31484 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Notices 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the self-regulatory organization 

to submit to the Commission written notice of its 

intent to file the proposed rule change, along with 

a brief description and text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. 

12 17 CFR 200.30–3(a)(12) and 200.30–3(a)(44). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 61937 

(April 16, 2010), 75 FR 21378. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change: (i) Does not significantly affect 

the protection of investors or the public 

interest; (ii) does not impose any 

significant burden on competition; and 

(iii) by its terms, does not become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 10 and Rule 19b– 

4(f)(6) thereunder.11

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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. 

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 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEAmex–2010–44 on 

the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEAmex–2010–44. This 

file number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 

10 a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number 

SR–NYSEAmex–2010–44 and should be 

submitted on or before June 24, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–13339 Filed 6–2–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62188; File No. SR– 

NYSEArca–2010–23] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Approving Proposed 

Rule Change To Modify the Fees for 

NYSE Arca Trades, To Establish the 

NYSE Arca BBO Service and Related 

Fees, and To Provide an Alternative 

Unit-of-Count Methodology for Those 

Services 

May 27, 2010. 

I. Introduction 

On April 1, 2010, the NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or the ‘‘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 modify fees for NYSE Arca 

Trades and to establish the NYSE Arca 

BBO service and related fees. The 

proposed rule change was published for 

comment in the Federal Register on 

April 23, 2010.3 The Commission 

received no comment letters on the 

proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

NYSE Arca proposes: (i) To establish 

NYSE Arca BBO, a service that will 

make available the Exchange’s best bids 

and offers; (ii) to establish fees for NYSE 

Arca BBO; (iii) to modify the 

professional subscriber fees for NYSE 

Arca Trades; and (iv) to provide an 

alternative unit-of-count methodology to 

the traditional device fee for NYSE Arca 

Trades and NYSE Arca BBO. 

a. Service 

NYSE Arca BBO is a NYSE Arca-Only 

market data service that allows a vendor 

to redistribute on a real-time basis the 

same best-bid-and-offer information that 

NYSE Arca reports under the CQ Plan 

and the Nasdaq/UTP Plan for inclusion 

in the NYSE Arca BBO Information. 

NYSE Arca BBO Information would 

include the best bids and offers for all 

securities that are traded on the 

Exchange and for which NYSE Arca 

reports quotes under the CQ Plan or the 

Nasdaq/UTP Plan. NYSE Arca will 

make the NYSE Arca BBO available over 

a single datafeed, regardless of the 

markets on which the securities are 

listed. 

NYSE Arca BBO would allow 

vendors, broker-dealers, private network 

providers and other entities (‘‘NYSE 

Arca-Only Vendors’’) to make available 

NYSE Arca BBO Information on a realtime basis. NYSE Arca-Only Vendors 

may distribute the NYSE Arca BBO to 

both professional and nonprofessional 

subscribers. The Exchange would make 

NYSE Arca BBO Information available 

through NYSE Arca BBO Service no 

earlier than it makes that information 

available to the processor under the CQ 

Plan or the Nasdaq/UTP Plan, as 

applicable. 

b. Fees 

i. Access Fee 

NYSE Arca currently charges $750 for 

access to the NYSE Arca Trades. The 

Exchange proposes to charge $750 per 

month for the receipt and use of NYSE 

Arca BBO and NYSE Acra Trades. One 

$750 monthly access fee entitles an 

NYSE Arca-Only Vendor to receive 

NYSE Arca BBO and NYSE Arca Trades 

(collectively, ‘‘NYSE Arca Market Data’’). 


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4See Securities Exchange Act Release No. 62038 

(May 5, 2010), 75 FR 26825 (May 12, 2010) (SR– 

NYSE–2010–22) (approving on a permanent basis 

the alternative unit-of-count methodology). 

The fee applies to receipt of NYSE Arca 

Market Data within the NYSE Arca-Only 

Vendor’s organization or outside of it. 

ii. Professional Subscriber Fee 

The Exchange currently charges two 

professional subscriber fees for the 

NYSE Arca Trades Service: (i) A $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; and (ii) 

$5 per month per display device for the 

receipt and use of NYSE Arca Last Sale 

Information relating to securities listed 

on Nasdaq. The Exchange proposes to 

set the professional subscriber fee for 

the NYSE Arca Trades at $10.00. This 

fee would entitle professional 

subscribers to receive NYSE Arca Last 

Sale Information relating to all 

securities for which last sale 

information is reported under the CTA 

Plan and the Nasdaq/UTP Plan. For the 

receipt and use of NYSE Arca BBO, the 

Exchange proposes to charge $10 per 

month per professional subscriber 

device. 

