[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Notices]
[Pages 9847-9859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03411]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88211; File No. SR-NYSENAT-2020-05]


Self-Regulatory Organizations; NYSE National, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Establish 
Fees for the NYSE National Integrated Feed

February 14, 2020.
    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 February 3, 2020, NYSE National, Inc. (``NYSE National'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III 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\ 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 establish fees for the NYSE National 
Integrated Feed. 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, 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 adopt the NYSE National Proprietary Market 
Data Fee Schedule (``Fee Schedule'') and establish the fees for the 
NYSE National Integrated Feed that would be effective February 3, 
2020.\4\
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    \4\ The proposed rule change establishing the NYSE National 
Integrated Feed was immediately effective on May 31, 2018. See 
Securities Exchange Act Release No. 83350 (May 31, 2018), 83 FR 
26332 (June 6, 2018) (SR-NYSENAT-2018-09) (``NYSE National 
Integrated Feed Product Filing''). The NYSE National Integrated Feed 
Product Filing also established the NYSE National BBO and NYSE 
National Trades market data feeds.
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    In summary, the NYSE National Integrated Feed is a NYSE National-
only market data feed that provides vendors and subscribers on a real-
time basis with a unified view of events, in sequence, as they appear 
on the NYSE National matching engine. The NYSE National Integrated Feed 
includes depth-of-book order data, last sale data, security status 
updates (e.g., trade corrections and trading halts), and stock summary 
messages. Because the NYSE National Integrated Feed has a unified view 
of events, in sequence, it also includes information about the 
Exchange's best bid or offer at any given time.
    The Exchange currently does not charge any fees for the NYSE 
National Integrated Feed market data product.\5\
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    \5\ The Exchange also currently does not charge any fees for the 
NYSE National BBO and NYSE National Trades market data products and 
proposes to adopt rule text on the Fee Schedule to reflect that 
there are no fees charged for NYSE National BBO and NYSE National 
Trades market data products.
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    The Exchange initially filed to introduce fees for the NYSE 
National Integrated Feed on December 4, 2019 (the ``Initial 
Proposal'').\6\ Pursuant to the Initial Proposal, the fees would not be 
implemented until February 3, 2020. The Initial Proposal was published 
in the Federal Register and two comment letters were submitted in 
response. The Initial Proposal was temporarily suspended pursuant to a 
Suspension Order (the ``Initial Suspension Order'').\7\ The Initial 
Suspension Order also instituted proceedings to determine whether to 
approve or disapprove the Initial Proposal.
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    \6\ See Securities Exchange Act Release No. 87797 (December 18, 
2019), 84 FR 71025 (December 26, 2019).
    \7\ See Securities Exchange Act Release No. 88109 (January 31, 
2020) (SR-NYSENAT-2019-13) (``Initial Suspension Order'').
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Background
    The Commission has repeatedly expressed its preference for 
competition over regulatory intervention in determining prices, 
products, and services in the securities markets. In Regulation NMS, 
the Commission highlighted the importance of market forces in 
determining prices and SRO revenues, and also recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \8\
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    \8\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS Adopting Release'').
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    As the Commission itself recognized, the market for trading 
services in NMS stocks has become ``more fragmented and competitive.'' 
\9\ Equity trading is currently dispersed across 13 exchanges,\10\ 31 
alternative trading systems,\11\ and numerous broker-dealer 
internalizers and wholesalers, all competing for order flow. Based on 
publicly-available information, no single exchange has more than 18% 
market share (whether including or excluding auction volume).\12\
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    \9\ See Securities Exchange Act Release No. 51808, 84 FR 5202, 
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot 
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
    \10\ 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.
    \11\ 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.
    \12\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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    The recent growth of NYSE National's market share demonstrates this 
competitive marketplace. Between February 2017 and mid-May 2018, NYSE 
National was non-operational, and therefore had 0% of market share. On 
May 21, 2018, NYSE National re-launched on its current platform as an 
affiliated exchange of New York Stock Exchange, LLC (``NYSE''), NYSE 
Arca, Inc. (``NYSE Arca, Inc.''), and NYSE American LLC (``NYSE 
American''). Within four months, NYSE National began regularly 
executing 1% of consolidated trading volume. By August 2019, NYSE 
National began executing approximately 1.5% of consolidated trading 
volume on a more regular basis. By October 2019, the Exchange had

[[Page 9848]]

1.9% market share of executed volume of equity trades.\13\
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    \13\ See id.
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    As NYSE National's transaction market share has increased, so has 
the value of its market data. For example, in May 2018, when NYSE 
National re-launched trading operations, the Exchange had 12 customers 
for its NYSE National Integrated Feed. As NYSE National's market share 
has increased, the number of subscribers of the NYSE National 
Integrated Feed has steadily increased and as of November 2019, the 
Exchange had 57 customers that subscribed to the NYSE National 
Integrated Feed. In November 2019, customers of the NYSE National 
Integrated Feed accounted for over 99% of the executed trade volume on 
the Exchange.
    On December 4, 2019, the Exchange filed the Initial Proposal to 
introduce fees for the NYSE National Integrated Feed, effective 
February 3, 2020. The Exchange explained in the Initial Proposal that 
it filed its proposed rule change early, in December 2019, because the 
Exchange believed it was appropriate to provide market participants 
with early notice of the proposed changes, so that they could begin 
determining whether the value of the NYSE National Integrated Feed to 
their businesses is such that they would choose to continue using the 
product once it was no longer provided for free. The Exchange explained 
that it believes that market participants should have the opportunity 
to begin such determinations before the Exchange begins charging fees.
    Since the date of the Initial Proposal and before the proposed fees 
went into effect, five subscribers to the NYSE National Integrated Feed 
product (i.e., nearly nine percent of the prior subscriber base) have 
canceled their subscriptions. In each instance, the subscriber told the 
Exchange that its reason for cancelling its subscription was the 
imminent imposition of fees. A sixth customer informed the Exchange 
that if the Exchange is permitted to impose the fees, the customer will 
cancel its subscription to the NYSE National Integrated Feed product 
and instead subscribe to the NYSE National BBO feed, which will remain 
available for free. These six lost subscribers constitute 10.5 percent 
of the prior subscriber base.
Proposed NYSE National Integrated Feed Fees
    To reflect the value of NYSE National's market data, as correlated 
to the Exchange's increased transaction volume market share, the 
Exchange proposes to establish the fees listed below for the NYSE 
National Integrated Feed, operative on February 3, 2020. The Exchange 
proposes to charge fees for the same categories of market data use as 
its affiliated exchanges (namely, NYSE, NYSE Arca, and NYSE American) 
currently charge. The Exchange believes that adopting the same fee 
structure as its affiliated exchanges would reduce administrative 
burdens on NYSE National market data subscribers that also currently 
subscribe to market data feeds from NYSE, NYSE Arca, or NYSE American.
    1. Access Fee. For the receipt of access to the NYSE National 
Integrated Feed, the Exchange proposes to charge $2,500 per month. This 
proposed Access Fee would be charged to any data recipient that 
receives a data feed of the NYSE National Integrated Feed. Data 
recipients that only use display devices to view NYSE National 
Integrated Feed market data and do not separately receive a data feed 
would not be charged an Access Fee. The proposed Access Fee is charged 
only once per firm.
    2. Redistribution Fee. For redistribution of the NYSE National 
Integrated Feed, the Exchange proposes to establish a fee of $1,500 per 
month. The proposed Redistribution Fee would be charged to any 
Redistributors of the NYSE National Integrated Feed, which is defined 
to mean a vendor or any person that provides a real-time NYSE National 
market data product externally to a data recipient that is not its 
affiliate or wholly-owned subsidiary, or to any system that an external 
data recipient uses, irrespective of the means of transmission or 
access. The proposed Redistribution Fee is charged only once per 
Redistributor account.
    3. User Fees. The Exchange proposes to charge a Professional User 
Fee (Per User) of $10 per month and a Non-Professional User Fee (Per 
User) of $1 per month. These user fees would apply to each display 
device that has access to the NYSE National Integrated Feed.
    4. Non-Display Use Fees. The Exchange proposes to establish non-
display fees for the NYSE National Integrated Feed that are based on 
the non-display use categories charged by NYSE, NYSE Arca, NYSE 
American, the Consolidated Tape Association, and the UTP Plan for non-
display use.\14\ Non-display use would mean accessing, processing, or 
consuming the NYSE National Integrated Feed, delivered directly or 
through a Redistributor, for a purpose other than in support of a data 
recipient's display or further internal or external redistribution 
(``Non-Display Use''). Non-Display Use would include trading uses such 
as high frequency or algorithmic trading as well as any trading in any 
asset class, automated order or quote generation and/or order pegging, 
price referencing for algorithmic trading or smart order routing, 
operations control programs, investment analysis, order verification, 
surveillance programs, risk management, compliance, and portfolio 
management.
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    \14\ See Endnote 1 to the NYSE Proprietary Market Data Fees, 
available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE Arca 
Equites Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Fee_Schedule.pdf; Endnote 1 to the NYSE American 
LLC Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf; Endnote 8 to 
the Schedule of Market Data Charges for the Consolidated Tape 
Association, available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Schedule%20Of%20Market%20Data%20Charges%20-%20January%201,%202015.pdf; and Non-Display Usage Fees as set forth 
in the UTP Plan Fee Schedule and Non-Display Policy, available here: 
http://utpplan.com/DOC/Datapolicies.pdf. See, e.g., Securities 
Exchange Act Release Nos. 69278 (April 2, 2013), 78 FR 20973 (April 
8, 2013) (SR-NYSE-2013-25) and 72923 (Aug. 26, 2014), 79 FR 52079 
(Sept. 2, 2014) (SR-NYSE-2014-43).
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    The Exchange proposes three categories of Non-Display Use of the 
NYSE National Integrated Feed and related fees applicable to each 
category. One, two, or three categories of Non-Display Use may apply to 
a data recipient.
     As proposed, the Category 1 Fee would be $5,000 per month 
and would apply when a data recipient's Non-Display Use of the NYSE 
National Integrated Feed is on its own behalf, not on behalf of its 
clients.
     As proposed, Category 2 Fees would be $5,000 per month and 
would apply to a data recipient's Non-Display Use of the NYSE National 
Integrated Feed on behalf of its clients.
     As proposed, Category 3 Fees would be $5,000 per month and 
would apply to a data recipient's Non-Display Use of the NYSE National 
Integrated Feed for the purpose of internally matching buy and sell 
orders within an organization, including matching customer orders for a 
data recipient's own behalf and/or on behalf of its clients. This 
category would apply to Non-Display Use in trading platforms, such as, 
but not restricted to, alternative trading systems (``ATSs''), broker 
crossing networks, broker crossing systems not filed as ATSs, dark 
pools,

