83 FR 26511 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Proprietary Market Data Fee Schedule Regarding the NYSE Best Quote and Trades Market Data Feed
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 110 (June 7, 2018)
Federal Register Volume 83, Issue 110 (June 7, 2018)
| Page Range | 26511-26514 | |
| FR Document | 2018-12194 |
[Federal Register Volume 83, Number 110 (Thursday, June 7, 2018)] [Notices] [Pages 26511-26514] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-12194] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83360; File No. SR-NYSE-2018-24] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Proprietary Market Data Fee Schedule Regarding the NYSE Best Quote and Trades Market Data Feed June 1, 2018. 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 May 21, 2018, New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the 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 the Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Proprietary Market Data Fee Schedule (``Fee Schedule'') regarding the NYSE Best Quote and Trades (``BQT'') market data feed. The Exchange proposes to make the fee change effective May 21, 2018. The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. [[Page 26512]] A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule regarding the NYSE BQT market data feed. The NYSE BQT data feed provides best bid and offer and last sale information for the Exchange and its affiliates, NYSE Arca, Inc. (``NYSE Arca'') and NYSE American LLC (``NYSE American'').\4\ In connection with the re-launch of operations of another affiliate of the Exchange, NYSE National, Inc. (``NYSE National''), the Exchange recently filed a proposed rule change to amend the content of the NYSE BQT market data feed \5\ to include NYSE National BBO and NYSE National Trades market data feeds.\6\ --------------------------------------------------------------------------- \4\ See Securities Exchange Act Release No. 34-73553 (Nov. 6, 2014), 79 FR 67491 (Nov. 13, 2014) (SR-NYSE-2014-40) (``NYSE BQT Approval Order''). \5\ See SR-NYSE-2018-22. \6\ See SR-NYSENat-2018-09. --------------------------------------------------------------------------- The Exchange currently charges an access fee of $250 per month for the NYSE BQT data feed. The Exchange is not proposing any change to the access fee. The purpose of this filing is to amend footnote 5 to the Fee Schedule to provide that to subscribe to NYSE BQT, subscribers must also subscribe to, and pay applicable fees for, NYSE National BBO and NYSE Trades in addition to subscribing to, and paying for, NYSE BBO, NYSE Trades, NYSE Arca BBO, NYSE Arca Trades, NYSE American BBO and NYSE American Trades. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\7\ in general, and Sections 6(b)(4) and 6(b)(5) of the Act,\8\ in particular, in that it provides an equitable allocation of reasonable fees among its members, issuers, and other persons using its facilities and is not designed to permit unfair discrimination among customers, issuers, brokers, or dealers. The Exchange also believes that the proposed rule change is consistent with Section 11(A) of the Act \9\ in that it is consistent with (i) fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets; and (ii) the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Furthermore, the proposed rule change is consistent with Rule 603 of Regulation NMS,\10\ which provides that any national securities exchange that distributes information with respect to quotations for or transactions in an NMS stock do so on terms that are not unreasonably discriminatory. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b). \8\ 15 U.S.C. 78f(b)(4), (5). \9\ 15 U.S.C. 78k-1. \10\ See 17 CFR 242.603. --------------------------------------------------------------------------- The Exchange further believes that requiring market data recipients to separately subscribe to and pay for the eight underlying data feeds to NYSE BQT is reasonable because by design, NYSE BQT represents an aggregated and consolidated version of those existing eight data feeds. The Exchange notes that it is not seeking with this filing to establish fees relating to the underlying BBO and Trades data feeds, as those fees have already been established consistent with Section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(2) \12\ thereunder, and which may be amended from time to time. However, the Exchange believes it would be unfair if it did not require NYSE BQT data feed recipients to separately subscribe to and pay for those underlying feeds because otherwise, NYSE BQT data feed recipients would be receiving a data product that includes such underlying data at a lower cost than separately subscribing to the underlying data feeds. The Exchange therefore believes that the fee structure for NYSE BQT would not be lower than the cost to another party to create a comparable product, including the cost of receiving the underlying data feeds. --------------------------------------------------------------------------- \11\ 15 U.S.C. 78s(b)(3)(A). \12\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- The Exchange further believes that the proposed NYSE BQT fee structure is equitable and not unfairly discriminatory because all vendors and subscribers that elect to purchase NYSE BQT would be subject to the same fees. In addition, vendors and subscribers that do not wish to purchase NYSE BQT may separately purchase the individual underlying data feed, and if they so choose, perform a similar aggregation and consolidation function that the Exchange performs in creating NYSE BQT. To enable such competition, the Exchange would continue to offer NYSE BQT on terms that a subscriber of the underlying feeds could offer a competing product if it so chooses. The Exchange also notes that the use of NYSE BQT is entirely optional. Firms have a wide variety of alternative market data products from which to choose, including the Exchanges' own underlying data products, and proprietary data products offered by the Exchange's competitors, and consolidated data. Moreover, the Exchange is not required to make any proprietary data products available or to offer any specific pricing alternatives to any customers. As explained below in the Exchange's Statement on Burden on Competition, the existence of alternatives to these data products further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect such alternatives. That is, the Exchange competes with other exchanges (and their affiliates) that provide similar ``best quote and