Consolidated Tape Association; Notice of Filing and Order Granting Accelerated Approval of Sixth Charges Amendment to the Second Restatement of the Consolidated Tape Association Plan and the Fifth Charges Amendment to the Restated Consolidated Quotation Plan

[Federal Register Volume 65, Number 6 (Monday, January 10, 2000)]
[Notices]
[Pages 1418-1420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-514]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42314; File No. SR-CTA/CQ-99-03]


Consolidated Tape Association; Notice of Filing and Order 
Granting Accelerated Approval of Sixth Charges Amendment to the Second 
Restatement of the Consolidated Tape Association Plan and the Fifth 
Charges Amendment to the Restated Consolidated Quotation Plan

January 4, 2000.
    Pursuant to Rule 11Aa3-2 \1\ of the Securities Exchange Act of 1934 
(``Act''),\2\ notice is hereby given that on December 27, 1999, the 
Consolidated Tape Association (``CTA'') and the Consolidated Quotation 
(``CQ'') Plan Participants (``Participants'') \3\ filed with the 
Securities and Exchange Commission (``Commission'' or ``SEC'') 
amendments to the Restated CTA Plan and CQ Plan. The amendments propose 
to establish an enterprise arrangement under which a broker-dealer 
would be charged a maximum monthly amount of $500,000 for aggregate 
monthly Network B market data fees incurred for interrogation services 
(both display-device and pay-per-use) that it provides to its officers, 
partners, and employees and to its nonprofessional, brokerage account 
customers.
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    \1\ 17 CFR 240.11Aa3-2.
    \2\ 15 U.S.C. 78k-1.
    \3\ The amendments were executed by each Participant in each of 
the Plans. The Participants include American Stock Exchange LLC, 
Boston Stock Exchange, Inc., Chicago Board Options Exchange, Inc., 
Chicago Stock Exchange, Inc., Cincinnati Stock Exchange, Inc., 
National Association of Securities Dealers, Inc., New York Stock 
Exchange, Inc., Pacific Exchange, Inc., and Philadelphia Stock 
Exchange, Inc.
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    Pursuant to Rule 11Aa3-2(c)(1), the CTA and CQ Participants 
submitted this notice of proposed amendments to two effective national 
market system plans.\4\ The Commission is publishing this notice to 
solicit comments from interested persons on the amendments. For the 
reasons discussed below, the Commission is granting accelerated 
approval of the proposed amendments.
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    \4\ The CTA and CQ Plans have been designated as effective 
transaction reporting plans pursuant to Exchange Act Rule 11Aa3-
1(b).
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I. Description and Purpose of the Amendments

A. Rule 11Aa3-2

Enterprise Arrangement
    The Network B Participants propose to introduce an enterprise 
arrangement and to make it available to United States registered 
broker-dealers. The arrangement would apply in respect of the devices 
that those broker-dealers use internally and to those broker-dealers' 
distribution of market data to their securities-trading customers. It 
would not apply insofar as broker-dealers make market data available to 
non-brokerage customers. The enterprise arrangement would limit the 
aggregate amount that United States registered broker-dealers would be 
required to pay in any month in respect of (i) the receipt and use of 
market data by its officers, partners and employees and those of its 
affiliates, and (ii) pay-for-use and monthly display-device 
interrogation services that it or its United States registered broker-
dealer affiliates provide to their nonprofessional, broker-account 
customers (that is, customers that

[[Page 1419]]

qualify as nonprofessional subscribers and that have opened a trading 
account pursuant to an applicable brokerage account agreement). Charges 
ineligible for inclusion in the enterprise arrangement's monthly 
payment limitation are (i) pay-for-use and display-device fees payable 
in respect of such nonprofessional subscribers that do not have 
brokerage accounts with the broker-dealer or its United States 
registered broker-dealer affiliates, (ii) access fees and (iii) program 
classification charges.
    The enterprise arrangement's maximum monthly payment through the 
end of the calendar year 2000 shall be $500,000. Thereafter, the 
Network B Participants propose to increase that maximum on an annual 
basis in an amount equal to the percentage increase in the annual 
composite share volume for the preceding calendar year, subject to a 
maximum annual increase of five percent.
    This amendment furthers the objectives of the national market 
system regarding the dissemination of last sale information delineated 
in sections 11A(a)(1)(C), 11A(a)(1)(D) and 11A(a)(3)(B) of the Act.

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of Amendment

    The Participants have manifested their approval of the proposed 
amendments to the CTA and CQ Network B rate schedules by means of their 
execution of the amendments. The rate changes would become effective on 
the first day of the month that follows the month in which the 
Commission approves the proposed plan amendments.

D. Development and Implementation Phases

    See Item I(C).

