[Federal Register Volume 89, Number 107 (Monday, June 3, 2024)]
[Notices]
[Pages 47672-47678]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12041]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100232; File No. SR-NYSE-2024-30]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the NYSE Proprietary Market Data Fee Schedule

May 28, 2024.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on May 13, 2024, 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 
and II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.

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[[Page 47673]]

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

    The Exchange proposes to amend the NYSE Proprietary Market Data Fee 
Schedule to establish an Access Fee for the NYSE Pillar Depth data 
feed. The Exchange proposes to implement the proposed fee change on May 
13, 2024. 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 to amend the NYSE Proprietary Market Data Fee 
Schedule (``Fee Schedule''). Specifically, the Exchange proposes to 
establish an Access Fee for the NYSE Pillar Depth (``Pillar Depth'') 
data feed, effective May 13, 2024. The proposed fee for Pillar Depth 
would be $250 per month, provided that the market data recipient 
separately pays the applicable fees for the five existing market data 
products underlying the Pillar Depth data feed, consistent with the 
existing fee structures for those market data products.
    The Pillar Depth data feed is a frequency-based depth of book 
market data feed that provides a consolidated view of the ten (10) best 
price levels on both the bid and offer sides across the NYSE Group's 
combined limit order books for securities traded on the NYSE Group 
equities markets, i.e., NYSE, NYSE American LLC (``NYSE American''), 
NYSE Arca, Inc. (``NYSE Arca''), NYSE Chicago, Inc. (``NYSE Chicago'') 
and NYSE National, Inc. (``NYSE National''), for which the NYSE Group 
equities markets report quotes and trades under the Consolidated Tape 
Association (``CTA'') Plan or the Nasdaq/UTP Plan.\4\ In other words, 
Pillar Depth would be a compilation of limit order data that the 
Exchange provides to vendors and subscribers, updated no less 
frequently than once per second. Specifically, the Pillar Depth data 
feed consists of certain data elements from five market data feeds 
\5\--NYSE Aggregated Lite,\6\ NYSE American Aggregated Lite,\7\ NYSE 
Arca Aggregated Lite,\8\ NYSE Chicago Aggregated Lite \9\ and NYSE 
National Aggregated Lite.\10\
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    \4\ See Securities Exchange Act Release No. 100030 (April 25, 
2024), 89 FR 35260 (May 1, 2024) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Establish the NYSE Pillar 
Depth Data Feed) (SR-NYSE-2024-24) (``Pillar Depth Product 
Filing'').
    \5\ Each of these data feeds are offered pursuant to preexisting 
and effective rules and fees filed with the Commission. This filing 
does not affect those rules, or the fees associated with these 
underlying data feeds or the ability for the Exchange, NYSE 
American, NYSE Arca, NYSE Chicago or NYSE National to amend the data 
feeds or fees associated with those data feeds pursuant to a 
separate rule filing.
    \6\ See Securities Exchange Act Release No. 99689 (March 7, 
2024) 89 FR 18466 (March 13, 2024) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Establish the NYSE 
Aggregated Lite Market Data Feed) (SR-NYSE-2024-12).
    \7\ See Securities Exchange Act Release No. 99690 (March 7, 
2024) 89 FR 18445 (March 13, 2024) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Establish the NYSE American 
Aggregated Lite Market Data Feed) (SR-NYSEAMER-2024-14).
    \8\ See Securities Exchange Act Release No. 99713 (March 12, 
2024) 89 FR 19381 (March 18, 2024) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Establish the NYSE Arca 