For both NYSE Arca Trades and 

NYSE Arca BBO, the Exchange proposes 

to offer an alternative methodology to 

the traditional device fee. Instead of 

charging $10 per month per device, it 

proposes to offer NYSE Arca-Only 

Vendors the option of paying $10 per 

month per ‘‘Subscriber Entitlement.’’ 

The fee entitles the end-user to receive 

and use NYSE Arca Market Data relating 

to all securities traded on NYSE Arca, 

regardless of the market on which a 

security is listed. For the purpose of 

calculating Subscriber Entitlements, the 

Exchange proposes to adopt a unit-ofcount methodology that is the same as 

that approved by the Commission 

earlier this year with respect to the 

NYSE OpenBook® service.4

Under the unit-of-count methodology, 

the Exchange would not define the 

Vendor-subscriber relationship based on 

the manner in which a datafeed 

recipient or subscriber receives data 

(i.e., through controlled displays or 

through data feeds). Instead, the 

Exchange would use billing criteria that 

define ‘‘Vendors,’’ ‘‘Subscribers,’’ 

‘‘Subscriber Entitlements’’ and 

‘‘Subscriber Entitlement Controls’’ as the 

basis for setting professional subscriber 

fees. The Exchange believes that this 

methodology more closely aligns with 

current data consumption and will 

reduce costs for the Exchange’s 

customers. 

The following basic principles 

underlie this proposal. 

A. Vendors 

• ‘‘Vendors’’ are market data vendors, 

broker-dealers, private network 

providers and other entities that control 

Subscribers’ access to data through 

Subscriber Entitlement Controls. 

B. Subscribers 

• ‘‘Subscribers’’ are unique individual 

persons or devices to which a Vendor 

provides data. Any person or device that 

receives data from a Vendor is a 

Subscriber, whether the person or 

device works for or belongs to the 

Vendor, or works for or belongs to an 

entity other than the Vendor. 

• Only a Vendor may control 

Subscriber access to data. 

• Subscribers may not redistribute 

data in any manner. 

C. Subscriber Entitlements 

• A Subscriber Entitlement is a 

Vendor’s permissioning of a Subscriber 

to receive access to data through an 

Exchange-approved Subscriber 

Entitlement Control. 

• A Vendor may not provide data 

access to a Subscriber except through a 

unique Subscriber Entitlement. 

• The Exchange will require each 

Vendor to provide a unique Subscriber 

Entitlement to each unique Subscriber. 

• At prescribed intervals (normally 

monthly), the Exchange will require 

each Vendor to report each unique 

Subscriber Entitlement. 

D. Subscriber Entitlement Controls 

• A Subscriber Entitlement Control is 

the Vendor’s process of permissioning 

Subscribers’ access to data. 

• Prior to using any Subscriber 

Entitlement Control or changing a 

previously approved Subscriber 

Entitlement Control, a Vendor must 

provide the Exchange with a 

demonstration and a detailed written 

description of the control or change and 

the Exchange must have approved it in 

writing. 

• The Exchange will approve a 

Subscriber Entitlement Control if it 

allows only authorized, unique endusers or devices to access data or 

monitors access to data by each unique 

end-user or device. 

• Vendors must design Subscriber 

Entitlement Controls to produce an 

audit report and make each audit report 

available to the Exchange upon request. 

The audit report must identify: 

1. Each entitlement update to the 

Subscriber Entitlement Control; 

2. The status of the Subscriber 

Entitlement Control; and 

3. Any other changes to the 

Subscriber Entitlement Control over a 

given period. 

• Only the Vendor may have access to 

Subscriber Entitlement Controls. 

Subject to the rules described below, 

the Exchange will require NYSE ArcaOnly Vendors to count every Subscriber 

Entitlement, whether it be a person or 

a device. This means that the NYSE 

Arca-Only Vendor must include in the 

count every person and device that has 

access to the data, regardless of the 

purposes for which the person or device 

uses the data. The Exchange will require 

NYSE Arca-Only Vendors to report and 

count all entitlements in accordance 

with the following rules. 

