[Federal Register Volume 88, Number 224 (Wednesday, November 22, 2023)]
[Notices]
[Pages 81504-81511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25788]



[[Page 81504]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98976; File No. SR-NYSE-2023-42]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Expand the Application of the per User Access Fee for Use of Certain 
Market Data Products by Redistributors

November 16, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that on November 1, 2023, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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

    The Exchange proposes to amend the fees for NYSE BBO and NYSE 
Trades by expanding the application of the Per User Access Fee. The 
Exchange proposes to implement the proposed fee change on November 1, 
2023. 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.

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 expand the application of the Per User 
Access Fee \4\ for certain NYSE market data products, as set forth on 
the NYSE Proprietary Market Data Fee Schedule (``Fee Schedule''). 
Specifically, the Exchange proposes to expand the application of the 
Per User Access Fee, which is currently available for Redistributors 
\5\ of NYSE BBO and NYSE Trades that subscribe to only such data feeds 
and do not subscribe to any other market data product listed on the Fee 
Schedule other than NYSE BQT and use such market data product for 
external distribution only. The Exchange proposes to make the Per User 
Access Fee available to Redistributors of NYSE OpenBook as well.
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    \4\ The Per User Access Fee is a lower access fee that currently 
applies for subscribers of NYSE BBO and NYSE Trades that receive a 
data feed and use those market data products in a display-only 
format. See Fee Schedule. See also Securities Exchange Act Release 
Nos. 87803 (December 19, 2019), 84 FR 71505 (December 27, 2019) (SR-
NYSE-2019-70) (Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change, as Modified by Partial Amendment No. 1, To 
Amend the Fees for NYSE BBO and NYSE Trades) (``BQT Fee Reduction 
Filing''); and 90407 (November 12, 2020), 85 FR 73570 (November 18, 
2020) (SR-NYSE-2020-91) (Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change Amending the Fees for NYSE BBO 
and NYSE Trades by Modifying the Application of the Access Fee and 
Amending the Fees for NYSE Trades by Adopting a Waiver Applicable to 
the Redistribution Fee) (``Second BQT Fee Reduction Filing'').
    \5\ A Redistributor is a vendor or any other person that 
provides a NYSE data product to a data recipient or to any system 
that a data recipient uses, irrespective of the means of 
transmission or access.
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    The proposed fee change, taken together with similar fee changes 
filed by the Exchange's affiliated exchanges, NYSE American LLC (``NYSE 
American'') and NYSE Arca, Inc. (``NYSE Arca''),\6\ will reduce the 
fees associated with the NYSE BQT proprietary data product for 
Redistributors of NYSE OpenBook. As described below, NYSE BQT competes 
directly with similar products offered by both the Nasdaq and Cboe 
families of U.S. equity exchanges. Collectively, the proposed fee 
changes are intended to respond to the competition posed by similar 
products offered by the other exchange groups.
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    \6\ See SR-NYSEAMER-2023-57 and SR-NYSEArca-2023-78.
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    The Exchange proposes to implement the proposed fee change on 
November 1, 2023.
Background
    The Securities and Exchange Commission (``Commission'') has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. In Regulation NMS, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues, and 
also recognized that current regulation of the market system ``has been 
remarkably successful in promoting market competition in its broader 
forms that are most important to investors and listed companies.'' \7\
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    \7\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS Adopting Release'').
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    While Regulation NMS has enhanced competition, it has also fostered 
a ``fragmented'' market structure where trading in a single stock can 
occur across multiple trading centers. When multiple trading centers 
compete for order flow in the same stock, the Commission has recognized 
that ``such competition can lead to the fragmentation of order flow in 
that stock.'' \8\ Indeed, equity trading is currently dispersed across 
16 exchanges,\9\ numerous alternative trading systems,\10\ and broker-
dealer internalizers and wholesalers, all competing for order flow. 
Based on publicly-available information, no single exchange currently 
has more than 17% market share (whether including or excluding auction 
volume).\11\
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    \8\ See Securities Exchange Act Release No. 61358, 75 3594, 3597 
(January 21, 2010) (File No. S7-02-10) (Concept Release on Equity 
Market Structure).
    \9\ See Cboe U.S. Equities Market Volume Summary, available at 
http://markets.cboe.com/us/equities/market_share/ share/.
    \10\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \11\ See Cboe U.S. Equities Market Volume Summary, available at 
http://markets.cboe.com/us/equities/market_share/ share/.
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    With the NYSE BQT market data product, NYSE and its affiliates 
compete head to head with the Nasdaq Basic \12\ and Cboe One Feed \13\ 
market data

