[Federal Register Volume 75, Number 62 (Thursday, April 1, 2010)]
[Notices]
[Pages 16535-16537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-7363]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61780; File No. SR-NYSE-2010-21]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change To Extend the Pilot Period for a Revised Unit-of-Count
Methodology for NYSE OpenBook
March 25, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 11, 2010, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared substantially by the
[[Page 16536]]
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons and is granting
accelerated approval to the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NYSE proposes to extend the expiration date of its pilot program
for a revised unit-of-count methodology for NYSE OpenBook until July
31, 2010. The text of the proposed rule change is available on the
Exchange's Web site at http://www.nyse.com, on the Commission's Web
site at http://www.sec.gov, at NYSE, 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, NYSE included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item III below. NYSE has prepared summaries, set forth in Sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On March 9, 2009, the Commission approved a pilot program by which
the Exchange redefines some of the basic ``units of measure'' that
Vendors are required to report to the Exchange and on which the
Exchange bases its fees for its NYSE OpenBook product packages.\3\
Under the proposal, the Exchange no longer defines the Vendor-
Subscriber relationship based on the manner in which a data feed
recipient or subscriber receives data (i.e., through controlled
displays or through data feeds). Instead, the pilot program adopts more
objective billing criteria that requires Vendors to count every
subscriber entitlement, whether it be an individual person or a device.
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\3\ See Securities Exchange Act Release No. 59544 (March 9,
2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131).
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Thus, the Vendor includes in the count every person and device that
has access to the data, regardless of the purposes for which the
individual or device uses the data. The pilot program eliminates
current exceptions to the device-reporting obligation in order to
subject the count to a more objective process and simplify the
reporting obligation for Vendors. (For instance, the Exchange
previously has not required Vendors to report certain programmers and
other individuals who receive access to data for certain specific, non-
trading purposes.) These exceptions require the Exchange to monitor the
manner end-users consume data, which in turn adds cost for both the
Exchange and customers.
The Exchange's experience with the pilot program has been
successful. A number of the Exchange's customers have embraced the
pilot program and the Exchange intends to submit to the Commission a
proposed rule change that would seek permanent approval of the revised
unit-of-count methodology.
The Exchange established March 31, 2010, as the expiration date for
the pilot program. The Exchange now seeks to extend the expiration date
of the pilot program to July 30, 2010, by which time, the Exchange
intends to have submitted the proposed rule change seeking permanent
approval.
2. Statutory Basis
The basis under the Securities Exchange Act of 1934 (the ``Act'')
for this proposed rule change is the requirement under Section 6(b)(4)
\4\ that an exchange have rules that provide for the equitable
allocation of reasonable dues, fees and other charges among its members
and other persons using its facilities and the requirements under
Section 6(b)(5) \5\ that the rules of an exchange be designed to
promote just and equitable principles of trade and not to permit unfair
discrimination between customers, issuers, brokers or dealers.
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\4\ 15 U.S.C. 78f(b)(4).
\5\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the pilot program benefits investors
because it is more closely aligned with current data consumption,
reduces costs for the Exchange's customers, and potentially serves as a
model for additional pricing efficiencies.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that this proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not received any unsolicited written comments from
members or other interested parties.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-NYSE-2010-21 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2010-21. This file
number should be included on the subject line if e-mail 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions
[[Page 16537]]
should refer to File Number SR-NYSE-2010-21 and should be submitted on
or before April 22, 2010.
IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\6\ In particular, it is consistent with Section 6(b)(4) of
the Act,\7\ which requires that the rules of a national securities
exchange provide for the equitable allocation of reasonable dues, fees,
and other charges among its members and issuers and other parties using
its facilities, and Section 6(b)(5) of the Act,\8\ which requires,
among other things, that the rules of a national securities exchange be
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest, and not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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\6\ In approving this rule change, the Commission notes that it
has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(5).
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The Commission also finds that the proposed rule change is
consistent with the provisions of Section 6(b)(8) of the Act,\9\ which
requires that the rules of an exchange not impose any burden on
competition not necessary or appropriate in furtherance of the purposes
of the Act. Finally, the Commission finds that the proposed rule change
is consistent with Rule 603(a) of Regulation NMS,\10\ adopted under
Section 11A(c)(1) of the Act, which requires an exclusive processor
that distributes information with respect to quotations for or
transactions in an NMS stock to do so on terms that are fair and
reasonable and that are not unreasonably discriminatory.\11\
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\9\ 15 U.S.C. 78f(b)(8).
\10\ 17 CFR 242.603(a).
\11\ NYSE is an exclusive processor of NYSE depth-of-book data
under Section 3(a)(22)(B) of the Act, 15 U.S.C. 78c(a)(22)(B), which
defines an exclusive processor as, among other things, an exchange
that distributes information with respect to quotations or
transactions on an exclusive basis on its own behalf.
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This proposal would extend the expiration date of the Unit of Count
pilot program to July 30, 2010. The Commission has reviewed the
proposal using the approach set forth in the NYSE Arca Order for non-
core market data fees.\12\ The Commission recently found that NYSE was
subject to significant competitive forces in setting fees for its
depth-of-book order data in the Unit of Count Filing.\13\ There are a
variety of alternative sources of information that impose significant
competitive pressures on the NYSE in setting the terms for distributing
its depth-of-book order data. The Commission believes that the
availability of those alternatives, as well as the NYSE's compelling
need to attract order flow, imposed significant competitive pressure on
the NYSE to act equitably, fairly, and reasonably in setting the terms
of its proposal.
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\12\ Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21) (``NYSE
Arca Order''). In the NYSE Arca Order, the Commission describes in
great detail the competitive factors that apply to non-core market
data products. The Commission hereby incorporates by reference the
data and analysis from the NYSE Arca Order into this order.
\13\ See Securities Exchange Act Release No. 59544 (March 9,
2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131).
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Because the NYSE was subject to significant competitive forces in
setting the terms of the proposal, the Commission will approve the
proposal in the absence of a substantial countervailing basis to find
that its terms nevertheless fail to meet an applicable requirement of
the Act or the rules thereunder. An analysis of the proposal does not
provide such a basis.
The Commission finds good cause for approving this proposal before
the 30th day after the publication of notice thereof in the Federal
Register. The Commission believes that accelerating approval of this
proposal is appropriate and would ensure that the Exchange could
continue to offer Unit of Count billing on their market data products
under the existing pilot program.\14\
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\14\ The Commission notes that that the Exchange has also
recently filed a proposed rule change seeking permanent approval of
the pilot program for the Unit of Count billing methodology for NYSE
OpenBook. See Securities Exchange Act Release No. 61779 (March 25,
2010) (SR-NYSE-2010-22).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\15\ that the proposed rule change (SR-NYSE-2010-21), be, and it
hereby is, approved on an accelerated basis.
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\15\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7363 Filed 3-31-10; 8:45 am]
BILLING CODE 8011-01-P