[[Page 9849]]

multilateral trading facilities, exchanges and systematic 
internalization systems. A data recipient will be charged $5,000 per 
month for each platform on which it uses the Non-Display data 
internally to match buy and sell orders, up to a cap of $15,000 per 
month; even if the data recipient uses the NYSE National Integrated 
Feed for more than three platforms, it will not pay more than $15,000 
for such Category 3 use per month.
    The Exchange proposes to adopt the description of the three non-
display use categories in the Fee Schedule in proposed endnote 1 on the 
Fee Schedule.\15\
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    \15\ See Fee Schedule, proposed endnote 1.
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    Data recipients that receive the NYSE National Integrated Feed for 
Non-Display Use would be required to complete and submit a Non-Display 
Use Declaration before they would be authorized to receive the feed. A 
firm subject to Category 3 Fees would be required to identify each 
platform that uses the NYSE National Integrated Feed for a Category 3 
Non-Display Use basis, such as ATSs and broker crossing systems not 
registered as ATSs, as part of the Non-Display Use Declaration.
    5. Non-Display Use Declaration Late Fee. Data recipients that 
receive the NYSE National Integrated Feed for Non-Display Use would be 
required to complete and submit a Non-Display Use Declaration before 
they would be authorized to receive the feed. NYSE National Integrated 
Feed data recipients would be required to submit, by December 31 of 
each year, the Non-Display Use Declaration. The requirement to submit a 
Non-Display Use Declaration would apply to all real-time NYSE National 
data feed product recipients. The Exchange proposes to charge a Non-
Display Use Declaration Late Fee of $1,000 per month to any data 
recipient that pays an Access Fee for the NYSE National Integrated Feed 
that has failed to timely complete and submit a Non-Display Use 
Declaration. Specifically, with respect to the Non-Display Use 
Declaration due by December 31 of each year, the Non-Display Use 
Declaration Late Fee would apply to data recipients that fail to 
complete and submit the Non-Display Use Declaration by the December 31 
due date, and would apply beginning January 1 and for each month 
thereafter until the data recipient has completed and submitted the 
annual Non-Display Use Declaration.
    The proposed Non-Display Use Declaration Late Fee would be set 
forth in endnote 2 on the Fee Schedule. Proposed endnote 2 would 
provide that a data recipient that pays an Access Fee and that fails to 
timely complete and submit a Non-Display Use Declaration must pay the 
Non-Display Use Declaration Late Fee.\16\ Proposed endnote 2 to the Fee 
Schedule would also provide that the annual Non-Display Use Declaration 
would be due by December 31 of each year. Finally, proposed endnote 2 
would provide that the Non-Display Use Declaration Late Fee would apply 
to data recipients that fail to complete and submit the annual Non-
Display Use Declaration by the December 31 due date, and would apply 
beginning January 1 of each year and for each month thereafter until 
the data recipient has completed and submitted the annual Non-Display 
Use Declaration.
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    \16\ See Fee Schedule, proposed endnote 2.
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    In addition, if a data recipient's use of the NYSE National 
Integrated Feed data changes at any time after the data recipient 
submits a Non-Display Use Declaration, the data recipient must inform 
the Exchange of the change by completing and submitting at the time of 
the change an updated declaration reflecting the change of use.
    6. Multiple Data Feed Fee. The Exchange proposes to establish a 
monthly fee, the ``Multiple Data Feed Fee,'' that would apply to data 
recipients that take a data feed for a market data product in more than 
two locations. Data recipients taking the NYSE National Integrated Feed 
in more than two locations would be charged $200 per additional 
location per month. No new reporting would be required.\17\
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    \17\ Data vendors currently report a unique Vendor Account 
Number for each location at which they provide a data feed to a data 
recipient. The Exchange considers each Vendor Account Number a 
location. For example, if a data recipient has five Vendor Account 
Numbers, representing five locations, for the receipt of the NYSE 
National Integrated Feed product, that data recipient will pay the 
Multiple Data Feed fee with respect to three of the five locations.
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    7. Fee Waiver for Federal Agencies. The Exchange proposes to adopt 
rule text in the Fee Schedule with respect to Federal agencies that 
subscribe to the NYSE National Integrated Feed. The proposed rule would 
provide that market data fees would not apply to any Federal agency for 
their use of NYSE National real-time proprietary market data products. 
The term ``Federal agency'' as used in the Fee Schedule would include 
all Federal agencies subject to the Federal Acquisition Regulation 
(FAR),\18\ as well as any Federal agency not subject to FAR that has 
promulgated its own procurement rules.\19\ More specifically, the 
Exchange proposes to specify that access fees, professional user fees 
and non-display fees would not apply to Federal agencies for those 
products to which those fees apply.\20\ The proposed fee waiver is 
designed to allow the Exchange to provide Federal agencies with NYSE 
National real-time proprietary market data products at no cost in 
support of Federal agencies' regulatory responsibilities. With the 
adoption of the proposed fee waiver, the Exchange is not waiving any 
other contractual rights, and all Federal agencies that subscribe to 
NYSE National real-time proprietary market data products will be 
required to execute the appropriate subscriber agreement, which 
includes, among other things, provisions against the redistribution of 
data.
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    \18\ FAR is the principal set of rules governing the process by 
which the U.S. federal government purchases goods and services.
    \19\ See 48 CFR 2.101. FAR defines ``Federal agency'' as ``any 
executive agency or any independent establishment in the legislative 
or judicial branch of the Government (except the Senate, the House 
of Representatives, the Architect of the Capitol, and any activities 
under the Architect's direction).'' ``Executive agency'' is defined 
as ``an executive department, a military department, or any 
independent establishment within the meaning of 5 U.S.C. 101, 102, 
and 104(1), respectively, and any wholly owned Government 
corporation within the meaning of 31 U.S.C. 9101.''
    \20\ Currently, pursuant to this proposed rule change, the NYSE 
National Integrated Feed is the only product to which fees would 
apply.
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    8. One-Month Free Trial. Finally, the Exchange proposes a one-month 
free trial for any firm that subscribes to a particular NYSE National 
market data product for the first time. As proposed, a first-time 
subscriber would be any firm that has not previously subscribed to a 
particular NYSE National market data product listed on the Fee 
Schedule. As proposed, a first-time subscriber of a particular NYSE 
National market data product would not be charged the Access Fee, Non-
Display Fee, any applicable Professional and Non-Professional User Fee, 
and Redistribution Fee for that product for one calendar month. For 
example, a firm that currently subscribes to NYSE National BBO for free 
would be eligible to receive a free one-month trial of the NYSE 
National Integrated Feed, whether in a display-only format or for non-
display use. On the other hand, if a firm pays an Access Fee and 
receives the NYSE National Integrated Feed for non-display use, it 
would not be eligible to receive a free one-month trial of the NYSE 
National Integrated Feed in a display-only format (or vice-versa). The 
proposed free trial would be for the first full calendar month 
following the date a subscriber is approved to receive trial access to 
the particular NYSE National