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products. Similar to those market data products, NYSE BQT, which was 
established in 2014,\14\ consists of certain elements from the NYSE BBO 
and NYSE Trades market data products as well as from market data 
products from the Exchange's affiliates, NYSE American, NYSE Arca, NYSE 
Chicago, Inc. (``NYSE Chicago''),\15\ and NYSE National, Inc. (``NYSE 
National'').\16\ Similar to both Nasdaq Basic and the Cboe One Feed, 
NYSE BQT provides investors with a unified view of comprehensive last 
sale and BBO data in all Tape A, B, and C securities that trade on the 
Exchange, NYSE American, NYSE Arca, NYSE Chicago, and NYSE National. 
Also similar to Nasdaq Basic and the Cboe One Feed, NYSE BQT is not 
intended to be used for purposes of making order-routing or trading 
decisions, but rather provides indicative prices for Tape A, B, and C 
securities.\17\
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    \12\ As described on the Nasdaq website, available here: http://www.nasdaqtrader.com/Trader.aspx?id=nasdaqbasic nasdaqbasic, Nasdaq Basic is 
a ``low cost alternative'' that provides ``Best Bid and Offer and 
Last Sale information for all U.S. exchange-listed securities based 
on liquidity within the Nasdaq market center, as well as trades 
reported to the FINRA Trade Reporting Facility (``TRF'').''
    \13\ As described on the Cboe website, available here: https://markets.cboe.com/us/equities/market_data_services/cboe_one/ one/, the 
Cboe One Feed is a ``market data product that provides cost-
effective, high-quality reference quotes and trade data for market 
participants looking for comprehensive, real-time market data'' and 
provides a ``unified view of the market from all four Cboe equity 
exchanges: BZX Exchange, BYX Exchange, EDGX Exchange, and EDGA 
Exchange.''
    \14\ See Securities Exchange Act Release Nos. 72750 (August 4, 
2014), 79 FR 46494 (August 8, 2014) (notice--NYSE BQT); and 73553 
(November 6, 2014), 79 FR 67491 (November 13, 2014) (approval 
order--NYSE BQT) (SR-NYSE-2014-40) (``NYSE BQT Filing'').
    \15\ In 2019, NYSE BQT was amended to include NYSE Chicago BBO 
and NYSE Chicago Trades. See Securities Exchange Act Release No. 
87511 (November 12, 2019), 84 FR 63689 (November 18, 2019) (SR-NYSE-
2019-60).
    \16\ In 2018, NYSE BQT was amended to include NYSE National BBO 
and NYSE National Trades. See Securities Exchange Act Release No. 
83359 (June 1, 2018), 83 FR 26507 (June 7, 2018) (SR-NYSE-2018-22).
    \17\ See NYSE BQT Filing, supra note 14.
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    Together with NYSE American and NYSE Arca, the Exchange proposes to 
compete for subscribers to NYSE BQT by designing the proposed fee 
change to be attractive to Redistributors of NYSE OpenBook that intend 
to subscribe to and externally redistribute NYSE BQT. Currently, 
Redistributors of NYSE OpenBook that want to subscribe to and 
redistribute NYSE BQT must pay the General Access Fee. Redistributors 
of NYSE OpenBook who have data recipient customers interested in NYSE 
BQT may not be inclined to subscribe to NYSE BQT. When Redistributors 
do not subscribe to NYSE BQT, the prospective data recipients that are 
the customers of such Redistributors ae unable to subscribe to NYSE 
BQT. The proposed fee change is designed to provide a financial 
incentive for such Redistributors to subscribe to NYSE BQT so that 
their customers, which have expressed an interest in subscribing to 
NYSE BQT, would be able to access the product via such Redistributors.
    Currently, subscribers of each of the NYSE BBO and NYSE Trades 
products that receive a data feed pay a General Access Fee of $1,500 
per month. In February 2020, the Exchange added the Per User Access 
Fee, which is a reduced fee of $100 per month available at that time 
only for subscribers of NYSE BBO and NYSE Trades that use those 
products in a display-only format, including for internal use for 
Professional Users and external distribution to both Professional and 
Non-Professional Users.\18\
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    \18\ See BQT Fee Reduction Filing, supra, note 4.
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    In November 2020, the Exchange expanded the application of the 
reduced Per User Access Fee to Redistributors of NYSE BBO and NYSE 
Trades data feeds that do not subscribe to any other market data 
product listed on the Fee Schedule other than NYSE BQT and use such 
market data products for external distribution only.\19\
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    \19\ See Second BQT Fee Reduction Filing, supra, note 4.
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    As noted above, the Exchange now proposes to further expand the 
applicability of the reduced Per User Access Fee. Specifically, the 
Exchange proposes that Redistributors of NYSE BBO and NYSE Trades that 
do not subscribe to any other market data product listed on the Fee 
Schedule other than NYSE BQT and/or NYSE OpenBook, and use such market 
data products for external distribution only, would be eligible for the 
reduced Per User Access Fee. A Redistributor that receives such data 
feeds and uses the market data products for any other purpose (such as 
internal use) would continue to pay the $1,500 per month General Access 
Fee. And, as currently set forth in footnote 8 to the Fee Schedule, a 
subscriber would be charged only one access fee for each of the NYSE 
BBO and NYSE Trades products, depending on the use of that product.
    To effect this change, the Exchange proposes to modify footnote 8 
to the Fee Schedule as follows (proposed text italicized, proposed 
deletions bracketed):

    The Per User Access Fee is charged to: (i) a subscriber that 
receives a data feed and uses the market data product only for 
Professional Users and Non-Professional Users in a display-only 
format, including for internal use and external redistribution in a 
display-only format, and (ii) a Redistributor that subscribes [only] 
to the NYSE BBO and NYSE Trades data feeds, and does not subscribe 
to any other Products listed on this Fee Schedule other than NYSE 
BQT and/or the NYSE OpenBook data feed, and uses these market data 
products for external distribution only. A subscriber that receives 
a data feed and uses the market data product for any other purpose, 
including if combined with Per User use, will be charged the General 
Access Fee. A subscriber will be charged only one access fee for 
each of the NYSE BBO and NYSE Trades products, depending on the use 
of that product.

    The proposed rule change would result in lower fees for 
Redistributors that receive NYSE BBO, NYSE Trades, and NYSE OpenBook 
data feeds, and use such market data products for external distribution 
only.\20\ The Exchange believes that the proposed expansion of the 
reduced Per User Access Fee would provide an incentive for 
Redistributors that currently subscribe to NYSE OpenBook to also 
subscribe to the NYSE BQT data feeds so that such product would be 
available to their customers, which have expressed an interest in 
subscribing to NYSE BQT.
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    \20\ The Per User Access Fee is 93% lower than the General 
Access Fee. Together with the corresponding proposed rule changes by 
NYSE American and NYSE Arca to similarly reduce the access fees to 
their BBO and Trades products for Redistributors, such 
Redistributors would be eligible for significantly lower access fees 
for NYSE BQT, from $6,250 per month to $850 per month ($250 + $200 + 
$200 +$200), a reduction of more than 86%.
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    The proposed rule change is intended to encourage greater use of 
NYSE BQT by making it more affordable for Redistributors that subscribe 
to NYSE OpenBook and also have customers interested in subscribing to 
NYSE BQT. The proposed fee change would allow the Exchange to compete 
more effectively with Nasdaq Basic and Cboe One Feed by expanding the 
number of Redistributors that would subscribe to NYSE BQT, and 
therefore make the product more widely available to data subscribers 
interested in NYSE BQT.
Applicability of Proposed Rule Change
    As noted above, the proposed rule change is designed to reduce the 
overall cost for Redistributors of NYSE BQT that also redistribute NYSE 
OpenBook by expanding the applicability of the Per User Access Fee. 
Today, the Exchange has thirty-one data feed subscribers, two of whom 
became Redistributors as a direct result of the Second BQT Fee 
Reduction Filing and currently pay the reduced Per User Access Fee. The 
Exchange believes that the proposed rule change would provide a further 
incentive for Redistributors that already subscribe to NYSE OpenBook to 
subscribe to NYSE BQT for purposes of providing external distribution 
of NYSE BQT to potential data recipients interested in the product.

