[Federal Register Volume 87, Number 154 (Thursday, August 11, 2022)]
[Notices]
[Pages 49632-49635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17226]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95442; File No. SR-NYSE-2022-36]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
the NYSE Equities Proprietary Market Data Fees To Adopt a Professional 
User Fee Cap and an Enterprise Fee for Broker-Dealer Subscribers of 
NYSE OpenBook

August 5, 2022.
    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 August 1, 2022, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to the NYSE Equities Proprietary Market Data 
Fees (``Fee Schedule'') to establish a Professional User Fee Cap and an 
Enterprise Fee for Broker-Dealer subscribers of NYSE OpenBook. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes changes to the Fee Schedule to establish a 
Professional User Fee Cap and an Enterprise Fee for Broker-Dealer 
subscribers of NYSE OpenBook. The Exchange proposes to make these fee 
changes operative on August 1, 2022.
    The Exchange currently offers a Non-Professional User Fee Cap for 
broker-dealers that are subscribers of NYSE OpenBook at $25,000 per 
month.\4\ To illustrate the application of the Non-Professional User 
Fee Cap, absent the fee cap, a broker-dealer with 2,500 external non-
professional users who receives NYSE OpenBook would pay $37,500 per 
month in professional user fees (2,500 users at $15 per month).\5\ This 
broker-dealer's fees, however, are currently capped at $25,000 per 
month.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 59544 (March 9, 
2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) (Order 
Approving Proposed Rule Change To Introduce a NYSE OpenBook 
Nonprofessional Subscriber Fee). The Non-Professional User Fee Cap 
applies to external users of a broker-dealer subscriber.
    \5\ The non-professional user fee for broker-dealer subscribers 
of NYSE OpenBook is $15 per month per user. See Fee Schedule, 
available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf.
---------------------------------------------------------------------------

    With this proposed rule change, the Exchange proposes to establish 
a Professional User Fee Cap for broker-dealers that are subscribers of 
NYSE OpenBook at $35,000 per month for internal and external 
professional users to whom the broker-dealer may redistribute NYSE 
OpenBook data. To illustrate the application of the proposed 
Professional User Fee Cap, a broker-dealer with 5,000 professional 
users who receives NYSE OpenBook would pay $300,000 per month in 
professional user fees (5,000 users at $60 per month per user).\6\ 
However, the operation of the proposed cap would cause this broker-
dealer's professional user fees to drop to $35,000 per month. 
Subscribers with more than 583 professional users would significantly

[[Page 49633]]

benefit as they would pay less than they would absent the proposed fee 
cap.
---------------------------------------------------------------------------

    \6\ The professional user fees for broker-dealer subscribers of 
NYSE OpenBook is $60 per month per user. See Fee Schedule, available 
here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf.
---------------------------------------------------------------------------

    Subscribers whose fees are capped are required to count and report 
to the Exchange the total number of professional and non-professional 
users that are permissioned to receive the data.
    Additionally, as part of the Exchange's efforts to ease 
administrative burdens on its customers, the Exchange proposes to adopt 
an Enterprise Fee for broker-dealers that are subscribers of NYSE 
OpenBook at $60,000 per month. The proposed fee is the sum of the Non-
Professional User Fee Cap of $25,000 per month and the proposed 
Professional User Fee Cap of $35,000 per month. To illustrate the 
application of the proposed Enterprise Fee, a broker-dealer with a 
total of 5,000 internal professional users and 2,500 external non-
professional users, would currently be capped at $60,000 per month 
($25,000 per month under the Non-Professional User Fee Cap plus $35,000 
per month under the proposed Professional User Fee Cap). This broker-
dealer would also not be required to count and report to the Exchange 
the number of professional and non-professional users.
Applicability of Proposed Rule Change
    The purpose of the Professional User Fee Cap for broker-dealer 
subscribers who redistribute NYSE OpenBook to professional users is to 
offer an additional subscription method that would limit the amount of 
fees paid by such subscriber. The Exchange notes that fee caps have 
long been accepted as an economically efficient form of volume discount 
for the heaviest users of market data and would allow for a broad 
dissemination of the Exchange's market data product. The concept of 
adopting a fee cap applicable to broker-dealer subscribers is not 
novel.\7\ The Exchange currently has a Non-Professional Fee Cap 
applicable to broker-dealers that subscribe to NYSE OpenBook.\8\
---------------------------------------------------------------------------