[[Page 9850]]

market data product. The Exchange would provide the one-month free 
trial for each particular product to each subscriber once.
    The Exchange believes that providing a one-month free trial to NYSE 
National market data products listed on the Fee Schedule would enable 
potential subscribers to determine whether a particular NYSE National 
market data product provides value to their business models before 
fully committing to expend development and implementation costs related 
to the receipt of that product, and is intended to encourage increased 
use of the Exchange's market data products by defraying some of the 
development and implementation costs subscribers would ordinarily have 
to expend before using a product.
Application of Proposed Fees
    The Exchange is not required to make the NYSE National Integrated 
Feed available or to offer any specific pricing alternatives to any 
customers, nor is any firm required to purchase the NYSE National 
Integrated Feed. Firms that choose to purchase the NYSE National 
Integrated Feed do so for the primary goals of using it to increase 
their revenues, reduce their expenses, and in some instances to compete 
directly with the Exchange (including for order flow). Those firms are 
able to determine for themselves whether or not the NYSE National 
Integrated Feed or any other similar products are attractively priced.
    The Exchange produces and disseminates the NYSE National Integrated 
Feed as part of its market data offerings to support its transaction 
execution services. Since May 2018, when NYSE National relaunched 
trading, the Exchange has observed a direct correlation between the 
steady increase of subscribers to the NYSE National Integrated Feed and 
the increase in the Exchange's transaction market share volume over the 
same period.
    Based on the reported usage of the NYSE National Integrated Feed, 
the Exchange believes that its data subscribers use the order-by-order 
detail information available in this market data product to make 
trading decisions that directly benefit the transaction services that 
the Exchange offers. Specifically, in the period before the Initial 
Proposal was published, subscribers of the NYSE National Integrated 
Feed represented firms that provided over 99% of the Exchange's 
executed transaction volume. More than half of the feed's subscribers 
overall (i.e., 34 of 57) reported ``Category 1'' non-display use of the 
NYSE National Integrated Feed, which means that they used the data for 
trading on their own behalf. This figure confirms that a substantial 
portion of the NYSE National Integrated Feed's subscribers analyzed 
whether it was in their business interest to use the feed for their own 
trading, and concluded that it was.
    The Exchange determined the level of the fees to charge for the 
NYSE National Integrated Feed based on the value of the Exchange's 
transaction services. As noted above, over an 18-month period, NYSE 
National has grown from 0% to nearly 2% market share of consolidated 
trading volume. During that same period, the Exchange has had a steady 
increase in the number of subscribers to the NYSE National Integrated 
feed.
    The proposed fee structure is not novel as it is based on the fee 
structure currently in place for the NYSE American Integrated Feed.\21\ 
Both NYSE American and NYSE National trade all NMS Stocks. As noted 
above, in October 2019, NYSE National had 1.9% market share; for that 
same month, NYSE American had 0.29% market share.\22\ Even though NYSE 
National's market share is several times higher than NYSE American's, 
the Exchange is proposing fees for the NYSE National Integrated Feed 
that are based on the existing fee structure and rates that data 
recipients already pay for the NYSE American Integrated Feed. 
Specifically, the fees for the NYSE American Integrated Feed--which 
like the NYSE National Integrated Feed, includes top of book, depth of 
book, trades, and security status messages--consist of an Access Fee of 
$2,500 per month, a Professional User Fee (Per User) of $10 per month, 
a Non-Professional User Fee (Per User) of $2 per month, Non-Display 
Fees of $5,000 per month for each of Categories 1, 2 and 3, and a 
Redistribution Fee of $1,500 per month. NYSE American also charges a 
Non-Display Use Declaration Late Fee of $1,000 per month and a Multiple 
Data Feed Fee of $200 per month.\23\
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    \21\ See Securities Exchange Act Release Nos. 76525 (November 
25, 2015), 80 FR 75148 (December 1, 2015) (SR-NYSEMKT-2015-95) 
(Notice of filing and immediate effectiveness of proposed rule 
change to establish fees for NYSE MKT Integrated Feed), and 76975 
(January 26, 2016), 81 FR 5139 (February 1, 2016) (SR-NYSEMKT-2016-
11) (Notice of filing and immediate effectiveness of proposed rule 
change amending the fees for NYSE MKT Integrated Feed to add a 
Multiple Data Feed Fee).
    \22\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
    \23\ See NYSE American LLC Equities Proprietary Market Data Fees 
at https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf.
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    In the Initial Proposal, the Exchange noted that each of the then-
current subscribers to the NYSE National Integrated Feed would be 
impacted by the proposed rule change, and that the scope of the fee 
impact for each data recipient would depend on that data recipient's 
use of the data. The Exchange noted that, based on current usage, at 
least 34 firms would be subject to Category 1 Non-Display Use fees, at 
least 14 firms would be subject to Category 2 Non-Display Use fees, and 
at least 10 firms would be subject to Category 3 Non-Display Use fees.
    The Exchange further explained that, because the NYSE National 
Integrated Feed had not been previously been subject to fees, the 
Exchange did not know the full impact of the proposed fees on current 
data recipients because subscribers may choose to reduce or eliminate 
their use of data. The Exchange stated that it anticipated that there 
might be data recipients of the NYSE National Integrated Feed that 
subscribed only because it was free and might choose to discontinue 
using the product once the fees were implemented. The Exchange noted 
that a data recipient that chooses to discontinue the NYSE National 
Integrated Feed may also choose to shift order flow away from the 
Exchange, and that, given the current competitive environment, if data 
recipients were to both discontinue the product and shift order flow 
away from the Exchange, the Exchange would reevaluate the fees and 
potentially file a separate proposed rule change to amend its fees. The 
Exchange explained that in advance of implementing the proposed fees, 
however, the Exchange could not estimate with precision the impact of 
the proposed fees on the Exchange's transaction services business or 
the number of NYSE National Integrated Feed subscribers.
    Since the Initial Proposal became publicly known on December 4, 
2019, five subscribers to the NYSE National Integrated Feed product 
have canceled their subscriptions. In each instance, the subscriber 
told the Exchange that the reason for ending its subscription was the 
imminent imposition of fees. A sixth customer informed the Exchange 
that if the Exchange is permitted to impose the fees, the customer will 
cancel its subscription to the NYSE National Integrated Feed product 
and instead subscribe to the NYSE National BBO feed, which will remain 
available for free.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 9851]]

the provisions of Section 6 of the Act,\24\ in general, and Sections 
6(b)(4) and 6(b)(5) of the Act,\25\ in particular, in that it provides 
an equitable allocation of reasonable fees among users and recipients 
of the data and is not designed to permit unfair discrimination among 
customers, issuers, and brokers.
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    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(4), (5).
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The Proposed Rule Change Is Reasonable
    In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique 
market data to the public. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues, and also recognized that 
current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \26\
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    \26\ See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
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    With respect to market data, the decision of the United States 
Court of Appeals for the District of Columbia Circuit in NetCoalition 
v. SEC upheld the Commission's reliance on the existence of competitive 
market mechanisms to evaluate the reasonableness and fairness of fees 
for proprietary market data:

In fact, the legislative history indicates that the Congress intended 
that the market system ``evolve through the interplay of competitive 
forces as unnecessary regulatory restrictions are removed'' and that 
the SEC wield its regulatory power ``in those situations where 
competition may not be sufficient,'' such as in the creation of a 
``consolidated transactional reporting system.'' \27\
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    \27\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) 
(``NetCoalition I'') (quoting H.R. Rep. No. 94-229 at 92 (1975), as 
reprinted in 1975 U.S.C.C.A.N. 323).

    The court agreed with the Commission's conclusion that ``Congress 
intended that `competitive forces should dictate the services and 
practices that constitute the U.S. national market system for trading 
equity securities.' '' \28\
---------------------------------------------------------------------------

    \28\ Id. at 535.
---------------------------------------------------------------------------

    In this competitive marketplace, the Exchange's executed trading 
volume has grown from 0% market share to nearly 2% market share in less 
than two years and the Exchange believes that it is reasonable to begin 
charging fees for the NYSE National Integrated Feed.
1. The Proposed Fees Are Constrained by Significant Competitive Forces
a. Exchange Market Data Is Sold in a Competitive Market
    In 2018, Charles M. Jones, the Robert W. Lear Professor of Finance 
and Economics of the Columbia University School of Business, conducted 
an analysis of the market for equity market data in the United States. 
He canvassed the demand for both consolidated and exchange proprietary 
market data products and the uses to which those products were put by 
market participants, and reported his conclusions in a paper annexed 
hereto.\29\ Among other things, Professor Jones concluded that:
---------------------------------------------------------------------------

    \29\ See Exhibit 3A, Charles M. Jones, Understanding the Market 
for U.S. Equity Market Data, August 31, 2018 (hereinafter ``Jones 
Paper'').
---------------------------------------------------------------------------

     ``The market [for exchange market data] is characterized 
by robust competition: Exchanges compete with each other in selling 
proprietary market data products. They also compete with consolidated 
data feeds and with data provided by alternative trading systems 
(`ATSs'). Barriers to entry are very low, so existing exchanges must 
also take into account competition from new entrants, who generally try 
to build market share [as NYSE National has done with its Integrated 
Feed] by offering their proprietary market data products for free for 
some period of time.'' \30\
---------------------------------------------------------------------------

    \30\ Id. at 2.
---------------------------------------------------------------------------

     ``Although there are regulatory requirements for some 
market participants to use consolidated data products, there is no 
requirement for market participants to purchase any proprietary market 
data product for regulatory purposes.'' \31\
---------------------------------------------------------------------------

    \31\ Id.
---------------------------------------------------------------------------

     ``There are a variety of data products, and consumers of 
equity market data choose among them based on their needs. Like most 
producers, exchanges offer a variety of market data products at 
different price levels. Advanced proprietary market data products 
provide greater value to those who subscribe. As in any other market, 
each potential subscriber takes the features and prices of available 
products into account in choosing what market data products to buy 
based on its business model.'' \32\
---------------------------------------------------------------------------

    \32\ Id.
---------------------------------------------------------------------------

     ``Exchange equity market data fees are a small cost for 
the industry overall: The data demonstrates that total exchange market 
data revenues are orders of magnitude smaller than (i) broker-dealer 
commissions, (ii) investment bank earnings from equity trading, and 
(iii) revenues earned by third-party vendors.'' \33\
---------------------------------------------------------------------------

    \33\ Id.
---------------------------------------------------------------------------

     ``For proprietary exchange data feeds, the main question 
is whether there is a competitive market for proprietary market data. 
More than 40 active exchanges and alternative trading systems compete 
vigorously in both the market for order flow and in the market for 
market data. The two are closely linked: An exchange needs to consider 
the negative impact on its order flow if it raises the price of its 
market data. Furthermore, new entrants have been frequent over the past 
10 years or so, and these venues often give market data away for free, 
[again, as NYSE National has done with its Integrated Feed] serving as 
a check on pricing by more established exchanges. These are all the 
standard hallmarks of a competitive market.'' \34\
---------------------------------------------------------------------------

