Federal Register / Vol. 74, No. 56 / Wednesday, March 25, 2009 / Notices 12919 

6 15 U.S.C. 78f(b)(4). 

7 15 U.S.C. 78f(b)(5). 

8See Notice, supra note 3. 

9 15 U.S.C. 78f(b)(4). In approving the proposed 

rule change, the Commission has considered the 

proposed rule’s impact in efficiency, competition 

and capital formation. See 15 U.S.C. 78c(f). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59308 

(January 28, 2009), 74 FR 5955 (February 3, 2009). 

4The Exchange does not currently perceive a 

demand for a nonprofessional subscriber fee for 

NYSE Arca Trades, but will monitor customer 

response. 

5See Securities Exchange Act Release No. 58444 

(August 29, 2008), 73 FR 51872 (September 5, 2008) 

(SR–NYSEArca–2008–96). 

III. Discussion and Commission’s 

Findings 

After careful review, 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. Specifically, the 

Commission finds that the proposal is 

consistent with Section 6(b)(4) of the 

Act,6 which requires, among other 

things, that the rules of an exchange 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among its members and issuers and 

other persons using its facilities. The 

Commission also finds that the proposal 

is consistent with Section 6(b)(5) of the 

Act,7 that an exchange have rules that 

are designed to remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, and are not designed to permit 

unfair discrimination between issuers. 

According to the Exchange, the 

existing $5,000 fee is unsuitable for 

Derivative Securities Products and 

Structured Products, because it is 

disproportionate in relation to the initial 

and continued listing fees for those 

securities.8 According to the Exchange, 

a $2,500 fee is more consistent with the 

pricing expectations of issuers for those 

securities. Accordingly, the Commission 

believes that the Exchange’s proposed 

fee is reasonable, given that it will be 

applied consistently to all listed 

securities in those classes and is 

consistent with the Exchange’s overall 

approach to pricing for Derivative 

Securities Products and Structured 

Products. 

Moreover, the Commission believes 

that charging a one time $2,500 

application fee for multiple issues of 

securities on a single application is 

appropriate in light of the general fee 

structure for such products. The 

Commission notes that the single fee for 

multiple issues of securities applies 

equally to all Derivative Securities 

Products and Structured Products. 

Finally, the Commission also believes 

that it is appropriate to delete an 

obsolete reference to a fee waiver that 

expired in 2007. 

For the foregoing reasons, the 

Commission agrees that the proposed 

rule change does not constitute an 

inequitable allocation of reasonable 

dues, fees and other charges and does 

not permit unfair discrimination 

between issuers, and is generally 

consistent with the Act.9

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–NYSEArca2009–03) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6464 Filed 3–24–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59598; File No. SR– 

NYSEArca–2009–05] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Approving Proposed 

Rule Change To Establish Fees for 

NYSE Arca Trades 

March 18, 2009. 

I. Introduction 

On January 21, 2009, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

to Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to introduce its NYSE Arca 

Trades service, a NYSE Arca-only 

market data service that allows a vendor 

to redistribute on a real-time basis the 

same last sale information that NYSE 

Arca reports to the Consolidated Tape 

Association (‘‘CTA’’) for inclusion in the 

CTA’s consolidated data stream and 

certain other related data elements 

(‘‘NYSE Arca Last Sale Information’’), 

and to establish fees for that service. 

The proposed rule change was 

published for comment in the Federal 

Register on February 3, 2009.3 The 

Commission received no comment 

letters on the proposal. This order 

approves the proposed rule change. 

II. Description of the Proposal 

The Exchange proposes to introduce 

NYSE Arca Trades, a new service 

pursuant to which it will allow vendors, 

broker-dealers, and others (‘‘NYSE ArcaOnly Vendors’’) to make available NYSE 

Arca Last Sale Information on a realtime basis. NYSE Arca Last Sale 

Information would include last sale 

information for all securities that are 

traded on the Exchange. The Exchange 

will make NYSE Arca Last Sale 

Information available through its new 

NYSE Arca Trades service at the same 

time as it provides last sale information 

to the processor under the CTA Plan. In 

addition to the information that the 

Exchange provides to CTA, NYSE Arca 

Last Sale Information will also include 

a unique sequence number that the 

Exchange assigns to each trade and that 

allows an investor to track the context 

of the trade through such other 

Exchange market data products as 

ArcaBook®. 

