81 FR 15375 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Adopting a Decommission Extension Fee for receipt of the NYSE MKT BBO and NYSE MKT Trades Market Data Products
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 55 (March 22, 2016)
Federal Register Volume 81, Issue 55 (March 22, 2016)
| Page Range | 15375-15378 | |
| FR Document | 2016-06409 |
[Federal Register Volume 81, Number 55 (Tuesday, March 22, 2016)] [Notices] [Pages 15375-15378] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-06409] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77389; File No. SR-NYSEMKT-2016-37] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Adopting a Decommission Extension Fee for receipt of the NYSE MKT BBO and NYSE MKT Trades Market Data Products March 17, 2016. Pursuant to Section 19(b)(1)\1\ of the Securities Exchange Act of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, on March 8, 2016, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') 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 adopt a Decommission Extension Fee for receipt of the NYSE MKT BBO and NYSE MKT Trades market data products. The proposed change is available on the Exchange's Web site 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 adopt a Decommission Extension Fee for receipt of the NYSE MKT BBO and NYSE MKT Trades market data products,\4\ as set forth on the NYSE MKT LLC Equities Proprietary Market Data Fee Schedule (``Fee Schedule''). Recipients of NYSE MKT BBO and NYSE MKT Trades would continue to be subject to the already existing subscription fees currently set forth in the Fee Schedule. The proposed Decommission Extension Fee would apply only to those subscribers who decide to continue to receive the NYSE MKT BBO and NYSE MKT Trades feeds in their legacy format for up to two months after those feeds otherwise will be distributed exclusively in the new format explained below. --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release Nos. 61936 (Apr. 16, 2010), 74 FR 21088 (Apr. 22, 2010) (SR-NYSEAmex-2010-35) (notice-- NYSE MKT BBO and NYSE MKT Trades) and 62187 (May 27, 2010), 75 FR 31500 (June 3, 2010) (SR-NYSEAmex-2010-35) (approval order--NYSE MKT BBO and NYSE MKT Trades). --------------------------------------------------------------------------- NYSE MKT Trades is an NYSE MKT-only last sale market data feed. NYSE MKT Trades currently allows vendors, broker-dealers and others to make available on a real-time basis the same last sale information that the Exchange reports under the Consolidated Tape Association (``CTA'') Plan for inclusion in the CTA Plan's consolidated data streams. Specifically, the NYSE MKT Trades feed includes, for each security traded on the Exchange, the real-time last sale price, time and size information and bid/ask quotations at the time of each sale and a stock summary message. The stock summary message updates every minute and includes NYSE MKT's opening price, high price, low price, closing price, and cumulative volume for the security.\5\ --------------------------------------------------------------------------- \5\ Id. --------------------------------------------------------------------------- NYSE MKT BBO is an NYSE MKT-only market data feed that allows a vendor to redistribute on a real-time basis the same best-bid-and-offer information that the Exchange reports under the Consolidated Quotation (``CQ'') Plan for inclusion in the CQ Plan's consolidated quotation information data stream. The data feed [[Page 15376]] includes the best bids and offers for all securities that are traded on the Exchange and for which NYSE MKT reports quotes under the CQ Plan. As part of the Exchange's efforts to regularly upgrade systems to support more modern data distribution formats and protocols as technology evolves, beginning March 1, 2016, NYSE MKT BBO and NYSE MKT Trades will both be transmitted in a new format, Exchange Data Protocol (XDP). Beginning March 1, 2016, the Exchange will transmit NYSE MKT BBO and NYSE MKT Trades in both the legacy format and in XDP without any additional fee being charged for providing these data feeds in both formats. The dual dissemination will remain in place until July 1, 2016, the planned decommission date of the legacy format. Beginning July 1, 2016, recipients of NYSE MKT BBO and NYSE MKT Trades who wish to continue to receive NYSE MKT BBO and NYSE MKT Trades in the legacy format will each be subject to the proposed Decommission Extension Fee of $5,000 per month. During the extension period, recipients of NYSE MKT BBO and NYSE MKT Trades would continue to be subject to the subscription fees currently noted in the Fee Schedule. The extension period for receiving these data feeds in the legacy format will expire on September 1, 2016, on which date distribution of NYSE MKT BBO and NYSE MKT Trades in the legacy format will be permanently discontinued. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\6\ in general, and Sections 6(b)(4) and 6(b)(5) of the Act,\7\ 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. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f(b). \7\ 15 U.S.C. 78f(b)(4), (5). --------------------------------------------------------------------------- The Exchange believes that adopting an extension fee for subscribers of NYSE MKT BBO and NYSE MKT Trades who wish to receive these data feeds in the legacy format for a period of time beyond the built-in overlap period is reasonable, equitable and not unfairly discriminatory because the proposed fee would apply equally to all data recipients that currently subscribe to NYSE MKT BBO and NYSE MKT Trades. The Exchange believes that it is reasonable to require data recipients to pay an additional fee for taking the data feeds in the legacy format beyond the period of time specifically allotted by the Exchange for data feed customers to adapt to the new XDP format at no extra cost. To that end, the extension fee is designed to encourage data recipients to migrate to the XDP format in order to continue to receive NYSE MKT BBO and NYSE MKT Trades in XDP as the legacy format would no longer be available after that date. The Exchange does not intend to support the legacy format at all after September 1, 2016. The Exchange notes that NYSE MKT BBO and NYSE MKT Trades are entirely optional. The Exchange is not required to make NYSE MKT BBO and NYSE MKT Trades available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase NYSE MKT BBO and NYSE MKT Trades, nor is the Exchange required to offer any feed (NYSE MKT BBO, NYSE MKT Trades, or otherwise) in a particular format, and it is a benefit to the markets generally that NYSE MKT update its distribution technology to make it more efficient (and at the same time eliminate less efficient forms of dissemination). Firms that do purchase NYSE MKT BBO and NYSE MKT Trades do so for the primary goals of using them to increase revenues, reduce expenses, and in some instances compete directly with the Exchange (including for order flow); those firms are able to determine for themselves whether NYSE MKT BBO and NYSE MKT Trades or any other similar products are attractively priced or not.\8\ --------------------------------------------------------------------------- \8\ See, e.g., Proposing Release on Regulation of NMS Stock Alternative Trading Systems, Securities Exchange Act Release No. 76474 (Nov. 18, 2015) (File No. S7-23-15). See also, ``Brokers Warned Not to Steer Clients' Stock Trades Into Slow Lane,'' Bloomberg Business, December 14, 2015 (Sigma X dark pool to use direct exchange feeds as the primary source of price data). --------------------------------------------------------------------------- The decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010), upheld reliance by the Securities and Exchange Commission (``Commission'') upon the existence of competitive market mechanisms to set reasonable and equitably allocated 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.' Id. at 535 (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.' '' \9\ --------------------------------------------------------------------------- \9\ NetCoalition, 615 F.3d at 535. --------------------------------------------------------------------------- As explained below in the Exchange's Statement on Burden on Competition, the Exchange believes that there is substantial evidence of competition in the marketplace for proprietary market data and that the Commission can rely upon such evidence in concluding that the fees established in this filing are the product of competition and therefore satisfy the relevant statutory standards. In addition, the existence of alternatives to the legacy format, such as converting to XDP as soon as possible, further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can select such alternatives. As the NetCoalition decision noted, the Commission is not required to undertake a cost-of-service or ratemaking approach. The Exchange believes that, even if it were possible as a matter of economic theory, cost-based pricing for proprietary market data would be so complicated that it could not be done practically or offer any significant benefits.\10\ --------------------------------------------------------------------------- \10\ The Exchange believes that cost-based pricing would be impractical because it would create enormous administrative burdens for all parties and the Commission to cost-regulate a large number of participants and standardize and analyze extraordinary amounts of information, accounts, and reports. In addition, and as described below, 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. Finally, the prices set herein are prices for continuing to support distribution formats the Exchange has elected to retire in favor of new and more efficient distribution formats, making cost-based analyses even less relevant. --------------------------------------------------------------------------- [[Page 15377]] 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 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. An exchange's ability to price its proprietary market data feed products is constrained by actual competition for the sale of proprietary market data products, the joint product nature of exchange platforms, and the existence of alternatives to the Exchange's proprietary data (and in this instance, the ability of any firm to switch to the new distribution format in a time frame that eliminates the need to pay these fees entirely). The Existence of Actual Competition The market for proprietary data products is currently competitive and inherently contestable because there is fierce competition for the inputs necessary for the creation of proprietary data and strict pricing discipline for the proprietary products themselves. Numerous exchanges compete with one another for listings and order flow and sales of market data itself, providing ample opportunities for entrepreneurs who wish to compete in any or all of those areas, including producing and distributing their own market data. Proprietary data products are produced and distributed by each individual exchange, as well as other entities, in a vigorously competitive market. Indeed, the U.S. Department of Justice (``DOJ'') (the primary antitrust regulator) has expressly acknowledged the aggressive actual competition among exchanges, including for the sale of proprietary market data. In 2011, the DOJ stated that exchanges ``compete head to head to offer real-time equity data products. These data products include the best bid and offer of every exchange