82 FR 55702 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees for NYSE Arca BBO and NYSE Arca Trades To Lower the Enterprise Fee for Those Products
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 224 (November 22, 2017)
Federal Register Volume 82, Issue 224 (November 22, 2017)
| Page Range | 55702-55707 | |
| FR Document | 2017-25228 |
[Federal Register Volume 82, Number 224 (Wednesday, November 22, 2017)] [Notices] [Pages 55702-55707] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-25228] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-82099; File No. SR-NYSEARCA-2017-129] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees for NYSE Arca BBO and NYSE Arca Trades To Lower the Enterprise Fee for Those Products November 16, 2017. 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 3, 2017, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE Arca'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the fees for NYSE Arca BBO and NYSE Arca Trades to lower the Enterprise Fee for those products. The proposed rule 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 55703]] II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the fees for NYSE Arca BBO and NYSE Arca Trades market data products,\4\ as set forth on the NYSE Arca Equities Proprietary Market Data Fee Schedule (``Fee Schedule''). Specifically, the Exchange proposes to lower the Enterprise Fee for those products. The Exchange proposes to make the fee change effective November 3, 2017. --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release Nos. 59308 (January 28, 2009), 74 FR 5955 (February 3, 2009) (SR-NYSEArca-2009-05) (notice-- NYSE Arca Trades); 59598 (March 18, 2009), 74 FR 12919 (March 25, 2009) (SR-NYSEArca-2009-05) (approval order--NYSE Arca Trades); 61937 (April 16, 2010), 78 FR 21378 (April 23, 2010) (SR-NYSEArca- 2010-23) (notice--NYSE Arca BBO); and 62188 (May 27, 2010), 75 FR 31484 (June 3, 2010) (SR-NYSEArca-2010-23) (approval order--NYSE Arca BBO). --------------------------------------------------------------------------- The Exchange currently charges an enterprise fee of $34,500 per month for an unlimited number of professional and non-professional users for each of NYSE Arca BBO and NYSE Arca Trades.\5\ A single Enterprise Fee applies for clients receiving both NYSE Arca BBO and NYSE Arca Trades.\6\ The Exchange proposes to lower the enterprise fee to $22,000 per month. --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 79310 (November 14, 2016), 81 FR 81820 (November 18, 2016) (SR-NYSEArca-2016-142). \6\ See Securities Exchange Act Release No. 70213 (August 15, 2013), 78 FR 51796 (August 21, 2013) (SR-NYSEArca-2013-81). --------------------------------------------------------------------------- As an example, under the current fee structure for per user fees, if a firm had 10,000 professional users who each received NYSE Arca Trades at $4 per month and NYSE Arca BBO at $4 per month, without the Enterprise Fee, the firm would pay $80,000 per month in professional user fees. Under the current pricing structure, this firm would pay a capped fee of $34,500 and effective November 3, 2017 it would pay a capped fee of $22,000. Under the proposed reduced enterprise fee, the firm would pay a flat fee of $22,000 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, upon request, 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. --------------------------------------------------------------------------- \7\ Professional users currently are subject to a per display device count. See Securities Act Release No. 73998 (January 6, 2015), 80 FR 1549 (January 12, 2015) (SR-NYSEArca-2014-148). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f(b). \9\ 15 U.S.C. 78f(b)(4), (5). --------------------------------------------------------------------------- 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 Arca BBO and NYSE Arca Trades. The proposed enterprise fees for NYSE Arca BBO and NYSE Arca Trades are reasonable because they will result in a fee reduction for data recipients with sufficiently large numbers of professional and non- professional users, as described in the example above. If a data recipient has a smaller number of professional users of NYSE Arca BBO and/or NYSE Arca Trades, then it may continue to use the per user fee structure and the fees it pays will not change. By reducing prices for data recipients with a large number of professional and non- professional users, the Exchange believes that more data recipients may choose to offer NYSE Arca BBO and NYSE Arca Trades, thereby expanding the distribution of this market data for the benefit of investors. The Exchange also believes that offering a reduced enterprise fee expands the range of options for offering NYSE Arca BBO and NYSE Arca 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 Arca BBO and NYSE Arca Trades are entirely optional. The Exchange is not required to make NYSE Arca BBO and NYSE Arca Trades available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase NYSE Arca BBO and NYSE Arca Trades. Firms that do purchase NYSE Arca BBO and NYSE Arca 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 Arca BBO and NYSE Arca Trades or any other similar products are attractively priced or not.\10\ --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- Firms that do not wish to purchase NYSE Arca BBO and NYSE Arca Trades have a variety of alternative market data products from which to choose,\11\ or if NYSE Arca BBO and NYSE Arca 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 Arca BBO and NYSE Arca 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\ --------------------------------------------------------------------------- \11\ See Nasdaq Rule 7047 (Nasdaq Basic) and BZX Equities Rule 11.22 (Top and Last Sale). \12\ See FINRA Regulatory Notice 15-46, ``Best Execution,'' November 2015. --------------------------------------------------------------------------- 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.' [[Page 55704]] 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.' '' \13\ --------------------------------------------------------------------------- \13\ 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 reduced 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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.'' \15\ --------------------------------------------------------------------------- \15\ 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.''). --------------------------------------------------------------------------- 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.'' \16\ 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.