[Federal Register Volume 74, Number 146 (Friday, July 31, 2009)]
[Notices]
[Pages 38249-38250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18275]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60385; File No. SR-NYSEAmex-2009-26]


 Self-Regulatory Organizations; NYSE Amex LLC; Order Approving 
Proposed Rule Change To Charge a $500 Monthly Fee to Recipients of the 
NYSE Amex Order Imbalance Information Datafeed

July 24, 2009.

I. Introduction

    On June 5, 2009, the NYSE Amex LLC (``NYSE Amex'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change 
to charge a $500 monthly fee to recipients of the NYSE Amex Order 
Imbalance Information datafeed. The proposed rule change was published 
for comment in the Federal Register on June 24, 2009.\3\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60122 (June 17, 
2009), 74 FR 30184.
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II. Description of the Proposal

    The Exchange proposes to charge a $500 monthly fee to recipients of 
the NYSE Amex Order Imbalance Information datafeed. NYSE Amex Order 
Imbalance Information provides real-time order imbalances that 
accumulate prior to the opening of trading on the Exchange and prior to 
the close of trading on the Exchange. The Exchange provides this 
information for issues that are likely to be of particular trading 
interest at the opening or closing.
    Currently, the Exchange provides this datafeed at no cost. The 
instant filing is submitted to establish a $500 monthly fee for receipt 
of the NYSE Amex Order Imbalance Information datafeed. This proposed 
$500 monthly fee to recipients of the NYSE Amex Order Imbalance 
Information datafeed applies whether the recipient receives the 
datafeed directly from the Exchange or indirectly from an intermediary. 
The fee entitles the datafeed recipient to make displays of that 
information available to an unlimited number of subscribers for no 
extra charge. The Exchange is not proposing to impose an end-user or 
display service fee on those subscribers.
    The Exchange states that the $500 monthly fee would allow vendors 
to redistribute NYSE Amex Order Imbalance Information: (1) Without 
having to differentiate between professional subscribers and 
nonprofessional subscribers; (2) without having to account for the 
extent of access to data; (3) without having to procure contracts with 
its subscribers for the benefit of the Exchange; and (4) without having 
to report the number of its subscribers.
    The Exchange believes that the fee enables the investment community 
that has an interest in the receipt of order imbalance information to 
contribute to the Exchange's operating costs in a manner that is 
appropriate for this market data product.
    In setting the level of the NYSE Amex Order Imbalance Information 
Product fee, the Exchange states that it took into consideration 
several factors, including:
    (1) The fees that other Exchanges are charging for similar services 
\4\;
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    \4\ New York Stock Exchange LLC imposes an access fee of $500 
per month for its order imbalance datafeed. Nasdaq OMX includes 
order imbalance information in its Nasdaq TotalView datafeed. Nasdaq 
OMX imposes end-user charges on both professional and 
nonprofessional subscribers that receive TotalView, as well as an 
array of monthly distribution charges that are significantly higher 
than the charge that NYSE Amex is proposing in this proposed rule 
change.
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    (2) consultation with some of the entities that the Exchange 
anticipates will be the most likely to take advantage of the proposed 
service;
    (3) the contribution of market data revenues that the Exchange 
believes is appropriate for entities that provide market data to large 
numbers of investors, which are the entities most likely to take 
advantage of the proposed service; and
    (4) the contribution that revenues accruing from the proposed fee 
will make to meet the overall costs of the Exchange's operations.
    The Exchange believes that the proposed NYSE Amex Order Imbalance 
Information fee would reflect an equitable allocation of its overall 
costs to users of its facilities.
    The Exchange believes that the level of the fee is consistent with 
the approach set forth in the approval order issued by the Commission 
related to ArcaBook fees.\5\ The Exchange submits that the NYSE Amex 
Order Imbalance Information datafeed constitutes ``non-core data''; 
i.e., the Exchange does not require a central processor to consolidate 
and distribute the product to the public pursuant to joint-SRO plans. 
Rather, the Exchange distributes this product voluntarily. In addition, 
the Exchange believes that both types of the competitive forces that 
the Commission described in the NYSE Arca Order are present: (i) The 
Exchange has a compelling need to attract order flow; and (ii) the 
product competes with a number of alternative products.
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    \5\ See Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21) (``NYSE 
Arca Order'').
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    The Exchange states that it must compete vigorously for order flow 
to maintain its share of trading volume. This requires the Exchange to 
act reasonably in setting market data fees for non-core products such 
as the NYSE Amex Order Imbalance Information datafeed. The Exchange 
hopes that NYSE Amex Order Imbalance datafeed will enable vendors to 
distribute NYSE Amex order imbalance information widely among 
investors, and thereby provide a means for promoting the Exchange's 
visibility in the marketplace.

III. Discussion and Commission Findings

    The Commission has reviewed carefully the proposed rule change and 
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, the

[[Page 38250]]

Commission finds that the proposal is consistent with Section 6(b)(4) 
of the Act,\7\ which requires 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) \8\ that the rules of an 
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 proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 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 Amex is an exclusive processor of NYSE Amex 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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    Under this proposal, the Exchange would charge a $500 monthly fee 
to recipients of the NYSE Amex Order Imbalance Information datafeed. 
The $500 monthly fee would allow vendors to redistribute NYSE Amex 
Order Imbalance Information: (1) Without having to differentiate 
between professional subscribers and nonprofessional subscribers; (2) 
without having to account for the extent of access to data; (3) without 
having to procure contracts with its subscribers for the benefit of the 
Exchange; and (4) without having to report the number of its 
subscribers.
    The Commission has reviewed the proposal using the approach set 
forth in the NYSE Arca Order for non-core market data fees.\12\ In the 
NYSE Arca Order, the Commission stated that ``when possible, reliance 
on competitive forces is the most appropriate and effective means to 
assess whether the terms for the distribution of non-core data are 
equitable, fair and reasonable, and not unreasonably discriminatory.'' 
\13\ It noted that the ``existence of significant competition provides 
a substantial basis for finding that the terms of an exchange's fee 
proposal are equitable, fair, reasonable, and not unreasonably or 
unfairly discriminatory.'' \14\ If an exchange ``was subject to 
significant competitive forces in setting the terms of a proposal,'' 
the Commission will approve a proposal unless it determines that 
``there is a substantial countervailing basis to find that the terms 
nevertheless fail to meet an applicable requirement of the Exchange Act 
or the rules thereunder.'' \15\
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    \12\ Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21). 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\ Id. at 74771.
    \14\ Id. at 74782.
    \15\ Id. at 74781.
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    There are a variety of alternative sources of information that 
impose significant competitive pressures on the NYSE Amex in setting 
the terms for distributing its market data. The Commission believes 
that the availability of those alternatives, as well as the NYSE Amex's 
compelling need to attract order flow, imposed significant competitive 
pressure on the NYSE Amex to act equitably, fairly, and reasonably in 
setting the terms of its proposal. In addition, the Commission recently 
determined that NYSE was subject to significant competitive forces in 
setting fees for a substantially similar non-core market data product--
NYSE Order Imbalance Information datafeed.\16\
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    \16\ See Securities Exchange Act Release No. 59543 (March 9, 
2009), 74 FR 11159 (March 16, 2009) (SR-NYSE-2008-132).
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    Because the NYSE Amex 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.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NYSEAmex-2009-26) is hereby 
approved.
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    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
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pursuant to delegated authority.\18\

    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-18275 Filed 7-30-09; 8:45 am]
BILLING CODE 8010-01-P