81 FR 83308 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Amending the Fees for NYSE MKT BBO and NYSE MKT Trades To Lower the Enterprise Fee

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 224 (November 21, 2016)

Page Range		83308-83312
FR Document		2016-27894
Federal Register, Volume 81 Issue 224 (Monday, November 21, 2016)
[Federal Register Volume 81, Number 224 (Monday, November 21, 2016)]
[Notices]
[Pages 83308-83312]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-27894]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79314; File No. SR-NYSEMKT-2016-101]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Change Amending the Fees for NYSE 
MKT BBO and NYSE MKT Trades To Lower the Enterprise Fee

November 15, 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 November 1, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the fees for NYSE MKT BBO and NYSE 
MKT Trades to lower the Enterprise Fee. 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.

[[Page 83309]]

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

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

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

1. Purpose
    The Exchange proposes to amend the fees for NYSE MKT BBO and NYSE 
MKT Trades market data products,\4\ as set forth on the NYSE MKT 
Equities Proprietary Market Data Fee Schedule (``Fee Schedule''). 
Specifically, the Exchange proposes to lower the Enterprise Fee. The 
Exchange proposes to make the fee change effective November 1, 2016.
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    \4\ See Securities Exchange Act Release Nos. 61936 (April 16, 
2010), 74 [sic] FR 21088 (April 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).
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    The Exchange currently charges an enterprise fee of $15,000 per 
month for an unlimited number of professional and non-professional 
users for each of NYSE MKT BBO and NYSE MKT Trades.\5\ A single 
Enterprise Fee applies for clients receiving both NYSE MKT BBO and NYSE 
MKT Trades.\6\ The Exchange proposes to lower the enterprise fee to 
$3,000 per month.
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    \5\ See Securities Exchange Act Release No. 76906 (January 14, 
2016), 81 FR 3500 (January 21, 2016) (SR-NYSEMKT-2016-04).
    \6\ See Securities Exchange Act Release No. 70212 (August 15, 
2013), 78 FR 51775 (August 21, 2013) (SR-NYSEMKT-2013-69).
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    As an example, under the current fee structure for per user fees, 
if a firm had 10,000 professional users who each received NYSE MKT 
Trades at $1 per month and NYSE MKT BBO at $1 per month, without the 
Enterprise Fee, the firm would be subject to $20,000 per month in 
professional user fees. Under the current pricing structure, the charge 
would be capped at $15,000 and effective November 1, 2016 it would be 
capped at $3,000.
    Under the proposed enterprise fee, the firm would pay a flat fee of 
$3,000 for an unlimited number of professional and non-professional 
users for both products. As is the case currently, a data recipient 
that pays the enterprise fee would not have to report the number of 
such users on a monthly basis.\7\ However, every six months, a data 
recipient 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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    \7\ Professional users currently are subject to a per display 
device count. See Securities [sic] Act Release No. 73986 (January 5, 
2015), 80 FR 1444 (January 9, 2015) (SR-NYSEMKT-2014-113).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\8\ in general, and 
Sections 6(b)(4) and 6(b)(5) of the Act,\9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4), (5).
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    The proposed fee change is also equitable and not unfairly 
discriminatory because it would apply to all data recipients that 
choose to subscribe to NYSE MKT BBO and NYSE MKT Trades.
    The proposed enterprise fees for NYSE MKT BBO and NYSE MKT Trades 
are reasonable because they could result in a fee reduction for data 
recipients with a large number of professional and nonprofessional 
users, as described in the example above. If a data recipient has a 
smaller number of professional users of NYSE MKT BBO and/or NYSE MKT 
Trades, then it may continue to use the per user fee structure. By 
reducing prices for data recipient with a large number of professional 
and non-professional users, the Exchange believes that more data 
recipients may choose to offer NYSE MKT BBO and NYSE MKT Trades, 
thereby expanding the distribution of this market data for the benefit 
of investors. The Exchange also believes that offering an enterprise 
fee expands the range of options for offering NYSE MKT BBO and NYSE MKT 
Trades and allows data recipients greater choice in selecting the most 
appropriate level of data and fees for the professional and non-
professional users they are servicing.
    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. 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.\10\
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    \10\ 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).
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    Firms that do not wish to purchase NYSE MKT BBO and NYSE MKT Trades 
have a variety of alternative market data products from which to 
choose,\11\ or if NYSE MKT BBO and NYSE MKT Trades do not provide 
sufficient value to firms as offered based on the uses those firms have 
or planned to make of it, such firms may simply choose to conduct their 
business operations in ways that do not use NYSE MKT BBO and NYSE MKT 
Trades or use them at different levels or in different configurations. 
The Exchange notes that broker-dealers are not required to purchase 
proprietary market data to comply with their best execution 
obligations.\12\
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    \11\ See NASDAQ Rule 7047 (Nasdaq Basic) and BATS [sic] Rule 
11.22 (BATS TOP and Last Sale).
    \12\ See FINRA Regulatory Notice 15-46, ``Best Execution,'' 
November 2015.
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    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