    \7\ See e.g., Section 123(c) Enterprise License Fees for Nasdaq 
Depth-of-Book Data at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207.
    \8\ See NYSE Equities Proprietary Market Data Fees at https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf.
---------------------------------------------------------------------------

    The purpose of the Enterprise Fee is to offer customers an 
additional subscription method without imposing any new or higher fees, 
and to lower the administrative burden on broker-dealer subscribers by 
not requiring the broker-dealer to count and report to the Exchange the 
number of professional users and non-professional users separately. The 
Exchange believes eliminating the distinction between professional 
users and non-professional users in a brokerage relationship will 
lessen current distinctions among broker-dealers. As proposed, all 
broker-dealers that choose to utilize the enterprise license will be 
treated the same in that each broker-dealer that chooses an enterprise 
license would pay the same amount of the fee without having to count 
and report the number of professional users and non-professional users 
separately. With the proposed fee change, a broker-dealer subscriber 
could choose an enterprise license and would continue to pay the same 
amount as it does today and would be able to provide NYSE OpenBook to 
internal and external professional and non-professional users at no 
additional cost. The proposed change will not increase any fee or 
charge to current subscribers.
    The proposed Enterprise Fee for NYSE OpenBook will result in a fee 
reduction for broker-dealer subscribers with sufficiently large numbers 
of professional and non-professional users, as described in the example 
above. Broker-dealers that purchase NYSE OpenBook typically have 
thousands of users. If a broker-dealer subscriber has a smaller number 
of professional and/or non-professional users of NYSE OpenBook, then it 
may continue to use the per user fee structure and the fees it pays 
will not change. By providing an enterprise license for broker-dealers 
with a large number of professional and non-professional users, the 
Exchange believes that more broker-dealers may choose to offer NYSE 
OpenBook, thereby expanding the distribution of this market data for 
the benefit of investors. The Exchange also believes that offering an 
enterprise license expands the range of options for offering NYSE 
OpenBook and would allow broker-dealers greater choice in selecting the 
most appropriate level of data and fees for the professional and non-
professional users they are servicing. As noted above, the concept of 
adopting an enterprise license fee is not novel.\9\ In addition, the 
Exchange currently has an enterprise license applicable to subscribers 
to NYSE BBO and NYSE Trades market data feeds.\10\
---------------------------------------------------------------------------

    \9\ See e.g., Section 123(c) Enterprise License Fees for Nasdaq 
Depth-of-Book Data at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207.
    \10\ See NYSE Equities Proprietary Market Data Fees at https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\11\ in general, and 
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``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.'' \13\
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule).
---------------------------------------------------------------------------

    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.'' \14\
---------------------------------------------------------------------------

    \14\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) 
(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.' '' \15\
---------------------------------------------------------------------------

    \15\ Id. at 535.
---------------------------------------------------------------------------

    More recently, the Commission confirmed that it applies a ``market-

[[Page 49634]]

based'' test in its assessment of market data fees, and that under that 
---------------------------------------------------------------------------
test:

the Commission considers whether the exchange was subject to 
significant competitive forces in setting the terms of its proposal 
for [market data], including the level of any fees. If an exchange 
meets this burden, the Commission will find that its fee rule is 
consistent with the Act unless there is a substantial countervailing 
basis to find that the terms of the rule violate the Act or the 
rules thereunder.\16\
---------------------------------------------------------------------------

    \16\ See Securities Exchange Act Release No. 34-90217 (October 
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) 
(Order Approving a Proposed Rule Change to Establish Fees for the 
NYSE National Integrated Feed) (internal quotation marks omitted), 
quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74781 (December 9, 2008) (NYSE ArcaBook Approval 
Order).