    \34\ Id. at 39-40.
---------------------------------------------------------------------------

    Professor Jones' conclusions are consistent with the demonstration 
of the competitive constraints on the pricing of market data 
demonstrated by analysis of exchanges as platforms for market data and 
trading services, as shown below.
b. Exchanges That Offer Market Data and Trading Services Function as 
Two-Sided Platforms
    An exchange may demonstrate that its fees are constrained by 
competitive forces by showing that the platform theory of competition 
applies. When the platform theory of competition applies, an exchange 
is not additionally required to demonstrate that there is a substitute 
for the specific market data product at issue, because the relevant 
question is whether a constraint on fees exists, not the specific 
mechanism of constraint.
    As the United States Supreme Court recognized in Ohio v. American 
Express, platforms are firms that act as intermediaries between two or 
more sets of agents, and typically the choices made on one side of the 
platform affect the results on the other side of the platform via 
externalities, or ``indirect network effects.'' \35\ Externalities are 
linkages between the different sides of a platform such that one cannot 
understand pricing and competition for goods or services on one side of 
the platform in isolation; one must also

[[Page 9852]]

account for the influence of the other sides. As the Supreme Court 
explained:
---------------------------------------------------------------------------

    \35\ Ohio v. American Express, 138 S. Ct. 2274, 2280-81 (2018).

    To ensure sufficient participation, two-sided platforms must be 
sensitive to the prices that they charge each side. . . . Raising 
the price on side A risks losing participation on that side, which 
decreases the value of the platform to side B. If the participants 
on side B leave due to this loss in value, then the platform has 
even less value to side A--risking a feedback loop of declining 
demand. . . . Two-sided platforms therefore must take these indirect 
network effects into account before making a change in price on 
either side.\36\
---------------------------------------------------------------------------

    \36\ Id. at 2281.

    The Exchange and its affiliated exchanges have long maintained that 
they function as platforms between consumers of market data and 
consumers of trading services. Proving the existence of linkages 
between the two sides of this platform requires an in-depth economic 
analysis of both public data and confidential exchange data about 
particular customers' trading activities and market data purchases. 
Exchanges, however, are prohibited from publicly sharing details about 
these specific customer activities and purchases. For example, pursuant 
to Exchange Rule 7.41, transactions executed on the Exchange are 
processed anonymously.
    The Exchange and its affiliated exchanges have retained a third-
party expert, Marc Rysman, Professor of Economics at Boston University, 
to analyze how platform economics applies to stock exchanges' sale of 
market data products and trading services, and to explain how this 
affects the assessment of competitive forces affecting the exchanges' 
data fees.\37\ Professor Rysman was able to analyze exchange data that 
is not otherwise publicly available in a manner that is consistent with 
the exchanges' confidentiality obligations to its customers. As shown 
in his paper, Professor Rysman surveyed the existing economic 
literature analyzing stock exchanges as platforms between market data 
and trading activities, and explained the types of linkages between 
market data access and trading activities that must be present for an 
exchange to function as a platform. In addition, Professor Rysman 
undertook an empirical analysis of customers' trading activities within 
the NYSE group of exchanges in reaction to NYSE's introduction in 2015 
of the NYSE Integrated Feed, a full order-by-order depth of book data 
product similar to the NYSE National Integrated Feed that is the 
subject of this fee filing.\38\
---------------------------------------------------------------------------

    \37\ See Exhibit 3B, Marc Rysman, Stock Exchanges as Platforms 
for Data and Trading, December 2, 2019 (hereinafter ``Rysman 
Paper''), ] 6.
    \38\ See Securities Exchange Act Release Nos. 74128 (January 23, 
2015), 80 FR 4951 (January 29, 2015) (SR-NYSE-2015-03) (Notice of 
filing and immediate effectiveness of proposed rule change to 
establish NYSE Integrated Feed) and 76485 (November 20, 2015), 80 FR 
74158 (November 27, 2015) (SR-NYSE-2015-57) (Notice of filing and 
immediate effectiveness of proposed rule change to establish fees 
for the NYSE Integrated Feed).
---------------------------------------------------------------------------

    Professor Rysman's analysis of this confidential firm-level data 
shows that firms that purchased the NYSE Integrated Feed market data 
product after its introduction were more likely to route orders to NYSE 
as opposed to one of the other NYSE-affiliated exchanges, such as NYSE 
Arca or NYSE American.\39\ Moreover, Professor Rysman shows that the 
same is true for firms that did not subscribe to the NYSE Integrated 
Feed: The introduction of the NYSE Integrated Feed led to more trading 
on NYSE (as opposed to other NYSE-affiliated exchanges) by firms that 
did not subscribe to the NYSE Integrated Feed.\40\ This is the sort of 
externality that is a key characteristic of a platform market.\41\
---------------------------------------------------------------------------

    \39\ Rysman Paper ]] 80-90.
    \40\ Id. ]] 91-93.
    \41\ Id. ] 91.
---------------------------------------------------------------------------

    From this empirical evidence, Professor Rysman concludes:
     ``[D]ata is more valuable when it reflects more trading 
activity and more liquidity-providing orders. These linkages alone are 
enough to make platform economics necessary for understanding the 
pricing of market data.'' \42\
---------------------------------------------------------------------------

    \42\ Id. ] 95.
---------------------------------------------------------------------------

     ``[L]inkages running in the opposite direction, from data 
to trading, are also very likely to exist. This is because market data 
from an exchange reduces uncertainty about the likelihood, price, or 
timing of execution for an order on that exchange. This reduction in 
uncertainty makes trading on that exchange more attractive for traders 
that subscribe to that exchange's market data. Increased trading by 
data subscribers, in turn, makes trading on the exchange in question 
more attractive for traders that do not subscribe to the exchange's 
market data.'' \43\
---------------------------------------------------------------------------

    \43\ Id. ] 96.
---------------------------------------------------------------------------

     The ``mechanisms by which market data makes trading on an 
exchange more attractive for subscribers to market data . . . apply to 
a wide assortment of market data products, including BBO, order book, 
and full order-by-order depth of book data products at all exchanges.'' 
\44\
---------------------------------------------------------------------------

    \44\ Id.
---------------------------------------------------------------------------

     ``[E]mpirical evidence confirms that stock exchanges are 
platforms for data and trading.'' \45\
---------------------------------------------------------------------------

    \45\ Id. ] 97.
---------------------------------------------------------------------------

     ``The platform nature of stock exchanges means that data 
fees cannot be analyzed in isolation, without accounting for the 
competitive dynamics in trading services.'' \46\
---------------------------------------------------------------------------

    \46\ Id. ] 98.
---------------------------------------------------------------------------

     ``Competition is properly understood as being between 
platforms (i.e., stock exchanges) that balance the needs of consumers 
of data and traders.'' \47\
---------------------------------------------------------------------------

    \47\ Id.
---------------------------------------------------------------------------

     ``Data fees, data use, trading fees, and order flow are 
all interrelated.'' \48\
---------------------------------------------------------------------------

    \48\ Id.
---------------------------------------------------------------------------

     ``Competition for order flow can discipline the pricing of 
market data, and vice-versa.'' \49\
---------------------------------------------------------------------------

    \49\ Id.
---------------------------------------------------------------------------

     ``As with platforms generally, overall competition between 
exchanges will limit their overall profitability, not margins on any 
particular side of the platform.'' \50\
---------------------------------------------------------------------------

    \50\ Id. ] 100.
---------------------------------------------------------------------------

    The Exchange has observed a similar correlation in connection with 
its offering of the NYSE National Integrated Feed. Since May 2018, when 
the Exchange re-launched trading, the number of subscribers of the NYSE 
National Integrated Feed grew from 12 to a high of 57. Over this same 
period, the Exchange has increased market share from 0% to nearly 2%. 
The Exchange therefore believes that its proposed fees for the NYSE 
National Integrated Feed are subject to platform-based competitive 
constraints on pricing.
c. Exchange Market Data Fees Are Constrained by the Availability of 
Substitute Platforms
    Professor Rysman's conclusions that exchanges function as platforms 
for market data and transaction services mean that exchanges do not set 
fees for market data products without considering, and being 
constrained by, the effect the fees will have on the order-flow side of 
the platform. As the D.C. Circuit recognized in NetCoalition I, ``[n]o 
one disputes that competition for order flow is fierce.'' \51\ The 
court further noted that ``no exchange possesses a monopoly, regulatory 
or otherwise, in the execution of order flow from broker dealers,'' and 
that an exchange ``must compete vigorously for order flow to maintain 
its share of trading volume.'' \52\
---------------------------------------------------------------------------

    \51\ NetCoalition I, 615 F.3d at 544 (internal quotation 
omitted).
    \52\ Id.