\17\ --------------------------------------------------------------------------- \16\ 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. \17\ 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 [[Page 55705]] 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 Arca BBO or NYSE Arca Trades unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE Arca BBO and NYSE Arca 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.\18\ 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. --------------------------------------------------------------------------- \18\ See generally Pricing of Market Data Services, An Economic Analysis at vi (``Given the general structure of electronic order books and electronic order matching, it is not possible to provide transaction services without generating market data, and it is not possible to generate trade transaction--or market depth--data without also supplying a trade execution service. In economic terms, trade execution and market data are joint products.'') (Oxera 2014). --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \19\ See Securities Exchange Act Release No. 72153 (May 12, 2014), 79 FR 28575, 28578 n.15 (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.''). --------------------------------------------------------------------------- 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 12 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 [[Page 55706]] constraints with regard to the joint offering. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- Existence of Alternatives The large number of SROs, ATSs, and internalizing broker-dealers that 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 American LLC, NASDAQ, Bats, 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 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 Arca BBO and NYSE Arca 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. --------------------------------------------------------------------------- \22\ See supra note 11 [sic]. --------------------------------------------------------------------------- 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 Arca BBO and NYSE Arca 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. --------------------------------------------------------------------------- \23\ 15 U.S.C. 78s(b)(3)(A). \24\ 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 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. --------------------------------------------------------------------------- \25\ 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-NYSEARCA-2017-129 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-NYSEARCA-2017-129. 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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEARCA-2017-129 and should be submitted on or before December 13, 2017. [[Page 55707]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\26\ --------------------------------------------------------------------------- \26\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-25228 Filed 11-21-17; 8:45 am] BILLING CODE 8011-01-P
![55702 Federal Register / Vol. 82, No. 224 / Wednesday, November 22, 2017 / Notices
the current leveraged (inverse, 2X, and 10. Do investors have access to to make available publicly. All
3X) ETP market? If so, how? information sufficient to fully submissions should refer to File
2. How much additional end-of-day understand the operation and risks of Number SR–NYSEArca–2017–69 and
volume in the underlying assets would leveraged ETPs? should be submitted on or before
the proposed Funds potentially add? 11. Would the potential loss of December 13, 2017. Rebuttal comments
How much volume do existing investment be limited to the amount should be submitted by December 27,
leveraged ETPs typically add to end-of- invested? For example, do investors 2017.
day trading in the underlying assets? frequently buy leveraged ETPs on
margin? For the Commission, by the Division of
3. What is the expected daily volume
12. How does use of long positions Trading and Markets, pursuant to delegated
of trades for the proposed Funds? How
authority.20
much daily creation and redemption versus short positions in leveraged ETPs
activity is expected in the proposed differ across different types of investors? Eduardo A. Aleman,
Funds? How much current daily 13. Which types of broker/dealers are Assistant Secretary.
creation and redemption activity is active with leveraged ETP investments? [FR Doc. 2017–25241 Filed 11–21–17; 8:45 am]
there for leveraged ETPs? Do they tend to also hold these BILLING CODE 8011–01–P
4. Would the volume and activity investments in their own portfolio?
increase during periods of downward Comments may be submitted by any
market movement or high volatility, and of the following methods: SECURITIES AND EXCHANGE
exacerbate the downward movement or Electronic Comments COMMISSION
volatility? What type of hedging
exposure is expected with these • Use the Commission’s Internet
[Release No. 34–82099; File No. SR–
products, and during significant down comment form (http://www.sec.gov/
NYSEARCA–2017–129]
market moves, how might related selling rules/sro.shtml); or
behavior be affected by such exposure? • Send an email to rule-comments@ Self-Regulatory Organizations; NYSE
5. What types of investors would sec.gov. Please include File Number SR– Arca, Inc.; Notice of Filing and
purchase Shares of the proposed Funds? NYSEArca-2017–69 on the subject line.
