[Federal Register Volume 84, Number 225 (Thursday, November 21, 2019)]
[Notices]
[Pages 64386-64389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-25216]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87554; File No. SR-NYSE-2019-61]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending the NYSE Proprietary Market Data Fee Schedule Regarding the 
NYSE Best Quote and Trades Market Data Feed

November 15, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on November 4, 2019, New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 amend the NYSE Proprietary Market Data Fee 
Schedule (``Market Data Fee Schedule'') regarding the NYSE Best Quote 
and Trades (``BQT'') market data feed. The Exchange proposes to make 
the fee change effective November 4, 2019. The proposed rule change is 
available on the Exchange's website 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,

[[Page 64387]]

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 a non-substantive amendment to the Market 
Data Fee Schedule regarding the NYSE BQT market data feed that does not 
add or change any existing fees. The proposed amendment would include a 
reference to market data products from NYSE Chicago, Inc. (``NYSE 
Chicago'').
    The NYSE BQT data feed provides best bid and offer and last sale 
information for the Exchange and its affiliates, NYSE Arca, Inc. 
(``NYSE Arca''), NYSE American LLC (``NYSE American''),\4\ and NYSE 
National, Inc. (``NYSE National'').\5\ In connection with the 
transition to trading to the Pillar trading platform of another 
affiliate of the Exchange, NYSE Chicago,\6\ the Exchange recently filed 
a proposed rule change to amend the content of the NYSE BQT market data 
feed \7\ to include NYSE Chicago BBO and NYSE Chicago Trades market 
data feeds.\8\
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    \4\ 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'').
    \5\ See Securities Exchange Act Release No. 83359 (June 1, 
2018), 83 FR 26507 (June 7, 2018) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change to Amend the Content of the 
NYSE Best Quote & Trades Data Feed) (SR-NYSE-2018-22).
    \6\ NYSE Chicago has announced that, subject to rule approvals, 
it will transition to trading to Pillar on November 4, 2019. See 
Trader Update, available at https://www.nyse.com/publicdocs/nyse/notifications/trader-update/NYSEChicago_Migration_update_9.4.pdf.
    \7\ See SR-NYSE-2019-60, filed on November 4, 2019 (the ``NYSE 
BQT Filing'').
    \8\ See Securities Exchange Act Release No. 87389 (October 23, 
2019), 84 FR 57904 (October 29, 2019) (SR-NYSEChicago-2019-15).
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    The Exchange currently charges an access fee of $250 per month for 
the NYSE BQT data feed. The Exchange is not proposing any change to the 
access fee. Footnote 5 to the Market Data Fee Schedule further provides 
that to subscribe to NYSE BQT, subscribers must also subscribe to, and 
pay applicable fees for, NYSE BBO, NYSE Trades, NYSE Arca BBO, NYSE 
Arca Trades, NYSE American BBO, NYSE American Trades, NYSE National 
BBO, and NYSE National Trades. Because, as provided for in the NYSE BQT 
Filing, NYSE will begin included data from NYSE Chicago BBO and NYSE 
Chicago Trades in NYSE BQT, the Exchange proposes to add references to 
NYSE Chicago BBO and NYSE Chicago Trades to Footnote 5 to the Market 
Data Fee Schedule. Accordingly, in addition to subscribing to, and 
paying for, NYSE BBO, NYSE Trades, NYSE Arca BBO, NYSE Arca Trades, 
NYSE American BBO, NYSE American Trades, NYSE National BBO and NYSE 
National Trades, subscribers of NYSE BQT will need to subscribe to NYSE 
Chicago BBO and NYSE Chicago Trades. Because there are currently no 
fees for NYSE Chicago BBO and NYSE Chicago Trades, adding these 
products to Footnote 5 of the Market Data Fee Schedule will not 
increase the fees for NYSE BQT.
    In anticipation of NYSE Chicago BBO and NYSE Chicago Trades being 
included in NYSE BQT, all current NYSE BQT customers have subscribed to 
NYSE Chicago BBO and NYSE Chicago Trades and therefore will be able to 
comply with the requirement proposed in this rule change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\9\ in general, and 
Sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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 \11\ 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,\12\ 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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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4), (5).
    \11\ 15 U.S.C. 78k-1.
    \12\ 17 CFR 242.603.
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    The Exchange further believes that requiring market data recipients 
to separately subscribe to and pay for the ten underlying data feeds to 
NYSE BQT is reasonable because by design, NYSE BQT represents an 
aggregated and consolidated version of those existing ten data feeds. 
The Exchange notes that it is not seeking with this filing to establish 
fees relating to the underlying BBO and Trades data feeds, as those 
fees have already been established consistent with Section 19(b)(3)(A) 
of the Act \13\ and Rule 19b-4(f)(2) \14\ 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 underlying 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. The Exchange 
therefore believes that the 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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(2).
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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 
subject to the same fees. In addition, vendors and subscribers that do 
not wish to purchase NYSE BQT may separately purchase the individual 
underlying data feed, 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 would 
continue to offer NYSE BQT on terms that a subscriber of the underlying 
feeds could offer a competing product if it so chooses.
    With respect to this proposed rule change, because NYSE Chicago 
does not currently charge any fees for NYSE Chicago BBO or NYSE Chicago 
Trades, the proposed amendment to include these products in Footnote 5 
to the Market Data Fee Schedule will not change any fees for NYSE BQT. 
Moreover, current subscribers to NYSE BQT have already subscribed to 
NYSE Chicago BBO and NYSE Chicago Trades, and therefore such 
subscribers will not have any issues complying with this proposed rule 
change.
    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

[[Page 64388]]

underlying data products, and proprietary data products offered by the 
Exchange's competitors, 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.
    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.