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

[[Page 9853]]

    Similarly, the Commission itself has recognized that the market for 
trading services in NMS stocks has become ``more fragmented and 
competitive.'' \53\ The Commission's Division of Trading and Markets 
has also recognized that with so many ``operating equities exchanges 
and dozens of ATSs, there is vigorous price competition among the U.S. 
equity markets and, as a result, [transaction] fees are tailored and 
frequently modified to attract particular types of order flow, some of 
which is highly fluid and price sensitive.'' \54\ Indeed, today, equity 
trading is currently dispersed across 13 exchanges,\55\ 31 alternative 
trading systems,\56\ and numerous broker-dealer internalizers and 
wholesalers, all competing for order flow. Based on publicly-available 
information, no single exchange has more than 18% market share.\57\
---------------------------------------------------------------------------

    \53\ See Securities Exchange Act Release No. 51808, 84 FR 5202, 
5253 (February 20, 2019) (File No. S7-05-18).
    \54\ Commission Division of Trading and Markets, Memorandum to 
EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
    \55\ 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.
    \56\ 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.
    \57\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
---------------------------------------------------------------------------

    Further, low barriers to entry mean that new exchanges may rapidly 
and inexpensively enter the market and offer additional substitute 
platforms to compete with the Exchange.\58\ In addition to the 13 
presently-existing exchanges, three new ones are expected to enter the 
market in 2020: Long Term Stock Exchange (LTSE), which has been 
approved as an equities exchange but is not yet operational; \59\ 
Members Exchange (MEMX), which has recently filed its application to be 
approved as a registered equities exchange; \60\ and Miami 
International Holdings (MIAX), which has announced its plan to 
introduce equities trading on an existing registered options 
exchange.\61\
---------------------------------------------------------------------------

    \58\ See Jones Paper at 10-11.
    \59\ See Securities Exchange Act Release No. 85828 (May 10, 
2019) (File No. 10-234) (Findings, Opinion, and Order of the 
Commission in the Matter of the Application of Long Term Stock 
Exchange, Inc. for Registration as a National Securities Exchange).
    \60\ See Securities Exchange Act Release No. 87436 (October 31, 
2019) (File No. 10-237) (Notice of filing of application of MEMX LLC 
for registration as a national securities exchange under Section 6 
of the Act).
    \61\ See Press Release of Miami International Holdings Inc., 
dated May 17, 2019, available here: https://www.miaxoptions.com/sites/default/files/press_release-files/MIAX_Press_Release_05172019.pdf.
---------------------------------------------------------------------------

    Given Professor Rysman's conclusion that exchanges are platforms 
for market data and trading, this fierce competition for order flow on 
the trading side of the platform acts to constrain, or ``discipline,'' 
the pricing of market data on the other side of the platform.\62\ And 
due to the ready availability of substitutes and the low cost to move 
order flow to those substitute trading venues, an exchange setting 
market data fees that are not at competitive levels would expect to 
quickly lose business to alternative platforms with more attractive 
pricing.\63\ Although the various exchanges may differ in their 
strategies for pricing their market data products and their transaction 
fees for trades--with some offering market data for free along with 
higher trading costs, and others charging more for market data and 
comparatively less for trading--the fact that exchanges are platforms 
ensures that no exchange makes pricing decisions for one side of its 
platform without considering, and being constrained by, the effects 
that price will have on the other side of the platform.
---------------------------------------------------------------------------

    \62\ Rysman Paper ] 98.
    \63\ See Jones Paper at 11.
---------------------------------------------------------------------------

    In sum, the fierce competition for order flow thus constrains any 
exchange from pricing its market data at a supracompetitive price, and 
constrains the Exchange here in setting its fees for the NYSE National 
Integrated Feed.
    The proposed fees are therefore reasonable because in setting them, 
the Exchange is constrained by the availability of numerous substitute 
platforms offering market data products and trading. Such substitutes 
need not be identical, but only substantially similar to the product at 
hand.
    More specifically, in setting fees for the NYSE National Integrated 
Feed, the Exchange is constrained by the fact that, if its pricing 
across the platform is unattractive to customers, customers have their 
pick of an increasing number of alternative platforms to use instead of 
the Exchange. The Exchange believes that it has considered all relevant 
factors and has not considered irrelevant factors in order to establish 
reasonable fees. The existence of numerous alternative platforms to the 
Exchange's platform ensures that the Exchange cannot set unreasonable 
market data fees without suffering the negative effects of that 
decision in the fiercely competitive market in which it operates as a 
platform.
d. NYSE National Integrated Feed Is an Optional Market Data Product
    Subscribing to the NYSE National Integrated Feed is entirely 
optional. The Exchange is not required to make the NYSE National 
Integrated Feed available to any customers, nor is any customer 
required to purchase the NYSE National Integrated Feed. Unlike some 
other data products (e.g., the consolidated quotation and last-sale 
information feeds) that firms are required to purchase in order to 
fulfil regulatory obligations,\64\ a customer's decision whether to 
purchase the NYSE National Integrated Feed is entirely discretionary. 
Most firms that choose to subscribe to the NYSE National Integrated 
Feed do so for the primary goals of using it to increase their 
revenues, reduce their expenses, and in some instances to compete 
directly with the Exchange for order flow. Such firms are able to 
determine for themselves whether the NYSE National Integrated Feed is 
necessary for their business needs, and if so, whether or not it is 
attractively priced. If the NYSE National Integrated Feed does not 
provide sufficient value to firms based on the uses those firms may 
have for it, such firms may simply choose to conduct their business 
operations in ways that do not use the NYSE National Integrated 
Feed.\65\ If they do not choose to use the NYSE National Integrated 
Feed, they could also choose not to direct order flow to the Exchange.
---------------------------------------------------------------------------

    \64\ The Exchange notes that broker-dealers are not required to 
purchase proprietary market data to comply with their best execution 
obligations. See In the Matter of the Application of Securities 
Industry and Financial Markets Association for Review of Actions 
Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-
15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement 
in Regulation NMS or any other rule that proprietary data be 
utilized for order routing decisions, and some broker-dealers and 
ATSs have chosen not to do so.
    \65\ See generally Jones Paper at 8, 10-11.
---------------------------------------------------------------------------

    As noted above, the current subscribers to the NYSE National 
Integrated Feed began changing their behavior in response to the 
potential imposition of fees as set out in the Initial Proposal and 
herein. Since the Initial Proposal became publicly known on December 4, 
2019, five subscribers to the NYSE National Integrated Feed product 
have canceled their subscriptions even before the fees go into effect. 
In each instance, the subscriber told the Exchange that the reason for 
ending its subscription was the imminent imposition of fees. These 
cancellations are evidence that

[[Page 9854]]

subscribing to the NYSE National Integrated Feed is discretionary, that 
each customer makes the decision whether to subscribe based on its own 
analysis of the benefits and costs to itself, and that customers can 
and do make those decisions quickly based on reactions to fee changes.
    But even if such firms determine that the fees for NYSE National 
Integrated Feed are too high, customers can access much of the same 
data on the NYSE National Integrated Feed for free by subscribing to 
the NYSE National BBO feed (which includes best-bid-and-offer 
information for NYSE National on a real-time basis) and NYSE National 
Trades (which includes last-sale information on a real-time basis), 
both of which are offered at no cost. NYSE National top-of-book 
quotation information and last-sale information is also available on 
the consolidated SIP feeds. In this way, the NYSE National BBO, NYSE 
National Trades, and SIP data products are all substitutes for a 
significant portion of the data available on the NYSE National 
Integrated Feed. Indeed, as already noted, after the Initial Proposal 
was made public, a sixth customer informed the Exchange that if the 
Exchange is permitted to impose the fees as proposed, the customer will 
drop its subscription to the NYSE National Integrated Feed product and 
instead subscribe to the NYSE National BBO feed, which will remain 
available for free. This is clear evidence that the availability of 
these substitute products constrains the Exchange's ability to charge 
supracompetitive prices for the NYSE National Integrated Feed.
    The only content available on NYSE National Integrated Feed that is 
not available on these other products is the order-by-order look at the 
NYSE National book, which provides information about depth of book on 
the Exchange. The Exchange has been a vocal advocate for the creation 
of a ``SIP Premium'' product that would include depth-of-book 
information on the consolidated market data feeds.\66\ Future products 
such as SIP Premium would include not only integrated depth-of-book 
information from NYSE National, but all other exchanges as well, and 
would further constrain the Exchange's ability to price NYSE National 
Integrated Feed at a supracompetitive price.
---------------------------------------------------------------------------

    \66\ See NYSE, ``Stock Quotes and Trade Data: One Size Doesn't 
Fit All'' (August 22, 2019), posted at https://www.nyse.com/equities-insights#20190822.
---------------------------------------------------------------------------

    Further, in the case of products that are also redistributed 
through market data vendors such as Bloomberg and Refinitiv, 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 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. 
Currently, only one vendor redistributes the NYSE National Integrated 
Feed. Even in the absence of fees for the NYSE National Integrated 
Feed, vendors have not elected to make available the NYSE National 
Integrated Feed and likely will not unless their customers request it, 
and customers will not elect to pay the proposed fees unless the NYSE 
National Integrated Feed 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.
    In setting the proposed fees for the NYSE National Integrated Feed, 
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 reasonable 
fees. The existence of alternatives to the Exchange's platform and the 
continued availability of the Exchange's separate data feeds for free 
ensure that the Exchange cannot set unreasonable fees when vendors and 
subscribers can elect these alternatives or choose not to purchase a 
specific proprietary data product if the attendant fees are not 
justified by the returns that any particular vendor or data recipient 
would achieve through the purchase.
2. The Proposed Fees Are Reasonable
    The specific fees that the Exchange proposes for the NYSE National 
Integrated Feed are reasonable for the following additional reasons.
    Overall. The Exchange believes that the proposed fees for the NYSE 
National Integrated Feed are reasonable because they represent not only 
the value of the data available from the NYSE National BBO and NYSE 
National Trades data feeds but also the value of receiving the data on 
an integrated basis. Receiving the data on an integrated basis provides 
greater efficiencies and reduced errors for vendors and subscribers 
that currently choose to integrate the data themselves after receiving 
it from the Exchange. Some vendors and subscribers may not have the 
technology or resources to integrate separate data feeds in a timely 
and/or efficient manner, and thus the integration feature of the 
product may be valuable to them.
    The Exchange believes the proposed fees for the NYSE National 
Integrated Feed are also reasonable when compared to fees for 
comparable products, such as the NYSE American Integrated Feed.\67\ 
Even though NYSE National's market share is several times higher than 
NYSE American's, the Exchange is proposing fees for the NYSE National 
Integrated Feed that are based on the existing fee structure and rates 
that data recipients already pay for the NYSE American Integrated Feed. 
The Exchange believes that adopting the same fee structure as its 
affiliated exchanges would reduce administrative burdens on NYSE 
National data subscribers that also currently subscribe to market data 
feeds from NYSE, NYSE Arca, or NYSE American.
---------------------------------------------------------------------------