trade'' market data products. If another exchange (or its affiliate) were to charge less to consolidate and distribute its similar product than the Exchange charges to consolidate and distribute NYSE BQT, prospective users likely would not subscribe to, or would cease subscribing to, NYSE BQT. In addition, the Exchange would compete with unaffiliated market data vendors who would be in a position to consolidate and distribute the same data that comprises the NYSE BQT feed into the vendor's own comparable market data product. If the third-party vendor is able to provide the exact same data for a lower cost, prospective users would avail themselves of that lower cost and elect not to take NYSE BQT. B. Self-Regulatory Organization's Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,\13\ 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. As noted above, the NYSE BQT data feed represents aggregated and consolidated information of eight existing market data feeds. Although the Exchange, NYSE Arca, NYSE American and NYSE National are the exclusive distributors of the underlying BBO and Trades feeds from which certain data elements are taken to create NYSE BQT, the Exchange may not be the exclusive distributor of the aggregated and consolidated information that comprises the NYSE BQT data feed. Any other market data recipient of the underlying data feeds would be able, if they chose, to create a data feed with the same information as NYSE BQT and distribute it to their clients on a level playing field with respect to latency and cost as compared to the Exchange's product. --------------------------------------------------------------------------- \13\ 78 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- The market for proprietary data products is competitive and inherently [[Page 26513]] 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.'' \14\ --------------------------------------------------------------------------- \14\ ``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 impose 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.'' \15\ More recently, former SEC Chair Mary Jo White reported 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.\16\ And as the Commission's own Chief Administrative Law Judge found after considering extensive fact and expert testimony and documentary evidence on the subject, ``there is fierce competition for trading services (or `order flow')'' among exchanges, and ``the record evidence shows that competition plays a significant role in restraining exchange pricing of depth-of-book products.'' In the Matter of the Application of Securities Industry And Financial Markets Association For Review of Actions Taken By Self-Regulatory Organizations, Initial Decision Release No. 1015, Administrative Proceeding File No. 3-15350 (June 1, 2016), at pp. 8 and 33. --------------------------------------------------------------------------- \15\ 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. \16\ 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 website), citing Tuttle, Laura, 2014, ``OTC Trading: Description of Non-ATS OTC Trading in National Market System Stocks,'' at 7-8. --------------------------------------------------------------------------- If an exchange succeeds in competing for quotations, order flow, and trade executions, then it earns trading revenues and increases the value of its proprietary market data products because they will contain greater quote and trade information. Conversely, if an exchange is less successful in attracting quotes, order flow, and trade executions, then its market data products may be less desirable to customers in light of the diminished content and data products offered by competing venues may become more attractive. Thus, competition for quotations, order flow, and trade executions puts significant pressure on an exchange to maintain both execution and data fees at reasonable levels. In addition, in the case of products that are also redistributed through market data vendors, such as Bloomberg and Thompson Reuters, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors will not elect to make NYSE BQT available unless their customers request it, and customers will not elect to pay for NYSE BQT unless the product 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. 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) \17\ of the Act and subparagraph (f)(2) of Rule 19b-4 \18\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 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) \19\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \19\ 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-NYSE-2018-24 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange [[Page 26514]] Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2018-24. 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 website (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 website 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-NYSE-2018-24, and should be submitted on or before June 28, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-12194 Filed 6-6-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 110 / Thursday, June 7, 2018 / Notices 26511
Rule 17f–2’s requirement that verifications of fund assets.7 SECURITIES AND EXCHANGE
directors designate access persons is Commission staff estimates that COMMISSION
intended to ensure that directors approximately 206 funds file Form N–
evaluate the trustworthiness of insiders 17f–2 each year.8 Thus, the total annual [Release No. 34–83360; File No. SR–NYSE–
who handle fund assets. The hour burden for rule 17f–2 is estimated 2018–24]
requirements that access persons act to be 51,912 hours.9 Based on the total
jointly in handling fund assets, prepare costs per fund listed above, the total Self-Regulatory Organizations; New
a written notation of each transaction, cost of rule 17f–2’s collection of York Stock Exchange LLC; Notice of
and transmit the notation to another information requirements is estimated Filing and Immediate Effectiveness of
designated person are intended to to be approximately $13.5 million.10 Proposed Rule Change To Amend the
reduce the risk of misappropriation of NYSE Proprietary Market Data Fee
The estimate of average burden hours
fund assets by access persons, and to Schedule Regarding the NYSE Best
is made solely for the purposes of the
ensure that adequate records are Quote and Trades Market Data Feed
Paperwork Reduction Act, and is not
prepared, reviewed by a responsible
derived from a comprehensive or even June 1, 2018.
