80 FR 41126 - Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Market Data Section of Its Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 134 (July 14, 2015)

Page Range		41126-41131
FR Document		2015-17173

Federal Register, Volume 80 Issue 134 (Tuesday, July 14, 2015)

[Federal Register Volume 80, Number 134 (Tuesday, July 14, 2015)]
[Notices]
[Pages 41126-41131]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-17173]

[[Page 41126]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75395; File No. SR-EDGA-2015-25]

Self-Regulatory Organizations; EDGA Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Market Data Section of Its Fee Schedule

July 8, 2015.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 1, 2015, EDGA Exchange, Inc. (the ``Exchange'' or
``EDGA'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. 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\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

The Exchange filed a proposal to amend the Market Data section of
its fee schedule to: (i) Adopt User fees, an Enterprise fee, and a
Digital Media Enterprise fee for the EDGA Top and EDGA Last Sale feeds;
and (ii) make a non-substantive change to the description of the BATS
One Feed Enterprise Fee as well as correct a cross-reference within the
definition of ``Non-Professional User''.
The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.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 Exchange 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 these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend the Market Data section of its fee
schedule to: (i) adopt User fees, an Enterprise fee, and a Digital
Media Enterprise fee for the EDGA Top and EDGA Last Sale feeds; and
(ii) make a non-substantive change to the description of the BATS One
Feed Enterprise Fee as well as correct a cross-reference within the
definition of ``Non-Professional User''.
EDGA Top and Last Sale Fees
EDGA Top is a market data feed that includes top of book quotations
and execution information for all equity securities traded on the
Exchange.\5\ EDGA Last Sale is a market data feed that includes last
sale information for all equity securities traded on Exchange.\6\
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\5\ See Exchange Rule 13.8(c).
\6\ See Exchange Rule 13.8(d).
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The Exchange does not charge fees to either Internal Distributors
\7\ or External Distributors \8\ for receipt of the EDGA Last Sale and
EDGA Top feeds. The Exchange also currently does not charge per User
\9\ fees for either EDGA Last Sale or EDGA Top. Therefore, the Exchange
does not currently require an External Distributor of EDGA Last Sale or
EDGA Top to count, classify (e.g., professional or non-professional),
or report to the Exchange information regarding the customers to which
they provide the data. End Users currently do not pay the Exchange for
EDGA Last Sale or EDGA Top, nor are End Users required to enter into
contracts with the Exchange.
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\7\ An ``Internal Distributor'' is defined as ``a Distributor
that receives the Exchange Market Data product and then distributes
that data to one or more Users within the Distributor's own
entity.'' See the Exchange Fee Schedule available at http://batstrading.com/regulation/rule_filings/edga/. A ``Distributor'' is
defined as ``any entity that receives the Exchange Market Data
product directly from the Exchange or indirectly through another
entity and then distributes it internally or externally to a third
party.'' Id.
\8\ An ``External Distributor'' is defined as ``a Distributor
that receives the Exchange Market Data product and then distributes
that data to a third party or one or more Users outside the
Distributor's own entity.'' Id.
\9\ A ``User'' is defined as ``a natural person, a
proprietorship, corporation, partnership, or entity, or device
(computer or other automated service), that is entitled to receive
Exchange data.'' Id.
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The Exchange now proposes to amend its fee schedule to incorporate
fees related to the EDGA Top or EDGA Last Sale feeds.\10\ These fees
include the following, each of which are described in detail below: (i)
Usage Fees for both Professional \11\ and Non-Professional \12\ Users;
\13\ (ii) Enterprise Fees; \14\ and (iii) a Digital Media Enterprise
Fee. The

[[Page 41127]]