    \67\ See NYSE American Integrated Feed, https://www.nyse.com/market-data/real-time/integrated-feed.
---------------------------------------------------------------------------

    Access Fee. The Exchange believes that is reasonable to charge 
access fees because of the value of the data to data recipients in 
their profit-generating activities. The Exchange believes that the 
proposed monthly Access Fee of $2,500 for the NYSE National Integrated 
Feed is reasonable because it is comparable to the monthly access fee 
for the NYSE American Integrated Feed, which is also $2,500.\68\
---------------------------------------------------------------------------

    \68\ See NYSE American LLC Equities Proprietary Market Data Fees 
at https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf.
---------------------------------------------------------------------------

    Redistribution Fees. The Exchange believes that it is reasonable to 
charge redistribution fees because vendors receive value from 
redistributing the data in their business products for their customers. 
The Exchange believes that charging a Redistribution Fee is reasonable 
because the vendors that would be charged such a fee profit by re-
transmitting the Exchange's market data to their customers. This fee 
would be charged only once per month to each vendor account that 
redistributes the NYSE National Integrated Feed, regardless of the 
number of customers to which that vendor redistributes the data. 
Currently, there is only one vendor that redistributes the NYSE 
National Integrated Feed. Accordingly, this proposed fee would have 
limited impact. The Exchange believes the proposed monthly 
Redistribution Fee of $1,500 for the NYSE National Integrated Feed is 
reasonable because it is comparable to the monthly Redistribution Fee 
for NYSE American Integrated Feed, which is also $1,500, and the 
monthly External Distributor

[[Page 9855]]

Fee for Nasdaq BX, Inc.'s (``Nasdaq BX'') BX TotalView Product, which 
is also $1,500.\69\
---------------------------------------------------------------------------

    \69\ See Section 119(a) of Nasdaq BX Equity 7 Pricing Schedule.
---------------------------------------------------------------------------

    User Fees. The Exchange believes that having separate Professional 
and Non-Professional User fees for the NYSE National Integrated Feed is 
reasonable because it will make the product more affordable and result 
in greater availability to Professional and Non-Professional Users. 
Setting a modest Non-Professional User fee is reasonable because it 
provides an additional method for Non-Professional Users to access the 
NYSE National Integrated Feed by providing the same data that is 
available to Professional Users. The proposed monthly Professional User 
Fee (Per User) of $10 and monthly Non-Professional User Fee (Per User) 
of $1 are reasonable because they are comparable to per user fees for 
the NYSE American Integrated Feed. The monthly Professional User Fee 
(Per User) for the NYSE American Integrated Feed is $10, and the 
monthly Non-Professional User Fee (Per User) for the NYSE American 
Integrated Feed is $2.\70\
---------------------------------------------------------------------------

    \70\ See NYSE American LLC Equities Proprietary Market Data Fees 
at https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf.
---------------------------------------------------------------------------

    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Use fees are reasonable, because they reflect the value of the 
data to the data recipients in their profit-generating activities and 
do not impose the burden of counting non-display devices.
    The Exchange believes that the proposed Non-Display Use fees 
reflect the significant value of the non-display data use to data 
recipients, which purchase such data on an entirely voluntary basis. 
Non-display data can be used by data recipients for a wide variety of 
profit-generating purposes, including proprietary and agency trading 
and smart order routing, as well as by data recipients that operate 
order matching and execution platforms that compete directly with the 
Exchange for order flow. The data also can be used for a variety of 
non-trading purposes that indirectly support trading, such as risk 
management and compliance. Although some of these non-trading uses do 
not directly generate revenues, they can nonetheless substantially 
reduce a recipient's costs by automating such functions so that they 
can be carried out in a more efficient and accurate manner and reduce 
errors and labor costs, thereby benefiting recipients. The Exchange 
believes that charging for non-trading uses is reasonable because data 
recipients can derive substantial value from such uses, for example, by 
automating tasks so that can be performed more quickly and accurately 
and less expensively than if they were performed manually.
    Previously, the non-display use data pricing policies of many 
exchanges required customers to count, and the exchanges to audit the 
count of, the number of non-display devices used by a customer. As non-
display use grew more prevalent and varied, however, exchanges received 
an increasing number of complaints about the impracticality and 
administrative burden associated with that approach. In response, the 
Exchange and its affiliated exchanges developed a non-display use 
pricing structure that does not require non-display devices to be 
counted or those counts to be audited, and instead looks merely at the 
three following categories of potential use of non-display data: Use of 
the data on the customer's own behalf (Category 1), use on behalf of 
clients (Category 2), and use to internally match buy and sell orders 
within an organization (Category 3).
    The Exchange believes that it is reasonable to segment the fee for 
non-display use into these three categories. As noted above, the uses 
to which customers can put the NYSE National Integrated Feed are 
numerous and varied, and the Exchange believes that charging separate 
fees for these separate categories of use is reasonable because it 
reflects the actual value the customer derives from the data, based 
upon how many categories of use the customer makes of the data. 
Segmenting the fees for non-display data in this way avoids the 
unreasonable result of customers that make only limited non-display use 
of the data paying the same fees as customers that use the data for 
numerous different revenue-generating and cost-saving purposes.
    The Exchange believes that the proposed fees of $5,000 per month 
for each of Categories 1, 2, and 3 is reasonable. These fees are 
comparable to the NYSE American Integrated Feed fees for non-display 
use for the different categories of use, which is also $5,000 per 
category.\71\ The Exchange believes that the proposed fees directly and 
appropriately reflect the significant value of using non-display data 
in a wide range of computer-automated functions relating to both 
trading and non-trading activities and that the number and range of 
these functions continue to grow through innovation and technology 
developments.
---------------------------------------------------------------------------

    \71\ See id.
---------------------------------------------------------------------------

    The Exchange also believes that, regarding Category 3 fees, it is 
reasonable to charge $5,000 per month for each trading platform on 
which the data recipient uses the Non-Display data, because such use of 
the data is directly in competition with the Exchange and the Exchange 
should be permitted to recoup some of its lost trading revenue by 
charging for the data that makes such competition possible. The 
Exchange believes that it is reasonable to cap such fees for Category 3 
use at $15,000 per month per data recipient, because a higher monthly 
fee may potentially dissuade competitors from buying the NYSE National 
Integrated Feed for use by their trading platforms.
    The proposed Non-Display Use fees for the NYSE National Integrated 
Feed are also reasonable because they take into account the extra value 
of receiving the data for Non-Display Use on an integrated basis. The 
Exchange believes that the proposed fees directly and appropriately 
reflect the significant value of using the NYSE National Integrated 
Feed on a non-display basis in a wide range of computer-automated 
functions relating to both trading and non-trading activities and that 
the number and range of these functions continue to grow through 
innovation and technology developments.\72\
---------------------------------------------------------------------------

    \72\ See also Exchange Act Release No. 69157, March 18, 2013, 78 
FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (``[D]ata feeds 
have become more valuable, as recipients now use them to perform a 
far larger array of non-display functions. Some firms even base 
their business models on the incorporation of data feeds into black 
boxes and application programming interfaces that apply trading 
algorithms to the data, but that do not require widespread data 
access by the firm's employees. As a result, these firms pay little 
for data usage beyond access fees, yet their data access and usage 
is critical to their businesses.'').
---------------------------------------------------------------------------

    Non-Display Use Declaration Late Fee. The Exchange believes that it 
is reasonable to require annual submissions of the Non-Display Use 
Declaration so that the Exchange will have current and accurate 
information about the use of the NYSE National Integrated Feed and can 
correctly assess fees for the uses of the NYSE National Integrated 
Feed. Requiring annual submissions of such declarations is reasonable 
because it also allows users to re-assess their own usage each year.
    The Exchange believes that it is reasonable to impose a late fee in 
connection with the submission of the Non-Display Use Declaration. In 
order to correctly assess fees for the non-display use of the NYSE 
National Integrated Feed, the Exchange needs to have current and 
accurate information about the use of the NYSE National Integrated 
Feed. The failure of data recipients to submit the Non-Display

[[Page 9856]]