    More specifically, the proposed rule change will expand competition 
by providing customers an additional subscription method (without 
imposing any new or higher fees) that would cap their fees and reduce 
the administrative burden of counting and reporting to the Exchange the 
number of professional and non-professional users. With this proposed 
rule change, customers will have the ability to choose which 
subscription options suits its needs best. For the broker-dealers who 
have a large user base of professionals and non-professionals, the 
ability to subscribe to an enterprise license would eliminate the 
burden of counting and reporting users, as well as the burden to 
validate the non-professional user status to ensure accurate non-
professional user count. The enterprise license would also cap the 
broker-dealer's device fees for NYSE OpenBook at the enterprise rate. 
If a current broker-dealer subscriber has a smaller number of 
professional and/or non-professional users of NYSE OpenBook, then it 
may continue to use the per user fee structure and the fees it pays 
will not change or increase. As proposed, all broker-dealers that 
choose to utilize the proposed enterprise license would pay the same 
amount of the fee without having to count and report the number of 
professional users and non-professional users separately and will not 
need to validate non-professional user status.
    The Exchange notes that NYSE OpenBook is entirely optional. The 
Exchange is not required to make NYSE OpenBook available or to offer 
any specific pricing alternatives to any customers, nor is any firm 
required to purchase NYSE OpenBook. 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,\17\ a customer's decision whether to purchase any of the 
Exchange's proprietary market data feeds is entirely discretionary. 
Firms that do purchase NYSE OpenBook do so for the primary goals of 
using the data feed to increase profits, reduce expenses, and in some 
instances compete directly with the Exchange (including for order 
flow); those firms are able to determine for themselves whether NYSE 
OpenBook or any other similar products are attractively priced or not.
---------------------------------------------------------------------------

    \17\ 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.
---------------------------------------------------------------------------

    Firms that do not wish to purchase NYSE OpenBook have a variety of 
alternative market data products from which to choose. For example, the 
Nasdaq Stock Market (``Nasdaq'') provides an enterprise license for the 
dissemination of Nasdaq TotalView, which competes with NYSE OpenBook. 
More specifically, Nasdaq provides broker-dealer subscribers an 
enterprise license that permits internal and external distribution to 
both professional and non-professional users for a monthly fee of 
$500,000.\18\ Alternatively, if NYSE OpenBook does not provide 
sufficient value to firms as offered based on the uses those firms have 
or planned to make of it, such firms may simply choose to conduct their 
business operations in ways that do not use NYSE OpenBook or use them 
at different levels or in different configurations.
---------------------------------------------------------------------------

    \18\ See Nasdaq TotalView, Enterprise License Option, available 
at http://www.nasdaqtrader.com/Trader.aspx?id=DPUSData.
---------------------------------------------------------------------------

    In setting the proposed fees, the Exchange considered the 
competitiveness of the market for proprietary data and all of the 
implications of that competition. The Exchange believes that it has 
considered all relevant factors and has not considered irrelevant 
factors in order to establish reasonable fees. The existence of 
numerous alternatives to the Exchange's offering, including proprietary 
data from other sources, ensures that the Exchange cannot set 
unreasonable fees when 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 
data recipient would achieve through the purchase.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. As noted above, the proposed 
rule change will expand competition by providing customers with an 
additional subscription method that would reduce their administrative 
burden and cap their fees. Customers that choose to purchase the 
proposed enterprise license will benefit from the ability to grow their 
use base without paying additional incremental fees, reduced 
administrative burden by eliminating the need to validate non-
professional user status, and eliminating the need to count and report 
the number of professional and/or non-professional users. Customers 
with a small number of professional and non-professional users can 
continue to use the per user fee structure and the fees it pays will 
not change.
    Intramarket Competition. The Exchange believes that the proposed 
rule change does not put any market participant at a relative 
disadvantage compared to other market participants. As noted above, the 
proposed fee schedule would apply to all subscribers of NYSE OpenBook, 
and customers may not only choose whether to subscribe to the feed at 
all but may tailor their subscription to include only the products and 
uses that they deem suitable for their business needs. The Exchange 
also believes that the proposed rule change neither favors nor 
penalizes one or more categories of market participants in a manner 
that would impose an undue market on competition.
    Intermarket Competition. The Exchange believes that the proposed 
rule change does not impose a burden on competition on other exchanges 
that is not necessary or appropriate; indeed, the Exchange believes the 
proposal would have the effect of increasing competition by offering 
customers additional subscription choices. In setting fees at issue 
here, the Exchange is constrained by the fact that, if its pricing is 
unattractive to customers, customers will have their pick of an 
increasing number of alternative venues to use instead of the Exchange. 
Given this competition, 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.

[[Page 49635]]

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) \19\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \20\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 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) \21\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \21\ 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-NYSE-2022-36 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2022-36. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2022-36 and should be submitted on 
or before September 1, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17226 Filed 8-10-22; 8:45 am]
BILLING CODE 8011-01-P