Exchange does not propose to adopt Distributor fees.
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\10\ The Exchange notes that EDGX Exchange, Inc. (``EDGX''),
BATS Y-Exchange, Inc. (``BYX'') and BATS Exchange, Inc. (``BZX'',
together with the Exchange, EDGX and BYX, the ``BATS Exchanges'')
also filed proposed rule changes with Commission to adopt similar
fees for their respective Top and Last Sale market data product. See
File Nos. SR-EDGX-2015-28, SR-BYX-2015-30, and SR-BATS-2015-48. The
Exchange represents that the proposed fees will not cause the
combined cost of subscribing to each of the BATS Exchanges'
individual Top and Last Sale feeds to be greater than those
currently charged to subscribe to the BATS One Feed. See Securities
Exchange Act Release Nos. 74285 (February 18, 2015), 80 FR 9828
(February 24, 2015) (SR-BATS-2015-11); 74283 (February 18, 2015), 80
FR 9809 (February 24, 2015) (SR-EDGA-2015-09); 74282 (February 17,
2015), 80 FR 9487 (February 23, 2015) (SR-EDGX-2015-09); and 74284
(February 18, 2015), 80 FR 9792 (February 24, 2015) (SR-BYX-2015-09)
(``Initial BATS One Feed Fee Filings''). In these filings, the
Exchange represented that the cost of subscribing to each of the
underlying individual feeds necessary to create the BATS One Feed
would not be greater than the cost of subscribing to the BATS One
Feed. Id.
\11\ A ``Professional User'' is defined as ``any User other than
a Non-Professional User.'' See the Exchange Fee Schedule available
at http://batstrading.com/regulation/rule_filings/edga/.
\12\ A ``Non-Professional User'' is defined as ``a natural
person who is not: (i) Registered or qualified in any capacity with
the Commission, the Commodity Futures Trading Commission, any state
securities agency, any securities exchange or association, or any
commodities or futures contract market or association; (ii) engaged
as an ``investment adviser'' as that term is defined in Section
[202(a)(11)] of the Investment Advisers Act of 1940 (whether or not
registered or qualified under that Act); or (iii) employed by a bank
or other organization exempt from registration under federal or
state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt.'' Id.
\13\ The Exchange notes that User fees as well as the
distinctions based on professional and non-professional users have
been previously filed with or approved by the Commission by the BATS
Exchanges and the Nasdaq Stock Market LLC (``Nasdaq''). See
Securities Exchange Act Release No. 59582 (March 16, 2009), 74 FR
12423 (March 24, 2009) (Order approving SR-Nasdaq-2008-102). See
also the Initial BATS One Feed Fee Filings, supra note 11 [sic].
\14\ The Exchange notes that Enterprise fees have been
previously filed with or approved by the Commission by the Exchange,
EDGA, BYX, BZX, Nasdaq, NYSE, and the CTA/CQ Plans. See Nasdaq Rule
7047. Securities Exchange Act Release Nos. 71507 (February 7, 2014),
79 FR 8763 (February 13, 2014) (SR-NASDAQ-2014-011); 70211 (August
15, 2013), 78 FR 51781 (August 21, 2013) (SR-NYSE-2013-58); and
70010 (July 19, 2013) (File No. SR-CTA/CQ-2013-04). See also the
Initial BATS One Feed Fee Filings, supra note 11 [sic].
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User Fees. The Exchange proposes to charge those who receive either
EDGA Top or EDGA Last Sale from External Distributors different fees
for both their Professional Users and Non-Professional Users. The
Exchange will assess a monthly fee for Professional Users of $2.00 per
User. Non-Professional Users will be assessed a monthly fee of $0.05
per User.\15\ The Exchange does not propose to charge per User fees to
Internal Distributors.
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\15\ The Exchange notes that EDGX, BYX and BZX also filed
proposed rule changes with Commission to adopt User fees for their
respective Top and Last Sale market data product. See File Nos. SR-
EDGX-2015-28, SR-BYX-2015-30, and SR-BATS-2015-48 (proposing a
monthly fee of $2.00 per Professional User and of $0.05 per Non-
Professional User for EDGX and BYX and a monthly fee of $4.00 per
Professional User and of $0.10 per Non-Professional User for BZX). A
vendor that wishes to create a product like the BATS One Summary
Feed could subscribe to each of the BATS Exchanges' Top and Last
Sale feeds. See the Initial BATS One Feed Fee Filings, supra note 11
[sic]. Should a vendor subscribe to each of the BATS Exchanges' Top
and Last Sale feeds, it would be charged a total of $10.00 per month
per Professional User and $0.25 per month per Non-Professional User.
This amount is equal to, and not greater than the User Fees charged
for the BATS One Summary Feed. Id. (adopting fees of $10.00 per
month per Professional User and $0.25 per month per Non-Professional
User as well as a separate $1,000 per month Data Consolidation Fee
for the BATS One Summary Feed).
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External Distributors would be required to count every Professional
User and Non-Professional User to which they provide EDGA Top and/or
EDGA Last Sale, the requirements for which are identical to that
currently in place for the BATS One Feed.\16\ Thus, the External
Distributor's count will include every person and device that accesses
the data regardless of the purpose for which the individual or device
uses the data. External Distributors must report all Professional and
Non-Professional Users in accordance with the following:
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\16\ See the Initial BATS One Feed Fee Filings, supra note 11
[sic].
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In connection with an External Distributor's distribution
of EDGA Top or EDGA Last Sale, the Distributor should count as one User