Immediate Effectiveness of Proposed
Would they be different from investors Paper Comments Rule Change To Amend the Fees for
in existing leveraged ETPs? If so, please NYSE Arca BBO and NYSE Arca
explain why. • Send paper comments in triplicate
to Secretary, Securities and Exchange Trades To Lower the Enterprise Fee for
6. Currently, are leveraged ETPs Those Products
always accessed through a registered Commission, 100 F Street NE.,
broker/dealer? If so, are transactions Washington, DC 20549–1090. November 16, 2017.
generally solicited or unsolicited? If not, All submissions should refer to File Pursuant to Section 19(b)(1) 1 of the
how does an investor acquire a Number SR–NYSEArca–2017–69. This
Securities Exchange Act of 1934 (the
leveraged ETP? What is the proportion file number should be included on the
of volume from retail versus ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
subject line if email is used. To help the
institutional trading? notice is hereby given that, on
Commission process and review your
7. Do institutional investors buy and comments more efficiently, please use November 3, 2017, NYSE Arca, Inc. (the
sell leveraged ETPs? If so, what is the only one method. The Commission will ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
purpose of institutional investments in post all comments on the Commission’s the Securities and Exchange
leveraged ETPs? For example, are they Internet Web site (http://www.sec.gov/ Commission (the ‘‘Commission’’) the
used for hedging or are they ever held rules/sro.shtml). Copies of the proposed rule change as described in
in mutual funds? Would institutional submission, all subsequent Items I, II, and III below, which Items
investors use the proposed Funds for a amendments, all written statements have been prepared by the self-
different purpose than with the existing with respect to the proposed rule regulatory organization. The
leveraged ETPs? If so, please explain change that are filed with the Commission is publishing this notice to
why. Do firms hold the securities on Commission, and all written solicit comments on the proposed rule
their books (for example, as trading communications relating to the change from interested persons.
securities or available-for-sale proposed rule change between the
securities)? If so, how are they held? If Commission and any person, other than I. Self-Regulatory Organization’s
the investors are not institutional those that may be withheld from the Statement of the Terms of Substance of
investors, are there any restrictions public in accordance with the the Proposed Rule Change
placed on access to these investments, provisions of 5 U.S.C. 552, will be The Exchange proposes to amend the
including accreditation or options available for Web site viewing and fees for NYSE Arca BBO and NYSE Arca
eligibility? printing in the Commission’s Public Trades to lower the Enterprise Fee for
8. What exposures do retail investors Reference Room, 100 F Street NE.,
those products. The proposed rule
seek when holding these ETPs? Would Washington, DC 20549, on official
change is available on the Exchange’s
retail investors hold Shares of the business days between the hours of
proposed Funds to seek different types 10:00 a.m. and 3:00 p.m. Copies of the Web site at www.nyse.com, at the
principal office of the Exchange, and at
asabaliauskas on DSKBBXCHB2PROD with NOTICES
of exposures than with existing filing also will be available for
leveraged ETPs? If so, please explain inspection and copying at the principal the Commission’s Public Reference
why. office of the Exchange. All comments Room.
9. What is the typical holding period received will be posted without change.
of leveraged ETPs by retail investors? Persons submitting comments are 20 17 CFR 200.30–3(a)(12); 17 CFR 200.30–
Are they holding the products in tax- cautioned that we do not redact or edit 3(a)(57).
advantaged accounts, such as Individual personal identifying information from 1 15 U.S.C. 78s(b)(1).
Retirement Accounts (IRAs), meant for comment submissions. You should 2 15 U.S.C. 78a.
long-term investment horizons? submit only information that you wish 3 17 CFR 240.19b–4.
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![55704 Federal Register / Vol. 82, No. 224 / Wednesday, November 22, 2017 / Notices
Id. at 535 (quoting H.R. Rep. No. 94– reasonable, equitable, and not unfairly multiple venues, rather than providing
229 at 92 (1975), as reprinted in 1975 discriminatory. them all to a single venue, which in turn
U.S.C.C.A.N. 323). The court agreed reinforces this competitive constraint.