Aggregated Lite Market Data Feed) (SR-NYSEARCA-2024-22).
    \9\ See Securities Exchange Act Release No. 99691 (March 7, 
2024) 89 FR 18468 (March 13, 2024) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Establish the NYSE Chicago 
Aggregated Lite Market Data Feed) (SR-NYSECHX-2024-08).
    \10\ See Securities Exchange Act Release No. 99715 (March 12, 
2024) 89 FR 19383 (March 18, 2024) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change To Establish the NYSE National 
Aggregated Lite Market Data Feed) (SR-NYSENAT-2024-06).
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    The Exchange, NYSE American, NYSE Arca, NYSE Chicago and NYSE 
National are the exclusive distributors of the five Aggregated Lite 
feeds from which certain data elements are taken to create the Pillar 
Depth data feed. By contrast, the Exchange would not be the exclusive 
distributor of the aggregated and consolidated information that 
comprises the Pillar Depth data feed. Any entity that receives, or 
elects to receive, the five underlying Aggregated Lite data feeds would 
be able, if it so chooses, to create a data feed with the same 
information included in Pillar Depth and sell and distribute it to its 
clients so that it could be received by those clients as quickly as the 
Pillar Depth data feed would be received by those same clients.\11\
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    \11\ See Pillar Depth Product Filing, supra note 4.
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    As proposed, the Exchange would charge a $250 per month Access Fee 
for Pillar Depth, which reflects the value of the aggregation and 
consolidation function that the Exchange performs in creating Pillar 
Depth. To obtain Pillar Depth, a market data recipient would need to 
pay any applicable fees for the five data feeds underlying Pillar 
Depth, consistent with the existing fee schedules for those market data 
products as previously filed with the Commission and which may be 
amended from time to time, including any applicable Access, 
Redistribution, Professional User, Non-Professional User, Non-Display 
or Enterprise fees. The Exchange proposes to denote the requirement for 
market data recipients to pay the applicable fees for the five data 
feeds underlying Pillar Depth in proposed footnote 3 on the Fee 
Schedule.
    When subscribing to Pillar Depth, the underlying data feeds would 
be delivered in the Pillar Depth consolidated format, as described 
above, but charged for as if the recipient were receiving the 
underlying feeds directly. The Exchange notes that if a subscriber 
chooses to receive the five underlying feeds both separately and in the 
Pillar Depth format, such subscriber may be subject to additional 
Professional User or Non-Professional User fees to reflect the 
distribution of both Pillar Depth (which incorporates the five 
underlying data feeds) and any separate dissemination of the underlying 
data feeds. The Exchange believes that the proposed fees for Pillar 
Depth would not be lower than the cost to a vendor of creating a 
comparable product, including the cost of receiving the underlying data 
feeds.
    The Exchange notes that another market participant seeking to 
distribute a competing product to Pillar Depth might engage in a 
different analysis of assessing the cost of a competing product, which 
may incorporate passing through fees associated with co-location at the 
Mahwah, New Jersey data center. However, the incremental co-location 
cost to a particular vendor might be inconsequential if such vendor is 
already co-located and is able to allocate its co-location costs over 
numerous product and customer relationships. The Exchange therefore 
believes that a vendor could create and offer a product similar to 
Pillar Depth on a cost-competitive basis.
    The proposed rule change is intended to encourage market 
participants to