each unique User that the Distributor has entitled to have access to
EDGA Top or EDGA Last Sale. However, where a device is dedicated
specifically to a single individual, the Distributor should count only
the individual and need not count the device.
The External Distributor should identify and report each
unique User. If a User uses the same unique method to gain access to
EDGA Top or EDGA Last Sale, the Distributor should count that as one
User. However, if a unique User uses multiple methods to gain access to
EDGA Top or EDGA Last Sale (e.g., a single User has multiple passwords
and user identifications), the External Distributor should report all
of those methods as an individual User.
External Distributors should report each unique individual
person who receives access through multiple devices as one User so long
as each device is dedicated specifically to that individual.
If an External Distributor entitles one or more
individuals to use the same device, the External Distributor should
include only the individuals, and not the device, in the count.
Enterprise Fee. The Exchange also proposes to establish a $10,000
per month Enterprise Fee that will permit a recipient firm who receives
EDGA Top or EDGA Last Sale from an External Distributor to receive the
data for an unlimited number of Professional and Non-Professional
Users.\17\ For example, if a recipient firm had 15,000 Professional
Users who each receive EDGA Top or EDGA Last Sale at $2.00 per month,
then that recipient firm will pay $30,000 per month in Professional
Users fees. Under the proposed Enterprise Fee, the recipient firm will
pay a flat fee of $10,000 for an unlimited number of Professional and
Non-Professional Users for EDGA Top or EDGA Last Sale. A recipient firm
must pay a separate Enterprise Fee for each External Distributor that
controls display of EDGA Top or EDGA Last Sale if it wishes such User
to be covered by an Enterprise Fee rather than by per User fees. A
recipient firm that pays the Enterprise Fee will not have to report its
number of such Users on a monthly basis. However, every six months, a
recipient firm must provide the Exchange with a count of the total
number of natural person users of each product, including both
Professional and Non-Professional Users.
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\17\ The Exchange notes that EDGA [sic], BYX and BZX also filed
proposed rule changes with Commission to adopt Enterprise Fees for
their respective Top and Last Sale market data product. File Nos.
SR-EDGA-2015-25 [sic], SR-BYX-2015-30, and SR-BATS-2015-48
(proposing a monthly Enterprise Fee of $10,000 for BYX Top and BYX
Last Sale and $15,000 for EDGX Top and Last Sale as well as BZX Top
and Last Sale). A vendor that wishes to create a product like the
BATS One Summary Feed could subscribe to each of the BATS Exchanges'
Top and Last Sale feeds. See the Initial BATS One Feed Fee Filings,
supra note 11 [sic]. Should a vendor subscribe to each of the BATS
Exchanges' Top and Last Sale feeds, it would be charged a total
monthly Enterprise Fee of $50,000. This amount is equal to, and not
greater than the Enterprise Fee charged for the BATS One Summary
Feed. Id. (adopting a monthly Enterprise Fee of $50,000 as well as a
separate $1,000 per month Data Consolidation Fee for the BATS One
Summary Feed).
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Digital Media Enterprise Fee. The Exchange proposes to adopt a
Digital Media Enterprise Fee of $2,500 per month for EDGA Top and EDGA
Last Sale.\18\ As an alternative to proposed User fees discussed above,
a recipient firm may purchase a monthly Digital Media Enterprise
license to receive EDGA Top and EDGA Last Sale from an External
Distributor to distribute to an unlimited number of Professional and
Non-Professional Users for viewing via television, Web sites, and
mobile devices for informational and non-trading purposes only without
having to account for the extent of access to the data or the report
the number of Users to the Exchange.
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\18\ The Exchange notes that EDGX, BYX and BZX also filed
proposed rule changes with Commission to adopt a Digital Media
Enterprise Fee for their respective Top and Last Sale market data
product. See File Nos. SR-EDGX-2015-28, SR-BYX-2015-30, and SR-BATS-
2015-48 (proposing a monthly Digital Media Enterprise Fee of $2,500
for their respective Top and Last Sale feeds). A vendor that wishes
to create a product like the BATS One Summary Feed could subscribe
to each of the BATS Exchanges' Top and Last Sale feeds. See the
Initial BATS One Feed Fee Filings, supra note 11 [sic]. Should a
vendor subscribe to each of the BATS Exchanges' Top and Last Sale
feeds, it would be charged a total monthly Digital Media Enterprise
Fee of $10,000. This amount is less than the Digital Media
Enterprise Fee charged for the BATS One Summary Feed. See Securities
Exchange Act Release Nos. 74598 (March 27, 2015), 80 FR 17791 (April
2, 2015) (SR-BATS-2015-24); 74599 (March 27, 2015), 80 FR 17812
(April 2, 2015) (SR-BYX-2015-19); 74600 (March 27, 2014), 80 FR
17797 (April 2, 2015) (SR-EDGA-2015-14); and 74601 (March 27, 2015),
80 FR 17804 (April 2, 2015) (SR-EDGX-2015-14) (adopting a monthly
Digital Media Enterprise Fee of $15,000 for the BATS One Summary
Feed).
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Non-Substantive, Corrective Changes
The Exchange proposes to make a non-substantive change to the
description of the BATS One Feed Enterprise Fee as well as correct a
cross-reference within the definition of ``Non-Professional User''.
First, the proposed change to the description of the BATS One Feed
\19\