and information on each equity trade, including the last sale.'' \11\ --------------------------------------------------------------------------- \11\ Press Release, U.S. Department of Justice, Assistant Attorney General Christine Varney Holds Conference Call Regarding NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. Abandoning Their Bid for NYSE Euronext (May 16, 2011), available at http://www.justice.gov/iso/opa/atr/speeches/2011/at-speech-110516.html; see also Complaint in U.S. v. Deutsche Borse AG and NYSE Euronext, Case No. 11-cv-2280 (DC Dist.) ] 24 (``NYSE and Direct Edge compete head- to-head . . . in the provision of real-time proprietary equity data products.''). --------------------------------------------------------------------------- Moreover, competitive markets for listings, order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products and therefore constrain markets from overpricing proprietary market data. Broker-dealers send their order flow and transaction reports to multiple venues, rather than providing them all to a single venue, which in turn reinforces this competitive constraint. As a 2010 Commission Concept Release noted, the ``current market structure can be described as dispersed and complex'' with ``trading volume . . . dispersed among many highly automated trading centers that compete for order flow in the same stocks'' and ``trading centers offer[ing] a wide range of services that are designed to attract different types of market participants with varying trading needs.'' \12\ More recently, SEC Chair Mary Jo White has noted that competition for order flow in exchange-listed equities is ``intense'' and divided among many trading venues, including exchanges, more than 40 alternative trading systems, and more than 250 broker-dealers.\13\ --------------------------------------------------------------------------- \12\ Concept Release on Equity Market Structure, Securities Exchange Act Release No. 61358 (Jan. 14, 2010), 75 FR 3594 (Jan. 21, 2010) (File No. S7-02-10). This Concept Release included data from the third quarter of 2009 showing that no market center traded more than 20% of the volume of listed stocks, further evidencing the dispersal of and competition for trading activity. Id. at 3598. Data available on ArcaVision show that from June 30, 2013 to June 30, 2014, no exchange traded more than 12% of the volume of listed stocks by either trade or dollar volume, further evidencing the continued dispersal of and fierce competition for trading activity. See https://www.arcavision.com/Arcavision/arcalogin.jsp. \13\ Mary Jo White, Enhancing Our Equity Market Structure, Sandler O'Neill & Partners, L.P. Global Exchange and Brokerage Conference (June 5, 2014) (available on the Commission Web site), citing Tuttle, Laura, 2014, ``OTC Trading: Description of Non-ATS OTC Trading in National Market System Stocks,'' at 7-8. --------------------------------------------------------------------------- If an exchange succeeds in competing for quotations, order flow, and trade executions, then it earns trading revenues and increases the value of its proprietary market data products because they will contain greater quote and trade information. Conversely, if an exchange is less successful in attracting quotes, order flow, and trade executions, then its market data products may be less desirable to customers in light of the diminished content and data products offered by competing venues may become more attractive. Thus, competition for quotations, order flow, and trade executions puts significant pressure on an exchange to maintain both execution and data fees at reasonable levels. In addition, in the case of products that are also redistributed through market data vendors, such as Bloomberg and Thompson Reuters, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors will not elect to make available NYSE MKT BBO or NYSE MKT Trades in the legacy format unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE MKT BBO and NYSE MKT Trades can provide value in the legacy formats by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. The Exchange has provided customers with adequate notice that it intends to discontinue dissemination of the data feeds in the legacy format. Therefore, the proposed Decommission Extension Fee would only be applicable to those customers who have a need or desire to continue to take the data feeds in the legacy format beyond the period provided for migration to the XDP format. Customers who timely migrate to the XDP format to receive the data feeds would not need to receive the data feeds in the legacy format and therefore would not be subject to the Decommission Extension Fee at all. All of these factors operate as constraints on pricing proprietary data products. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule 19b-4 \15\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A). \15\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of [[Page 15378]] the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NYSEMKT-2016-37 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-NYSEMKT-2016-37. 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; 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-NYSEMKT-2016-37 and should be submitted on or before April 12, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ --------------------------------------------------------------------------- \17\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-06409 Filed 3-21-16; 8:45 am] BILLING CODE 8011-01-P
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the self-regulatory organization 2016–14 and should be submitted on or of those statements may be examined at
consents, the Commission will: before April 12, 2016. the places specified in Item IV below.