[[Page 47674]]

subscribe to Pillar Depth by making it more affordable for prospective 
customers. The proposed fee change would allow the Exchange to compete 
more effectively with the Cboe One Premium Feed, which as described 
below, is a comparable market data offering to Pillar Depth.
    The Exchange notes that the proposed change is not otherwise 
intended to address any other issues, and the Exchange is not aware of 
any problems that member organizations or others would have in 
complying with the proposed rule change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\12\ in general, and 
Sections 6(b)(4) and 6(b)(5) of the Act,\13\ 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. The Exchange also 
believes that the proposed rule change is consistent with Section 11(A) 
of the Act \14\ in that it is consistent with (i) fair competition 
among brokers and dealers, among exchange markets, and between exchange 
markets and markets other than exchange markets; and (ii) the 
availability to brokers, dealers, and investors of information with 
respect to quotations for and transactions in securities. Furthermore, 
the proposed rule change is consistent with Rule 603 of Regulation 
NMS,\15\ which provides that any national securities exchange that 
distributes information with respect to quotations for or transactions 
in an NMS stock do so on terms that are not unreasonably 
discriminatory.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4), (5).
    \14\ 15 U.S.C. 78k-1.
    \15\ 17 CFR 242.603.
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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.'' \16\
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    \16\ 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.'' \17\
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    \17\ 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.' '' \18\
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    \18\ Id. at 535.
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    More recently, the Commission confirmed that it applies a ``market-
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.\19\
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    \19\ See Securities Exchange Act Release No. 34-90217 (October 
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) 
(``National IF Approval Order'') (internal quotation marks omitted), 
quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74781 (December 9, 2008) (``2008 ArcaBook 
Approval Order'').