[[Page 41128]]

Enterprise Fee is intended to align with the descriptions of the
Enterprise Fees for EDGA Top and EDGA Last Sale proposed above. The fee
schedule currently states that:
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\19\ In sum, the BATS One Feed is a data feed that disseminates,
on a real-time basis, the aggregate best bid and offer (``BBO'') of
all displayed orders for securities traded on EDGA and its
affiliated exchanges and for which the BATS Exchanges report quotes
under the Consolidated Tape Association (``CTA'') Plan or the
Nasdaq/UTP Plan. The BATS One Feed also contains the individual last
sale information for the BATS Exchanges (collectively with the
aggregate BBO, the ``BATS One Summary Feed''). In addition, the BATS
One Feed contains optional functionality which enables recipients to
receive aggregated two-sided quotations from the BATS Exchanges for
up to five (5) price levels (``BATS One Premium Feed''). See
Securities Exchange Act Release No. 73918 (December 23, 2014), 79 FR
78920 (December 31, 2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-
25; SR-BATS-2014-055; SR-BYX-2014-030) (Notice of Amendments No. 2
and Order Granting Accelerated Approval to Proposed Rule Changes, as
Modified by Amendments Nos. 1 and 2, to Establish a New Market Data
Product called the BATS One Feed) (``BATS One Approval Order'').

[a]s an alternative to User fees, a recipient firm may purchase a
monthly Enterprise license to receive the BATS One Feed from an
External Distributor to an unlimited number of Professional and Non-
Professional Users. A recipient firm must pay a separate Enterprise
Fee for each External Distributor that controls the display of the
BATS One Feed if it wishes such User to be covered by the Enterprise
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Fee. The Enterprise Fee is in addition to the Distributor Fee.