(A) By order approve or disapprove For the Commission, by the Division of The Exchange has prepared summaries,
the proposed rule change, or Trading and Markets, pursuant to delegated set forth in sections A, B, and C below,
(B) institute proceedings to determine authority.29 of the most significant parts of such
whether the proposed rule change Robert W. Errett, statements.
should be disapproved. Deputy Secretary. A. Self-Regulatory Organization’s
IV. Solicitation of Comments
[FR Doc. 2016–06362 Filed 3–21–16; 8:45 am] Statement of the Purpose of, and the
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
Interested persons are invited to Change
submit written data, views and
SECURITIES AND EXCHANGE 1. Purpose
arguments concerning the foregoing,
including whether the proposed rule COMMISSION The Exchange proposes to adopt a
change is consistent with the Act. Decommission Extension Fee for receipt
[Release No. 34–77389; File No. SR–
Comments may be submitted by any of NYSEMKT–2016–37] of the NYSE MKT BBO and NYSE MKT
the following methods: Trades market data products,4 as set
Self-Regulatory Organizations; NYSE forth on the NYSE MKT LLC Equities
Electronic Comments MKT LLC; Notice of Filing and Proprietary Market Data Fee Schedule
• Use the Commission’s Internet Immediate Effectiveness of Proposed (‘‘Fee Schedule’’). Recipients of NYSE
comment form (http://www.sec.gov/ Change Adopting a Decommission MKT BBO and NYSE MKT Trades
rules/sro.shtml); or Extension Fee for receipt of the NYSE would continue to be subject to the
MKT BBO and NYSE MKT Trades already existing subscription fees
• Send an email to rule-comments@
Market Data Products currently set forth in the Fee Schedule.
sec.gov. Please include File Number SR–
The proposed Decommission Extension
NYSE–2016–14 on the subject line. March 17, 2016. Fee would apply only to those
Paper Comments Pursuant to Section 19(b)(1)1 of the subscribers who decide to continue to
Securities Exchange Act of 1934 (the receive the NYSE MKT BBO and NYSE
• Send paper comments in triplicate ‘‘Act’’) 2 and Rule 19b-4 thereunder,3 MKT Trades feeds in their legacy format
to Secretary, Securities and Exchange notice is hereby given that, on March 8, for up to two months after those feeds
Commission, 100 F Street NE., 2016, NYSE MKT LLC (the ‘‘Exchange’’ otherwise will be distributed
Washington, DC 20549–1090. or ‘‘NYSE MKT’’) filed with the exclusively in the new format explained
All submissions should refer to File Securities and Exchange Commission below.