A. The count shall be separate for the 

NYSE Arca Trades and NYSE Arca BBO 

services. This means that a device that 

is entitled to receive both NYSE Arca 

Last Sale Information and NYSE Arca 

BBO Information would count as a 

Subscriber Entitlement for the purposes 

of the NYSE Amex Trades service and 

as a separate Subscriber Entitlement for 

the purposes of the NYSE Amex BBO 

service. 

B. In connection with a Vendor’s 

external distribution of either NYSE 

Arca Trades or NYSE Arca BBO, the 

NYSE Arca-Only Vendor should count 

as one Subscriber Entitlement each 

unique Subscriber that the NYSE ArcaOnly Vendor has entitled to have access 

to that type of market data. However, 

where a device is dedicated specifically 

to a single person, the NYSE Arca-Only 

Vendor should count only the person 

and need not count the device. 

C. In connection with a NYSE ArcaOnly Vendor’s internal distribution of a 

type of NYSE Arca Market Data, the 

NYSE Arca-Only Vendor should count 

as one Subscriber Entitlement each 

unique person (but not devices) that the 

Vendor has entitled to have access to 

that type of market data. 

D. The NYSE Arca-Only Vendor 

should identify and report each unique 

Subscriber. If a Subscriber uses the same 

unique Subscriber Entitlement to 

receive multiple services, the NYSE 

Arca-Only Vendor should count that as 

one Subscriber Entitlement. However, if 

a unique Subscriber uses multiple 

Subscriber Entitlements to gain access 

to one or more services (e.g., a single 

Subscriber has multiple passwords and 

user identifications), the Vendor should 

report all of those Subscriber 

Entitlements. 

E. The NYSE Arca-Only Vendor 

should report each Subscriber device 

serving multiple users individually as 

well as each person who may access the 

device. As an example, for a single 

device to which the NYSE Arca-Only 


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5The Exchange stated that it did not propose to 

establish a nonprofessional subscriber fee for NYSE 

Arca Last Sale Information because an alternative 

to that product is available. See Securities Exchange 

Act Release No. 61404 (January 22, 2010), 75 FR 

5363 (February 2, 2010) (SR–NYSEArca–2009–108) 

(approving the NYSE Arca Realtime Reference 

Prices service). 

6 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). 

Vendor has granted two people access, 

the Vendor should report three 

Subscriber Entitlements. Only a single, 

unique device that is dedicated to a 

single, unique person may be counted as 

one Subscriber Entitlement. 

F. NYSE Arca-Only Vendors should 

report each unique person who receives 

access through multiple devices as one 

Subscriber Entitlement so long as each 

device is dedicated specifically to that 

person. 

G. The NYSE Arca-Only Vendor 

should include in the count as one 

Subscriber Entitlement devices serving 

no users. 

For example, if a Subscriber’s device 

has no users or multiple users, the 

NYSE Arca-Only Vendor should count 

that device as one Subscriber 

Entitlement. If a NYSE Arca-Only 

Vendor entitles five individuals to use 

one of a Subscriber’s devices, the 

Vendor should count five individual 

entitlements and one device 

entitlement, for a total of six Subscriber 

Entitlements. If a NYSE Arca-Only 

Vendor entitles an individual to receive 

a type of NYSE Arca Market Data over 

a Subscriber device that is dedicated to 

that individual, the Vendor should 

count that as one Subscriber 

Entitlement, not two. 

iii. Nonprofessional Subscriber Fee 

The Exchange proposes to charge each 

NYSE Arca-Only Vendor $5.00 per 

month for each nonprofessional 

subscriber to whom it provides NYSE 

Arca BBO Information. The Exchange 

proposes to impose the charge on the 

NYSE Arca-Only Vendor, rather than on 

the nonprofessional Subscriber.5 In 

addition, the Exchange proposes to 

establish as an alternative to the fixed 

$5.00 monthly fee a fee of $.005 for each 

response that a NYSE Arca-Only Vendor 

disseminates to a nonprofessional 

Subscriber’s inquiry for a best bid or 

offer under NYSE Arca BBO. The 

Exchange proposes to limit a NYSE 

Arca-Only Vendor’s exposure under this 

alternative fee to $5.00 per month, the 

same amount as the proposed fixed 

monthly nonprofessional Subscriber flat 

fee. In order to take advantage of the 

per-query fee, a NYSE Arca-Only 

Vendor must document in its Exhibit A 

that it can: (1) Accurately measure the 

number of queries from each 

nonprofessional Subscriber and (2) 

report aggregate query quantities on a 

monthly basis. 