third person, and available for
a representative survey or study of the
examination by the Commission. The Pursuant to Section 19(b)(1) 1 of the
requirement that auditors verify fund costs of Commission rules and forms.
Securities Exchange Act of 1934 (the
assets without notice twice each year is Complying with the collections of
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
intended to provide an additional information required by rule 17f–2 is notice is hereby given that on May 21,
deterrent to the misappropriation of mandatory for those funds that maintain 2018, New York Stock Exchange LLC
fund assets and to detect any custody of their own assets. Responses (‘‘NYSE’’ or the ‘‘Exchange’’) filed with
irregularities. will not be kept confidential. An agency the Securities and Exchange
may not conduct or sponsor, and a Commission (‘‘Commission’’) the
The Commission staff estimates that person is not required to respond to, a
each fund makes 974 responses and proposed rule change as described in
collection of information unless it Items I, II, and III below, which Items
spends an average of 252 hours annually
displays a currently valid control have been prepared by the self-
in complying with the rule’s
number. regulatory organization. The
requirements.3 Commission staff
estimates that on an annual basis it The public may view the background Commission is publishing this notice to
takes: (i) 0.5 hours of fund accounting documentation for this information solicit comments on the proposed rule
personnel at a total cost of $102 to draft collection at the following website, change from interested persons.
director resolutions; 4 (ii) 0.5 hours of www.reginfo.gov. Comments should be I. Self-Regulatory Organization’s
the fund’s board of directors at a total directed to: (i) Desk Officer for the Statement of the Terms of the Substance
cost of $2,233 to adopt the resolution; 5 Securities and Exchange Commission, of the Proposed Rule Change
(iii) 244 hours for the fund’s accounting Office of Information and Regulatory
personnel at a total cost of $65,745 to Affairs, Office of Management and The Exchange proposes to amend the
prepare written notations of Budget, Room 10102, New Executive NYSE Proprietary Market Data Fee
transactions; 6 and (iv) 7 hours for the Office Building, Washington, DC 20503, Schedule (‘‘Fee Schedule’’) regarding
fund’s accounting personnel at a total or by sending an email to: Shagufta_ the NYSE Best Quote and Trades
cost of $1,428 to assist the independent Ahmed@omb.eop.gov; and (ii) Pamela (‘‘BQT’’) market data feed. The
public accountants when they perform Dyson, Director/Chief Information Exchange proposes to make the fee
Officer, Securities and Exchange change effective May 21, 2018. The
3 The 974 responses are: 1 (one) response to draft
Commission, c/o Remi Pavlik-Simon, proposed rule change is available on the
and adopt the resolution and 973 notations. 100 F Street NE, Washington, DC 20549 Exchange’s website at www.nyse.com, at
Estimates of the number of hours are based on the principal office of the Exchange, and
conversations with individuals in the fund or send an email to: PRA_Mailbox@
industry. The actual number of hours may vary sec.gov. Comments must be submitted to at the Commission’s Public Reference
significantly depending on individual fund assets. OMB within 30 days of this notice. Room.
4 This estimate is based on the following
calculation: 0.5 (burden hours per fund) × $204 Dated: June 1, 2018. II. Self-Regulatory Organization’s
(senior accountant’s hourly rate) = $102. Unless Eduardo A. Aleman, Statement of the Purpose of, and
otherwise indicated, the hourly wage figures used Statutory Basis for, the Proposed Rule
herein are from the Securities Industry and Assistant Secretary.