    An exchange may demonstrate that its fees are constrained by 
competitive forces by showing that platform competition applies.
    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.'' \20\ 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 account for the influence of 
the other sides. As the Supreme Court explained:
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    \20\ 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.\21\
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    \21\ 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.
    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.'' \22\ 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.'' 
\23\
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    \22\ NetCoalition I, 615 F.3d at 544 (internal quotation 
omitted).
    \23\ Id.
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    As noted above, while Regulation NMS has enhanced competition, it 
has also fostered a ``fragmented'' market structure where trading in a 
single stock can occur across multiple trading centers. When multiple 
trading centers compete for order flow in the same

[[Page 47675]]

stock, the Commission has recognized that ``such competition can lead 
to the fragmentation of order flow in that stock.'' \24\ 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.'' \25\ Indeed, today, equity trading is currently 
dispersed across 16 exchanges,\26\ numerous alternative trading 
systems,\27\ broker-dealer internalizers and wholesalers, all competing 
for order flow. Based on publicly-available information, no single 
exchange currently has more than 20% market share.\28\
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    \24\ See Securities Exchange Act Release No. 61358, 75 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \25\ 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.
    \26\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
    \27\ 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.
    \28\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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    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. For example, since 2020, three 
new ones have entered the market: Long Term Stock Exchange (LTSE), 
which began operations as an exchange on August 28, 2020; \29\ Members 
Exchange (MEMX), which began operations as an exchange on September 29, 
2020; \30\ and Miami International Holdings (MIAX), which began 
operations of its first equities exchange on September 29, 2020.\31\
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    \29\ See LTSE Market Announcement: MA-2020-020, dated August 14, 
2020, announcing LTSE production securities phase-in planned for 
August 28, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf and 
LTSE Market Announcement: MA-2020-025, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf.
    \30\ As of October 29, 2020, MEMX is trading all NMS symbols. 
See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
    \31\ See MIAX Pearl Press release, dated September 29, 2020, 
available here: https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf.
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    These low barriers enable existing exchange customers to 
disintermediate and start their own exchanges if they think the prices 
charged for exchange proprietary market data products are too high. 
This is precisely the rationale behind the creation of MEMX, which was 
formed by some of the largest and most well capitalized financial firms 
that are also Exchange customers (including Bank of America, BlackRock, 
Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. 
Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others).\32\
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    \32\ MEMX Home Page (``Founded by members and investors, MEMX 
aims to drive simplicity, efficiency, and competition in equity 
markets.''), available at https://memx.com/.
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    For example, one of MEMX's founding principles is that exchange 
proprietary market data prices are too high, and that MEMX will benefit 
its members by offering ``[l]ower pricing on market data.'' \33\ Nor is 
this a new phenomenon: exchange customers formed BATS to compete with 
incumbent exchanges and once registered as an exchange in 2008, BATS 
did not initially charge for market data. The BATS venture was a 
financial success for its founders, first through recouping their 
investment in its initial public offering and then in the subsequent 
sale of BATS to Cboe, which now charges for market data from those 
exchanges. Notably, MEMX has some of the same founding broker-dealer 
customers, leading some to dub MEMX ``BATS 2.0.'' \34\
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    \33\ MEMX home page, available at https://memx.com/.
    \34\ See ``MEMX turns up the heat on US stock exchanges,'' 
Financial Times, January 9, 2019, available at https://www.ft.com/content/4908c8b0-1418-11e9-a581-4ff78404524e; see also ``US equities 
exchanges: If you can't beat them, join them,'' Euromoney, February 
13, 2019, available at https://www.euromoney.com/article/b1d3tfby4p3y4v/us-equities-exchanges-if-you-cant-beat-them-join-them.
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    The fact that this cycle is viable and repeatable by entities that 
both trade on and compete with existing exchanges confirms that 
barriers to entry are low and that these markets are competitive and 
contestable.\35\ And low barriers to entry act as a market check on 
high prices.\36\
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    \35\ United States v. SunGard Data Sys., 172 F. Supp. 2d 172, 
186 (D.D.C. 2001) (recognizing that ``[a]s a matter of law, courts 
have generally recognized that when a customer can replace the 
services of an external product with an internally-created system, 
this captive output (i.e. the self-production of all or part of the 
relevant product) should be included in the same market.''). In 
SunGard, the court rejected the Antitrust Division's attempt to 
block SunGuard's acquisition of the disaster recovery assets of 
Comdisco on the basis that the acquisition would ``substantially 
lessen competition in the market for shared hotsite disaster 
recovery services,'' when the evidence showed that ``internal 
hotsites'' created by customers competed with the ``external shared 
hotsite business'' engaged in by the merging parties. Id. at 173-74, 
187.
    \36\ United States v. Baker Hughes, 908 F.2d 981, 987 (1990) 
(``In the absence of significant barriers [to entry], a company 
probably cannot maintain supracompetitive pricing for any length of 
time.''); see also David S. Evans and Richard Schmalensee, Markets 
with Two-Sided Platforms, in 1 Issues in Competition Law and Policy 
667, 685 (ABA Section of Antitrust Law 2008) (noting that exchange 
mergers in 2005 and 2006 were approved by competition authorities in 
part in reliance on planned and likely entry of other firms).
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    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 in setting its fees at issue here.
    More specifically, in setting fees for the Pillar Depth data 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 for trading order flow.
    More specifically, the Exchange believes that the proposed $250 per 
month Access Fee for Pillar Depth is reasonable because it represents 
the value for the data aggregation and consolidation function that the 
Exchange performs. The Exchange further believes that requiring market 
data recipients to separately pay for the five underlying data feeds to 
Pillar Depth is reasonable because by design, Pillar Depth represents 
an aggregated and consolidated version of those existing five data 
feeds. The Exchange notes that it is not seeking with this filing to 
establish fees relating to the underlying five Aggregated Lite data 
feeds, as those fees have been established consistent with Section 
19(b)(3)(A) of the Act \37\ and Rule 19b-4(f)(2) \38\ thereunder, and 
which may be amended from time to time. However, the Exchange believes 
it would be unfair if it did not require Pillar Depth data feed 
recipients to separately pay for those five feeds because otherwise, 
Pillar Depth data feed recipients would

[[Page 47676]]