Use Declaration on time leads to potentially incorrect billing and 
administrative burdens, including tracking and obtaining late Non-
Display Use Declarations and correcting and following up on payments 
owed in connection with late Non-Display Use Declarations. The purpose 
of the late fee is to incent data recipients to submit the Non-Display 
Use Declaration promptly to avoid the administrative burdens associated 
with the late submission of Non-Display Use Declarations.
    Multiple Data Feed Fee. The Exchange believes that it is reasonable 
to require data recipients to pay a modest additional fee for taking a 
data feed for a market data product in more than two locations, because 
such data recipients can derive substantial value from being able to 
consume the product in as many locations as they want. In addition, 
there are administrative burdens associated with tracking each location 
at which a data recipient receives the product. The Multiple Data Feed 
Fee is designed to encourage data recipients to better manage their 
requests for additional data feeds and to monitor their usage of data 
feeds. The proposed fee is designed to apply to data feeds received in 
more than two locations so that each data recipient can have one 
primary and one backup data location before having to pay a multiple 
data feed fee.
    Fee Waiver for Federal Agencies. The Exchange believes the proposal 
to not charge the access fees, display fees for professional users, and 
non-display fees associated with its proprietary market data products 
to customers that are Federal agencies is reasonable because it is 
designed to facilitate federal government regulation without giving an 
undue advantage to one set of commercial users over another. The 
Exchange believes that it is reasonable to assess no fees to Federal 
agencies that subscribe to the Exchange's proprietary market data 
products because Federal agencies do not use the Exchange's proprietary 
market data for commercial gain, but only for regulatory purposes.
    One-Month Free Trial. The Exchange believes the proposal to provide 
the NYSE National Integrated Free to new customers free-of-charge for 
their first subscription month is reasonable because it would allow 
vendors and subscribers to become familiar with the feed and determine 
whether it suits their needs without incurring fees. Making a new 
market data product available for free for a trial period is consistent 
with offerings of other exchanges. For example, Nasdaq BX offers new 
subscribers of BX TotalView a 30-day waiver of user fees.\73\
---------------------------------------------------------------------------

    \73\ See Section 123(a)(4) of Nasdaq BX's Equity 7 Pricing 
Schedule.
---------------------------------------------------------------------------

    For all of the foregoing reasons, the Exchange believes that the 
proposed fees for the NYSE National Integrated Fee are reasonable.
The Proposed Fees Are Equitably Allocated
    The Exchange believes the proposed fees for the NYSE National 
Integrated Feed are allocated fairly and equitable among the various 
categories of users of the feed, and any differences among categories 
of users are justified.
    Overall. The Exchange believes that the proposed fees are equitably 
allocated because they will apply to all data recipients that choose to 
subscribe to the NYSE National Integrated Feed. Any subscriber or 
vendor that chooses to subscribe to the NYSE National Integrated Feed 
is subject to the same Fee Schedule, regardless of what type of 
business they operate or the use they plan to make of the data feed. 
Subscribers and vendors may choose to continue to receive some or all 
of the data on the NYSE National Integrated Feed through the existing 
separate feeds for free, or they can choose to pay for the NYSE 
National Integrated Feed in order to receive integrated data, or they 
or they can choose a combination of the two approaches, thereby 
allowing each vendor or subscriber to choose the best business solution 
for itself.
    Access Fee. The Exchange believes the proposed monthly Access Fee 
of $2,500 for the NYSE National Integrated Feed is equitably allocated 
because it would be charged on an equal basis to all data recipients 
that receive a data feed of the NYSE National Integrated Feed, 
regardless of what type of business they operate or the use they plan 
to make of the data feed.
    Redistribution Fees. The Exchange believes the proposed monthly fee 
of $1,500 for redistributing the NYSE National Integrated Feed is 
equitably allocated because it would be charged on an equal basis to 
those vendors that choose to redistribute the feed.
    User Fees. The Exchange believes that the fee structure 
differentiating Professional User fees ($10 per month per user) from 
Non-Professional User fees ($1 per month per user) for display device 
access to the NYSE National Integrated Feed is equitable. This 
structure has long been used by the Exchange to reduce the price of 
data to Non-Professional Users and make it more broadly available.\74\ 
Offering the NYSE National Integrated Feed to Non-Professional Users 
with the same data as is available to Professional Users results in 
greater equity among data recipients. These user fees would be charged 
uniformly to all display devices that have access to the NYSE National 
Integrated Feed.
---------------------------------------------------------------------------

    \74\ See, e.g., Securities Exchange Act Release No. 59544 (March 
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) 
(establishing the $15 Non-Professional User Fee (Per User) for NYSE 
OpenBook); Securities Exchange Act Release No. 20002, File No. S7-
433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing Non-
Professional fees for CTA data); NASDAQ BX Equity 7 Pricing 
Schedule, Section 123.
---------------------------------------------------------------------------

    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Use fees are equitably allocated because they would require 
subscribers to pay fees only for the uses they actually make of the 
data. As noted above, non-display data can be used by data recipients 
for a wide variety of profit-generating purposes (including trading, 
risk management, and compliance) as well as purposes that do not 
directly generate revenues but nonetheless substantially reduce the 
recipient's costs by automating certain functions. The Exchange 
believes that it is equitable to charge non-display data subscribers a 
$5,000 fee for each category of use they make of such data--namely, 
using the data on their own behalf (Category 1), on behalf of their 
clients (Category 2), and to internally match buy and sell orders 
within an organization (Category 3)--because this fee structure results 
in subscribers with greater uses of the data paying higher fees, and 
subscribers with fewer uses of the data paying lower fees. This 
segmented fee structure is also equitable because no subscriber of non-
display data would be charged a fee for a category of use in which it 
did not actually engage.
    The Exchange also believes that, regarding Category 3 fees, it is 
equitable to charge $5,000 per month for each trading platform on which 
the data recipient uses the Non-Display data, because such use of the 
data is directly in competition with the Exchange and the Exchange 
should be permitted to recoup some of its lost trading revenue by 
charging for the data that makes such competition possible. The 
Exchange believes that it is equitable to cap such fees for Category 3 
use at $15,000 per month per data recipient, because a higher monthly 
fee may potentially dissuade competitors from buying the NYSE National 
Integrated Feed for use by their trading platforms.
    Non-Display Use Declaration Late Fee. The Exchange believes that 
the proposed fee of $1,000 per month for a late Non-Display Use 
Declaration is equitably allocated because it applies to

[[Page 9857]]

any data recipient that pays an Access Fee for the NYSE National 
Integrated Feed but has failed to complete and submit a Non-Display Use 
Declaration. In addition, the Exchange believes that it is equitable to 
charge a late fee to subscribers who fail to timely submit their Non-
Display Use Declarations because their failure to do so leads to 
potentially incorrect billing and administrative burdens on the part of 
the Exchange. The Exchange believes it is equitable to defray these 
administrative costs by imposing a late fee only on subscribers' whose 
declarations were late, as opposed to all subscribers.
    Multiple Data Feed Fee. The Exchange believes that the $200 per 
month per location fee to data recipients taking the NYSE National 
Integrated Feed in more than two locations is equitable because it 
would apply to all such customers, regardless of what type of business 
they operate or the use they make of the data feed. In addition, the 
Exchange believes that it is equitable to charge a fee to subscribers 
for taking a data feed in more than two locations because there are 
administrative burdens on the part of the Exchange associated with 
tracking each location at which a data recipient receives the product. 
The Exchange believes that it is equitable for it to defray these 
administrative costs by imposing a modest fee only on subscribers who 
seek to take the feed in more than two locations, as opposed to all 
subscribers.
    Fee Waiver for Federal Agencies. The Exchange believes that the 
proposal to not charge the access fees, display fees for professional 
users, and non-display fees associated with its proprietary market data 
products to customers that are Federal agencies is equitable because it 
is designed to facilitate federal government regulation without giving 
an undue advantage to one set of commercial users over another. The 
Exchange believes that it is equitable to waive fees for Federal 
agencies that subscribe to the Exchange's proprietary market data 
products because Federal agencies do not use the Exchange's proprietary 
market data for commercial gain, but only for regulatory purposes.
    One-Month Free Trial. The Exchange believes the proposal to provide 
the NYSE National Integrated Feed to new customers free-of-charge for 
their first subscription month is equitable because it applies to any 
first-time subscriber, regardless of the use they plan to make of the 
feed. As proposed, any first-time subscriber of the NYSE National 
Integrated Feed would not be charged the Access Fee, Non-Display Fee, 
any applicable Professional and Non-Professional User Fee, and 
Redistribution Fee for one calendar month. The Exchange believes it is 
equitable to restrict the availability of this one-month free trial to 
customers that have not previously subscribed to the NYSE National 
Integrated Feed, since customers who are current or previous 
subscribers of the feed are already familiar with it and whether it 
suits their needs.
    For all of the foregoing reasons, the Exchange believes that the 
proposed fees for the NYSE National Integrated Fee are equitably 
allocated.
The Proposed Fees Are Not Unfairly Discriminatory
    The Exchange believes the proposed fees for the NYSE National 
Integrated Feed are not unfairly discriminatory because any differences 
in the application of the fees are based on meaningful distinctions 
between customers, and those meaningful distinctions are not unfairly 
discriminatory between customers.
    Overall. The Exchange believes that the proposed fees are not 
unfairly discriminatory because they would apply to all data recipients 
that choose to subscribe to the NYSE National Integrated Feed. Any 
vendor or subscriber that chooses to subscribe to the NYSE National 
Integrated Feed is subject to the same Fee Schedule, regardless of what 
type of business they operate or the use they plan to make of the data 
feed. Vendors and subscribers may choose to continue to receive some or 
all of the data on the NYSE National Integrated Feed through the 
existing separate feeds for free, or they can choose to pay for the 
NYSE National Integrated Feed in order to receive integrated data, or 
they or they can choose a combination of the two approaches, thereby 
allowing each vendor or subscriber to choose the best business solution 
for itself.
    Access Fee. The Exchange believes the proposed monthly Access Fee 
of $2,500 for the NYSE National Integrated Feed is not unfairly 
discriminatory because it would be charged on an equal basis to all 
data recipients that receive a data feed of the NYSE National 
Integrated Feed, regardless of what type of business they operate or 
the use they plan to make of the data feed.
    Redistribution Fees. The Exchange believes the proposed monthly fee 
of $1,500 for redistributing the NYSE National Integrated Feed is not 
unfairly discriminatory because it would be charged on an equal basis 
to those vendors that choose to redistribute the feed.
    User Fees. The Exchange believes that the fee structure 
differentiating Professional User fees ($10 per month per user) from 
Non-Professional User fees ($1 per month per user) for display device 
access to the NYSE National Integrated Feed is not unfairly 
discriminatory. This structure has long been used by the Exchange to 
reduce the price of data to Non-Professional Users and make it more 
broadly available.\75\ Offering the NYSE National Integrated Feed to 
Non-Professional Users with the same data as is available to 
Professional Users results in greater equity among data recipients. 
These user fees would be charged uniformly to all display devices that 
have access to the NYSE National Integrated Feed.
---------------------------------------------------------------------------

