its co-location 
costs over numerous product and customer relationships. The Exchange 
therefore believes that a competing vendor could create and offer a 
product similar to the NYSE BQT data feed at a similar cost. For these 
reasons, the Exchange believes that vendors could readily offer a 
product similar to NYSE BQT on a competitive basis.
    Finally, the Exchange notes that there is already actual 
competition for products similar to NYSE BQT. NASDAQ already offers 
NASDAQ Basic, a filed market data product, and through its affiliate, 
offers NLS Plus, which provides a unified view of last trade 
information similar to NYSE BQT. In addition, BATS has recently filed 
to adopt a similar market data product.\18\ The existence of these 
competing data products demonstrates that there is ample, existing 
competition for products such as NYSE BQT and the fees associated with 
such products are constrained by that competition.
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    \18\ See supra note 15.
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    As such, in establishing the proposed fees, the Exchange considered 
the competitiveness of the market for proprietary data and all of the 
implications of that competition. The Exchange believes that it has 
considered all relevant factors and has not considered irrelevant 
factors in order to establish fair, reasonable, and not unreasonably 
discriminatory fees and an equitable allocation of fees among all 
users. The existence of alternatives to NYSE BQT, including the six 
underlying feeds, consolidated data, and proprietary data from other 
sources, ensures that the Exchange cannot set unreasonable fees, or 
fees that are

[[Page 75203]]

unreasonably discriminatory, when vendors and subscribers can elect 
these alternatives or choose not to purchase a specific proprietary 
data product if its cost to purchase is not justified by the returns 
any particular vendor or subscriber would achieve through the purchase.

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 foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \19\ and paragraph (f)(2) of Rule 19b-4 
thereunder.\20\ At any time within 60 days of the filing of the 
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.
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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 17 CFR 240.19b-4(f)(2).
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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-2014-64 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2014-64. 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 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of NYSE. 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-2014-64 and should be 
submitted on or before January 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29494 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P