The Exchange proposes to delete the last sentence of the above
description stating that the Enterprise Fee is in addition to the
Distributor Fee. The original purpose of this sentence was to clarify
that the Distributor Fee and Enterprise Fee were separate fees.
However, the Exchange understands that this sentence has led to
confusion because the Exchange does not currently charge Distributor
fees. Deleting this sentence does not alter the manner in which the
Enterprise Fee is charged. Rather, it is intended to avoid confusion
and align the description with that of the proposed Enterprise Fees for
EDGA Top and EDGA Last Sale described above.
Second, the Exchange proposes to correct a cross-reference within
the definition of ``Non-Professional User''. In part, a ``Non-
Professional User'' is currently defined as ``a natural person who is
not: . . . engaged as an ``investment adviser'' as that term is defined
in Section 201(11) of the Investment Advisers Act of 1940 (whether or
not registered or qualified under that Act) . . .'' The definition
incorrectly states that the term ``investment adviser is defined under
Section 201(11) of the Investment Advisers Act of 1940, when it is, in
fact, defined under Section 202(a)(11) of the Investment Advisers Act
of 1940. Therefore, the Exchange proposes to replace the reference to
Section 201(11) with Section 202(a)(11) within the definition of Non-
Professional User.
Implementation Date
The Exchange proposes to implement the proposed change to its fee
schedule on July 1, 2015.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\20\ in general, and
furthers the objectives of Section 6(b)(4),\21\ in particular, as it is
designed to provide for the equitable allocation of reasonable dues,
fees and other charges among its members and other recipients of
Exchange data. The Exchange believes that the proposed rates are
equitable and non-discriminatory in that they apply uniformly to all
recipients of Exchange data. The Exchange believes the proposed fees
are competitive with those charged by other venues and, therefore,
reasonable and equitably allocated to recipients. Lastly, the Exchange
also believes that the proposed fees are reasonable and non-
discriminatory because they will apply uniformly to all recipients of
Exchange data.
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\20\ 15 U.S.C. 78f.
\21\ 15 U.S.C. 78f(b)(4).
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The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act \22\ in that it supports (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,\23\ 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. In adopting Regulation NMS, the Commission granted
self-regulatory organizations and broker-dealers increased authority
and flexibility to offer new and unique market data to the public. It
was believed that this authority would expand the amount of data
available to consumers, and also spur innovation and competition for
the provision of market data.
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\22\ 15 U.S.C. 78k-1.
\23\ See 17 CFR 242.603.
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In addition, the proposed fees would not permit unfair
discrimination because all of the Exchange's customers and market data
vendors will be subject to the proposed fees on an equivalent basis.
EDGA Last Sale and EDGA Top are distributed and purchased on a
voluntary basis, in that neither the Exchange nor market data
distributors are required by any rule or regulation to make this data
available. Accordingly, Distributors and Users can discontinue use at
any time and for any reason, including due to an assessment of the
reasonableness of fees charged. Firms have a wide variety of
alternative market data products from which to choose, such as similar
proprietary data products offered by other exchanges and consolidated
data. Moreover, the Exchange is not required to make any proprietary
data products available or to offer any specific pricing alternatives
to any customers.
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
EDGA Top and EDGA Last Sale 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
EDGA Top or EDGA Last Sale, prospective Users likely would not
subscribe to, or would cease subscribing to, the EDGA Top or EDGA Last
Sale.
The Exchange notes that the Commission is not required to undertake
a cost-of-service or rate-making approach. The Exchange believes that,
even if it were possible as a matter of economic theory, cost-based
pricing for non-core market data would be so complicated that it could
not be done practically.\24\
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\24\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties, including the Commission, to cost-regulate a large
number of participants and standardize and analyze extraordinary
amounts of information, accounts, and reports. In addition, it is
impossible to regulate market data prices in isolation from prices
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort
incentives, including those to minimize costs and to innovate,
leading to further waste. Under cost-based pricing, the Commission
would be burdened with determining a fair rate of return, and the
industry could experience frequent rate increases based on
escalating expense levels. Even in industries historically subject
to utility regulation, cost-based ratemaking has been discredited.
As such, the Exchange believes that cost-based ratemaking would be
inappropriate for proprietary market data and inconsistent with
Congress's direction that the Commission use its authority to foster
the development of the national market system, and that market
forces will continue to provide appropriate pricing discipline. See
Appendix C to NYSE's comments to the Commission's 2000 Concept
Release on the Regulation of Market Information Fees and Revenues,
which can be found on the Commission's Web site at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change to Establish an
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative
December 1, 2014).

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[[Page 41129]]