    \75\ See e.g., Securities Exchange Act Release No. 59544 (March 
9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) 
(establishing the $15 Non-Professional User Fee (Per User) for NYSE 
OpenBook). See e.g., Securities Exchange Act Release No. 20002, File 
No. S7-433 (July 22, 1983), 48 FR 34552 (July 29, 1983) 
(establishing nonprofessional fees for CTA data); NASDAQ BX Equity 7 
Pricing Schedule, Section 123.
---------------------------------------------------------------------------

    Non-Display Use Fees. The Exchange believes the proposed Non-
Display Use fees are not unfairly discriminatory because they would 
require subscribers for non-display use to pay fees only for the 
categories of use they actually make of the data. As noted above, non-
display data can be used by data recipients for a wide variety of 
profit-generating purposes (including trading, risk management, and 
compliance) as well as purposes that do not directly generate revenues 
but nonetheless substantially reduce the recipient's costs by 
automating certain functions. The Exchange believes that it is not 
unfairly discriminatory to charge non-display data subscribers a $5,000 
fee for each category of use they make of such data--namely, using the 
data on their own behalf (Category 1), on behalf of their clients 
(Category 2), and to internally match buy and sell orders within an 
organization (Category 3)--because this fee structure results in 
subscribers with greater uses for the data paying higher fees, while 
subscribers with fewer uses of the data pay lower fees. This segmented 
fee structure is not unfairly discriminatory because no subscriber of 
non-display data would be charged a fee for a category of use in which 
it did not actually engage.
    The Exchange also believes that, regarding Category 3 fees, it is 
not unreasonably discriminatory to charge $5,000 per month for each 
trading platform on which the data recipient uses the Non-Display data, 
because such use of the data is directly in competition with the 
Exchange and the Exchange

[[Page 9858]]

should be permitted to recoup some of its lost trading revenue by 
charging for the data that makes such competition possible. The 
Exchange believes that it is not unreasonably discriminatory to cap 
such fees for Category 3 use at $15,000 per month per data recipient, 
because a higher monthly fee may potentially dissuade competitors from 
buying the NYSE National Integrated Feed for use by their trading 
platforms.
    Non-Display Use Declaration Late Fee. The Exchange believes that 
the proposed fee of $1,000 per month for a late Non-Display Use 
Declaration is not unfairly discriminatory because it applies to any 
data recipient that pays an Access Fee for the NYSE National Integrated 
Feed but has failed to complete and submit a Non-Display Use 
Declaration. In addition, the Exchange believes that it is not unfairly 
discriminatory to charge a late fee to subscribers who fail to timely 
submit their Non-Display Use Declarations because their failure to do 
so leads to potentially incorrect billing and administrative burdens on 
the part of the Exchange. Nor is it unfairly discriminatory for the 
Exchange to defray these administrative costs by imposing a late fee 
only on subscribers' whose declarations were late, as opposed to all 
subscribers.
    Multiple Data Feed Fee. The Exchange believes that the $200 per 
month per location fee to data recipients taking the NYSE National 
Integrated Feed in more than two locations is not unfairly 
discriminatory because it would apply to all such customers, regardless 
of what type of business they operate or the use they make of the data 
feed. In addition, the Exchange believes that it is not unfairly 
discriminatory to charge a fee to subscribers for taking a data feed in 
more than two locations because there are administrative burdens on the 
part of the Exchange associated with tracking each location at which a 
data recipient receives the product. The Exchange believes that it is 
not unfairly discriminatory for it to defray these administrative costs 
by imposing a modest fee only on subscribers who seek to take the feed 
in more than two locations, as opposed to all subscribers.
    Fee Waiver for Federal Agencies. The Exchange believes that the 
proposal to not charge the access fees, display fees for professional 
users, and non-display fees associated with its proprietary market data 
products to customers that are Federal agencies is not unreasonably 
discriminatory because it is designed to facilitate federal government 
regulation without giving an undue advantage to one set of commercial 
users over another. The Exchange believes that it is not unfairly 
discriminatory to waive fees for Federal agencies that subscribe to the 
Exchange's proprietary market data products because Federal agencies do 
not use the Exchange's proprietary market data for commercial gain, but 
only for regulatory purposes.
    One-Month Free Trial. The Exchange believes the proposal to provide 
the NYSE National Integrated Feed to new customers free-of-charge for 
their first subscription month is not unfairly discriminatory because 
it applies to any first-time subscriber, regardless of the use they 
plan to make of the feed. As proposed, any first-time subscriber of the 
NYSE National Integrated Feed would not be charged the Access Fee, Non-
Display Fee, any applicable Professional and Non-Professional User Fee, 
and Redistribution Fee for one calendar month. The Exchange believes it 
is not unfairly discriminatory to restrict the availability of this 
one-month free trial to customers that have not previously subscribed 
to the NYSE National Integrated Feed, since customers who are current 
or previous subscribers of the feed are already familiar with it and 
whether it suits their needs.
    For all of the foregoing reasons, the Exchange believes that the 
proposed fees for the NYSE National Integrated Fee are not unfairly 
discriminatory.

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

    The Exchange does not believe that the proposed fees will impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.
    Intramarket Competition. The Exchange believes that the proposed 
fees do not put any market participants at a relative disadvantage 
compared to other market participants. As noted above, the proposed fee 
schedule would apply to all subscribers of the NYSE National Integrated 
Feed, and customers may not only choose whether to subscribe to the 
feed at all, but may tailor their subscriptions by choosing particular 
uses of the feed but not others (e.g., Category 1 only versus all three 
categories; display device access only versus non-display use).
    The Exchange also believes that the proposed fees neither favor nor 
penalize one or more categories of market participants in a manner that 
would impose an undue market on competition. As shown above, to the 
extent that particular proposed fees apply to only a subset of 
subscribers (e.g., Category 2 fees apply only to those making non-
display use on behalf of clients; late fees apply only to customers who 
fail to timely submit their declarations), those distinctions are not 
unfairly discriminatory and do unfairly burden one set of customers 
over another. To the contrary, by tailoring the proposed fees in this 
manner, the Exchange believes that it has eliminated the potential 
burden on competition that might result from unfairly asking 
subscribers to pay fees for services they did not use, or late fees 
they did not actually incur.
    Intermarket Competition. The Exchange believes that the proposed 
fees do not impose a burden on competition or on other SROs that is not 
necessary or appropriate. As demonstrated above and in Professor 
Rysman's attached [sic] paper, exchanges are platforms for market data 
and trading. In setting the proposed fees, the Exchange was constrained 
by the availability of numerous substitute platforms also offering 
market data products and trading, and low barriers to entry mean new 
exchange platforms are frequently introduced. The fact that exchanges 
are platforms ensures that no exchange can make pricing decisions for 
one side of its platform without considering, and being constrained by, 
the effects that price will have on the other side of the platform. In 
setting fees for the NYSE National Integrated Feed, the Exchange is 
constrained by the fact that, if its pricing across the platform is 
unattractive to customers, customers will have its pick of an 
increasing number of alternative platforms to use instead of the 
Exchange. Given this intense competition between platforms, no one 
exchange's market data fees can impose an unnecessary burden on 
competition, and the Exchange's proposed fees do not do so here.
    In addition, the Exchange believes that the proposed fees do not 
impose a burden on competition or on other exchanges that is not 
necessary or appropriate because of the availability of numerous 
substitute market data products. Many other exchanges offer proprietary 
data feeds like the NYSE National Integrated Feed, supplying depth of 
book order data, last sale data, security status updates, stock summary 
messages, and the exchange's best bid and offer at any given time, on a 
real-time basis. Because market data users can find suitable substitute 
feeds, an exchange that overprices its market data products stands a 
high risk that users may substitute another platform, in which case the 
platform would stand to lose both market data and trading fees. These 
competitive pressures ensure that no one exchange's market data fees 
can impose an unnecessary burden on

[[Page 9859]]

competition, and the Exchange's proposed fees do not do so here.

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) \76\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \77\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \76\ 15 U.S.C. 78s(b)(3)(A).
    \77\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \78\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

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

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-NYSENAT-2020-05 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-NYSENAT-2020-05. 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-NYSENAT-2020-05, and should be submitted 
on or before March 12, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\79\
---------------------------------------------------------------------------

    \79\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03411 Filed 2-19-20; 8:45 am]
 BILLING CODE 8011-01-P