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

    In accordance with Section 6(b)(8) of the Act,\15\ 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 ten existing 
market data feeds. Although the Exchange, NYSE Arca, NYSE American, 
NYSE National and NYSE Chicago are the exclusive distributors of the 
underlying BBO and Trades feeds from which certain data elements are 
taken to create 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 underlying data feeds would be able, if they chose, to create a 
data feed with the same information as 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.
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    \15\ 78 U.S.C. 78f(b)(8).
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    The market for proprietary data products is competitive and 
inherently contestable because there is fierce competition for the 
inputs necessary for the creation of proprietary data and strict 
pricing discipline for the proprietary products themselves. Numerous 
exchanges compete with one another for listings and order flow and 
sales of market data itself, providing ample opportunities for 
entrepreneurs who wish to compete in any or all of those areas, 
including producing and distributing their own market data. Proprietary 
data products are produced and distributed by each individual exchange, 
as well as other entities, in a vigorously competitive market. Indeed, 
the U.S. Department of Justice (``DOJ'') (the primary antitrust 
regulator) has expressly acknowledged the aggressive actual competition 
among exchanges, including for the sale of proprietary market data. In 
2011, the DOJ stated that exchanges ``compete head to head to offer 
real-time equity data products. These data products include the best 
bid and offer of every exchange and information on each equity trade, 
including the last sale.'' \16\
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    \16\ Press Release, U.S. Department of Justice, Assistant 
Attorney General Christine Varney Holds Conference Call Regarding 
NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. Abandoning 
Their Bid for NYSE Euronext (May 16, 2011), available at http://www.justice.gov/iso/opa/atr/speeches/2011/at-speech-110516.html; see 
also Complaint in U.S. v. Deutsche Borse AG and NYSE Euronext, Case 
No. 11-cv-2280 (DC Dist.) ] 24 (``NYSE and Direct Edge compete head-
to-head . . . in the provision of real-time proprietary equity data 
products.'').
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    Moreover, competitive markets for listings, order flow, executions, 
and transaction reports impose pricing discipline for the inputs of 
proprietary data products and therefore constrain markets from 
overpricing proprietary market data. Broker-dealers send their order 
flow and transaction reports to multiple venues, rather than providing 
them all to a single venue, which in turn reinforces this competitive 
constraint. As a 2010 Commission Concept Release noted, the ``current 
market structure can be described as dispersed and complex'' with 
``trading volume . . . dispersed among many highly automated trading 
centers that compete for order flow in the same stocks'' and ``trading 
centers offer[ing] a wide range of services that are designed to 
attract different types of market participants with varying trading 
needs.'' \17\ Indeed, equity trading is currently dispersed across 13 
exchanges,\18\ 31 alternative trading systems,\19\ and numerous broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly-available information, no single exchange has more 
than 19% market share (whether including or excluding auction 
volume).\20\ And as the Commission's own Chief Administrative Law Judge 
found after considering extensive fact and expert testimony and 
documentary evidence on the subject, ``there is fierce competition for 
trading services (or `order flow')'' among exchanges, and ``the record 
evidence shows that competition plays a significant role in restraining 
exchange pricing of depth-of-book products.'' In the Matter of the 
Application of Securities Industry And Financial Markets Association 
For Review of Actions Taken By Self-Regulatory Organizations, Initial 
Decision Release No. 1015, Administrative Proceeding File No. 3-15350 
(June 1, 2016), at pp. 8 and 33.
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    \17\ Concept Release on Equity Market Structure, Securities 
Exchange Act Release No. 61358 (Jan. 14, 2010), 75 FR 3594 (Jan. 21, 
2010) (File No. S7-02-10). This Concept Release included data from 
the third quarter of 2009 showing that no market center traded more 
than 20% of the volume of listed stocks, further evidencing the 
dispersal of and competition for trading activity. Id. at 3598.
    \18\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \19\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \20\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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    If an exchange succeeds in competing for quotations, order flow, 
and trade executions, then it earns trading revenues and increases the 
value of its proprietary market data products because they will contain 
greater quote and trade information. Conversely, if an exchange is less 
successful in attracting quotes, order flow, and trade executions, then 
its market data products may be less desirable to customers in light of 
the diminished content and data products offered by competing venues 
may become more attractive. Thus, competition for quotations, order 
flow, and trade executions puts significant pressure on an exchange to 
maintain both execution and data fees at reasonable levels.
    In addition, in the case of products that are also redistributed 
through market data vendors, the vendors themselves provide additional 
price discipline for proprietary data products because they control the 
primary means of access to certain end users. These vendors impose 
price discipline based

[[Page 64389]]

upon their business models. For example, vendors that assess a 
surcharge on data they sell are able to refuse to offer proprietary 
products that their end users do not or will not purchase in sufficient 
numbers. Vendors will not elect to make NYSE BQT available unless their 
customers request it, and customers will not elect to pay for NYSE BQT 
unless the product can provide value by sufficiently increasing 
revenues or reducing costs in the customer's business in a manner that 
will offset the fees. All of these factors operate as constraints on 
pricing proprietary data products.

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 is effective upon filing pursuant to 
Section 19(b)(3)(A) \21\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \22\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(2).
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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. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \23\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \23\ 15 U.S.C. 78s(b)(2)(B).
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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-2019-61 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-2019-61. 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 website (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 website 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 the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2019-61 and should be submitted on 
or before December 12, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-25216 Filed 11-20-19; 8:45 am]
 BILLING CODE 8011-01-P