Financial Markets Association’s Management &
Change
[FR Doc. 2018–12192 Filed 6–6–18; 8:45 am]
Professional Earnings in the Securities Industry
2013, modified by Commission staff to account for BILLING CODE 8011–01–P In its filing with the Commission, the
an 1800-hour work-year and inflation, and self-regulatory organization included
multiplied by 5.35 to account for bonuses, firm size, 7 This estimate is based on the following statements concerning the purpose of,
employee benefits and overhead. calculation: 7 × $204 (senior accountant’s hourly and basis for, the proposed rule change
5 The estimate for the cost of board time as a
rate) = $1,428. and discussed any comments it received
whole is derived from estimates made by the staff 8 On average, each year approximately 206 funds
regarding typical board size and compensation that on the proposed rule change. The text
filed Form N–17f–2 with the Commission during
is based on information received from fund
calendar years 2015–2017.
of those statements may be examined at
representatives and publicly available sources. 9 This estimate is based on the following the places specified in Item IV below.
6 Respondents estimated that each fund makes
sradovich on DSK3GMQ082PROD with NOTICES
calculation: 206 (funds) × 252 (total annual hourly The Exchange has prepared summaries,
974 responses on an annual basis and spends a total
of 0.25 hours per response. The fund personnel burden per fund) = 51,912 hours for rule. The set forth in sections A, B, and C below,
involved are Accounts Payable Manager ($192 annual burden for rule 17f–2 does not include time of the most significant parts of such
spent preparing Form N–17f–2. The burden for
hourly rate), Operations Manager ($345 hourly rate) statements.
and Accounting Manager ($274 hourly rate). The Form N–17f–2 is included in a separate collection
average hourly rate of these personnel is $270. The of information.
10 This estimate is based on the following 1 15 U.S.C. 78s(b)(1).
estimated cost of preparing notations is based on
the following calculation: 974 × 0.25 × $270 = calculation: $65,745 (total annual cost per fund) × 2 15 U.S.C. 78a.
$65,745. 206 funds = $13,543,470. 3 17 CFR 240.19b–4.
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contestable because there is fierce Chair Mary Jo White reported that purchase in sufficient numbers. Vendors
competition for the inputs necessary for competition for order flow in exchange- will not elect to make NYSE BQT
the creation of proprietary data and listed equities is ‘‘intense’’ and divided available unless their customers request
strict pricing discipline for the among many trading venues, including it, and customers will not elect to pay
proprietary products themselves. exchanges, more than 40 alternative for NYSE BQT unless the product can
Numerous exchanges compete with one trading systems, and more than 250 provide value by sufficiently increasing
another for listings and order flow and broker-dealers.16 And as the revenues or reducing costs in the
sales of market data itself, providing Commission’s own Chief Administrative customer’s business in a manner that
ample opportunities for entrepreneurs Law Judge found after considering will offset the fees. All of these factors
who wish to compete in any or all of extensive fact and expert testimony and operate as constraints on pricing
those areas, including producing and documentary evidence on the subject, proprietary data products.
distributing their own market data. ‘‘there is fierce competition for trading
C. Self-Regulatory Organization’s
Proprietary data products are produced services (or ‘order flow’)’’ among
Statement on Comments on the
and distributed by each individual exchanges, and ‘‘the record evidence
Proposed Rule Change Received From
exchange, as well as other entities, in a shows that competition plays a
Members, Participants, or Others
vigorously competitive market. Indeed, significant role in restraining exchange
the U.S. Department of Justice (‘‘DOJ’’) pricing of depth-of-book products.’’ In No written comments were solicited
(the primary antitrust regulator) has the Matter of the Application of or received with respect to the proposed
expressly acknowledged the aggressive Securities Industry And Financial rule change.