[[Page 81506]]

    Because the proposed rule change is targeted to potential 
Redistributors of NYSE BQT that also subscribe to NYSE OpenBook, the 
proposed change to the availability of the NYSE BBO and NYSE Trades Per 
User Access Fees, together with the proposed changes on NYSE American 
and NYSE Arca, are narrowly tailored with that purpose in mind. 
Accordingly, this proposed fee change is not designed for 
Redistributors that are existing customers of NYSE market data products 
(other than NYSE OpenBook) or that engage in internal use of NYSE BQT. 
This proposed rule change would not result in any changes to the market 
data fees for NYSE BBO and NYSE Trades for such data subscribers.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\21\ in general, and 
Sections 6(b)(4) and 6(b)(5) of the Act,\22\ 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.
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    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(4), (5).
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The Proposed Rule Change Is Reasonable
    In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique 
market data to the public. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. Specifically, 
in Regulation NMS, the Commission highlighted the importance of market 
forces in determining prices and SRO revenues, and also recognized that 
current regulation of the market system ``has been remarkably 
successful in promoting market competition in its broader forms that 
are most important to investors and listed companies.'' \23\
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    \23\ See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
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    With respect to market data, the decision of the United States 
Court of Appeals for the District of Columbia Circuit in NetCoalition 
v. SEC upheld the Commission's reliance on the existence of competitive 
market mechanisms to evaluate the reasonableness and fairness of 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.'' \24\
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    \24\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) 
(``NetCoalition I'') (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.' '' \25\
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    \25\ Id. at 535.
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    More recently, the Commission confirmed that it applies a ``market-
based'' test in its assessment of market data fees, and that under that 
test:

the Commission considers whether the exchange was subject to 
significant competitive forces in setting the terms of its proposal 
for [market data], including the level of any fees. If an exchange 
meets this burden, the Commission will find that its fee rule is 
consistent with the Act unless there is a substantial countervailing 
basis to find that the terms of the rule violate the Act or the 
rules thereunder.\26\
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    \26\ See Securities Exchange Act Release No. 34-90217 (October 
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) 
(``National IF Approval Order'') (internal quotation marks omitted), 
quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74781 (December 9, 2008) (``2008 ArcaBook 
Approval Order'').

1. The Proposed Fees Are Constrained by Significant Competitive Forces
    An exchange may demonstrate that its fees are constrained by 
competitive forces by showing that platform competition applies.
    As the United States Supreme Court recognized in Ohio v. American 
Express, platforms are firms that act as intermediaries between two or 
more sets of agents, and typically the choices made on one side of the 
platform affect the results on the other side of the platform via 
externalities, or ``indirect network effects.'' \27\ Externalities are 
linkages between the different ``sides'' of a platform such that one 
cannot understand pricing and competition for goods or services on one 
side of the platform in isolation; one must also account for the 
influence of the other side. As the Supreme Court explained:
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    \27\ Ohio v. American Express, 138 S. Ct. 2274, 2280-81 (2018).

    To ensure sufficient participation, two-sided platforms must be 
sensitive to the prices that they charge each side. . . . Raising 
the price on side A risks losing participation on that side, which 
decreases the value of the platform to side B. If the participants 
on side B leave due to this loss in value, then the platform has 
even less value to side A--risking a feedback loop of declining 
demand. . . . Two-sided platforms therefore must take these indirect 
network effects into account before making a change in price on 
either side.\28\
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    \28\ Id. at 2281.

    The Exchange and its affiliated exchanges have long maintained that 
they function as platforms between consumers of market data and 
consumers of trading services. Proving the existence of linkages 
between the two sides of this platform requires an in-depth economic 
analysis of both public data and confidential Exchange data about 
particular customers' trading activities and market data purchases. 
Exchanges, however, are prohibited from sharing details about these 
specific customer activities and purchases. For example, pursuant to 
Exchange Rule 7.41E, transactions executed on the Exchange are 
processed anonymously.
    Exchanges function as platforms for market data and transaction 
services mean that exchanges do not set fees for market data products 
without considering, and being constrained by, the effect the fees will 
have on the order-flow side of the platform. And as the D.C. Circuit 
recognized in NetCoalition I, ``[n]o one disputes that competition for 
order flow is fierce.'' \29\ The court further noted that ``no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers,'' and that an exchange ``must compete 
vigorously for order flow to maintain its share of trading volume.'' 
\30\
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    \29\ NetCoalition I, 615 F.3d at 544 (internal quotation 
omitted).
    \30\ Id.
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    As noted above, while Regulation NMS has enhanced competition, it 
has also fostered a ``fragmented'' market structure where trading in a 
single stock can occur across multiple trading centers. When multiple 
trading centers compete for order flow in the same stock, the 
Commission has recognized that ``such competition can lead to the 
fragmentation of order flow in that stock.'' \31\ The Commission's 
Division of Trading and Markets has also recognized that with so many 
``operating equities exchanges and dozens of ATSs, there is vigorous 
price competition among the U.S. equity markets and, as a result, 
[transaction] fees are tailored and frequently modified to attract 
particular types of order flow, some of which is highly