The Exchange will impose the perquery fee only on the dissemination of 

best bids and offers to nonprofessional 

Subscribers. The per-query charge is 

imposed on NYSE Arca-Only Vendors, 

not end-users, and is payable on a 

monthly basis. NYSE Arca-Only 

Vendors may elect to disseminate NYSE 

Arca BBO pursuant to the per-query fee 

rather than the fixed monthly fee. 

In establishing a nonprofessional 

Subscriber fee for NYSE Arca BBO, the 

Exchange proposes to apply the same 

criteria for qualification as a 

‘‘nonprofessional subscriber’’ as the CTA 

and CQ Plan Participants use. Similar to 

the CTA and CQ Plans, classification as 

a nonprofessional subscriber is subject 

to Exchange review and requires the 

subscriber to attest to his or her 

nonprofessional subscriber status. A 

nonprofessional subscriber is a natural 

person who uses the data solely for his 

personal, non-business use and who is 

neither: 

A. Registered or qualified with the 

Securities and Exchange Commission, 

the Commodities Futures Trading 

Commission, any State securities 

agency, any securities exchange or 

association, or any commodities or 

futures contract market or association, 

B. Engaged as an ‘‘investment adviser’’ 

as that term is defined in Section 

202(a)(11) of the Investment Advisors 

Act of 1940 (whether or not registered 

or qualified under that act), nor 

C. Employed by a bank or other 

organization exemption from 

registration under Federal and/or State 

securities laws to perform functions that 

would require him/her to be so 

registered or qualified if he/she were to 

perform such function for an 

organization not so exempt. 

The Exchange believes that the 

proposed monthly access fee, 

professional subscriber fee and 

nonprofessional subscriber fee for NYSE 

Arca Trades and NYSE Arca BBO enable 

NYSE Arca-Only Vendors and their 

subscribers to contribute to the 

Exchange’s operating costs in a manner 

that is appropriate for the distribution of 

NYSE Arca Market Data in the form 

taken by the proposed services. 

In setting the level of the proposed 

fees, the Exchange considered several 

factors, including: 

(i) NYSE Arca’s expectation that 

NYSE Arca Trades and NYSE Arca BBO 

are likely to be premium services, used 

by investors most concerned with 

receiving NYSE Arca Market Data on a 

low latency basis; 

(ii) The fees that the CTA and CQ Plan 

Participants, the Nasdaq/UTP Plan 

Participants, Nasdaq, NYSE and NYSE 

Amex are charging for similar services 

(or that NYSE Arca anticipates they will 

soon propose to charge); 

(iii) Consultation with some of the 

entities that the Exchange anticipates 

will be the most likely to take advantage 

of the proposed service; 

(iv) The contribution of market data 

revenues that the Exchange believes is 

appropriate for entities that are most 

likely to take advantage of the proposed 

service; 

(v) The contribution that revenues 

accruing from the proposed fee will 

make to meet the overall costs of the 

Exchange’s operations; 

(vi) The savings in administrative and 

reporting costs that the NYSE Arca 

Trades and NYSE Arca BBO will 

provide to NYSE Arca-Only Vendors 

(relative to counterpart services under 

the CTA, CQ and Nasdaq/UTP Plans); 

and 

(vii) The fact that the proposed fees 

provide alternatives to existing fees 

under the CTA, CQ and Nasdaq/UTP 

Plans, alternatives that vendors will 

purchase only if they determine that the 

perceived benefits outweigh the cost. 

d. Administrative Requirements 

The Exchange will require each NYSE 

Arca-Only Vendor to enter into a vendor 

agreement just as the CTA and CQ Plans 

require recipients of the Network A 

datafeeds to enter (the ‘‘Consolidated 

Vendor Form’’). The agreement will 

authorize the NYSE Amex-Only Vendor 

to provide its NYSE Arca Market Data 

service to its customers or to distribute 

the data internally. 