B. Self-Regulatory Organization’s
with the Commission’s conclusion that As a 2010 Commission Concept Release
Statement on Burden on Competition
‘‘Congress intended that ‘competitive noted, the ‘‘current market structure can
forces should dictate the services and The Exchange does not believe that be described as dispersed and complex’’
practices that constitute the U.S. the proposed rule change will impose with ‘‘trading volume . . . dispersed
national market system for trading any burden on competition that is not among many highly automated trading
equity securities.’ ’’ 13 necessary or appropriate in furtherance centers that compete for order flow in
As explained below in the Exchange’s of the purposes of the Act. An the same stocks’’ and ‘‘trading centers
Statement on Burden on Competition, exchange’s ability to price its offer[ing] a wide range of services that
the Exchange believes that there is proprietary market data feed products is are designed to attract different types of
substantial evidence of competition in constrained by actual competition for market participants with varying trading
the marketplace for proprietary market the sale of proprietary market data needs.’’ 16 More recently, SEC Chair
data and that the Commission can rely products, the joint product nature of Mary Jo White has noted that
upon such evidence in concluding that exchange platforms, and the existence of competition for order flow in exchange-
the reduced fees established in this alternatives to the Exchange’s listed equities is ‘‘intense’’ and divided
filing are the product of competition proprietary data. among many trading venues, including
and therefore satisfy the relevant The Existence of Actual Competition exchanges, more than 40 alternative
statutory standards. In addition, the trading systems, and more than 250
The market for proprietary data broker-dealers.17
existence of alternatives to these data products is currently competitive and
products, such as consolidated data and If an exchange succeeds in competing
inherently contestable because there is for quotations, order flow, and trade
proprietary data from other sources, as fierce competition for the inputs
described below, further ensures that executions, then it earns trading
necessary for the creation of proprietary revenues and increases the value of its
the Exchange cannot set unreasonable data and strict pricing discipline for the proprietary market data products
fees, or fees that are unreasonably proprietary products themselves. because they will contain greater quote
discriminatory, when vendors and Numerous exchanges compete with one and trade information. Conversely, if an
subscribers can select such alternatives. another for listings and order flow and exchange is less successful in attracting
As the NetCoalition decision noted, sales of market data itself, providing quotes, order flow, and trade
the Commission is not required to ample opportunities for entrepreneurs executions, then its market data
undertake a cost-of-service or who wish to compete in any or all of products may be less desirable to
ratemaking approach. The Exchange those areas, including producing and customers in light of the diminished
believes that, even if it were possible as distributing their own market data. content and data products offered by
a matter of economic theory, cost-based Proprietary data products are produced competing venues may become more
pricing for proprietary market data and distributed by each individual attractive. Thus, competition for
would be so complicated that it could exchange, as well as other entities, in a quotations, order flow, and trade
not be done practically or offer any vigorously competitive market. Indeed, executions puts significant pressure on
significant benefits.14 the U.S. Department of Justice (‘‘DOJ’’) an exchange to maintain both execution
For these reasons, the Exchange (the primary antitrust regulator) has and data fees at reasonable levels.
believes that the proposed fees are expressly acknowledged the aggressive In addition, in the case of products
actual competition among exchanges, that are also redistributed through
13 NetCoalition, 615 F.3d at 535. including for the sale of proprietary market data vendors, such as Bloomberg
14 The Exchange believes that cost-based pricing market data. In 2011, the DOJ stated that and Thompson Reuters, the vendors
would be impractical because it would create exchanges ‘‘compete head to head to themselves provide additional price
enormous administrative burdens for all parties and
the Commission to cost-regulate a large number of offer real-time equity data products. discipline for proprietary data products
participants and standardize and analyze These data products include the best bid because they control the primary means
extraordinary amounts of information, accounts, and offer of every exchange and of access to certain end users. These
and reports. In addition, and as described below, it information on each equity trade, vendors impose price discipline based
is impossible to regulate market data prices in
isolation from prices charged by markets for other including the last sale.’’ 15 upon their business models. For
services that are joint products. Cost-based rate Moreover, competitive markets for
regulation would also lead to litigation and may listings, order flow, executions, and 16 Concept Release on Equity Market Structure,
distort incentives, including those to minimize transaction reports provide pricing Securities Exchange Act Release No. 61358 (Jan. 14,
costs and to innovate, leading to further waste. 2010), 75 FR 3594 (Jan. 21, 2010) (File No. S7–02–
Under cost-based pricing, the Commission would discipline for the inputs of proprietary 10). This Concept Release included data from the
be burdened with determining a fair rate of return, data products and therefore constrain third quarter of 2009 showing that no market center
and the industry could experience frequent rate markets from overpricing proprietary traded more than 20% of the volume of listed
increases based on escalating expense levels. Even stocks, further evidencing the dispersal of and
market data. Broker-dealers send their competition for trading activity. Id. at 3598. Data
in industries historically subject to utility
regulation, cost-based ratemaking has been order flow and transaction reports to available on ArcaVision show that from June 30,
discredited. As such, the Exchange believes that 2013 to June 30, 2014, no exchange traded more
cost-based ratemaking would be inappropriate for 15 Press Release, U.S. Department of Justice, than 12% of the volume of listed stocks by either
asabaliauskas on DSKBBXCHB2PROD with NOTICES
proprietary market data and inconsistent with Assistant Attorney General Christine Varney Holds trade or dollar volume, further evidencing the
Congress’s direction that the Commission use its Conference Call Regarding NASDAQ OMX Group continued dispersal of and fierce competition for
authority to foster the development of the national Inc. and IntercontinentalExchange Inc. Abandoning trading activity. See https://www.arcavision.com/
market system, and that market forces will continue Their Bid for NYSE Euronext (May 16, 2011), Arcavision/arcalogin.jsp.
