[Federal Register Volume 89, Number 224 (Wednesday, November 20, 2024)]
[Notices]
[Pages 91817-91822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27016]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101627; File No. SR-NYSE-2024-72]
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 To Establish an
Access Fee for the NYSE Pillar Depth Data Feed
November 14, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on November 4, 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, 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 amend the NYSE Proprietary Market Data Fee
Schedule to establish an Access Fee for the NYSE Pillar Depth data
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 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 November 4, 2024.\4\
---------------------------------------------------------------------------
\4\ The Exchange originally filed to amend the Fee Schedule on
May 13, 2024 (SR-NYSE-2024-30). On July 11, 2024, the Exchange
withdrew SR-NYSE-2024 30 and replaced it with SR-NYSE-2024-39. On
September 6, 2024, the Exchange withdrew SR-NYSE-2024-39 and
replaced it with SR-NYSE-2024-55. On November 4, 2024, the Exchange
withdrew SR-NYSE-2024-55 and replaced it with this filing.
---------------------------------------------------------------------------
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
[[Page 91818]]
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.\5\ 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
\6\--NYSE Aggregated Lite,\7\ NYSE American Aggregated Lite,\8\ NYSE
Arca Aggregated Lite,\9\ NYSE Chicago Aggregated Lite \10\ and NYSE
National Aggregated Lite.\11\
---------------------------------------------------------------------------
\5\ 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'').
\6\ 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.
\7\ 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).
\8\ 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).
\9\ 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).
\10\ 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).
\11\ 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).
---------------------------------------------------------------------------
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.\12\
---------------------------------------------------------------------------
\12\ See Pillar Depth Product Filing, supra note 5.
---------------------------------------------------------------------------
As proposed, the Exchange would charge a $250 per month Access Fee
for 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 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,\13\ in general, and
Sections 6(b)(4) and 6(b)(5) of the Act,\14\ 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 \15\ 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,\16\ 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.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4), (5).
\15\ 15 U.S.C. 78k-1.
\16\ 17 CFR 242.603.
---------------------------------------------------------------------------
[[Page 91819]]
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.'' \17\
---------------------------------------------------------------------------
\17\ See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
---------------------------------------------------------------------------
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.'' \18\
---------------------------------------------------------------------------
\18\ 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.' '' \19\
---------------------------------------------------------------------------
\19\ Id. at 535.
---------------------------------------------------------------------------
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.\20\
---------------------------------------------------------------------------
\20\ 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'').
As discussed below, the Exchange believes that its proposed fees
are constrained by competitive forces.
As the D.C. Circuit recognized in NetCoalition I, ``[n]o one
disputes that competition for order flow is fierce.'' \21\ 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.'' \22\
---------------------------------------------------------------------------
\21\ NetCoalition I, 615 F.3d at 544 (internal quotation
omitted).
\22\ Id.
---------------------------------------------------------------------------
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 stock, the
Commission has recognized that ``such competition can lead to the
fragmentation of order flow in that stock.'' \23\ Indeed, today, equity
trading is currently dispersed across 16 exchanges,\24\ numerous
alternative trading systems,\25\ 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.\26\
---------------------------------------------------------------------------
\23\ See Securities Exchange Act Release No. 61358, 75 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\24\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
\25\ 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.
\26\ 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 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; \27\ Members Exchange (MEMX), which began operations as an
exchange on September 29, 2020; \28\ and Miami International Holdings
(MIAX), which began operations of its first equities exchange on
September 29, 2020.\29\
---------------------------------------------------------------------------
\27\ 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.
\28\ As of October 29, 2020, MEMX is trading all NMS symbols.
See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
\29\ 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.
---------------------------------------------------------------------------
More specifically, in setting fees for the Pillar Depth data feed,
the Exchange is constrained by the fact that, if its pricing is
unattractive to customers, customers have their pick of alternatives to
purchase similar data from instead of purchasing it from the Exchange.
The existence of alternatives to the Exchange's data product ensures
that the Exchange cannot set unreasonable market data fees without
suffering the negative effects of that decision in the competitive
market for non-latency-sensitive proprietary partial depth of book
market data.
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 \30\ and Rule 19b-4(f)(2) \31\ 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 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
[[Page 91820]]
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.
---------------------------------------------------------------------------
\30\ 15 U.S.C. 78s(b)(3)(A).