The Exchange proposes to charge 

$750 per month for access to each of the 

NYSE Arca Last Sale Information 

datafeeds that NYSE Arca makes 

available. The Exchange proposes to 

charge each subscriber to an NYSE 

Arca-Only Vendor’s NYSE Arca Trades 

service: $5 per month per display device 

for the receipt and use of NYSE Arca 

Last Sale Information relating to 

Network A and Network B Eligible 

Securities (as the CTA Plan uses those 

terms); and $5 per month per display 

device for the receipt and use of NYSE 

Arca Last Sale Information relating to 

securities listed on Nasdaq.4 The access 

fee applies equally to all NYSE ArcaOnly Vendors that receive the NYSE 

Arca Trades datafeed and the device fee 

applies equally to all subscribers that 

receive an NYSE Arca-Only Vendor’s 

NYSE Arca Trades service. The 

Exchange does not propose to impose 

any program classification charges for 

the use of NYSE Arca Trades. 

NYSE Arca represents that no 

investors or broker-dealers are required 

to subscribe to the product, as they can 

find the same NYSE Arca last sale prices 

either in the Exchange’s NYSE Arca 

Realtime Reference Prices service,5 or 

integrated with the prices that other 

markets make available under the CTA 

Plan. NYSE Arca anticipates that, even 

though NYSE Arca Trades’ Last Sale 

Information provides a less expensive 

alternative to the consolidated price 

information that investors and brokerdealers receive from CTA, the 

information that NYSE Arca contributes 

to the CTA consolidated datafeed and 


PWALKER on PROD1PC71 with NOTICES
12920 Federal Register / Vol. 74, No. 56 / Wednesday, March 25, 2009 / Notices 

6The latency difference between accessing last 

sales through the NYSE Arca datafeed or through 

the CTA datafeed can be measured in tens of 

milliseconds. 7See Securities Exchange Act Release Nos. 28407 

(September 6, 1990), 55 FR 37276 (September 10, 

1990); and 49185 (February 4, 2004), 69 FR 6704 

(February 11, 2004). 8 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

9 15 U.S.C. 78f(b)(4). 

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78f(b)(6). 

12 17 CFR 242.603(a). 

13NYSE Arca is an exclusive processor of NYSE 

Arca Trades 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. 

14See Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770 (December 9, 

2008) (SR-NYSEArca-2006-21) (‘‘NYSE Arca 

Oder’’). In the NYSE Arca Order, the Commission 

describes the competitive factors that apply to noncore market data products. The Commission hereby 

incorporates by reference the data and analysis from 

the NYSE Arca Order into this order. 

15 Id. at 74771. 

16 Id. at 74782. 

17 Id. at 74781. 

18See 17 CFR 242.603(b). (‘‘Every national 

securities exchange on which an NMS stock is 

traded and national securities association shall act 

jointly pursuant to one or more effective national 

market system plans to disseminate consolidated 

information, including a national best bid and 

national best offer, on quotations for and 

transactions in NMS stocks. Such plan or plans 

shall provide for the dissemination of all 

consolidated information for an individual NMS 

stock through a single plan processor.’’). 

19Source: ArcaVision (available at http:// 

www.arcavision.com). 

the low latency of the CTA datafeed will 

continue to satisfy the needs of the vast 

majority of individual and professional 

investors. The Exchange developed 

NYSE Arca Trades primarily at the 

request of traders who are very latency 

sensitive and anticipates that demand 

for the product will derive primarily 

from investors and broker-dealers who 

desire to use NYSE Arca Trades to 

power certain trading algorithms or 

smart order routers.6

The Exchange will require NYSE 

Arca-Only Vendors to enter into the 

form of ‘‘vendor’’ agreement into which 

the CTA Plan requires recipients of the 

Network A last sale prices information 

datafeeds to enter (the ‘‘Network A 

Vendor Form’’). The Network A Vendor 

Form will authorize the NYSE ArcaOnly Vendor to provide the NYSE Arca 

Trades service to its subscribers and 

customers. The Network A Participants 

drafted the Network A Vendor Form, it 

is sufficiently generic to accommodate 

NYSE Arca Trades, and it has been in 

use in substantially the same form since 

1990.7 The Exchange will require 

professional and non-professional 

subscribers to NYSE Arca Trades to 

undertake to comply with the same 

contract, reporting, payment, and other 

administrative requirements as to which 

the Network A Participants subject them 

in respect of Network A last sale 

information under the CTA Plan. 