actual competition among exchanges, Markets Association For Review of III. Date of Effectiveness of the
including for the sale of proprietary Actions Taken By Self-Regulatory Proposed Rule Change and Timing for
market data. In 2011, the DOJ stated that Organizations, Initial Decision Release Commission Action
exchanges ‘‘compete head to head to No. 1015, Administrative Proceeding
offer real-time equity data products. File No. 3–15350 (June 1, 2016), at pp. The foregoing rule change is effective
These data products include the best bid 8 and 33. upon filing pursuant to Section
and offer of every exchange and If an exchange succeeds in competing 19(b)(3)(A) 17 of the Act and
information on each equity trade, for quotations, order flow, and trade subparagraph (f)(2) of Rule 19b–4 18
including the last sale.’’ 14 executions, then it earns trading thereunder, because it establishes a due,
Moreover, competitive markets for revenues and increases the value of its fee, or other charge imposed by the
listings, order flow, executions, and proprietary market data products Exchange.
transaction reports impose pricing because they will contain greater quote At any time within 60 days of the
discipline for the inputs of proprietary and trade information. Conversely, if an filing of such proposed rule change, the
data products and therefore constrain exchange is less successful in attracting Commission summarily may
markets from overpricing proprietary quotes, order flow, and trade temporarily suspend such rule change if
market data. Broker-dealers send their executions, then its market data it appears to the Commission that such
order flow and transaction reports to products may be less desirable to action is necessary or appropriate in the
multiple venues, rather than providing customers in light of the diminished public interest, for the protection of
them all to a single venue, which in turn content and data products offered by investors, or otherwise in furtherance of
reinforces this competitive constraint. competing venues may become more the purposes of the Act. If the
As a 2010 Commission Concept Release attractive. Thus, competition for Commission takes such action, the
noted, the ‘‘current market structure can quotations, order flow, and trade Commission shall institute proceedings
be described as dispersed and complex’’ executions puts significant pressure on under Section 19(b)(2)(B) 19 of the Act to
with ‘‘trading volume . . . dispersed an exchange to maintain both execution determine whether the proposed rule
among many highly automated trading and data fees at reasonable levels. change should be approved or
centers that compete for order flow in In addition, in the case of products disapproved.
the same stocks’’ and ‘‘trading centers that are also redistributed through IV. Solicitation of Comments
offer[ing] a wide range of services that market data vendors, such as Bloomberg
and Thompson Reuters, the vendors Interested persons are invited to
are designed to attract different types of
themselves provide additional price submit written data, views, and
market participants with varying trading
discipline for proprietary data products arguments concerning the foregoing,
needs.’’ 15 More recently, former SEC
because they control the primary means including whether the proposed rule
14 ‘‘Press Release, U.S. Department of Justice, of access to certain end users. These change is consistent with the Act.
Assistant Attorney General Christine Varney Holds vendors impose price discipline based Comments may be submitted by any of
Conference Call Regarding NASDAQ OMX Group
upon their business models. For the following methods:
Inc. and IntercontinentalExchange Inc. Abandoning
Their Bid for NYSE Euronext (May 16, 2011), example, vendors that assess a Electronic Comments
available at http://www.justice.gov/iso/opa/atr/ surcharge on data they sell are able to • Use the Commission’s internet
speeches/2011/at-speech-110516.html; see also refuse to offer proprietary products that
Complaint in U.S. v. Deutsche Borse AG and NYSE comment form (http://www.sec.gov/
Euronext, Case No. 11–cv–2280 (D.C. Dist.) ¶ 24
their end users do not or will not rules/sro.shtml); or
(‘‘NYSE and Direct Edge compete head-to-head . . . • Send an email to rule-comments@
in the provision of real-time proprietary equity data than 12% of the volume of listed stocks by either
products.’’). trade or dollar volume, further evidencing the
sec.gov. Please include File Number SR–
15 Concept Release on Equity Market Structure, continued dispersal of and fierce competition for NYSE–2018–24 on the subject line.
sradovich on DSK3GMQ082PROD with NOTICES
Securities Exchange Act Release No. 61358 (Jan. 14, trading activity. See https://www.arcavision.com/
Arcavision/arcalogin.jsp.
Paper Comments
2010), 75 FR 3594 (Jan. 21, 2010) (File No. S7–02–
10). This Concept Release included data from the 16 Mary Jo White, Enhancing Our Equity Market
• Send paper comments in triplicate
third quarter of 2009 showing that no market center Structure, Sandler O’Neill & Partners, L.P. Global to Secretary, Securities and Exchange
traded more than 20% of the volume of listed Exchange and Brokerage Conference (June 5, 2014)
stocks, further evidencing the dispersal of and (available on the Commission website), citing
17 15 U.S.C. 78s(b)(3)(A).
competition for trading activity. Id. at 3598. Data Tuttle, Laura, 2014, ‘‘OTC Trading: Description of
18 17 CFR 240.19b–4(f)(2).
available on ArcaVision show that from June 30, Non-ATS OTC Trading in National Market System
2013 to June 30, 2014, no exchange traded more Stocks,’’ at 7–8. 19 15 U.S.C. 78s(b)(2)(B).