[[Page 83310]]

practices that constitute the U.S. national market system for trading 
equity securities.' '' \13\
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    \13\ NetCoalition, 615 F.3d at 535.
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    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 these data products, such as consolidated data and 
proprietary data from other sources, as described below, 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.\14\
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    \14\ 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.
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    In addition, the Exchange believes that the proposed fees are 
reasonable when compared to fees for comparable products offered by at 
least one other exchange. For example, Bats BYX Exchange (``BYX'') 
charges an enterprise fee of $10,000 per month for each of BYX Top and 
BYX Last Sale, which includes best bid and offer and last sale data, 
respectively.\15\ The Exchange is proposing enterprise fees that are 
less than the fees currently charged by BYX.
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    \15\ See Market Data Fees at https://www.batstrading.com/support/fee_schedule/byx/.
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    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.
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.'' \16\
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    \16\ 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 (D.C. Dist.) ] 24 (``NYSE and Direct Edge compete 
head-to-head . . . in the provision of real-time proprietary equity 
data products.'').
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    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.'' \17\ 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.\18\
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    \17\ 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.
    \18\ 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.
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    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

[[Page 83311]]

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 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 
by sufficiently increasing revenues or reducing costs in the customer's 
business in a manner that will offset the fees. All of these factors 
operate as constraints on pricing proprietary data products.
Joint Product Nature of Exchange Platform
    Transaction execution and proprietary data products are 
complementary in that market data is both an input and a byproduct of 
the execution service. In fact, proprietary market data and trade 
executions are a paradigmatic example of joint products with joint 
costs. The decision of whether and on which platform to post an order 
will depend on the attributes of the platforms where the order can be 
posted, including the execution fees, data availability and quality, 
and price and distribution of data products. Without a platform to post 
quotations, receive orders, and execute trades, exchange data products 
would not exist.
    The costs of producing market data include not only the costs of 
the data distribution infrastructure, but also the costs of designing, 
maintaining, and operating the exchange's platform for posting quotes, 
accepting orders, and executing transactions and the cost of regulating 
the exchange to ensure its fair operation and maintain investor 
confidence. The total return that a trading platform earns reflects the 
revenues it receives from both products and the joint costs it incurs.
    Moreover, an exchange's broker-dealer customers generally view the 
costs of transaction executions and market data as a unified cost of 
doing business with the exchange. A broker-dealer will only choose to 
direct orders to an exchange if the revenue from the transaction 
exceeds its cost, including the cost of any market data that the 
broker-dealer chooses to buy in support of its order routing and 
trading decisions. If the costs of the transaction are not offset by 
its value, then the broker-dealer may choose instead not to purchase 
the product and trade away from that exchange.
    Other market participants have noted that proprietary market data 
and trade executions are joint products of a joint platform and have 
common costs.\19\ The Exchange agrees with and adopts those discussions 
and the arguments therein. The Exchange also notes that the economics 
literature confirms that there is no way to allocate common costs 
between joint products that would shed any light on competitive or 
efficient pricing.\20\
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    \19\ See Securities Exchange Act Release No. 72153 (May 12, 
2014), 79 FR 28575, 28578 n.15 [sic] (May 16, 2014) (SR-NASDAQ-2014-
045) (``[A]ll of the exchange's costs are incurred for the unified 
purposes of attracting order flow, executing and/or routing orders, 
and generating and selling data about market activity. The total 