be receiving a data product that includes such underlying data at a 
lower cost than separately subscribing to the underlying data feeds. 
Similarly, the Exchange believes that it would be reasonable to charge 
separate Professional User or Non-Professional User fees if a market 
data recipient chooses to receive both Pillar Depth and a separate 
dissemination of the five underlying data feeds in a non-consolidated 
form. The Exchange believes that such delivery would constitute two 
separate uses of the underlying data feeds and thus should be charged 
accordingly, consistent with the existing fee schedule for those market 
data products. The Exchange therefore believes that the proposed fee 
structure for Pillar Depth would not be lower than the cost to another 
party to create a comparable product, including the cost of receiving 
the underlying data feeds.
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    \37\ 15 U.S.C. 78s(b)(3)(A).
    \38\ 17 CFR 240.19b-4(f)(2).
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    The Exchange notes that its proposed fee structure is similar to 
the fee structure for the NYSE BQT data feed.\39\ The NYSE BQT data 
feed provides best bid and offer (``BBO'') and last sale information 
(``Trades'') for the Exchange and its affiliates, NYSE Arca, NYSE 
American, NYSE Chicago and NYSE National. NYSE BQT consists of certain 
data elements from ten market data feeds--NYSE Trades, NYSE BBO, NYSE 
Arca Trades, NYSE Arca BBO, NYSE American Trades, NYSE American BBO, 
NYSE Chicago Trades, NYSE Chicago BBO, NYSE National Trades and NYSE 
National BBO.\40\ To receive NYSE BQT, market data recipient must pay 
the applicable fee for the ten data feeds underlying NYSE BQT, and an 
Access Fee of $250 per month.\41\
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    \39\ See Securities Exchange Act Release No. 73816 (December 11, 
2014), 79 FR 75200 (December 17, 2014) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Establish an 
Access Fee for the NYSE Best Quote & Trades Data Feed) (SR-NYSE-
2014-64).
    \40\ See Securities Exchange Act Release Nos. 72750 (August 4, 
2014), 79 FR 46494 (August 8, 2014) (notice--NYSE BQT); and 73553 
(November 6, 2014), 79 FR 67491 (November 13, 2014) (approval 
order--NYSE BQT) (SR-NYSE-2014-40) (``NYSE BQT Filing''). In 2018, 
NYSE BQT was amended to include NYSE National BBO and NYSE National 
Trades. See Securities Exchange Act Release No. 83359 (June 1, 
2018), 83 FR 26507 (June 7, 2018) (SR-NYSE-2018-22). In 2019, NYSE 
BQT was amended to include NYSE Chicago BBO and NYSE Chicago Trades. 
See Securities Exchange Act Release No. 87511 (November 12, 2019), 
84 FR 63689 (November 18, 2019) (SR-NYSE-2019-60).
    \41\ See Securities Exchange Act Release No. 82121 (November 30, 
2017), 82 FR 57627 (December 6, 22017) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Amend the Fees 
for NYSE BBO and NYSE Trades To Lower the Enterprise Fee, and for 
NYSE BQT To Lower the Access Fee) (SR-NYSE-2017-60).
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    The Exchange notes that Pillar Depth is entirely optional. The 
Exchange is not required to make the proprietary data products that are 
the subject of this proposed rule change available or to offer any 
specific pricing alternatives to any customers, nor is any firm or 
investor required to purchase the Exchange's data products. 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,\42\ a customer's decision whether to 
purchase any of the Exchange's proprietary market data feeds is 
entirely discretionary. Most firms that choose to subscribe to 
proprietary market data feeds from the Exchange and its affiliates do 
so for the primary goals of using them to increase their revenues, 
reduce their expenses, and in some instances compete directly with the 
Exchange's trading services. Such firms are able to determine for 
themselves whether or not the products in question or any other similar 
products are attractively priced. If market data feeds from the 
Exchange and its affiliates do 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 
products.
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    \42\ 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.
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    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. 
Vendors may elect not to make Pillar Depth available to its customers 
unless their customers request it, and customers will not elect to pay 
the proposed fees unless Pillar Depth 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 Pillar Depth, 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 ensures that the Exchange 
cannot set unreasonable market data fees without suffering the negative 
effects of that decision in the fiercely competitive market for trading 
order flow.
    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.\43\
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    \43\ For example, in the National IF Approval Order, the 
Commission recognized that for some customers, the best bid and 
offer information from consolidated data feeds may function as a 
substitute for the NYSE National Integrated Feed product, which 
contains order by order information. See National IF Approval Order, 
supra note 19, at 67397 [release p. 21] (``[I]nformation provided by 
NYSE National demonstrates that a number of executing broker-dealers 
do not subscribe to the NYSE National Integrated Feed and executing 
broker-dealers can otherwise obtain NYSE National best bid and offer 
information from the consolidated data feeds.'' (internal quotations 
omitted)).
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    The four U.S. equities exchanges operated by Cboe Exchange, Inc.--
Cboe BZX Exchange, Inc. (``BZX''), Cboe BYX Exchange, Inc. (``BYX''), 
Cboe EDGA Exchange, Inc. (``EDGA''), and Cboe EDGX Exchange, Inc. 
(``EDGX''), currently offer a market data product called the Cboe One 
Premium Feed,\44\ which competes with the Pillar Depth data feed. 
Similar to the Cboe One Premium Feed, Pillar Depth can be utilized by 
vendors and subscribers to quickly access and distribute aggregated 
order book data. As noted above, Pillar Depth, similar to Cboe One 
Premium Feed, would provide aggregated depth per security, including 
the bid, ask and share quantity for orders received by the NYSE Group 
markets. The Exchange believes that Pillar Depth will offer a