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![26514 Federal Register / Vol. 83, No. 110 / Thursday, June 7, 2018 / Notices
Commission, 100 F Street NE, SECURITIES AND EXCHANGE Commission issued an order instituting
Washington, DC 20549–1090. COMMISSION proceedings to determine whether to
approve or disapprove the Proposed
All submissions should refer to File [Release No. 34–83362; File No. SR–FICC–
Rule Change.5 On April 25, 2018, FICC
Number SR–NYSE–2018–24. This file 2018–001]
filed Amendment No. 1 to the Proposed
number should be included on the Rule Change (‘‘Amendment No. 1’’).6
Self-Regulatory Organizations; Fixed
subject line if email is used. To help the The Commission is publishing this
Income Clearing Corporation; Notice of
Commission process and review your notice to solicit comment on
Filing of Amendment No. 1 and Order
comments more efficiently, please use Granting Accelerated Approval of a Amendment No. 1 from interested
only one method. The Commission will Proposed Rule Change, as Modified by persons and to approve the Proposed
post all comments on the Commission’s Amendment No. 1, To Implement Rule Change, as modified by
internet website (http://www.sec.gov/ Changes to the Required Fund Deposit Amendment No. 1, on an accelerated
rules/sro.shtml). Copies of the Calculation in the Government basis.
submission, all subsequent Securities Division Rulebook II. Description of the Proposed Rule
amendments, all written statements Change
with respect to the proposed rule June 1, 2018.
change that are filed with the FICC proposes to change the FICC
I. Introduction GSD Rulebook (‘‘GSD Rules’’) 7 to adjust
Commission, and all written
The Fixed Income Clearing GSD’s method of calculating GSD
communications relating to the Corporation (‘‘FICC’’) filed with the U.S. netting members’ (‘‘Members’’) margin.8
proposed rule change between the Securities and Exchange Commission Specifically, FICC proposes to (1)
Commission and any person, other than (‘‘Commission’’) on January 12, 2018 change GSD’s method of calculating the
those that may be withheld from the proposed rule change SR–FICC–2018– Value-at-Risk (‘‘VaR’’) Charge
public in accordance with the 001 (‘‘Proposed Rule Change’’) pursuant component; (2) add a new component
provisions of 5 U.S.C. 552, will be to Section 19(b)(1) of the Securities referred to as the ‘‘Blackout Period
available for website viewing and Exchange Act of 1934 (‘‘Exchange Exposure Adjustment;’’ (3) eliminate the
printing in the Commission’s Public Act’’) 1 and Rule 19b–4 thereunder.2 The existing Blackout Period Exposure
Reference Room, 100 F Street NE, Proposed Rule Change was published Charge and the Coverage Charge
Washington, DC 20549 on official for comment in the Federal Register on components; (4) adjust the existing
business days between the hours of February 1, 2018.3 The Commission Backtesting Charge component to (i)
10:00 a.m. and 3:00 p.m. Copies of the received eight comments on the include the backtesting deficiencies of
filing also will be available for proposal.4 On March 14, 2018, the certain GCF Repo Transaction 9
inspection and copying at the principal counterparties during the Blackout
office of the Exchange. All comments 1 15 U.S.C. 78s(b)(1). Period, and (ii) give GSD the ability to
received will be posted without change.