Number SR–NYSE–2016–14. This file (the ‘‘Commission’’) the proposed rule NYSE MKT Trades is an NYSE MKT-
number should be included on the change as described in Items I, II, and only last sale market data feed. NYSE
subject line if email is used. To help the III below, which Items have been MKT Trades currently allows vendors,
Commission process and review your prepared by the self-regulatory broker-dealers and others to make
comments more efficiently, please use organization. The Commission is available on a real-time basis the same
only one method. The Commission will publishing this notice to solicit last sale information that the Exchange
post all comments on the Commission’s comments on the proposed rule change reports under the Consolidated Tape
Internet Web site (http://www.sec.gov/ from interested persons. Association (‘‘CTA’’) Plan for inclusion
rules/sro.shtml). Copies of the in the CTA Plan’s consolidated data
I. Self-Regulatory Organization’s streams. Specifically, the NYSE MKT
submission, all subsequent Statement of the Terms of Substance of
amendments, all written statements Trades feed includes, for each security
the Proposed Rule Change traded on the Exchange, the real-time
with respect to the proposed rule
change that are filed with the The Exchange proposes to adopt a last sale price, time and size information
Commission, and all written Decommission Extension Fee for receipt and bid/ask quotations at the time of
communications relating to the of the NYSE MKT BBO and NYSE MKT each sale and a stock summary message.
proposed rule change between the Trades market data products. The The stock summary message updates
Commission and any person, other than proposed change is available on the every minute and includes NYSE MKT’s
those that may be withheld from the Exchange’s Web site at www.nyse.com, opening price, high price, low price,
public in accordance with the at the principal office of the Exchange, closing price, and cumulative volume
provisions of 5 U.S.C. 552, will be and at the Commission’s Public for the security.5
available for Web site viewing and Reference Room. NYSE MKT BBO is an NYSE MKT-
printing in the Commission’s Public only market data feed that allows a
II. Self-Regulatory Organization’s vendor to redistribute on a real-time
Reference Room, 100 F Street NE., Statement of the Purpose of, and
Washington, DC 20549, on official basis the same best-bid-and-offer
Statutory Basis for, the Proposed Rule information that the Exchange reports
business days between the hours of Change
10:00 a.m. and 3:00 p.m. Copies of the under the Consolidated Quotation
filing also will be available for In its filing with the Commission, the (‘‘CQ’’) Plan for inclusion in the CQ
inspection and copying at the principal self-regulatory organization included Plan’s consolidated quotation
asabaliauskas on DSK3SPTVN1PROD with NOTICES
office of the Exchange. All comments statements concerning the purpose of, information data stream. The data feed
received will be posted without change; and basis for, the proposed rule change
the Commission does not edit personal and discussed any comments it received 4 See Securities Exchange Act Release Nos. 61936
on the proposed rule change. The text (Apr. 16, 2010), 74 FR 21088 (Apr. 22, 2010) (SR–
identifying information from NYSEAmex–2010–35) (notice—NYSE MKT BBO
submissions. You should submit only 29 17
and NYSE MKT Trades) and 62187 (May 27, 2010),
CFR 200.30–3(a)(12). 75 FR 31500 (June 3, 2010) (SR–NYSEAmex–2010–
information that you wish to make 1 15 U.S.C. 78s(b)(1). 35) (approval order—NYSE MKT BBO and NYSE
available publicly. All submissions 2 15 U.S.C. 78a. MKT Trades).
should refer to File Number SR–NYSE– 3 17 CFR 240.19b–4. 5 Id.