to provide appropriate pricing discipline. See available at http://www.justice.gov/iso/opa/atr/ 17 Mary Jo White, Enhancing Our Equity Market
Appendix C to NYSE’s comments to the speeches/2011/at-speech-110516.html; see also Structure, Sandler O’Neill & Partners, L.P. Global
Commission’s 2000 Concept Release on the Complaint in U.S. v. Deutsche Borse AG and NYSE Exchange and Brokerage Conference (June 5, 2014)
Regulation of Market Information Fees and Euronext, Case No. 11–cv–2280 (D.C. Dist.) ¶ 24 (available on the Commission Web site), citing
Revenues, which can be found on the Commission’s (‘‘NYSE and Direct Edge compete head-to- Tuttle, Laura, 2014, ‘‘OTC Trading: Description of
Web site at http://www.sec.gov/rules/concept/ head . . . in the provision of real-time proprietary Non-ATS OTC Trading in National Market System
s72899/buck1.htm. equity data products.’’). Stocks,’’ at 7–8.
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![Federal Register / Vol. 82, No. 224 / Wednesday, November 22, 2017 / Notices 55705
example, vendors that assess a of its order routing and trading Rather, all of an exchange’s costs are
surcharge on data they sell are able to decisions. If the costs of the transaction incurred for the unified purposes of
refuse to offer proprietary products that are not offset by its value, then the attracting order flow, executing and/or
their end users do not or will not broker-dealer may choose instead not to routing orders, and generating and
purchase in sufficient numbers. Vendors purchase the product and trade away selling data about market activity. The
will not elect to make available NYSE from that exchange. total return that an exchange earns
Arca BBO or NYSE Arca Trades unless Other market participants have noted reflects the revenues it receives from the
their customers request it, and that proprietary market data and trade joint products and the total costs of the
customers will not elect to pay the executions are joint products of a joint joint products.
proposed fees unless NYSE Arca BBO platform and have common costs.19 The
and NYSE Arca Trades can provide Exchange agrees with and adopts those As noted above, the level of
value by sufficiently increasing discussions and the arguments therein. competition and contestability in the
revenues or reducing costs in the The Exchange also notes that the market is evident in the numerous
customer’s business in a manner that economics literature confirms that there alternative venues that compete for
will offset the fees. All of these factors is no way to allocate common costs order flow, including 12 equities self-
operate as constraints on pricing between joint products that would shed regulatory organization (‘‘SRO’’)
proprietary data products. any light on competitive or efficient markets, as well as various forms of
pricing.20 alternative trading systems (‘‘ATSs’’),
Joint Product Nature of Exchange Analyzing the cost of market data including dark pools and electronic
Platform product production and distribution in communication networks (‘‘ECNs’’), and
Transaction execution and proprietary isolation from the cost of all of the internalizing broker-dealers. SRO
data products are complementary in that inputs supporting the creation of market markets compete to attract order flow
market data is both an input and a data and market data products will and produce transaction reports via
byproduct of the execution service. In inevitably underestimate the cost of the trade executions, and two FINRA-
fact, proprietary market data and trade data and data products because it is regulated Trade Reporting Facilities
executions are a paradigmatic example impossible to obtain the data inputs to compete to attract transaction reports
of joint products with joint costs.18 The create market data products without a from the non-SRO venues.
decision of whether and on which fast, technologically robust, and well- Competition among trading platforms
platform to post an order will depend regulated execution system, and system can be expected to constrain the
on the attributes of the platforms where and regulatory costs affect the price of aggregate return that each platform
the order can be posted, including the both obtaining the market data itself and earns from the sale of its joint products,
execution fees, data availability and creating and distributing market data but different trading platforms may
quality, and price and distribution of products. It would be equally choose from a range of possible, and
data products. Without a platform to misleading, however, to attribute all of equally reasonable, pricing strategies as
post quotations, receive orders, and an exchange’s costs to the market data
execute trades, exchange data products the means of recovering total costs. For
portion of an exchange’s joint products. example, some platforms may choose to
would not exist.