[[Page 81507]]

fluid and price sensitive.'' \32\ Indeed, today, equity trading is 
currently dispersed across 16 exchanges,\33\ numerous alternative 
trading systems,\34\ broker-dealer internalizers and wholesalers, all 
competing for order flow. Based on publicly-available information, no 
single exchange currently has more than 17% market share.\35\
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    \31\ See Securities Exchange Act Release No. 61358, 75 3594, 
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on 
Equity Market Structure).
    \32\ Commission Division of Trading and Markets, Memorandum to 
EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
    \33\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/ share/.
    \34\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData AtsIssueData. A list of 
alternative trading systems registered with the Commission is 
available at https://www.sec.gov/foia/docs/atslist.htm.
    \35\ See Cboe Global Markets, U.S. Equities Market Volume 
Summary, available at http://markets.cboe.com/us/equities/market_share/ share/.
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    Further, low barriers to entry mean that new exchanges may, and do, 
rapidly and inexpensively enter the market and offer additional 
substitute platforms to compete with the Exchange. For example, since 
2020, three new exchanges have entered the market: Long Term Stock 
Exchange (LTSE), which began operations as an exchange on August 28, 
2020; \36\ Members Exchange (MEMX), which began operations as an 
exchange on September 29, 2020; \37\ and Miami International Holdings 
(MIAX), which began operations of its first equities exchange on 
September 29, 2020.\38\
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    \36\ See LTSE Market Announcement: MA-2020-020, dated August 14, 
2020, announcing LTSE production securities phase-in planned for 
August 28, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf 
and LTSE Market Announcement: MA-2020-025, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf.
    \37\ As of October 29, 2020, MEMX is trading all NMS symbols. 
See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
    \38\ See MIAX Pearl Press release, dated September 29, 2020, 
available here: https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf.
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    These low barriers enable existing exchange customers to 
disintermediate and start their own exchanges if they think the prices 
charged for exchange proprietary market data products are too high. 
This is precisely the rationale behind the creation of MEMX, which was 
formed by some of the largest and most well capitalized financial firms 
that are also Exchange customers (including Bank of America, BlackRock, 
Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. 
Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others).\39\
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    \39\ MEMX Home Page (``Founded by members and investors, MEMX 
aims to drive simplicity, efficiency, and competition in equity 
markets.''), available at https://memx.com/.
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    For example, one of MEMX's founding principles is that exchange 
proprietary market data prices are too high, and that MEMX will benefit 
its members by offering ``[l]ower pricing on market data.'' \40\ Nor is 
this a new phenomenon: exchange customers formed BATS to compete with 
incumbent exchanges and once registered as an exchange in 2008, BATS 
did not initially charge for market data. The BATS venture was a 
financial success for its founders, first through recouping their 
investment in its initial public offering and then in the subsequent 
sale of BATS to Cboe, which now charges for market data from those 
exchanges. Notably, MEMX has some of the same founding broker-dealer 
customers, leading some to dub MEMX ``BATS 2.0.'' \41\
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    \40\ MEMX home page, available at https://memx.com/.
    \41\ See ``MEMX turns up the heat on US stock exchanges,'' 
Financial Times, January 9, 2019, available at https://www.ft.com/content/4908c8b0-1418-11e9-a581-4ff78404524e; see also ``US equities 
exchanges: If you can't beat them, join them,'' Euromoney, February 
13, 2019, available at https://www.euromoney.com/article/b1d3tfby4p3y4v/us-equities-exchanges-if-you-cant-beat-them-join-them.
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    The fact that this cycle is viable and repeatable by entities that 
both trade on and compete with existing exchanges confirms that 
barriers to entry are low and that these markets are competitive and 
contestable.\42\ And low barriers to entry act as a market check on 
high prices.\43\
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    \42\ United States v. SunGard Data Sys., 172 F. Supp. 2d 172, 
186 (D.D.C. 2001) (recognizing that ``[a]s a matter of law, courts 
have generally recognized that when a customer can replace the 
services of an external product with an internally-created system, 
this captive output (i.e. the self-production of all or part of the 
relevant product) should be included in the same market.''). In 
SunGard, the court rejected the Antitrust Division's attempt to 
block SunGuard's acquisition of the disaster recovery assets of 
Comdisco on the basis that the acquisition would ``substantially 
lessen competition in the market for shared hotsite disaster 
recovery services,'' when the evidence showed that ``internal 
hotsites'' created by customers competed with the ``external shared 
hotsite business'' engaged in by the merging parties. Id. at 173-74, 
187.
    \43\ United States v. Baker Hughes, 908 F.2d 981, 987 (1990) 
(``In the absence of significant barriers [to entry], a company 
probably cannot maintain supracompetitive pricing for any length of 
time.''); see also David S. Evans and Richard Schmalensee, Markets 
with Two-Sided Platforms, in 1 Issues In Competition Law and Policy 
667, 685 (ABA Section of Antitrust Law 2008) (noting that exchange 
mergers in 2005 and 2006 were approved by competition authorities in 
part in reliance on planned and likely entry of other firms).
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    In sum, the fierce competition for order flow thus constrains any 
exchange from pricing its market data at a supracompetitive price and 
constrains the Exchange in setting its fees at issue here.
    The proposed expansion of the Per User Access Fee is therefore 
reasonable because in setting it, the Exchange is constrained by the 
availability of numerous substitute platforms offering market data 
products and trading. Such substitutes need not be identical, but only 
substantially similar to the product at hand.
    More specifically, in expanding the applicability of the Per User 
Access Fee to Redistributors of NYSE OpenBook, the Exchange is 
constrained by the fact that, if its pricing across the platform is 
unattractive to customers, customers have their pick of an increasing 
number of alternative platforms to use instead of the Exchange. The 
Exchange believes that it has considered all relevant factors and has 
not considered irrelevant factors in order to establish reasonable 
fees. The existence of numerous alternative platforms to the Exchange's 
platform ensures that the Exchange cannot set unreasonable market data 
fees without suffering the negative effects of that decision in the 
fiercely competitive market for trading order flow.
    Even putting aside the facts that exchanges are platforms and that 
pricing decisions on the two sides of the platform are intertwined, the 
Exchange is constrained in setting the proposed market data fees by the 
availability of numerous substitute market data products. The 
Commission has been clear that substitute products need not be 
identical, but only substantially similar to the product at hand.\44\
---------------------------------------------------------------------------

    \44\ For example, in the National IF Approval Order, the 
Commission recognized that for some customers, the best bid and 
offer information from consolidated data feeds may function as a 
substitute for the NYSE National Integrated Feed product, which 
contains order by order information. See National IF Approval Order, 
supra note 26, at 67397 [release p. 21] (``[I]nformation provided by 
NYSE National demonstrates that a number of executing broker-dealers 
do not subscribe to the NYSE National Integrated Feed and executing 
broker-dealers can otherwise obtain NYSE National best bid and offer 
information from the consolidated data feeds.'' (internal quotations 
omitted)).
---------------------------------------------------------------------------