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For these reasons, the Exchange transaction reports provide pricing themselves provide additional price
believes that the proposed fees are discipline for the inputs of proprietary discipline for proprietary data products
reasonable, equitable, and not unfairly data products and therefore constrain because they control the primary means
discriminatory. markets from overpricing proprietary of access to certain end users. These
market data. Broker-dealers send their vendors impose price discipline based
B. Self-Regulatory Organization’s
order flow and transaction reports to upon their business models. For
Statement on Burden on Competition
multiple venues, rather than providing example, vendors that assess a
The Exchange does not believe that them all to a single venue, which in turn surcharge on data they sell are able to
the proposed rule change will impose reinforces this competitive constraint. refuse to offer proprietary products that
any burden on competition that is not As a 2010 Commission Concept Release their end users do not or will not
necessary or appropriate in furtherance noted, the ‘‘current market structure can purchase in sufficient numbers. Vendors
of the purposes of the Act. An be described as dispersed and complex’’ will not elect to make available NYSE
exchange’s ability to price its with ‘‘trading volume . . . dispersed MKT BBO or NYSE MKT Trades in the
proprietary market data feed products is among many highly automated trading legacy format unless their customers
constrained by actual competition for centers that compete for order flow in request it, and customers will not elect
the sale of proprietary market data the same stocks’’ and ‘‘trading centers to pay the proposed fees unless NYSE
products, the joint product nature of offer[ing] a wide range of services that MKT BBO and NYSE MKT Trades can
exchange platforms, and the existence of are designed to attract different types of provide value in the legacy formats by
alternatives to the Exchange’s market participants with varying trading sufficiently increasing revenues or
proprietary data (and in this instance, needs.’’ 12 More recently, SEC Chair reducing costs in the customer’s
the ability of any firm to switch to the Mary Jo White has noted that business in a manner that will offset the
new distribution format in a time frame competition for order flow in exchange- fees. The Exchange has provided
that eliminates the need to pay these listed equities is ‘‘intense’’ and divided customers with adequate notice that it
fees entirely). among many trading venues, including intends to discontinue dissemination of
The Existence of Actual Competition exchanges, more than 40 alternative the data feeds in the legacy format.
trading systems, and more than 250 Therefore, the proposed Decommission
The market for proprietary data broker-dealers.13 Extension Fee would only be applicable
products is currently competitive and If an exchange succeeds in competing to those customers who have a need or
inherently contestable because there is for quotations, order flow, and trade desire to continue to take the data feeds
fierce competition for the inputs executions, then it earns trading in the legacy format beyond the period
necessary for the creation of proprietary revenues and increases the value of its provided for migration to the XDP
data and strict pricing discipline for the proprietary market data products format. Customers who timely migrate
proprietary products themselves. because they will contain greater quote to the XDP format to receive the data
Numerous exchanges compete with one and trade information. Conversely, if an feeds would not need to receive the data
another for listings and order flow and exchange is less successful in attracting feeds in the legacy format and therefore
sales of market data itself, providing quotes, order flow, and trade would not be subject to the
ample opportunities for entrepreneurs executions, then its market data Decommission Extension Fee at all. All
who wish to compete in any or all of products may be less desirable to of these factors operate as constraints on
those areas, including producing and customers in light of the diminished pricing proprietary data products.
distributing their own market data. content and data products offered by
Proprietary data products are produced competing venues may become more C. Self-Regulatory Organization’s
and distributed by each individual attractive. Thus, competition for Statement on Comments on the
exchange, as well as other entities, in a quotations, order flow, and trade Proposed Rule Change Received From
vigorously competitive market. Indeed, executions puts significant pressure on Members, Participants, or Others
the U.S. Department of Justice (‘‘DOJ’’) an exchange to maintain both execution No written comments were solicited
(the primary antitrust regulator) has and data fees at reasonable levels. or received with respect to the proposed
expressly acknowledged the aggressive In addition, in the case of products rule change.
actual competition among exchanges, that are also redistributed through
including for the sale of proprietary market data vendors, such as Bloomberg III. Date of Effectiveness of the
market data. In 2011, the DOJ stated that and Thompson Reuters, the vendors Proposed Rule Change and Timing for
exchanges ‘‘compete head to head to Commission Action
offer real-time equity data products. 12 Concept Release on Equity Market Structure,
The foregoing rule change is effective
Securities Exchange Act Release No. 61358 (Jan. 14, upon filing pursuant to Section
These data products include the best bid 2010), 75 FR 3594 (Jan. 21, 2010) (File No. S7–02–
and offer of every exchange and 10). This Concept Release included data from the 19(b)(3)(A) 14 of the Act and
information on each equity trade, third quarter of 2009 showing that no market center subparagraph (f)(2) of Rule 19b–4 15
including the last sale.’’ 11 traded more than 20% of the volume of listed thereunder, because it establishes a due,
stocks, further evidencing the dispersal of and fee, or other charge imposed by the
Moreover, competitive markets for competition for trading activity. Id. at 3598. Data
listings, order flow, executions, and available on ArcaVision show that from June 30, Exchange.