User Fees. The Exchange believes that implementing the Professional
and Non-Professional User fees for EDGA Top and EDGA Last Sale is
equitable and reasonable because it will result in greater availability
to Professional and Non-Professional Users. Moreover, introducing a
modest Non-Professional User fee for EDGA Top and EDGA Last Sale is
reasonable because it provides an additional method for retail
investors to access EDGA Top and EDGA Last Sale data by providing the
same data that is available to Professional Users. The Exchange
believes that the proposed fees are equitable and not unfairly
discriminatory because they will be charged uniformly to recipient
firms and Users. The fee structure of differentiated Professional and
Non-Professional fees is utilized by the Exchange for the BATS One Feed
and has long been used by other exchanges for their proprietary data
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to
reduce the price of data to retail investors and make it more broadly
available.\25\ Offering EDGA Top and EDGA Last Sale to Non-Professional
Users with the same data available to Professional Users results in
greater equity among data recipients.
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\25\ See the Initial BATS One Feed Fee Filings, supra note 11
[sic]. See also, e.g., Securities Exchange Act Release No. 20002,
File No. S7-433 (July 22, 1983) (establishing nonprofessional fees
for CTA data); Nasdaq Rules 7023(b), 7047.
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In addition, the proposed fees are reasonable when compared to
similar fees for comparable products offered by the NYSE. Specifically,
NYSE offers NYSE BBO, which includes best bid and offer for NYSE traded
securities, for a monthly fee of $4.00 per professional subscriber and
$0.20 per non-professional subscriber.\26\ NYSE also offers NYSE
Trades, which is a data feed that provides the last sale information
for NYSE traded securities, for the same price as NYSE BBO. The
Exchange's proposed per User Fees for EDGA Top and EDGA Last Sale are
less than the NYSE's fees for NYSE Trades and NYSE BBO.
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\26\ See NYSE Market Data Pricing dated May 2015 available at
http://www.nyxdata.com/.
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Enterprise Fee. The proposed Enterprise Fee for EDGA Top and EDGA
Last Sale are equitable and reasonable as the fees proposed are less
than the enterprise fees currently charged for NYSE Trades and NYSE
BBO. The NYSE charges a separate enterprise fee of $190,000 per month
for NYSE Trades and NYSE BBO.\27\ In addition, the Enterprise Fee
proposed by the Exchange could result in a fee reduction for recipient
firms with a large number of Professional and Non-Professional Users.
If a recipient firm has a smaller number of Professional Users of EDGA
Top or EDGA Last Sale, then it may continue using the per User
structure and benefit from the per User Fee reductions. By reducing
prices for recipient firms with a large number of Professional and Non-
Professional Users, the Exchange believes that more firms may choose to
receive and to distribute the EDGA Top or EDGA Last Sale, thereby
expanding the distribution of this market data for the benefit of
investors.
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\27\ Id.
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The Exchange further believes that the proposed Enterprise Fee is
reasonable because it will simplify reporting for certain recipients
that have large numbers of Professional and Non-Professional Users.
Firms that pay the proposed Enterprise Fee will not have to report the
number of Users on a monthly basis as they currently do, but rather
will only have to count natural person users every six months, which is
a significant reduction in administrative burden. Finally, the Exchange
believes that it is equitable and not unfairly discriminatory to
establish an Enterprise Fee because it reduces the Exchange's costs and
the Distributor's administrative burdens in tracking and auditing large
numbers of Users.
Digital Media Enterprise Fee. The Exchange believes that the
proposed Digital Media Enterprise Fee for EDGA Top and EDGA Last Sale
provides for an equitable allocation of reasonable fees among
recipients of the data and is not designed to permit unfair
discrimination among customers, brokers, or dealers. In establishing
the Digital Media Enterprise Fee, the Exchange recognizes that there is
demand for a more seamless and easier-to-administer data distribution
model that takes into account the expanded variety of media and
communication devices that investors utilize today. The Exchange
believes the Digital Media Enterprise Fee will be easy to administer
because data recipients that purchase it would not be required to
differentiate between Professional and Non-Professional Users, account
for the extent of access to the data, or report the number of Users.
This is a significant reduction on a recipient firm's administrative
burdens and is a significant value to investors. For example, a
television broadcaster could display EDGA Top and/or EDGA Last Sale
data during market-related programming and on its Web site or allow
viewers to view the data via their mobile devices, creating a more
seamless distribution model that will allow investors more choice in
how they receive and view market data, all without having to account
for and/or measure who accesses the data and how often they do so.
The proposed Digital Media Enterprise Fee is equitable and
reasonable because it will also enable recipient firms to more widely
distribute data from EDGA Top and EDGA Last Sale to investors for
informational purposes at a lower cost than is available today. For
example, a recipient firm may purchase an Enterprise license in the
amount of $10,000 per month for to receive EDGA Top and/or EDGA Last
Sale from an External Distributor for an unlimited number of
Professional and Non-Professional Users, which is greater than the
proposed Digital Media Enterprise Fee. The Exchange also believes the
amount of the Digital Media Enterprise Fee is reasonable as compared to
the existing enterprise fees discussed above because the distribution
of EDGA Top and EDGA Last Sale data is limited to television, Web
sites, and mobile devices for informational purposes only, while
distribution of EDGA Top and EDGA Last Sale data pursuant to an
Enterprise license contains no such limitation. The Exchange also
believes that the proposed Digital Media Enterprise Fee is equitable
and reasonable because it is less than similar fees charged by other
exchanges.\28\
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\28\ The Nasdaq Stock Market offers proprietary data products
for distribution over the internet and television under alternative
fee schedules that are subject to maximum fee of $50,000 per month.
See Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise
fee of $40,000 per month for the NYSE Trade Digital Media product.
See Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR
20983 (April 8, 2013) (SR-NYSE-2013-23).
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Non-Substantive, Corrective Changes. The Exchange believes that the
proposed non-substantive, corrective changes are consistent with
Section 6(b) of the Act,\29\ in general, and Section 6(b)(4) of the
Act,\30\ in particular, in that they provide for an equitable
allocation of reasonable fees among recipients of the data and is not
designed to permit unfair discrimination among customers, brokers, or
dealers. These proposed changes are equitable and reasonable because
the changes are designed to clarify the fee schedule and avoid
potential investor confusion. The amendment to the BATS One Enterprise
Fee is also intended to align the