[[Page 47677]]

competitive alternative to the Cboe One Premium Feed.\45\
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    \44\ See BZX Rule 11.22(j); BYX Rule 11.22(i); EDGA Rule 
13.8(b); and EDGX Rule 13.8(b). The Cboe One Feed offered by BZX, 
BYX, EDGA and EDGX is a data feed that contains the aggregate best 
bid and offer of all displayed orders for securities traded on the 
Cboe exchanges. The Cboe One Feed also contains the individual last 
sale information, consolidated volume, the primary listing market's 
official opening and closing price, and the current day consolidated 
high and low price for all listed equity securities. Cboe One Feed 
recipients may also elect to receive aggregated two-sided quotations 
from the Cboe exchanges for five (5) price levels (``Cboe One 
Premium Feed'').
    \45\ Fees for the Cboe One Premium Feed are available at https://www.cboe.com/market_data_services/us/equities/cboe_one/.
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    In addition, the fees that are the subject of this rule filing are 
constrained by competition. As explained below in the Exchange's 
Statement on Burden on Competition, the existence of alternatives to 
these data products further ensures that the Exchange cannot set 
unreasonable fees, or fees that are unreasonably discriminatory, when 
vendors and subscribers can elect such alternatives. That is, the 
Exchange competes with other exchanges (and their affiliates) that 
provide similar market data products. If another exchange (or its 
affiliate) were to charge less to consolidate and distribute its 
similar product than the Exchange charges to consolidate and distribute 
Pillar Depth, prospective users likely would not subscribe to, or would 
cease subscribing to, Pillar Depth. In addition, the Exchange would 
compete with unaffiliated market data vendors who would be in a 
position to consolidate and distribute the same data that comprises the 
Pillar Depth data feed into the vendor's own comparable market data 
product. If the third-party vendor is able to provide the exact same 
data for a lower cost, prospective users would avail themselves of that 
lower cost and elect not to take Pillar Depth.
The Proposed Fees Are Equitably Allocated and Are Not Unfairly 
Discriminatory
    The Exchange believes that the proposed fee is equitable and non-
discriminatory in that it would apply uniformly to all recipients of 
Exchange data. The Exchange also believes the proposed fee is 
competitive with those charged by other venues and, therefore, 
reasonable and equitably allocated to recipients. The Exchange also 
notes that the proposed fee is not designed to permit unfair 
discrimination because all market data recipients that subscribe to 
Pillar Depth would be charged the same fee. The Exchange further 
believes that the proposed Pillar Depth fee structure is equitable and 
not unfairly discriminatory because all vendors and subscribers that 
elect to purchase Pillar Depth would be charged the same fees. In 
addition, vendors and subscribers that do not wish to purchase Pillar 
Depth may separately purchase the five individual underlying products, 
and if they so choose, perform a similar aggregation and consolidation 
function that the Exchange performs in creating Pillar Depth. To enable 
such competition, the Exchange is offering Pillar Depth on terms that a 
subscriber of those five feeds could offer a competing product if it so 
chooses.
    For these reasons, the Exchange believes that the proposed fees are 
reasonable, equitable, and not unfairly discriminatory.