\31\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
The Exchange notes that its proposed fee structure is similar to
the fee structure for the NYSE BQT data feed.\32\ 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.\33\ To receive NYSE BQT, a market data recipient must pay
the applicable fee for the ten data feeds underlying NYSE BQT, and an
Access Fee of $250 per month.\34\
---------------------------------------------------------------------------
\32\ 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).
\33\ 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).
\34\ 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).
---------------------------------------------------------------------------
The Exchange notes that Pillar Depth is entirely optional. The
Exchange is not required to make Pillar Depth available to any
customers, nor is any customer required to purchase the Pillar Depth
data 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,\35\ a customer's
decision whether to purchase Pillar Depth is entirely discretionary.
The Exchange believes that Pillar Depth would provide high-quality,
comprehensive partial depth of book data for the Exchange, NYSE Arca,
NYSE American, NYSE Chicago and NYSE National in a unified view that an
anticipated end user might use for purposes of identifying an
indicative price of Tape A, B and C securities through leveraging the
depth and breadth of NYSE, NYSE Arca, NYSE American, NYSE Chicago and
NYSE National without having to purchase consolidated data and thus it
would not be a latency-sensitive product. The Exchange does not
anticipate that an end user would, or could, use Pillar Depth data for
purposes of making order-routing or trading decisions. Firms that
choose to subscribe to Pillar Depth are able to determine for
themselves whether Pillar Depth is necessary for their business needs,
and if so, whether or not it is attractively priced. If Pillar Depth
does not provide sufficient benefit 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 Pillar Depth.
---------------------------------------------------------------------------
\35\ 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.
---------------------------------------------------------------------------
In setting the proposed fees for Pillar Depth, the Exchange
considered the competitiveness of the market for non-latency-sensitive
proprietary partial depth of book 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 proposed fees are therefore reasonable
because in setting them, the Exchange is constrained by the
availability of substitute partial depth of book market data products.
The Commission has been clear that such substitutes need not be
identical, but only substantially similar to the product at hand.\36\
---------------------------------------------------------------------------
\36\ 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 20, 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)).
---------------------------------------------------------------------------
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,\37\ 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
competitive alternative to the Cboe One Premium Feed.\38\
---------------------------------------------------------------------------
\37\ 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'').
\38\ Fees for the Cboe One Premium Feed are available at https://www.cboe.com/market_data_services/us/equities/cboe_one/.
---------------------------------------------------------------------------
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.
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
[[Page 91821]]
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) \39\ 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 it 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.\40\
---------------------------------------------------------------------------
\39\ 78 U.S.C. 78f(b)(8).
\40\ See Pillar Depth Product Filing, supra note 5.
---------------------------------------------------------------------------
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 choose whether to subscribe to Pillar Depth at all. 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 if such vendor is already co-located and is able to
allocate its co-location costs over numerous product and customer
relationships. The Exchange therefore believes that a competing vendor
could create and offer a product similar to the 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.
Specifically, 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 substitute
partial depth of book market data products. As described above, Pillar
Depth would compete with the Cboe One Premium Feed.\41\ 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 partial depth of book data from five NYSE-
affiliated U.S. equities exchanges, while Cboe One Premium Feed
similarly provides partial 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. In setting the fee for the Pillar Depth, the Exchange
is constrained by the fact that if its pricing is unattractive,
customers will have their pick of alternative partial depth of book
market data products to purchase instead of purchasing the Exchange's
product. 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.
---------------------------------------------------------------------------
\41\ See supra, note 37.
---------------------------------------------------------------------------
As such, in establishing the proposed fees, the Exchange considered
the competitiveness of the market for non-latency-sensitive proprietary
partial depth of book data and all of the implications of that
competition. The Exchange believes that it has considered all relevant
factors and has not considered irrelevant factors in order to establish
fair, reasonable, and not unreasonably discriminatory fees and an
equitable allocation of fees among all users. The existence of
alternatives to 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
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\42\ and Rule 19b-
4(f)(2) thereunder \43\ the Exchange has designated this proposal as
establishing or changing a due, fee, or other charge imposed on any
person, whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing. At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\42\ 15 U.S.C. 78s(b)(3)(A)(ii).
\43\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
[[Page 91822]]
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-2024-72 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-2024-72. 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-2024-72 and should be
submitted on or before December 11, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\44\
---------------------------------------------------------------------------
\44\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-27016 Filed 11-19-24; 8:45 am]
BILLING CODE 8011-01-P