return that an exchange earns reflects the revenues it receives from 
the joint products and the total costs of the joint products.''). 
See also Securities Exchange Act Release No. 62907 (Sept. 14, 2010), 
75 FR 57314, 57317 (Sept. 20, 2010) (SR-NASDAQ-2010-110), and 
Securities Exchange Act Release No. 62908 (Sept. 14, 2010), 75 FR 
57321, 57324 (Sept. 20, 2010) (SR-NASDAQ-2010-111).
    \20\ See generally Mark Hirschey, Fundamentals of Managerial 
Economics, at 600 (2009) (``It is important to note, however, that 
although it is possible to determine the separate marginal costs of 
goods produced in variable proportions, it is impossible to 
determine their individual average costs. This is because common 
costs are expenses necessary for manufacture of a joint product. 
Common costs of production--raw material and equipment costs, 
management expenses, and other overhead--cannot be allocated to each 
individual by-product on any economically sound basis. . . . Any 
allocation of common costs is wrong and arbitrary.''). This is not 
new economic theory. See, e.g., F.W. Taussig, ``A Contribution to 
the Theory of Railway Rates,'' Quarterly Journal of Economics V(4) 
438, 465 (July 1891) (``Yet, surely, the division is purely 
arbitrary. These items of cost, in fact, are jointly incurred for 
both sorts of traffic; and I cannot share the hope entertained by 
the statistician of the Commission, Professor Henry C. Adams, that 
we shall ever reach a mode of apportionment that will lead to 
trustworthy results.'').
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    Analyzing the cost of market data product production and 
distribution in isolation from the cost of all of the inputs supporting 
the creation of market data and market data products will inevitably 
underestimate the cost of the data and data products because it is 
impossible to obtain the data inputs to create market data products 
without a fast, technologically robust, and well-regulated execution 
system, and system and regulatory costs affect the price of both 
obtaining the market data itself and creating and distributing market 
data products. It would be equally misleading, however, to attribute 
all of an exchange's costs to the market data portion of an exchange's 
joint products. Rather, all of an exchange's costs are incurred for the 
unified purposes of attracting order flow, executing and/or routing 
orders, and generating and selling data about market activity. The 
total return that an exchange earns reflects the revenues it receives 
from the joint products and the total costs of the joint products.
    As noted above, the level of competition and contestability in the 
market is evident in the numerous alternative venues that compete for 
order flow, including 13 equities self-regulatory organization 
(``SRO'') markets, as well as various forms of alternative trading 
systems (``ATSs''), including dark pools and electronic communication 
networks (``ECNs''), and internalizing broker-dealers. SRO markets 
compete to attract order flow and produce transaction reports via trade 
executions, and two FINRA-regulated Trade Reporting Facilities compete 
to attract transaction reports from the non-SRO venues.
    Competition among trading platforms can be expected to constrain 
the aggregate return that each platform earns from the sale of its 
joint products, but different trading platforms may choose from a range 
of possible, and equally reasonable, pricing strategies as the means of 
recovering total costs. For example, some platforms may choose to pay 
rebates to attract orders, charge relatively low prices for market data 
products (or provide market data products free of charge), and charge 
relatively high prices for accessing posted liquidity. Other platforms 
may choose a strategy of paying lower rebates (or no rebates) to 
attract orders, setting relatively high prices for market data 
products, and setting relatively low prices for accessing posted 
liquidity. For example, Bats Global Markets (``Bats'') and Direct Edge, 
which previously operated as ATSs and obtained exchange status in 2008 
and 2010, respectively, provided certain market data at no charge on 
their Web sites in order to attract more order flow, and used revenue 
rebates from resulting additional executions to maintain low execution 
charges for their users.\21\ In this environment, there is no economic 
basis for regulating maximum prices for one of the joint products in an 
industry in which suppliers face competitive constraints with regard to 
the joint offering.
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    \21\ This is simply a securities market-specific example of the 
well-established principle that in certain circumstances more sales 
at lower margins can be more profitable than fewer sales at higher 
margins; this example is additional evidence that market data is an 
inherent part of a market's joint platform.
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Existence of Alternatives
    The large number of SROs, ATSs, and internalizing broker-dealers 
that