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

    In accordance with Section 6(b)(8) \46\ of the Act, 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 Pillar Depth data feed 
represents aggregated and consolidated information from five existing 
market data feeds. Although the Exchange, NYSE American, NYSE Arca, 
NYSE Chicago and NYSE National are the exclusive distributors of the 
five Aggregated Lite data feeds from which certain data elements are 
taken to create Pillar Depth, the Exchange may not be the exclusive 
distributor of the aggregated and consolidated information that 
comprises the Pillar Depth data feed. Any other market participant 
recipient of the five Aggregated Lite feeds would be able, if they 
chose, to create a data feed with the same information as Pillar Depth 
and distribute it to their clients on a level-playing field with 
respect to latency and cost as compared to the Exchange's product.\47\
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    \46\ 78 U.S.C. 78f(b)(8).
    \47\ See Pillar Depth Product Filing, supra note 4.
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    Intramarket Competition. The Exchange believes that the proposed 
fees do not put any market participant at a relative disadvantage 
compared to other market participant. As noted above, the proposed fees 
would apply equally to all subscribers of Pillar Depth, and subscribers 
may not only choose whether to subscribe to Pillar Depth at all, but 
also may tailor their subscription to include only the products offered 
by the Exchange that they deem suitable for their business needs. 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.
    Intermarket Competition. The Exchange believes that the proposed 
monthly Access Fee the Exchange proposes to charge subscribers for 
Pillar Depth would be pro-competitive because another market data 
recipient could perform a similar aggregating and consolidating 
function and similarly charge for such service. The Exchange notes that 
a competing vendor might engage in a different analysis of assessing 
the cost of a competing product, which may incorporate passing through 
fees associated with co-location at the Mahwah, New Jersey data center. 
However, the incremental co-location costs to a particular vendor may 
be inconsequential of such vendor is already co-located and is able to 
allocate its co-location costs over numerous product and customer 
relationships. The Exchange therefore believes that a competing vendor 
could create and offer a product similar to the Pillar Depth data feed 
at a similar cost. For these reasons, the Exchange believes that 
vendors could readily offer a product similar to Pillar Depth on a 
competitive basis.
    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. Specifically, as described above, 
Pillar Depth would compete with the Cboe One Premium Feed.\48\ These 
products each serve as reasonable substitutes for one another as they 
are each designed to provide investors with a unified view of quotes in 
all Tape A, B, and C securities. Each product provides subscribers with 
aggregated and consolidated quotes from multiple U.S. equities markets. 
Pillar Depth provides depth of book data from five NYSE-affiliated U.S. 
equities exchanges, while Cboe One Premium Feed similarly provides 
depth of book data from Cboe's four U.S. equities exchanges. Pillar 
Depth and Cboe One Premium Feed are intended to provide indicative 
pricing and therefore, are reasonable substitutes for one another. 
Additionally, market data vendors are also able to offer close 
substitutes to Pillar Depth. 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 source of 
market data information for its own. These competitive pressures ensure 
that 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.
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    \48\ See supra, note 45.
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    As such, in establishing the proposed fees, the Exchange considered 
the competitiveness of the market for proprietary data and all of the 
implications of that competition. The Exchange believes that it has 
considered all relevant factors and has not

[[Page 47678]]

considered irrelevant factors in order to establish fair, reasonable, 
and not unreasonably discriminatory fees and an equitable allocation of 
fees among all users. The existence of alternatives to Pillar Depth, 
including the five underlying feeds, consolidated data, and proprietary 
data from other sources, ensures that the Exchange cannot set 
unreasonable fees, or fees that are unreasonably discriminatory, when 
vendors and subscribers can elect these alternatives or choose not to 
purchase a specific proprietary data product if its cost to purchase is 
not justified by the returns any particular vendor or subscriber would 
achieve through the purchase.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \49\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \50\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \49\ 15 U.S.C. 78s(b)(3)(A).
    \50\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \51\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \51\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-NYSE-2024-30 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-2024-30. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSE-2024-30 and should be 
submitted on or before June 24, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\52\
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    \52\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-12041 Filed 5-31-24; 8:45 am]
BILLING CODE 8011-01-P