[[Page 41130]]

description with that of the proposed Enterprise Fees for EDGA Top and
EDGA Last Sale described above. The proposed changes are also non-
discriminatory as they would apply to all recipient firms uniformly.
---------------------------------------------------------------------------

\29\ 15 U.S.C. 78f.
\30\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
EDGA Top and EDGA Last Sale
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange's ability to price EDGA Last Sale and EDGA Top are constrained
by: (i) Competition among exchanges, other trading platforms, and Trade
Reporting Facilities (``TRF'') that compete with each other in a
variety of dimensions; (ii) the existence of inexpensive real-time
consolidated data and market-specific data and free delayed data; and
(iii) the inherent contestability of the market for proprietary data.
The Exchange and its market data products are subject to
significant competitive forces and the proposed fees represent
responses to that competition. To start, the Exchange competes
intensely for order flow. It competes with the other national
securities exchanges that currently trade equities, with electronic
communication networks, with quotes posted in FINRA's Alternative
Display Facility, with alternative trading systems, and with securities
firms that primarily trade as principal with their customer order flow.
In addition, EDGA Last Sale and EDGA Top compete with a number of
alternative products. For instance, EDGA Last Sale and EDGA Top do not
provide a complete picture of all trading activity in a security.
Rather, the other national securities exchanges, the several TRFs of
FINRA, and Electronic Communication Networks (``ECN'') that produce
proprietary data all produce trades and trade reports. Each is
currently permitted to produce last sale information products, and many
currently do, including Nasdaq and NYSE. In addition, market
participants can gain access to EDGA last sale prices and top-of-book
quotations, though integrated with the prices of other markets, on
feeds made available through the SIPs.
In sum, the availability of a variety of alternative sources of
information imposes significant competitive pressures on Exchange data
products and the Exchange's compelling need to attract order flow
imposes significant competitive pressure on the Exchange to act
equitably, fairly, and reasonably in setting the proposed data product
fees. The proposed data product fees are, in part, responses to that
pressure. The Exchange believes that the proposed fees would reflect an
equitable allocation of its overall costs to users of its facilities.
In addition, when 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 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 EDGA Last Sale and
EDGA Top, including existing similar feeds by other exchanges,
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.
Non-Substantive, Corrective Changes
The proposed non-substantive, corrective changes to the fee
schedule will not have any impact on completion. The proposed changes
are designed to clarify the fee schedule and avoid potential investor
confusion.

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

The Exchange has neither solicited nor received written comments on
the proposed rule change.

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

The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \31\ and paragraph (f) of Rule 19b-4
thereunder.\32\ 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.
---------------------------------------------------------------------------

\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include
File Number SR-EDGA-2015-25 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-EDGA-2015-25. 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 Web site (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 Web site 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-EDGA-

[[Page 41131]]

2015-25, and should be submitted on or before August 4, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
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\33\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-17173 Filed 7-13-15; 8:45 am]
BILLING CODE 8011-01-P