2 17 CFR 240.19b–4. FICC also filed the Proposed assess the Backtesting Charge on an
Rule Change as advance notice SR–FICC–2018–801 intraday basis for all Members; and (5)
Persons submitting comments are (‘‘Advance Notice’’) pursuant to Section 806(e)(1) of
cautioned that we do not redact or edit the Payment, Clearing, and Settlement Supervision adjust the calculation for determining
personal identifying information from Act of 2010, 12 U.S.C. 5465(e)(1), and Rule 19b–
4(n)(1)(i) under the Exchange Act, 17 CFR 240.19b– Pierpont Securities LLC, dated April 4, 2018, to
comment submissions. You should 4(n)(1)(i). Notice of Filing of the Advance Notice Brent J. Fields, Secretary, Commission (‘‘Amherst
submit only information that you wish was published for comment in the Federal Register Letter II’’); letter from Levent Kahraman, Chief
to make available publicly. All on March 2, 2018. Securities Exchange Act Release Executive Officer, KGS-Alpha Capital Markets
No. 82779 (February 26, 2018), 83 FR 9055 (March (‘‘KGS’’), dated April 4, 2018, to Brent J. Fields,
submissions should refer to File 2, 2018) (SR–FICC–2018–801). The Commission Secretary, Commission (‘‘KGS Letter’’); letter from
Number SR–NYSE–2018–24, and extended the deadline for its review period of the Timothy Cuddihy, Managing Director, FICC, dated
should be submitted on or before June Advance Notice for an additional 60 days on March April 13, 2018, to Robert W. Errett, Deputy
7, 2018. Securities Exchange Act Release No. 82820 Secretary, Commission (‘‘FICC Letter II’’); and letter
28, 2018. (March 7, 2018), 83 FR 10761 (March 12, 2018) (SR– from Robert E. Pooler, Chief Financial Officer,
For the Commission, by the Division of FICC–2018–801). On April 25, 2018, FICC filed Ronin, dated April 13, 2018, to Eduardo A. Aleman,
Amendment No.1 to the Advance Notice. Available Assistant Secretary, Commission (‘‘Ronin Letter
Trading and Markets, pursuant to delegated II’’). Since the proposal contained in the Proposed
at https://www/sec/gov/comments/sr-ficc-2018-801/
authority.20 ficc2018801.htm. The Commission issued a notice Rule Change was also filed as an Advance Notice,
Eduardo A. Aleman, of filing of Amendment No. 1 and notice of no supra note 2, the Commission is considering all
objection to the Advance Notice, as modified by public comments received on the proposal
Assistant Secretary. Amendment No. 1, on May 11, 2018. Securities regardless of whether the comments were submitted
[FR Doc. 2018–12194 Filed 6–6–18; 8:45 am] Exchange Act Release No. 83223 (May 11, 2018), 83 to the Advance Notice or the Proposed Rule
FR 23020 (May 17, 2018). Change.
BILLING CODE 8011–01–P 5 See Securities Exchange Act Release No. 34–
3 Securities Exchange Act Release No. 82588
(January 26, 2018), 83 FR 4687 (February 1, 2018) 82876 (March 14, 2018), 83 FR 12229 (March 20,
(SR–FICC–2018–001). 2018) (SR–FICC–2018–001). The order instituting
4 Letter from Robert E. Pooler, Chief Financial proceedings re-opened the comment period and
Officer, Ronin Capital LLC (‘‘Ronin’’), dated extended the Commission’s period of review of the
February 22, 2018, to Robert W. Errett, Deputy Proposed Rule Change. See id.
6 Available at https://www.sec.gov/comments/sr-
Secretary, Commission (‘‘Ronin Letter I’’); letter
from Michael Santangelo, Chief Financial Officer, ficc-2018-001/ficc2018001.htm. FICC filed related
Amherst Pierpont Securities LLC (‘‘Amherst’’), amendments to the related Advance Notice. Supra
dated February 22, 2018, to Brent J. Fields, note 2.
sradovich on DSK3GMQ082PROD with NOTICES
7 Available at http://www.dtcc.com/legal/rules-
Secretary, Commission (‘‘Amherst Letter I’’); letter
from Timothy Cuddihy, Managing Director, FICC, and-procedures.
8 Notice, supra note 3, at 4688.
dated March 19, 2018, to Robert W. Errett, Deputy
Secretary, Commission (‘‘FICC Letter I’’); letter from 9 GCF Repo Transactions refer to transactions
James Tabacchi, Chairman, Independent Dealer and made on FICC’s GCF Repo Service that enable
Trader Association (‘‘IDTA’’), dated March 29, dealers to trade general collateral repos, based on
2018, to Eduardo A. Aleman, Assistant Secretary, rate, term, and underlying product, throughout the
Commission (‘‘IDTA Letter’’); letter from Michael day, without requiring intra-day, trade-for-trade
20 17 CFR 200.30–3(a)(12). Santangelo, Chief Financial Officer, Amherst settlement on a Delivery-versus-Payment basis. Id.
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Document Created: 2018-06-07 00:50:44
Document Modified: 2018-06-07 00:50:44
| 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 | 83 FR 26511 |
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