2013 to June 30, 2014, no exchange traded more At any time within 60 days of the
11 Press Release, U.S. Department of Justice, than 12% of the volume of listed stocks by either filing of such proposed rule change, the
trade or dollar volume, further evidencing the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Assistant Attorney General Christine Varney Holds Commission summarily may
Conference Call Regarding NASDAQ OMX Group continued dispersal of and fierce competition for
Inc. and IntercontinentalExchange Inc. Abandoning trading activity. See https://www.arcavision.com/ temporarily suspend such rule change if
Their Bid for NYSE Euronext (May 16, 2011), Arcavision/arcalogin.jsp. it appears to the Commission that such
available at http://www.justice.gov/iso/opa/atr/ 13 Mary Jo White, Enhancing Our Equity Market action is necessary or appropriate in the
speeches/2011/at-speech-110516.html; see also Structure, Sandler O’Neill & Partners, L.P. Global public interest, for the protection of
Complaint in U.S. v. Deutsche Borse AG and NYSE Exchange and Brokerage Conference (June 5, 2014)
Euronext, Case No. 11–cv–2280 (DC Dist.) ¶ 24 (available on the Commission Web site), citing
investors, or otherwise in furtherance of
(‘‘NYSE and Direct Edge compete head-to-head . . . Tuttle, Laura, 2014, ‘‘OTC Trading: Description of
14 15 U.S.C. 78s(b)(3)(A).
in the provision of real-time proprietary equity data Non-ATS OTC Trading in National Market System
products.’’). Stocks,’’ at 7–8. 15 17 CFR 240.19b–4(f)(2).
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![15378 Federal Register / Vol. 81, No. 55 / Tuesday, March 22, 2016 / Notices
the purposes of the Act. If the NYSEMKT–2016–37 and should be and discussed any comments it received
Commission takes such action, the submitted on or before April 12, 2016. on the proposed rule change. The text
Commission shall institute proceedings For the Commission, by the Division of of those statements may be examined at
under Section 19(b)(2)(B) 16 of the Act to Trading and Markets, pursuant to delegated the places specified in Item IV below.
determine whether the proposed rule authority.17 The Exchange has prepared summaries,
change should be approved or Robert W. Errett, set forth in sections A, B, and C below,
disapproved. Deputy Secretary. of the most significant parts of such
statements.
IV. Solicitation of Comments [FR Doc. 2016–06409 Filed 3–21–16; 8:45 am]
Interested persons are invited to BILLING CODE 8011–01–P A. Self-Regulatory Organization’s
submit written data, views, and Statement of the Purpose of, and
arguments concerning the foregoing, Statutory Basis for, the Proposed Rule
SECURITIES AND EXCHANGE Change
including whether the proposed rule
COMMISSION
change is consistent with the Act. 1. Purpose
Comments may be submitted by any of [Release No. 34–77385; File No. SR–
NYSEARCA–2016–25] The Exchange proposes to amend and
the following methods:
restate the Fifth Amended and Restated
Electronic Comments Self-Regulatory Organizations; NYSE Bylaws of ICE (‘‘ICE Bylaws’’). The
• Use the Commission’s Internet Arca, Inc.; Notice of Filing of Proposed proposed amendments to the ICE
comment form (http://www.sec.gov/ Rule Change Amending and Restating Bylaws would (1) add a new Section
rules/sro.shtml); or the Fifth Amended and Restated 2.15 that permits a stockholder, or
• Send an email to rule-comments@ Bylaws of the Exchange’s Ultimate stockholders, that meet specific
sec.gov. Please include File Number SR– Parent Company, Intercontinental requirements to nominate director
NYSEMKT–2016–37 on the subject line. Exchange, Inc., To Implement Proxy nominees for the board of directors of
Access ICE (‘‘ICE Board’’), provided that the
Paper Comments nominating stockholder(s) and
• Send paper comments in triplicate March 17, 2016. nominee(s) satisfy the proposed
to Brent J. Fields, Secretary, Securities Pursuant to Section 19(b)(1) 1 of the requirements, and (2) amend the
and Exchange Commission, 100 F Street Securities Exchange Act of 1934 advance notice provisions in Section
NE., Washington, DC 20549–1090. (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 2.13 to account for proxy access.4
All submissions should refer to File notice is hereby given that, on March 2, ICE owns 100% of the equity interest