[[Page 83312]]

currently produce proprietary data or are currently capable of 
producing it provides further pricing discipline for proprietary data 
products. Each SRO, ATS, and broker-dealer is currently permitted to 
produce and sell proprietary data products, and many currently do, 
including but not limited to the Exchange, New York Stock Exchange LLC, 
NYSE Arca, Inc. (``NYSE Arca''), NASDAQ, Bats [sic], and Direct Edge.
    The fact that proprietary data from ATSs, internalizing broker-
dealers, and vendors can bypass SROs is significant in two respects. 
First, non-SROs can compete directly with SROs for the production and 
sale of proprietary data products. By way of example, Bats [sic] and 
NYSE Arca both published proprietary data on the Internet before 
registering as exchanges. Second, because a single order or transaction 
report can appear in an SRO proprietary product, a non-SRO proprietary 
product, or both, the amount of data available via proprietary products 
is greater in size than the actual number of orders and transaction 
reports that exist in the marketplace. Indeed, in the case of NYSE MKT 
BBO and NYSE MKT Trades, the data provided through these products 
appears both in (i) real-time core data products offered by the 
Securities Information Processors (SIPs) for a fee, and (ii) free SIP 
data products with a 15-minute time delay, and finds a close substitute 
in similar products of competing venues.\22\ Because market data users 
can find suitable substitutes for most proprietary market data 
products, a market that overprices its market data products stands a 
high risk that users may substitute another source of market data 
information for its own.
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    \22\ See supra note 15.
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    Those competitive pressures imposed by available alternatives are 
evident in the Exchange's proposed pricing.
    In addition to the competition and price discipline described 
above, the market for proprietary data products is also highly 
contestable because market entry is rapid and inexpensive. The history 
of electronic trading is replete with examples of entrants that swiftly 
grew into some of the largest electronic trading platforms and 
proprietary data producers: Archipelago, Bloomberg Tradebook, Island, 
RediBook, Attain, TrackECN, BATS Trading and Direct Edge. A 
proliferation of dark pools and other ATSs operate profitably with 
fragmentary share of consolidated market volume.
    In determining the proposed changes to the fees for the NYSE MKT 
BBO and NYSE MKT Trades, 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 numerous 
alternatives to the Exchange's products, including 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 the attendant fees are not 
justified by the returns that any particular vendor or data recipient 
would achieve through the purchase.

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

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

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \23\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \24\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \23\ 15 U.S.C. 78s(b)(3)(A).
    \24\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \25\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \25\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEMKT-2016-101 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-2016-101. 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-2016-101 and should 
be submitted on or before December 12, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2016-27894 Filed 11-18-16; 8:45 am]
BILLING CODE 8011-01-P
83308 Federal Register / Vol. 81, No. 224 / Monday, November 21, 2016 / Notices