III. Discussion 

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.8 In particular, it is consistent 

with Section 6(b)(4) of the Act,9 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,10 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. 

The Commission also finds that the 

proposed rule change is consistent with 

the provisions of Section 6(b)(8) of the 

Act,11 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,12 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.13

The Commission has reviewed the 

proposal using the approach set forth in 

the NYSE Arca Order for non-core 

market data fees.14 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.’’ 15 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.’’ 16 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.’’ 17

As noted in the NYSE Arca Order, the 

standards in Section 6 of the Act and 

Rule 603 of Regulation NMS do not 

differentiate between types of data and 

therefore apply to exchange proposals to 

distribute both core data and non-core 

data. Core data is the best-priced 

quotations and comprehensive last-sale 

reports of all markets that the 

Commission, pursuant to Rule 603(b), 

requires a central processor to 

consolidate and distribute to the public 

pursuant to joint-SRO plans.18 In 

contrast, individual exchanges and 

other market participants distribute 

non-core data voluntarily. The 

mandatory nature of the core data 

disclosure regime leaves little room for 

competitive forces to determine 

products and fees. Non-core data 

products and their fees are, by contrast, 

much more sensitive to competitive 

forces. The Commission therefore is able 

to use competitive forces in its 

determination of whether an exchange’s 

proposal to distribute non-core data 

meets the standards of Section 6 and 

Rule 603. Because NYSE Arca’s instant 

proposal relates to the distribution of 

non-core data, the Commission will 

apply the market-based approach set 

forth in the NYSE Arca Order. 

In the NYSE Arca Order, the 

Commission discussed two broad types 

of competitive forces that generally 

apply to exchanges in their distribution 

of a non-core data product—the need to 

attract order flow and the availability of 

data alternatives. These forces also 

applied to NYSE Arca in setting the 

terms of this proposal for the NYSE 

Arca Trades data product: (i) NYSE 

Arca’s compelling need to attract order 

flow from market participants; and (ii) 

the availability to market participants of 

alternatives to purchasing NYSE Arca’s 

data. 

Table 1 below provides a recent 

snapshot of the state of competition in 

the U.S. equity markets in the month of 

January 2009: 19


PWALKER on PROD1PC71 with NOTICES
Federal Register / Vol. 74, No. 56 / Wednesday, March 25, 2009 / Notices 12921 

20See NYSE Arca Order at 74784 nn. 218–219 

and accompanying text (noting exchange strategy of 

offering data for free as a means to gain visibility 

in the marketplace). 21See Richard Posner, Economic Analysis of Law 

§ 9.1 (5th ed. 1998) (discussing the theory of 

monopolies and pricing). See also U.S. Dep’t of 

Justice & Fed’l Trade Comm’n, Horizontal Merger 

Guidelines § 1.11 (1992), as revised (1997) 

(explaining the importance of alternatives to the 

presence of competition and the definition of 

markets and market power). Courts frequently refer 

to the Department of Justice and Federal Trade 

Commission merger guidelines to define product 

markets and evaluate market power. See, e.g., FTC 

v. Whole Foods Market, Inc., 502 F. Supp. 2d 1 

(D.D.C. 2007); FTC v. Arch Coal, Inc., 329 F. Supp. 

2d 109 (D.D.C. 2004). In considering antitrust 

issues, courts have recognized the value of 

competition in producing lower prices. See, e.g., 

Leegin Creative Leather Products v. PSKS, Inc., 127 

S. Ct. 2705 (2007); Atlanta Richfield Co. v. United 

States Petroleum Co., 495 U.S. 328 (1990); 

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 

475 U.S. 574 (1986); State Oil Co. v. Khan, 522 U.S. 

3 (1997); Northern Pacific Raliway Co. v. U.S., 356 

U.S. 1 (1958). 

22See NYSE Arca Order at 74783. 

23 Id. 

24 Id. 

25 15 U.S.C. 78s(b)(2). 

26 17 CFR 200.30–3(a)(12). 

