80 FR 48940 - Consolidated Tape Association; Order Approving the Twenty Third Substantive Amendment to the Second Restatement of the CTA Plan

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 157 (August 14, 2015)

[Federal Register Volume 80, Number 157 (Friday, August 14, 2015)]
[Notices]
[Pages 48940-48941]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-20147]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75660; File No. SR-CTA-2015-02]


Consolidated Tape Association; Order Approving the Twenty Third 
Substantive Amendment to the Second Restatement of the CTA Plan

August 11, 2015.

I. Introduction

    On June 19, 2015, certain participants (``Approving Participants'') 
\1\ of the Consolidated Tape Association (``CTA'') Plan filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') pursuant 
to Section 11A of the Securities Exchange Act of 1934 (``Act''),\2\ and 
Rule 608 thereunder,\3\ a proposal to amend the Second Restatement of 
the CTA Plan (``CTA Plan'').\4\ The proposal represents the Twenty 
Third Substantive Amendment to the CTA Plan (``Amendment'').\5\ The 
Amendment proposes to establish a fee that will be charged to a vendor 
or other data redistributor that fails to comply with the CTA Plan 
participants' Consolidated Volume display statement, and related 
requirements. The non-compliance charge seeks to provide incentives for 
data redistributors to comply with the participants' consolidated 
volume requirements. The proposed Amendment was published for comment 
in the Federal Register on July 10, 2015.\6\ No comment letters were 
received in response to the Notice. This order approves the proposed 
Amendment to the Plan.
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    \1\ More than two-thirds of the CTA Plan participants approved 
the amendment. The Approving Participants are: BATS Exchange, Inc., 
BATS-Y Exchange, Inc., Chicago Board Options Exchange, Incorporated, 
Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, 
Inc., Financial Industry Regulatory Authority, Inc., International 
Securities Exchange, LLC, National Stock Exchange, New York Stock 
Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc. NASDAQ OMX BX, Inc., 
NASDAQ OMX PHLX, Inc., and the Nasdaq Stock Market LLC are also CTA 
Plan participants (``participants'').
    \2\ 15 U.S.C. 78k-1.
    \3\ 17 CFR 242.608.
    \4\ See Securities Exchange Act Release No. 10787 (May 10, 
1974), 39 FR 17799 (declaring the CTA Plan effective). The CTA Plan, 
pursuant to which markets collect and disseminate last sale price 
information for non-NASDAQ listed securities, is a ``transaction 
reporting plan'' under Rule 601 under the Act, 17 CFR 242.601, and a 
``national market system plan'' under Rule 608 under the Act, 17 CFR 
242.608.
    \5\ The Amendment was originally submitted on an immediately 
effective basis pursuant to Rule 608(b)(3)(i) under Regulation NMS. 
See Letter from Emily Kasparov, Chairman, CTA Plan Operating 
Committee to Brent J. Fields, Secretary, Commission, dated May 18, 
2015. On June 19, 2015, the Approving Participants filed a letter to 
indicate the proposal should be considered under Rule 608(b)(1) and 
Rule 608(b)(2) of Regulation NMS. As a result, the Amendment must be 
approved by the Commission. See Letter from Emily Kasparov, 
Chairman, CTA Plan Operating Committee to Brent J. Fields, 
Secretary, Commission, dated June 17, 2015. The Amendment was 
originally designated as the Twenty Second Charges Amendment to the 
Plan. The Commission noted that the proposal is the Twenty Third 
Substantive Amendment to the Plan. See Notice, infra note 6, 80 FR 
at 39822 at note 5. On August 7, 2015, the Approving Participants 
filed a letter to indicate the proposal should be designated as the 
Twenty Third Substantive Amendment of the Plan. See Letter from 
Emily Kasparov, Chairman, CTA Plan Operating Committee to Brent J. 
Fields, Secretary, Commission, dated August 6, 2015 (``August 6 
Letter'').
    \6\ See Securities Exchange Act Release No. 75363 (July 6, 
2015), 80 FR 39821 (``Notice'').
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II. Description of the Proposal