E. Analysis of Impact on Competition

    The proposed amendments do not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The Network B Participants do not believe that the proposed 
plan amendments introduce terms that are unreasonably discriminatory 
for the purposes of section 11A(c)(1)(D) of the Act.

F. Written Understanding or Agreements relating to Interpretation of, 
or Participation in, Plan

    Not applicable.

G. Approval by Sponsors in Accordance with Plans

    In accordance with Section XII(b)(iii) of the CTA Plan and section 
IX(b)(iii) of the CQ Plan, each of the Participants has approved the 
fee reductions.

H. Description of Operation of Facility Contemplated by the Proposed 
Amendment

    Not applicable.

I. Terms and Conditions of Access

    See Item I(A) above.

J. Method of Determination and Imposition, and Amount of Fees and 
Charges

    See Item I(A) and the text of the amendments.

K. Method and Frequency of Processor Evaluation

    Not applicable.

L. Dispute Resolution

    Not applicable.

II. Rule 11Aa3-1 (solely in its application to the amendments to 
the CTA Plan)

A. Reporting Requirements

    Not applicable.

B. Manner of Collecting, Processing, Sequencing, Making Available and 
Disseminating Last Sale Information

    Not applicable.

C. Manner of Consolidation

    Not applicable.

D. Standards and Methods Ensuring Promptness, Accuracy and Completeness 
of Transaction Reports

    Not applicable.

E. Rules and Procedures Addressed to Fraudulent or Manipulative 
Dissemination

    Not applicable.

F. Terms of Access to Transaction Reports

    See Item I(A).

G. Identification of Marketplace of Execution

    Not applicable.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the amendments 
are consistent with the Act. Persons making written submissions should 
file six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 inspection and copying in the Commission's 
Public Reference Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the Nasdaq-Amex. All 
submissions should refer to the file number in the caption above and 
should be submitted by January 31, 2000.

IV. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Amendment

    The Commission has reviewed Network B's proposed amendments and 
finds that the amendment is consistent with the requirements of section 
11A of the Act and the rules and regulations thereunder applicable to 
national market system plans.\5\ Specifically, the Commission finds 
that approval of the amendments is consistent with Rule 11Aa3-2(c)(2) 
\6\ of the Act in that they are necessary for the protection of 
investors, the maintenance of fair and orderly markets, and to remove 
impediments to a national market system. The Commission realizes that 
the modified fee structure, as applied, may create competitive 
disparities. However, the Commission believes that the enterprise 
arrangement will reduce broker-dealers' costs of access to market 
information, which should result in a reduction of costs for investors.
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    \5\ The Commission has considered the proposed amendments' 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \6\ 17 CFR 240.11Aa3-2(c)(2).
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    The Commission has issued a release which reviews the fee 
structures for obtaining market information and the role of market 
information revenues in funding the self-regulatory organizations.\7\ 
The concept release describes existing market information fees and 
revenues and invites public comment on the subject. The proposed 
amendment implicates some of the issues that the concept release 
addresses, including whether certain fee structures are unreasonably 
discriminatory or an inappropriate burden on competition. The 
Commission has decided to approve the

[[Page 1420]]

proposed plan amendments pending the outcome of the market data debate. 
The Commission wishes to emphasize, therefore, that a reevaluation of 
the enterprise arrangement may be required depending on subsequent 
actions taken by the Commission involving its review of market 
information fees and revenues.
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    \7\ See Securities Exchange Act Rel. No. 42208 (December 9, 
1999), 64 FR 70613 (December 17, 1999) (``Concept Release'').
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    The Commission finds good cause for approving the proposed 
amendments prior to the thirtieth day after the date of the publication 
of the notice in the Federal Register. On June 14, 1999, the 
Participants, on behalf of Network A, submitted amendments to the Plans 
which proposed to reduce the monthly nonprofessional subscriber fees 
and to implement an identical enterprise arrangement.\8\ On October 5, 
1999,\9\ the Commission approved the plan amendments. Public comment 
supported the fee reductions only because they represented an 
improvement over the CTA's current fee structure. Given that the 
proposed amendments are identical to amendments approved previously by 
the Commission and that retail investors should ultimately benefit from 
lower costs of execution, the Commission believes that granting 
accelerated approval of the proposed rule change is appropriate and 
consistent with the Act.
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    \8\ See Securities Exchange Act Rel. No. 41572 (June 28, 1999), 
64 FR 36412 (July 6, 1999).
    \9\ See Securities Exchange Act Rel. No. 41977, 64 FR 55503 
(October 13, 1999).
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V. Conclusion

    It is therefore ordered, pursuant to section 11A of the Act,\10\ 
and the rules thereunder, that the proposed amendments to the Plans 
(SR-CTA/CQ-99-03) are approved.
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    \10\ 15 U.S.C. 78k-1.


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(27).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-514 Filed 1-7-00; 8:45 am]
BILLING CODE 8010-01-M