    The NYSE BQT market data product is subject to significant 
competitive forces that constrain its pricing. Specifically, as 
described above, NYSE BQT competes head-to-head with the Nasdaq Basic 
product and the Cboe One Feed. These products each serve as reasonable 
substitutes for one another as they are each designed to provide 
investors with a unified view of real-

[[Page 81508]]

time quotes and last-sale prices in all Tape A, B, and C securities. 
Each product provides subscribers with consolidated top-of-book quotes 
and trades from multiple U.S. equities markets. In the case of NYSE 
BQT, this product provides top-of-book quotes and trades data from five 
NYSE-affiliated U.S. equities exchanges, which together account for 
approximately 20% of consolidated U.S. equities trading volume as of 
October 2023.\45\ Cboe One Feed similarly provides top-of-book quotes 
and trades data from Cboe's four U.S. equities exchanges. NYSE BQT, 
Nasdaq Basic, and Cboe One Feed are all intended to provide indicative 
pricing and are not intended to be used for order routing or trading 
decisions.
---------------------------------------------------------------------------

    \45\ See Cboe Global Markets U.S. Equities Market Volume 
Summary, available at https://www.cboe.com/us/equities/market_share/ share/.
---------------------------------------------------------------------------

    In addition to competing with proprietary data products from Nasdaq 
and Cboe, NYSE BQT also competes with the consolidated data feed. 
However, the Exchange does not claim that NYSE BQT is a substitute for 
consolidated data with respect to requirements under the Vendor Display 
Rule, which is Regulation NMS Rule 603(c).
    The fact that this filing is proposing to further expand the 
application of the reduced Per User Access Fee is itself confirmation 
of the inherently competitive nature of the market for the sale of 
proprietary market data. For example, in August 2019, Cboe filed 
proposed rule changes to reduce certain of its Cboe One Feed fees and 
noted that it attracted two additional customers because of the reduced 
fees.\46\ More recently, Nasdaq filed a proposed rule change to lower 
the enterprise license fee for broker-dealers distributing Nasdaq Basic 
to internal Professional subscribers and the enterprise license fee for 
broker-dealers distributing Nasdaq Last Sale to Professional 
subscribers.\47\
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    \46\ See Securities Exchange Act Release Nos. 86667 (August 14, 
2019) (SR-CboeBZX-2019-069); 86670 (August 14, 2019) (SR-CboeBYX-
2019-012); 86676 (August 14, 2019) (SR-CboeEDGA-2019-013); and 86678 
(August 14, 2019) (SR-CboeEDGX-2019-048) (Notices of filing and 
Immediate effectiveness of proposed rule change to reduce fees for 
the Cboe One Feed) (collectively ``Cboe One Fee Filings''). The Cboe 
One Fee Filings were in effect from August 1, 2019 until September 
30, 2019, when the Commission suspended them and instituted 
proceedings to determine whether to approve or disapprove those 
proposals. See, e.g., Securities Exchange Act Release No. 87164 
(September 30, 2019), 84 FR 53208 (October 4, 2019) (SR-CboeBZX-
2019-069). On October 1, 2019, the Cboe equities exchanges refiled 
the Cboe One Fee Filings on the basis that they had new customers 
subscribe as a result of the Cboe One Fee Filings, and therefore its 
fee proposal had increased competition for top-of-book market data. 
See Securities Exchange Act Release Nos. 87312 (October 15, 2019), 
84 FR 56235 (October 21, 2019) (SR-CboeBZX-2019-086); 87305 (October 
14, 2019), 84 FR 56210 (October 21, 2019) (SR-CboeBYX-2019-015); 
87295 (October 11, 2019), 84 FR 55624 (October 17, 2019) (SR-
CboeEDGX-2019-059); and 87294 (October 11, 2019), 84 FR 55638 
(October 17, 2019) (SR-CboeEDGA-2019-015) (Notices of filing and 
immediate effectiveness of proposed rule changes to re-file the 
Small Retail Broker Distribution Program) (``Cboe One Fee Re-
Filings''). On November 26, 2019, the Commission suspended the Cboe 
One Fee Re-Filings and instituted proceedings to determine whether 
to approve or disapprove those proposals. See, e.g., Securities 
Exchange Act Release No. 87629 (November 26, 2019), 84 FR 66245 
(December 3, 2019) (SR-CboeBZX-2019-086). On November 27, 2019, the 
Cboe equities exchanges refiled the Cboe One Fee Filings with one 
revision to the requirements for participating in the Small Retail 
Broker Distribution Program and additional information about the 
basis for the proposed fee changes. See Securities Exchange Act 
Release Nos. 87712 (December 10, 2019), 84 FR 68508 (December 16, 
2019) (SR-CboeBZX-2019-101); 88713 (December 10, 2019), 84 FR 68530 
(December 16, 2019) (SR-CboeBYX-2019-023); 87709 (December 10, 
2019), 84 FR 68523 (December 16, 2019) (SR-CboeEDGA-2019-021); and 
87711 (December 10, 2019), 84 FR 68501 (December 16, 2019) (SR-Cboe-
EDGX-2019-071) (Notices of filing and immediate effectiveness of 
proposed rule changes to introduce a Small Retail Broker 
Distribution Program) (``Cboe One Third Fee Re-Filings''). On 
February 4, 2020, the Cboe equities exchanges withdrew the Cboe One 
Third Fee Re-Filings and, on the same date, refiled the Cboe One Fee 
Filings. See Securities Exchange Act Release Nos. 88221 (February 
14, 2020), 85 FR 9904 (February 20, 2020) (SR-CboeBYX-2020-007); 
88218 (February 14, 2020), 85 FR 9827 (February 20, 2020) (SR-
CboeBZX-2020-014); 88220 (February 14, 2020), 85 FR 9912 (February 
20, 2020) (SR-CboeEDGA-2020-004); and 88219 (February 14, 2020), 85 
FR 9872 (February 20, 2020) (SR-CboeEDGX-2020-008) (Notices of 
filing and immediate effectiveness of proposed rule changes to 
introduce a Small Retail Broker Distribution Program) (``Cboe One 
Fourth Fee Re-Filings''). On April 15, 2020, the Cboe equities 
exchanges withdrew the Cboe One Fee Filings and the Cboe One Fee Re-
Filings. Pursuant to the Cboe One Fourth Fee Re-Filings, the Small 
Retail Broker Distribution Program is currently in effect at the 
Cboe equities exchanges.
    \47\ See Securities Exchange Act Release No. 90177 (October 14, 
2020), 85 FR 66620 (October 20, 2020) (SR-NASDAQ-2020-065) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To 
Lower the Enterprise License Fee for Broker-Dealers Distributing 
Nasdaq Basic to Internal Professional Subscribers as Set Forth in 
the Equity 7 Pricing Schedule, Section 147, and the Enterprise 
License Fee for Broker-Dealers Distributing Nasdaq Last Sale to 
Professional Subscribers at Equity 7, Section 139).
---------------------------------------------------------------------------