The costs of producing market data pay rebates to attract orders, charge
19 See Securities Exchange Act Release No. 72153
include not only the costs of the data (May 12, 2014), 79 FR 28575, 28578 n.15 (May 16,
relatively low prices for market data
distribution infrastructure, but also the 2014) (SR–NASDAQ–2014–045) (‘‘[A]ll of the products (or provide market data
costs of designing, maintaining, and exchange’s costs are incurred for the unified products free of charge), and charge
purposes of attracting order flow, executing and/or relatively high prices for accessing
operating the exchange’s platform for routing orders, and generating and selling data
posting quotes, accepting orders, and about market activity. The total return that an
posted liquidity. Other platforms may
executing transactions and the cost of exchange earns reflects the revenues it receives choose a strategy of paying lower
regulating the exchange to ensure its fair from the joint products and the total costs of the rebates (or no rebates) to attract orders,
joint products.’’). See also Securities Exchange Act setting relatively high prices for market
operation and maintain investor Release No. 62907 (Sept. 14, 2010), 75 FR 57314,
confidence. The total return that a 57317 (Sept. 20, 2010) (SR–NASDAQ–2010–110),
data products, and setting relatively low
trading platform earns reflects the and Securities Exchange Act Release No. 62908 prices for accessing posted liquidity. For
revenues it receives from both products (Sept. 14, 2010), 75 FR 57321, 57324 (Sept. 20, example, Bats Global Markets (‘‘Bats’’)
2010) (SR–NASDAQ–2010–111). and Direct Edge, which previously
and the joint costs it incurs. 20 See generally Mark Hirschey, Fundamentals of
Moreover, an exchange’s broker- Managerial Economics, at 600 (2009) (‘‘It is
operated as ATSs and obtained
dealer customers generally view the important to note, however, that although it is exchange status in 2008 and 2010,
costs of transaction executions and possible to determine the separate marginal costs of respectively, provided certain market
market data as a unified cost of doing goods produced in variable proportions, it is data at no charge on their Web sites in
impossible to determine their individual average
business with the exchange. A broker- costs. This is because common costs are expenses
order to attract more order flow, and
dealer will only choose to direct orders necessary for manufacture of a joint product. used revenue rebates from resulting
to an exchange if the revenue from the Common costs of production—raw material and additional executions to maintain low
transaction exceeds its cost, including equipment costs, management expenses, and other execution charges for their users.21 In
the cost of any market data that the overhead—cannot be allocated to each individual
by-product on any economically sound this environment, there is no economic
broker-dealer chooses to buy in support basis . . . . Any allocation of common costs is basis for regulating maximum prices for
asabaliauskas on DSKBBXCHB2PROD with NOTICES
wrong and arbitrary.’’). This is not new economic one of the joint products in an industry
18 See generally Pricing of Market Data Services, theory. See, e.g., F. W. Taussig, ‘‘A Contribution to in which suppliers face competitive
An Economic Analysis at vi (‘‘Given the general the Theory of Railway Rates,’’ Quarterly Journal of
structure of electronic order books and electronic Economics V(4) 438, 465 (July 1891) (‘‘Yet, surely,
order matching, it is not possible to provide the division is purely arbitrary. These items of cost, 21 This is simply a securities market-specific
transaction services without generating market data, in fact, are jointly incurred for both sorts of traffic; example of the well-established principle that in
and it is not possible to generate trade transaction— and I cannot share the hope entertained by the certain circumstances more sales at lower margins
or market depth—data without also supplying a statistician of the Commission, Professor Henry C. can be more profitable than fewer sales at higher
trade execution service. In economic terms, trade Adams, that we shall ever reach a mode of margins; this example is additional evidence that
execution and market data are joint products.’’) apportionment that will lead to trustworthy market data is an inherent part of a market’s joint
(Oxera 2014). results.’’). platform.
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![55706 Federal Register / Vol. 82, No. 224 / Wednesday, November 22, 2017 / Notices
constraints with regard to the joint fragmentary share of consolidated arguments concerning the foregoing,
offering. market volume. including whether the proposed rule
In determining the proposed changes change is consistent with the Act.
Existence of Alternatives
to the fees for the NYSE Arca BBO and Comments may be submitted by any of
The large number of SROs, ATSs, and NYSE Arca Trades, the Exchange the following methods:
internalizing broker-dealers that considered the competitiveness of the
currently produce proprietary data or market for proprietary data and all of Electronic Comments
are currently capable of producing it the implications of that competition.
provides further pricing discipline for • Use the Commission’s Internet
The Exchange believes that it has
proprietary data products. Each SRO, considered all relevant factors and has comment form (http://www.sec.gov/
ATS, and broker-dealer is currently not considered irrelevant factors in rules/sro.shtml); or
permitted to produce and sell order to establish fair, reasonable, and • Send an email to rule-comments@
proprietary data products, and many not unreasonably discriminatory fees sec.gov. Please include File Number SR–
currently do, including but not limited and an equitable allocation of fees NYSEARCA–2017–129 on the subject
to the Exchange, New York Stock among all users. The existence of line.