necessary bandwidth for the Premium proposal, as modified by Amendment 10:00 a.m. and 3:00 p.m. Copies of such
NYSE Data Products and responding to Nos. 1 and 2, should be approved or filing also will be available for
any production issues.’’ 89 The disapproved by December 12, 2016. Any inspection and copying at the principal
Commission does not believe the person who wishes to file a rebuttal to office of the Exchange. All comments
Exchange has clearly explained why the any other person’s submission must file received will be posted without change;
same rationale would not apply to the that rebuttal by December 27, 2016. In the Commission does not edit personal
Included Data Products. The Exchange light of the concerns raised by the identifying information from
has sought to justify this on the basis proposed rule change, as discussed submissions. You should submit only
that the Premium NYSE Data Products above, the Commission invites information that you wish to make
are similar to any other service offered additional comment on the proposed available publicly. All submissions
by the Exchange such as connectivity to rule change, as modified by Amendment should refer to File No. SR–NYSE–
Third Party Systems and DTCC.90 The Nos. 1 and 2, as the Commission 2016–45, and shoul‘d be submitted by
Commission however is concerned that continues its analysis of the proposed December 12, 2016. Rebuttal comments
these Premium NYSE Data Products are rule change’s consistency with Sections should be submitted by December 27,
similar to the Included Data Products 6(b)(4), (5) and (8),94 or any other 2016.
and therefore should not include provision of the Act, or the rules and For the Commission, by the Division
different fee structures as they are the regulations thereunder. The of Trading and Markets, pursuant to
same offering by the Exchange within Commission asks that commenters delegated authority.95
the contemplated purpose of co- address the sufficiency and merit of the Brent J. Fields,
location. The Commission seeks Exchange’s statements in support of the
Secretary.
comment on whether charging fees for proposed rule change, as modified by
[FR Doc. 2016–27896 Filed 11–18–16; 8:45 am]
Included Data Products and Premium Amendment Nos. 1 and 2, in addition
to any other comments they may wish BILLING CODE 8011–01–P
NYSE Data Products in a different
manner is consistent with Section to submit about the proposed rule
6(b)(4) of the Act. change.
Comments may be submitted by any SECURITIES AND EXCHANGE
Procedure: Request for Written of the following methods: COMMISSION
Comments [Release No. 34–79314; File No. SR–
Electronic Comments:
The Commission requests that NYSEMKT–2016–101]
interested persons provide written • Use the Commission’s Internet
submissions of their views, data and comment form (http://www.sec.gov/ Self-Regulatory Organizations; NYSE
arguments with respect to the concerns rules/sro.shtml); or MKT LLC; Notice of Filing and
identified above, as well as any other • Send an email to rule-comments@ Immediate Effectiveness of Proposed
concerns they may have with the sec.gov. Please include File No. SR– Change Amending the Fees for NYSE
proposed rule change, as modified by NYSE–2016–45 on the subject line. MKT BBO and NYSE MKT Trades To
Amendment Nos. 1 and 2. In particular, Lower the Enterprise Fee
Paper Comments
the Commission invites the written • Send paper comments in triplicate November 15, 2016.
views of interested persons concerning to Brent J. Fields, Secretary, Securities Pursuant to Section 19(b)(1) 1 of the
whether the proposal, as modified by and Exchange Commission, 100 F Street Securities Exchange Act of 1934 (the
Amendment Nos. 1 and 2, is consistent NE., Washington, DC 20549–1090. ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
with Sections 6(b)(4), (5), or (8) 91 or any notice is hereby given that, on
All submissions should refer to File No.
other provision of the Act, or the rules November 1, 2016, NYSE MKT LLC (the
SR–NYSE–2016–45. This file number
and regulations thereunder. Although ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
should be included on the subject line
there does not appear to be any issue the Securities and Exchange
if email is used. To help the
relevant to approval or disapproval Commission (the ‘‘Commission’’) the
Commission process and review your
which would be facilitated by an oral proposed rule change as described in
comments more efficiently, please use
presentation of views, data, and Items I, II, and III below, which Items
only one method. The Commission will
arguments, the Commission will have been prepared by the self-
post all comments on the Commission’s
consider, pursuant to Rule 19b-4 under regulatory organization. The
Internet Web site (http://www.sec.gov/
the Act,92 any request for an Commission is publishing this notice to
rules/sro.shtml). Copies of the
opportunity to make an oral solicit comments on the proposed rule
submission, all subsequent
presentation.93 change from interested persons.
Interested persons are invited to amendments, all written statements
submit written data, views, and with respect to the proposed rule I. Self-Regulatory Organization’s
arguments regarding whether the change that are filed with the Statement of the Terms of Substance of
Commission, and all written the Proposed Rule Change
89 See Amendment No. 2, supra note 8. communications relating to the The Exchange proposes to amend the
90 See id. proposed rule change between the fees for NYSE MKT BBO and NYSE
91 15 U.S.C. 78f(b)(4), (b)(5) and (b)(8). Commission and any person, other than MKT Trades to lower the Enterprise Fee.
92 17 CFR 240.19b–4. those that may be withheld from the The proposed change is available on the
public in accordance with the
asabaliauskas on DSK3SPTVN1PROD with NOTICES

93 Section 19(b)(2) of the Act, as amended by the

Securities Act Amendments of 1975, Public Law
Exchange’s Web site at www.nyse.com,
provisions of 5 U.S.C. 552, will be at the principal office of the Exchange,
94–29 (June 4, 1975), grants to the Commission
flexibility to determine what type of proceeding— available for Web site viewing and and at the Commission’s Public
either oral or notice and opportunity for written printing in the Commission’s Public Reference Room.
comments—is appropriate for consideration of a Reference Room, 100 F Street NE.,
particular proposal by a self-regulatory Washington, DC 20549 on official 95 17
organization. See Securities Act Amendments of CFR 200.30–3(a)(57).
1975, Senate Comm. on Banking, Housing & Urban business days between the hours of 1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30
(1975). 94 15 U.S.C. 78f(b)(4), (b)(5), and (b)(8). 3 17 CFR 240.19b–4.

VerDate Sep<11>2014 18:09 Nov 18, 2016 Jkt 241001 PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 E:\FR\FM\21NON1.SGM 21NON1
Document Created: 2018-02-14 08:34:18
Document Modified: 2018-02-14 08:34:18
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		81 FR 83308