    The Exchange notes that NYSE proprietary market data products are 
entirely optional. The Exchange is not required to make the proprietary 
data products that are the subject of this proposed rule change 
available or to offer any specific pricing alternatives to any 
customers, nor is any firm or investor required to purchase the 
Exchange's data products. Unlike some other data products (e.g., the 
consolidated quotation and last-sale information feeds) that firms are 
required to purchase in order to fulfil regulatory obligations,\48\ a 
customer's decision whether to purchase any of the Exchange's 
proprietary market data feeds is entirely discretionary. Most firms 
that choose to subscribe to proprietary market data feeds from the 
Exchange and its affiliates do so for the primary goals of using them 
to increase their revenues, reduce their expenses, and in some 
instances compete directly with the Exchange's trading services. Such 
firms are able to determine for themselves whether or not the products 
in question or any other similar products are attractively priced. If 
market data feeds from the Exchange and its affiliates do not provide 
sufficient value to firms based on the uses those firms may have for 
it, such firms may simply choose to conduct their business operations 
in ways that do not use the products.
---------------------------------------------------------------------------

    \48\ The Exchange notes that broker-dealers are not required to 
purchase proprietary market data to comply with their best execution 
obligations. See In the Matter of the Application of Securities 
Industry and Financial Markets Association for Review of Actions 
Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-
15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement 
in Regulation NMS or any other rule that proprietary data be 
utilized for order routing decisions, and some broker-dealers and 
ATSs have chosen not to do so.
---------------------------------------------------------------------------

    In addition, in the case of products that are also redistributed 
through market data vendors, such as Bloomberg and Refinitiv, 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. This 
competitive constraint is precisely what is driving the proposed fee 
changes here, which are designed to attract new market data vendors, 
and through them new subscribers, to the NYSE BQT product. Currently, 
only seven data feed vendors subscribe to NYSE BQT, and each vendor has 
limited redistribution of NYSE BQT. No other vendors currently 
subscribe to NYSE BQT and likely will not unless their customers 
request it, and customers will not elect to pay the proposed fees 
unless such 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.
    Because of the availability of substitutes, an exchange that 
overprices

[[Page 81509]]

its market data products stands a high risk that users may substitute 
another source of market data information for its own. Those 
competitive pressures imposed by available alternatives are evident in 
the Exchange's proposed pricing.
    In setting the proposed fees, 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 reasonable fees. The existence of 
numerous alternatives to the Exchange's platform and, more 
specifically, alternatives to the market data products, including 
proprietary data from other sources, ensures that the Exchange cannot 
set unreasonable fees 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.
    The proposed expansion of the Per User Access Fee is reasonable, 
for the following additional reasons.
    Overall. This proposed fee change is a result of the competitive 
environment, as the Exchange seeks to decrease certain of its fees to 
attract Redistributors that do not currently subscribe to the NYSE BQT 
market data product. The Exchange is proposing the fee reduction at 
issue to make the Exchange's fees more competitive for a specific 
segment of market participants, thereby increasing the availability of 
the Exchange's data products, and expanding the options available to 
firms making data purchasing decisions based on their business needs. 
The Exchange believes that this is consistent with the principles 
contained in Regulation NMS to ``promote the wide availability of 
market data and to allocate revenues to SROs that produce the most 
useful data for investors.'' \49\
---------------------------------------------------------------------------

    \49\ See Regulation NMS Adopting Release, 70 FR 37495, at 37503.
---------------------------------------------------------------------------

    Access Fee. By making the reduced Per User Access Fee available to 
Redistributors of NYSE OpenBook for external distribution who do not 
subscribe to any other products listed on the Fee Schedule other than 
NYSE BBO and NYSE Trades, the Exchange believes that more 
Redistributors may choose to subscribe to these products, thereby 
expanding the distribution of this market data for the benefit of 
investors that participate in the national market system and increasing 
competition generally. The Exchange also believes that offering the Per 
User Access Fee to these Redistributors would expand the availability 
of NYSE BQT to potential data recipients that are interested in 
subscribing to NYSE BQT but do not have access to a Redistributor who 
subscribes to the data feeds.
    The Exchange determined to make the reduced Per User Access Fee 
available to these Redistributors because it constitutes a substantial 
reduction of the current fee, with the intended purpose of increasing 
use of NYSE BQT by Redistributors. NYSE BQT has been in place since 
2014 but has a very small number of subscribers. The Exchange believes 
that in order to compete with other indicative pricing products such as 
Nasdaq Basic and Cboe One Feed, it needs to provide a meaningful 
financial incentive for more Redistributors to choose to subscribe to 
NYSE BQT so that they can make it available to their customers. 
Accordingly, the proposed expansion of the Per User Access Fee, 
together with the proposed expansion of the Per User Access Fee by the 
Exchange's affiliates, is reasonable because the reductions will make 
NYSE BQT a more attractive offering for Redistributors that do not 
currently subscribe to any NYSE market data products other than NYSE 
OpenBook and make it more competitive with Nasdaq Basic and Cboe One 
Feed.
    Evidence of the competition among exchange groups for these 
products has previously been demonstrated via fee changes. For example, 
following the introduction of the Cboe One Feed, Nasdaq responded by 
reducing its fees for the Nasdaq Basic product.\50\ With the proposed 
changes by the Exchange, NYSE American, and NYSE Arca, the Exchange is 
similarly seeking to compete by decreasing the total access fees for 
NYSE BQT from $6,250 to $850 for Redistributors that do not currently 
subscribe to any NYSE market data products other than NYSE OpenBook and 
have customers that are interested in subscribing to NYSE BQT but 
cannot do so until their Redistributor also subscribes. This proposed 
rule change therefore demonstrates the existence of an effective, 
competitive market because this proposal resulted from a need to 
generate innovative approaches in response to competition from other 
exchanges that offer market data for a specific segment of market 
participants.
---------------------------------------------------------------------------