Exchange LLC, NYSE American LLC, numerous alternatives to the Exchange’s
NASDAQ, Bats, and Direct Edge. products, including proprietary data Paper Comments
The fact that proprietary data from from other sources, ensures that the
ATSs, internalizing broker-dealers, and • Send paper comments in triplicate
Exchange cannot set unreasonable fees, to Brent J. Fields, Secretary, Securities
vendors can bypass SROs is significant or fees that are unreasonably
in two respects. First, non-SROs can and Exchange Commission, 100 F Street
discriminatory, when vendors and
compete directly with SROs for the NE., Washington, DC 20549–1090.
subscribers can elect these alternatives
production and sale of proprietary data or choose not to purchase a specific All submissions should refer to File
products. By way of example, Bats and proprietary data product if the attendant Number SR–NYSEARCA–2017–129.
NYSE Arca both published proprietary fees are not justified by the returns that This file number should be included on
data on the Internet before registering as any particular vendor or data recipient the subject line if email is used. To help
exchanges. Second, because a single would achieve through the purchase.
order or transaction report can appear in the Commission process and review
an SRO proprietary product, a non-SRO C. Self-Regulatory Organization’s your comments more efficiently, please
proprietary product, or both, the amount Statement on Comments on the use only one method. The Commission
of data available via proprietary Proposed Rule Change Received From will post all comments on the
products is greater in size than the Members, Participants, or Others Commission’s Internet Web site (http://
actual number of orders and transaction www.sec.gov/rules/sro.shtml). Copies of
No written comments were solicited
reports that exist in the marketplace. the submission, all subsequent
or received with respect to the proposed
Indeed, in the case of NYSE Arca BBO rule change. amendments, all written statements
and NYSE Arca Trades, the data with respect to the proposed rule
provided through these products III. Date of Effectiveness of the change that are filed with the
appears both in (i) real-time core data Proposed Rule Change and Timing for Commission, and all written
products offered by the Securities Commission Action communications relating to the
Information Processors (SIPs) for a fee, The foregoing rule change is effective proposed rule change between the
and (ii) free SIP data products with a 15- upon filing pursuant to Section Commission and any person, other than
minute time delay, and finds a close 19(b)(3)(A) 23 of the Act and those that may be withheld from the
substitute in similar products of subparagraph (f)(2) of Rule 19b–4 24 public in accordance with the
competing venues.22 Because market thereunder, because it establishes a due, provisions of 5 U.S.C. 552, will be
data users can find suitable substitutes fee, or other charge imposed by the available for Web site viewing and
for most proprietary market data Exchange. printing in the Commission’s Public
products, a market that overprices its At any time within 60 days of the Reference Room, 100 F Street NE.,
market data products stands a high risk filing of such proposed rule change, the Washington, DC 20549 on official
that users may substitute another source Commission summarily may business days between the hours of
of market data information for its own. temporarily suspend such rule change if
Those competitive pressures imposed 10:00 a.m. and 3:00 p.m. Copies of the
it appears to the Commission that such filing also will be available for
by available alternatives are evident in action is necessary or appropriate in the
the Exchange’s proposed pricing. inspection and copying at the principal
public interest, for the protection of
In addition to the competition and office of the Exchange. All comments
investors, or otherwise in furtherance of
price discipline described above, the received will be posted without change.
the purposes of the Act. If the
market for proprietary data products is Commission takes such action, the Persons submitting comments are
also highly contestable because market Commission shall institute proceedings cautioned that we do not redact or edit
entry is rapid and inexpensive. The under Section 19(b)(2)(B) 25 of the Act to personal identifying information from
history of electronic trading is replete determine whether the proposed rule comment submissions. You should
with examples of entrants that swiftly change should be approved or submit only information that you wish
asabaliauskas on DSKBBXCHB2PROD with NOTICES
grew into some of the largest electronic disapproved. to make available publicly. All
trading platforms and proprietary data submissions should refer to File
producers: Archipelago, Bloomberg IV. Solicitation of Comments Number SR–NYSEARCA–2017–129 and
Tradebook, Island, RediBook, Attain, Interested persons are invited to should be submitted on or before
TrackECN, BATS Trading and Direct submit written data, views, and December 13, 2017.
Edge. A proliferation of dark pools and
other ATSs operate profitably with 23 15 U.S.C. 78s(b)(3)(A).
24 17 CFR 240.19b–4(f)(2).