41130 Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices

description with that of the proposed In sum, the availability of a variety of change, the Commission summarily may
Enterprise Fees for EDGA Top and alternative sources of information temporarily suspend such rule change if
EDGA Last Sale described above. The imposes significant competitive it appears to the Commission that such
proposed changes are also non- pressures on Exchange data products action is necessary or appropriate in the
discriminatory as they would apply to and the Exchange’s compelling need to public interest, for the protection of
all recipient firms uniformly. attract order flow imposes significant investors, or otherwise in furtherance of
competitive pressure on the Exchange to the purposes of the Act.
B. Self-Regulatory Organization’s
act equitably, fairly, and reasonably in
Statement on Burden on Competition IV. Solicitation of Comments
setting the proposed data product fees.
The Exchange does not believe that The proposed data product fees are, in Interested persons are invited to
the proposed rule change will result in part, responses to that pressure. The submit written data, views, and
any burden on competition that is not Exchange believes that the proposed arguments concerning the foregoing,
necessary or appropriate in furtherance fees would reflect an equitable including whether the proposed rule
of the purposes of the Act, as amended. allocation of its overall costs to users of change is consistent with the Act.
its facilities. Comments may be submitted by any of
EDGA Top and EDGA Last Sale In addition, when establishing the the following methods:
The Exchange does not believe that proposed fees, the Exchange considered
Electronic Comments
the proposed rule change will result in the competitiveness of the market for
any burden on competition that is not proprietary data and all of the • Use the Commission’s Internet
necessary or appropriate in furtherance implications of that competition. The comment form (http://www.sec.gov/
of the purposes of the Act, as amended. Exchange believes that it has considered rules/sro.shtml); or
The Exchange’s ability to price EDGA all relevant factors and has not • Send an email to rule-
Last Sale and EDGA Top are constrained considered irrelevant factors in order to comments@sec.gov. Please include File
by: (i) Competition among exchanges, establish fair, reasonable, and not Number SR–EDGA–2015–25 on the
other trading platforms, and Trade unreasonably discriminatory fees and an subject line.
Reporting Facilities (‘‘TRF’’) that equitable allocation of fees among all
Users. The existence of alternatives to Paper Comments
compete with each other in a variety of
dimensions; (ii) the existence of EDGA Last Sale and EDGA Top, • Send paper comments in triplicate
inexpensive real-time consolidated data including existing similar feeds by other to Brent J. Fields, Secretary, Securities
and market-specific data and free exchanges, consolidated data, and and Exchange Commission, 100 F Street
delayed data; and (iii) the inherent proprietary data from other sources, NE., Washington, DC 20549–1090.
contestability of the market for ensures that the Exchange cannot set All submissions should refer to File
proprietary data. unreasonable fees, or fees that are Number SR–EDGA–2015–25. This file
The Exchange and its market data unreasonably discriminatory, when number should be included on the
products are subject to significant vendors and subscribers can elect these subject line if email is used. To help the
competitive forces and the proposed alternatives or choose not to purchase a Commission process and review your
fees represent responses to that specific proprietary data product if its comments more efficiently, please use
competition. To start, the Exchange cost to purchase is not justified by the only one method. The Commission will
competes intensely for order flow. It returns any particular vendor or post all comments on the Commission’s
competes with the other national subscriber would achieve through the Internet Web site (http://www.sec.gov/
securities exchanges that currently trade purchase. rules/sro.shtml). Copies of the
equities, with electronic communication Non-Substantive, Corrective Changes submission, all subsequent
networks, with quotes posted in amendments, all written statements
FINRA’s Alternative Display Facility, The proposed non-substantive,
with respect to the proposed rule
with alternative trading systems, and corrective changes to the fee schedule
change that are filed with the
with securities firms that primarily will not have any impact on completion.
Commission, and all written
trade as principal with their customer The proposed changes are designed to
communications relating to the
order flow. clarify the fee schedule and avoid
proposed rule change between the
potential investor confusion.
In addition, EDGA Last Sale and Commission and any person, other than
EDGA Top compete with a number of C. Self-Regulatory Organization’s those that may be withheld from the
alternative products. For instance, Statement on Comments on the public in accordance with the
EDGA Last Sale and EDGA Top do not Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be
provide a complete picture of all trading Members, Participants, or Others available for Web site viewing and
activity in a security. Rather, the other The Exchange has neither solicited printing in the Commission’s Public
national securities exchanges, the nor received written comments on the Reference Room, 100 F Street NE.,
several TRFs of FINRA, and Electronic proposed rule change. Washington, DC 20549 on official
Communication Networks (‘‘ECN’’) that business days between the hours of
produce proprietary data all produce III. Date of Effectiveness of the 10:00 a.m. and 3:00 p.m. Copies of such
trades and trade reports. Each is Proposed Rule Change and Timing for filing also will be available for
currently permitted to produce last sale Commission Action inspection and copying at the principal
asabaliauskas on DSK5VPTVN1PROD with NOTICES

information products, and many The foregoing rule change has become office of the Exchange. All comments
currently do, including Nasdaq and effective pursuant to Section 19(b)(3)(A) received will be posted without change;
NYSE. In addition, market participants of the Act 31 and paragraph (f) of Rule the Commission does not edit personal
can gain access to EDGA last sale prices 19b–4 thereunder.32 At any time within identifying information from
and top-of-book quotations, though 60 days of the filing of the proposed rule submissions. You should submit only
integrated with the prices of other information that you wish to make
markets, on feeds made available 31 15 U.S.C. 78s(b)(3)(A). available publicly. All submissions
through the SIPs. 32 17 CFR 240.19b–4(f). should refer to File Number SR–EDGA–

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Document Created: 2018-02-23 09:19:09
Document Modified: 2018-02-23 09:19:09

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 41126