    \50\ See e.g., Securities Exchange Act Release No. 83751 (July 
31, 2018), 83 FR 38428 (August 6, 2018) (SR-NASDAQ-2018-058) (Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To 
Lower Fees and Administrative Costs for Distributors of Nasdaq 
Basic, Nasdaq Last Sale, NLS Plus and the Nasdaq Depth-of-Book 
Products Through a Consolidated Enterprise License). Nasdaq filed 
the proposed fee change to lower the Enterprise Fee for Nasdaq Basic 
and other market data products in response to the Enterprise Fee for 
the Cboe One Feed adopted by Cboe family of exchanges.
---------------------------------------------------------------------------

    For all of the foregoing reasons, the Exchange believes that the 
proposed fees are reasonable.
The Proposed Fees Are Equitably Allocated
    The Exchange believes the proposed expansion of the Per User Access 
Fee is allocated fairly and equitably among the various categories of 
users of the Exchange's market data feed, and any differences among 
categories of users are justified.
    Overall. As noted above, this proposed fee change is a result of 
the competitive environment for market data products that provide 
indicative pricing information across a family of exchanges. To respond 
to this competitive environment, the Exchange seeks to expand the 
application of the Per User Access Fee for Redistributors that would be 
subscribing to the NYSE BBO, NYSE Trades and NYSE OpenBook data feeds 
and would use these market data products for external distribution 
only, which the Exchange hopes will attract new Redistributor 
subscribers for the NYSE BQT market data product so that the product 
can be made available to prospective market data recipients. The 
Exchange is proposing to expand the application of the reduced Per User 
Access Fee to make the Exchange's fees more competitive for a specific 
segment of market participants, thereby increasing the availability of 
the Exchange's data products, expanding the options available to firms 
making data purchasing decisions based on their business needs, and 
generally increasing competition.
    Access Fee. The Exchange believes that making the Per User Access 
Fee available to Redistributors that would be subscribing to the NYSE 
BBO, NYSE Trades and NYSE OpenBook data feeds and would use these 
market data products for external distribution only is equitable as the 
reduced fee would apply equally to all data recipients that choose to 
subscribe to NYSE BBO, NYSE Trades and NYSE OpenBook for external 
distribution only. Because NYSE BBO, NYSE Trades and NYSE OpenBook are 
optional products, any data recipient could choose to subscribe to such 
data feeds to distribute externally and be eligible for the Per User 
Access Fee. The Exchange does not believe that it is inequitable that 
the Per User Access Fee would be available only to data recipients that 
subscribe to

[[Page 81510]]

NYSE BBO, NYSE Trades and NYSE OpenBook and only for external 
distribution. Internal use of data represents a different set of use 
cases than a Redistributor that is engaged only in external 
distribution of data. For example, non-display data can be used by data 
recipients for a wide variety of profit-generating purposes, including 
proprietary and agency trading and smart order routing, as well as by 
data recipients that operate order matching and execution platforms 
that compete directly with the Exchange for order flow. The data also 
can be used for a variety of non-trading purposes that indirectly 
support trading, such as risk management and compliance. Although some 
of these non-trading uses do not directly generate revenues, they can 
nonetheless substantially reduce the recipient's costs by automating 
such functions so that they can be carried out in a more efficient and 
accurate manner and reduce errors and labor costs, thereby benefiting 
end users. The Exchange believes that charging a different access fee 
for a Redistributor that is engaged solely in external distribution of 
only the NYSE BBO, NYSE Trades and NYSE OpenBook products is equitable 
because it would make NYSE BQT available to more data recipients that 
are customers of such Redistributors and who would not otherwise be 
able to access NYSE BQT if their Redistributor did not subscribe to and 
redistribute NYSE BQT.
    For all of the foregoing reasons, the Exchange believes that the 
proposed fees for the NYSE market data products are equitably 
allocated.
The Proposed Fees Are Not Unfairly Discriminatory
    The Exchange believes the proposed fees are not unfairly 
discriminatory because any differences in the application of the fees 
are based on meaningful distinctions between customers, and those 
meaningful distinctions are not unfairly discriminatory between 
customers.
    Overall. As noted above, this proposed fee change is a result of 
the competitive environment for market data products that provide 
indicative pricing information across a family of exchanges. To respond 
to this competitive environment, the Exchange seeks to amend its fees 
to provide a financial incentive for Redistributors of NYSE OpenBook 
that do not currently subscribe to any NYSE market data products that 
decide to subscribe to NYSE BQT, which the Exchange hopes will attract 
more subscribers for the NYSE BQT market data product. The Exchange is 
proposing to expand the application of the Per User Access Fee to make 
the Exchange's fees more competitive for a specific segment of market 
participants, thereby increasing the availability of the Exchange's 
data products, expanding the options available to firms making data 
purchasing decisions based on their business needs, and generally 
increasing competition.
    Access Fee. The Exchange believes that making the Per User Access 
Fee available to Redistributors that would be subscribing to the NYSE 
BBO, NYSE Trades and NYSE OpenBook data feeds and would use these 
market data products for external distribution only is not unfairly 
discriminatory as the reduced fee would apply equally to all 
Redistributors that choose to subscribe to NYSE BBO, NYSE Trades and 
NYSE OpenBook for external distribution only. Because NYSE BBO, NYSE 
Trades and NYSE OpenBook are optional products, any data recipient 
could choose to subscribe to such data feeds to distribute externally 
and be eligible for the Per User Access Fee. The Exchange does not 
believe that it is unfairly discriminatory that the Per User Access Fee 
would be available only to data recipients that subscribe to NYSE BBO, 
NYSE Trades and NYSE OpenBook and only for external distribution. 
Internal use of data represents a different set of use cases than a 
Redistributor that is engaged only in external distribution of data. 
For example, non-display data can be used by data recipients for a wide 
variety of profit-generating purposes, including proprietary and agency 
trading and smart order routing, as well as by data recipients that 
operate order matching and execution platforms that compete directly 
with the Exchange for order flow. The data also can be used for a 
variety of non-trading purposes that indirectly support trading, such 
as risk management and compliance. While some of these non-trading uses 
do not directly generate revenues, they can nonetheless substantially 
reduce the recipient's costs by automating such functions so that they 
can be carried out in a more efficient and accurate manner and reduce 
errors and labor costs, thereby benefiting end users. The Exchange 
therefore believes that there is a meaningful distinction between 
internal use and redistribution of market data and that charging a 
different access fee to a Redistributor that is engaged solely in 
external distribution of only the NYSE BBO, NYSE Trades and NYSE 
OpenBook products is not unfairly discriminatory because it would make 
NYSE BQT available to more data recipients that are customers of such 
Redistributors and who would not otherwise be able to access NYSE BQT 
if their Redistributor did not subscribe to and redistribute NYSE BQT.
    Moreover, the Exchange does not believe that it is unfairly 
discriminatory to offer the Per User Access Fee only to those 
Redistributors that would subscribe to the NYSE BBO, NYSE Trades and 
NYSE OpenBook data feeds, and only for external distribution. This 
proposed rule change is designed to provide an incentive for 
Redistributors that currently subscribe to NYSE OpenBook, but do not 
subscribe to NYSE BQT, and may have customers that are interested in 
subscribing to NYSE BQT, to subscribe to the NYSE BBO and NYSE Trades 
data feeds so that they can make NYSE BQT available to their customers. 
This fee incentive is not necessary for Redistributors that currently 
subscribe to the NYSE BBO and NYSE Trades data feeds because such 
Redistributors could already subscribe to NYSE BQT, but have chosen not 
to, and a reduction in their existing access fees would likely not 
result in such Redistributors choosing to subscribe to NYSE BQT.
    For all of the foregoing reasons, the Exchange believes that the 
proposed fees are 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. Indeed, as demonstrated 
above, the Exchange believes the proposed rule changes are pro-
competitive.
    Intramarket Competition. The Exchange believes that the proposed 
fees do not put any market participants at a relative disadvantage 
compared to other market participants. As noted above, the proposed fee 
schedule would apply to all subscribers of NYSE market data products, 
and customers may not only choose whether to subscribe to the products 
at all, but also may tailor their subscriptions to include only the 
products and uses that they deem suitable for their business needs. The 
Exchange also believes that the proposed fees neither favor nor 
penalize one or more categories of market participants in a manner that 
would impose an undue market on competition. As shown above, to the 
extent that particular proposed fees apply to only a subset of 
subscribers, those distinctions are not unfairly discriminatory and do 
unfairly burden one set of customers over another.