    Historically, the Plan participants have not applied device fees to 
devices that receive consolidated volume (i.e., aggregate volume for 
trades taking place on all market centers under the Plan) in displays 
that do not also include CTA Plan prices or CQ Plan quotation 
information. The participants do not plan to change this policy.
    However, some data redistributors include consolidated volume in 
displays of unconsolidated last sale prices and/or unconsolidated bid-
asked quotes, such as displays of one exchange's trade prices and 
quotes. The Participants believe that such displays, whether displayed 
internally or externally, could mislead investors regarding the nature 
of the information they are viewing. A significant number of data users 
receive proprietary trade prices and quotes. Unless the data users 
understand the content being displayed, they could mistakenly think 
that they are seeing consolidated trades and quotes because the volume 
is consolidated volume.
    To make the displays transparent and less likely to mislead, data 
redistributors that include consolidated volume in displays of 
unconsolidated prices and quotes must incorporate into those displays 
the following statement (or a close iteration of the statement that the 
network administrator(s) have approved): ``Realtime quote and/or trade 
prices are not sourced from all markets.''
    A data redistributor must also assure that any person included in 
the redistribution chain starting with the data redistributor places 
the statement in any such display that it provides. The statement must 
be clearly visible to the end users so that they understand the 
differences in the sources of the data. In addition, data 
redistributors need to assure that they, and any person or entity 
included in the redistribution chain starting with them, clearly 
incorporate the display statement into any advertisement, sales 
literature or other material displaying CTA Consolidated Volume 
alongside unconsolidated prices or quotes. These requirements apply to 
both real-time and delayed displays of consolidated volume.
    In order to ensure compliance with these requirements, all 
recipients of the CTA last sale price datafeed (whether directly or 
indirectly) must submit a declaration. The Amendment will require firms 
that include consolidated volume in displays of unconsolidated prices 
and quotes to submit to NYSE a screen print of the displays, which 
include the display statement. The CTA Administrator will work with 
firms to facilitate their compliance.\7\
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    \7\ A firm with access to CTA consolidated volume data must 
submit the declaration and, if applicable, the screen print within 
120 days from the effective date of the amendment or within 30 days 
of the effective date of the firm's market data agreement with the 
participants that governs its receipt of the CTA datafeed (its 
``Vendor Agreement''). Thereafter, each firm must submit its 
declaration and, if applicable, its screen print annually by the 
31st day of January.
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    The Approving Participants' representatives met with SIFMA and the 
CTA Plan's Advisory Committee to discuss the consolidated volume 
requirements and responded to their questions. They shortened the 
display statement in response to comments and made clear that a 
datafeed recipient that provides an exchange's trading volume with 
displays of the exchange's trade prices and quotes is not subject to 
the display requirement.

[[Page 48941]]

    In order to motivate data recipients to comply with the display 
statement requirements, including the requisite declarations and screen 
submissions, the Amendment establishes a non-compliance fee for each 
month of non-compliance. For each of Network A and Network B, the 
monthly fee is $3,000.
    A datafeed recipient must submit the required screen prints upon 
the Amendment's implementation date \8\ or within thirty days of the 
effective date of its Vendor Agreement. It must submit those screen 
prints (including previously provided, new, or changed screen prints) 
annually by the 31st day of January.
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    \8\ The Approving Participants indicated that they will give 
notice of the compliance fee to all data redistributors no less than 
120 days prior to its implementation. See August 6 Letter.
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    The non-compliance charges will be assessed against a data 
redistributor for each month in which it fails to provide the 
declaration or a copy of a Consolidated Volume screen print with the 
required display statement in a timely manner. The charge will also be 
assessed against a data redistributor each month for non-compliance by 
persons in the redistribution chain starting with the data 
redistributor where such persons have not entered into an applicable 
agreement with CTA.
    The Approving Participants expect the non-compliance charges to 
provide incentives for data redistributors to comply with the 
consolidated volume requirements; they do not view the non-compliance 
fee as establishing a new revenue source. Rather, they hope it 
encourages all data redistributors to submit their declarations and 
screen prints (where applicable) in a timely fashion. They hope that 
the fee will motivate non-compliant redistributors to adopt the same 
practices that the majority of redistributors follow.
    The Approving Participants included delayed displays of 
consolidated volume in the Amendment to make it clear that if a data 
redistributor accompanies displays of real-time unconsolidated prices 
and quotes with delayed consolidated volume, it is subject to the new 
requirement.

III. Discussion

    After careful review, the Commission finds that the proposed 
Amendment to the Plan is consistent with the requirements of the Act 
and the rules and regulations thereunder,\9\ and, in particular, 
Section 11A(a)(1) of the Act \10\ and Rule 608 thereunder \11\ in that 
it is necessary or appropriate in the public interest, for the 
protection of investors and the maintenance of fair and orderly 
markets, to remove impediments to, and perfect the mechanisms of, a 
national market system.
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    \9\ The Commission has considered the proposed amendment's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \10\ 15 U.S.C. 78k-1(a)(1).
    \11\ 17 CFR 240.608.
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    The proposal is consistent with Section 11A(a)(1)(C)(iii) of the 
Act,\12\ which sets forth Congress' finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations and transactions in securities. These goals are furthered by 
the proposed changes to establish a fee that will be charged to a 
vendor or other data redistributor that fails to comply with the CTA 
Plan participants' Consolidated Volume display statement, and related 
requirements. Consolidated data continues to provide a great deal of 
value for investors in assessing the current market for trades and the 
quality of the execution they receive for their trades. The Commission 
believes it is important for market participants to know when 
Consolidated Volume is displayed alongside unconsolidated prices and 
quotes by data redistributors. The Consolidated Volume display policy 
should provide greater transparency on the source of the data for users 
of displays that contain both consolidated and proprietary data from 
redistributors. Additionally, the non-compliance charge should provide 
incentives for data redistributors to comply with the Consolidated 
Volume requirement.
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    \12\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act,\13\ 
and the rules thereunder, that the proposed Amendment to the CTA Plan 
(File No. SR-CTA-2015-02) is approved.
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    \13\ 15 U.S.C. 78k-1.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(27).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-20147 Filed 8-13-15; 8:45 am]
 BILLING CODE 8011-01-P