Number SR–NYSEMKT–2016–37. This 2016, NYSE Arca, Inc. (the ‘‘Exchange’’ in Intercontinental Exchange Holdings,
file number should be included on the or ‘‘NYSE Arca’’) filed with the Inc. (‘‘ICE Holdings’’), which in turn
subject line if email is used. To help the Securities and Exchange Commission owns 100% of the equity interest in
Commission process and review your (‘‘Commission’’) the proposed rule NYSE Holdings LLC (‘‘NYSE
comments more efficiently, please use change as described in Items I, II, and Holdings’’). NYSE Holdings owns 100%
only one method. The Commission will III below, which Items have been of the equity interest of NYSE Group,
post all comments on the Commission’s prepared by the self-regulatory Inc., which in turn directly owns 100%
Internet Web site (http://www.sec.gov/ organization. The Commission is of the equity interest of the Exchange
rules/sro.shtml). Copies of the publishing this notice to solicit and its affiliates New York Stock
submission, all subsequent comments on the proposed rule change Exchange LLC and NYSE MKT LLC.5
from interested persons. The proposed amendments to the ICE
amendments, all written statements
Bylaws have been approved by the ICE
with respect to the proposed rule I. Self-Regulatory Organization’s Board, subject to Securities and
change that are filed with the Statement of the Terms of Substance of Exchange Commission (‘‘Commission’’)
Commission, and all written the Proposed Rule Change approval. Under Section 11.1 of the ICE
communications relating to the
The Exchange proposes to amend and Bylaws, no stockholder approval is
proposed rule change between the
restate the Fifth Amended and Restated required for amendment of the ICE
Commission and any person, other than
Bylaws of the Exchange’s ultimate Bylaws. ICE filed a Form 8–K setting
those that may be withheld from the
parent company, Intercontinental forth the proposed amendments on
public in accordance with the
Exchange, Inc. (‘‘ICE’’), to implement January 22, 2016 after approval by the
provisions of 5 U.S.C. 552, will be
proxy access. The proposed rule change ICE Board, and will file a further Form
available for Web site viewing and
is available on the Exchange’s Web site 8–K when the amendments are adopted.
printing in the Commission’s Public
at www.nyse.com, at the principal office
Reference Room, 100 F Street NE., Bylaw Section 2.15
of the Exchange, and at the
Washington, DC 20549 on official The proposed rule change would add
Commission’s Public Reference Room.
business days between the hours of new Section 2.15 to the ICE Bylaws.
10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s Section 2.15 would permit a
filing also will be available for Statement of the Purpose of, and
inspection and copying at the principal Statutory Basis for, the Proposed Rule 4 In November 2015, the Comptroller of the City
office of the Exchange. All comments Change of New York, on behalf of certain city retirement
received will be posted without change; systems that are stockholders of ICE, requested that
asabaliauskas on DSK3SPTVN1PROD with NOTICES
In its filing with the Commission, the ICE include a proxy access proposal in its 2016
the Commission does not edit personal self-regulatory organization included proxy statement. After discussions with the
identifying information from statements concerning the purpose of, Comptroller’s office, ICE management determined
submissions. You should submit only and basis for, the proposed rule change to recommend the amendment reflected in the
information that you wish to make proposed rule change to the ICE Board and, on that
basis, the Comptroller’s request was withdrawn.
available publicly. All submissions 17 17 CFR 200.30–3(a)(12). 5 The Exchange’s affiliates have each submitted
should refer to File Number SR– 1 15 U.S.C. 78s(b)(1). proposed rule changes to propose the changes
2 15 U.S.C. 78a.
described in this filing. See SR–NYSE–2016–14 and
16 15 U.S.C. 78s(b)(2)(B). 3 17 CFR 240.19b–4. SR–NYSEMKT–2016–20.
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Document Created: 2018-02-02 15:15:37
Document Modified: 2018-02-02 15:15:37
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 81 FR 15375 |
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