[[Page 81511]]

    Intermarket Competition. The Exchange believes that the proposed 
fees do not impose a burden on competition on other exchanges that is 
not necessary or appropriate; indeed, the Exchange believes the 
proposed fee changes would have the effect of increasing competition. 
As described above, exchanges are platforms for market data and 
trading. In setting the proposed fees, the Exchange is constrained by 
the availability of substitute platforms also offering market data 
products and trading, and low barriers to entry mean new exchange 
platforms are frequently introduced. The fact that exchanges are 
platforms ensures that no exchange can make pricing decisions for one 
side of its platform without considering, and being constrained by, the 
effects that price will have on the other side of the platform. In 
setting fees at issue here, the Exchange is constrained by the fact 
that, if its pricing across the platform is unattractive to customers, 
customers will have its pick of an increasing number of alternative 
platforms to use instead of the Exchange. Given this intense 
competition between platforms, no one exchange's market data fees can 
impose an unnecessary burden on competition, and the Exchange's 
proposed fees do not do so here.
    In addition, the Exchange believes that the proposed fees do not 
impose a burden on competition or on other exchanges that is not 
necessary or appropriate because of the availability of numerous 
substitute market data products. Specifically, as described above, NYSE 
BQT competes head-to-head with the Nasdaq Basic product and the Cboe 
One Feed. These products each serve as reasonable substitutes for one 
another as they are each designed to provide investors with a unified 
view of real-time quotes and last-sale prices in all Tape A, B, and C 
securities. Each product provides subscribers with consolidated top-of-
book quotes and trades from multiple U.S. equities markets. NYSE BQT 
provides top-of-book quotes and trades data from five NYSE-affiliated 
U.S. equities exchanges, while Cboe One Feed similarly provides top-of-
book quotes and trades data from Cboe's four U.S. equities exchanges. 
NYSE BQT, Nasdaq Basic, and Cboe One Feed are all intended to provide 
indicative pricing and therefore, are reasonable substitutes for one 
another. Additionally, market data vendors are also able to offer close 
substitutes to NYSE BQT. Because market data users can find suitable 
substitute feeds, an exchange that overprices its market data products 
stands a high risk that users may substitute another source of market 
data information for its own. These competitive pressures ensure that 
no one exchange's market data fees can impose an unnecessary burden on 
competition, and the Exchange's proposed fees do not do so here.

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 has become effective upon filing pursuant 
to Section 19(b)(3)(A) \51\ of the Act and paragraph (f) of Rule 19b-4 
thereunder.\52\ At any time within 60 days of the filing of the 
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.
---------------------------------------------------------------------------

    \51\ 15 U.S.C. 78s(b)(3)(A).
    \52\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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 Comments

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#047671686129676b6969616a7077447761672a636b72"><span class="__cf_email__" data-cfemail="e795928b82ca84888a8a82899394a7948284c9808891">[email protected]</span></a>. Please include 
file number SR-NYSE-2023-42 on the subject line.

Paper Comments

    <bullet> Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number SR-NYSE-2023-42. 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 (https://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 
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. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NYSE-2023-42 and should be 
submitted on or before December 13, 2023.
---------------------------------------------------------------------------

    \53\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\53\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-25788 Filed 11-21-23; 8:45 am]
BILLING CODE 8011-01-P


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