22 See supra note 11 [sic]. 25 15 U.S.C. 78s(b)(2)(B).
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![Federal Register / Vol. 82, No. 224 / Wednesday, November 22, 2017 / Notices 55707
For the Commission, by the Division of minimize burden on respondents, 1. Fee Agreement for Representation
Trading and Markets, pursuant to delegated including the use of automated Before the Social Security
authority.26 collection techniques or other forms of Administration—0960–NEW. SSA
Eduardo A. Aleman, information technology. Mail, email, or requires individuals who represent a
Assistant Secretary. fax your comments and claimant before the Social Security
[FR Doc. 2017–25228 Filed 11–21–17; 8:45 am] recommendations on the information Administration and want to receive a
BILLING CODE 8011–01–P collection(s) to the OMB Desk Officer fee for their services to obtain SSA’s
and SSA Reports Clearance Officer at authorization of the fee under the Social
the following addresses or fax numbers. Security Act (Act). We currently have
SOCIAL SECURITY ADMINISTRATION (OMB), Office of Management and two different, but mutually exclusive,
Budget, Attn: Desk Officer for SSA, methods to authorize a fee for a
[Docket No: SSA–2017–0064] representative’s services before SSA.
Fax: 202–395–6974, Email address:
OIRA_Submission@omb.eop.gov. SSA authorizes the fee either via the
Agency Information Collection
agreement process, if the representative
Activities: Proposed Request and (SSA), Social Security Administration,
submits the fee agreement before the
Comment Request OLCA, Attn: Reports Clearance
first favorable decision, or the fee
Director, 3100 West High Rise, 6401
The Social Security Administration petition process, if the representative
Security Blvd., Baltimore, MD 21235,
(SSA) publishes a list of information submits the request after the favorable
Fax: 410–966–2830, Email address:
collection packages requiring clearance decision. Currently SSA has no
OR.Reports.Clearance@ssa.gov.
by the Office of Management and standardized form for the fee agreement
Budget (OMB) in compliance with Or you may submit your comments process. Therefore, we created the SSA–
Public Law 104–13, the Paperwork online through www.regulations.gov, 1693 to make it easier for
Reduction Act of 1995, effective October referencing Docket ID Number [SSA– representatives to obtain the
1, 1995. This notice includes an 2017–0064]. authorization for a fee agreement. SSA
extension of an OMB-approved I. The information collections below will use the information we collect on
information collection, new information are pending at SSA. SSA will submit the SSA–1693 to review the request and
collections, and revisions of OMB- them to OMB within 60 days from the authorize any fee to representatives who
approved information collections. date of this notice. To be sure we seek to charge and collect from a
SSA is soliciting comments on the consider your comments, we must claimant. The respondents are the
accuracy of the agency’s burden receive them no later than January 22, representatives who help claimants
estimate; the need for the information; 2018 Individuals can obtain copies of through the application process.
its practical utility; ways to enhance its the collection instruments by writing to Type of Request: Request for a new
quality, utility, and clarity; and ways to the above email address. information collection.
Average burden Estimated total
Modality of Number of Frequency of per response annual burden
completion respondents response (minutes) (hours)
SSA–1693 ........................................................................ 600,000 1 12 120,000
2. Statement of Interpreter—0960– conversation between the person witness, and (3) they will accurately
NEW. SSA and the Disability requiring an interpreter and SSA or interpret the interview to the best of
Determination Services (DDS) will use DDS. SSA will require the interpreter to their ability. Section 205(a) of the Act,
Form SSA–4321, Statement of sign Form SSA–4321, and confirm, as amended in 42 U.S.C. 405(a),
Interpreter, when a person requiring an among other things, that: (1) They will authorizes SSA collect this information.
interpreter prefers to provide their own not knowingly give false information; Type of Request: Request for a new
interpreter during an interview or (2) they will act as an interpreter and information collection.
Average burden Estimated total
Modality of Number of Frequency of per response annual burden
completion respondents response (minutes) (hours)
SSA–4321 ........................................................................ 5,170,399 1 5 430,867
3. Statement of Living Arrangements, including in-kind support and support and maintenance SSI applicants
In-Kind Support, and Maintenance—20 maintenance in the form of food and and recipients receive. The respondents
CFR 416.1130–416.1148–0960–0174. shelter other people provide. SSA uses are individuals who apply for SSI
SSA determines Supplemental Security Form SSA–8006–F4 to determine if in- payments, or who complete an SSI
Income (SSI) payment amounts based kind support and maintenance exists for
asabaliauskas on DSKBBXCHB2PROD with NOTICES
eligibility redetermination.
on applicants’ and recipients’ needs. We SSI applicants and recipients. This
Type of Request: Revision of an OMB-
measure individuals’ needs, in part, by information also assists SSA in
approved information collection.
the amount of income they receive, determining the income value of in-kind
26 17 CFR 200.30–3(a)(12).
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Document Created: 2017-11-22 00:49:08
Document Modified: 2017-11-22 00:49:08
| 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 | 82 FR 55702 |
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