TABLE 1 

[Reported Share Volume in U.S.-Listed Equities during January 2009 (%)] 

Trading venue All stocks NYSE-listed NASDAQlisted 

NASDAQ ...................................................................................................................................... 27.1 20.5 39.9 

All Non-Exchange ........................................................................................................................ 26.7 26.2 31.0 

NYSE Arca ................................................................................................................................... 17.9 15.7 15.8 

NYSE ........................................................................................................................................... 14.8 26.2 0.0 

BATS ............................................................................................................................................ 10.7 9.0 10.8 

International Stock Exchange ...................................................................................................... 1.3 1.4 1.4 

National Stock Exchange ............................................................................................................ 0.6 0.7 0.7 

Chicago Stock Exchange ............................................................................................................ 0.4 0.4 0.3 

CBOE Stock Exchange ............................................................................................................... 0.2 0.0 0.1 

NYSE Alternext ............................................................................................................................ 0.1 0.0 0.0 

NASDAQ OMX BX ...................................................................................................................... 0.0 0.0 0.0 

The market share percentages in Table 

1 strongly indicate that NYSE Arca must 

compete vigorously for order flow to 

maintain its share of trading volume. 

The need to attract order flow imposes 

significant pressure on NYSE Arca to act 

reasonably in setting its fees for NYSE 

Arca market data, particularly given that 

the market participants that must pay 

such fees often will be the same market 

participants from whom NYSE Arca 

must attract order flow. These market 

participants particularly include the 

large broker-dealer firms that control the 

handling of a large volume of customer 

and proprietary order flow. Given the 

portability of order flow from one 

trading venue to another, any exchange 

that sought to charge unreasonably high 

data fees would risk alienating many of 

the same customers on whose orders it 

depends for competitive survival. 

Moreover, distributing data widely 

among investors, and thereby promoting 

familiarity with the exchange and its 

services, is an important exchange 

strategy for attracting order flow.20

In addition to the need to attract order 

flow, the availability of alternatives to 

NYSE Arca Trades significantly affect 

the terms on which NYSE Arca can 

distribute this market data.21 In setting 

the fees for its NYSE Arca Trades, the 

Exchange must consider the extent to 

which market participants would 

choose one or more alternatives instead 

of purchasing the Exchange’s data.22 Of 

course, the most basic source of 

information generally available at an 

exchange is the complete record of an 

exchange’s transactions that is provided 

in the core data feeds.23 In this respect, 

the core data feeds that include an 

exchange’s own transaction information 

are a significant alternative to the 

exchange’s market data product.24

The various self-regulatory 

organizations, the several Trade 

Reporting Facilities of FINRA, and ECNs 

that produce proprietary data, as well as 

the core data feed, are all sources of 

competition in non-core data products. 

As Table 1 illustrates, share volume in 

U.S.-listed equities is widely dispersed 

among trading venues, and these venues 

are able to offer competitive data 

products as alternatives to NYSE Arca 

Trades. The Commission believes that 

the availability of those alternatives, as 

well as the NYSE Arca’s compelling 

need to attract order flow, imposed 

significant competitive pressure on the 

NYSE Arca to act equitably, fairly, and 

reasonably in setting the terms of its 

proposal. 

Because NYSE Arca 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. 

No comments were submitted on this 

proposal, and the Commission notes 

that the proposal does not unreasonably 

discriminate among types of users. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,25 that the 

proposed rule change (SR–NYSEArca– 

2009–05), be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.26

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6465 Filed 3–24–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59468; File No. SR– 

NYSEALTR–2009–16] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Alternext US LLC Amending Rule 

300.10T—NYSE Alternext Equities To 

Provide a Grace Period Under That 

Rule for Member Organizations That 

Have Applied for a Trading License To 

Comply With Certain Exchange Rules 

Correction 

In notice document E9–4678 

beginning on page 9651 in the issue of 

Thursday, March 5, 2009, make the 

following correction: 

On page 9654, in the first column, in 

the first paragraph, in the second line 

from the bottom, ‘‘March 25, 2009’’ 

should read ‘‘March 26, 2009’’. 

[FR Doc. Z9–4678 Filed 3–25–09; 8:45 am] 

BILLING CODE 1505–01–D 


PWALKER on PROD1PC71 with NOTICES