In addition, the Exchange will require 

each professional end-user that receives 

NYSE Arca Market Data from a vendor 

or broker-dealer to enter into the form 

of professional subscriber agreement 

into which the CTA and CQ Plans 

require end users of Network A data to 

enter. It will also require NYSE AmexOnly Vendors to subject 

nonprofessional subscribers to the same 

contract requirements as the CTA and 

CQ Plan Participants require of Network 

A nonprofessional subscribers. 

III. Discussion 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.6 In 

particular, it is consistent with Section 


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7 15 U.S.C. 78f(b)(4). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78f(b)(8). 

10 17 CFR 242.603(a). 

11NYSE Arca is an exclusive processor of the 

NYSE Arca Trades and NYSE Arca BBO services 

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. 

12Securities Exchange Act Release No. 59039 

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

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

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

describes in great detail the competitive factors that 

apply to non-core market data products. The 

Commission hereby incorporates by reference the 

data and analysis from the NYSE Arca Order into 

this order. 

13 Id. at 74771. 

14 Id. at 74782. 

15 Id. at 74781. 

16See 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.’’). 

17See NYSE Arca Order at 74779. 

18 Id. 

19 Id. 

20The Commission recently published estimated 

trading percentages in NMS Stocks in its Concept 

Release on Equity Market Structure. See Securities 

Exchange Act Release No. 61358 (January 14, 2010), 

75 FR 3594, 3597 n. 21 (January 21, 2010) (File No. 

S7–02–10). 

6(b)(4) of the Act,7 which requires that 

the rules of a national securities 

exchange provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

issuers and other parties using its 

facilities, and Section 6(b)(5) of the 

Act,8 which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest, and 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

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

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

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.16 In 

contrast, individual exchanges and 

other market participants distribute 

non-core data voluntarily.17 The 

mandatory nature of the core data 

disclosure regime leaves little room for 

competitive forces to determine 

products and fees.18 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 603.19 Because NYSE Arca’s 

instant proposal relates to the 

distribution of non-core data, the 

Commission will apply the marketbased approach set forth in the NYSE 

Arca Order. 

The Exchange proposes to establish a 

service that would allow a vendor to 

redistribute best bids and offers for all 

securities that are traded on the 

Exchange and for which NYSE Amex 

reports quotes under the CQ Plan. The 

Exchange proposes to establish a 

monthly vendor fee and an alternative 

fee rate that uses the unit-of-count 

methodology. In addition, the Exchange 

proposes to modify the professional 

subscriber fees and to establish an 

alternative fee rate that uses the unit-ofcount methodology for NYSE Arca 

Trades. 

The proposal before the Commission 

relates to fees for NYSE Amex Trades 

and NYSE Amex BBO which are noncore, market data products. As in the 

Commission’s NYSE Arca Order 

analysis, at least two broad types of 

significant competitive forces applied to 

NYSE Amex in setting the terms of this 

proposal: (i) NYSE Amex’s compelling 

need to attract order flow from market 

participants; and (ii) the availability to 

market participants of alternatives to 

purchasing NYSE Amex Market Data. 

Attracting order flow is the core 

competitive concern of any equity 

exchange, including NYSE Arca. 

Attracting order flow is an essential part 

of NYSE Arca’s competitive success. If 

NYSE Arca cannot attract order flow to 

its market, it will not be able to execute 

transactions. If NYSE Arca cannot 

execute transactions on its market, it 

will not generate transaction revenue. If 

NYSE Arca cannot attract orders or 

execute transactions on its market, it 

will not have market data to distribute, 

for a fee or otherwise, and will not earn 

market data revenue and thus not be 

competitive with other exchanges that 

have this ability. Table 1 below provides 

a useful recent snapshot of the state of 

competition in the U.S. equity markets 

in the month of September 2009: 20

TABLE 1—TRADING CENTERS AND ESTIMATED % OF SHARE VOLUME IN

NMS STOCKS SEPTEMBER 2009 

Trading venue 

Share volume in NMS 

stocks 

(percent) 

Registered Exchanges: 

NASDAQ ............................... 19.4 

NYSE .................................... 14.7 

NYSE Arca ............................ 13.2 

BATS ..................................... 9.5 

NASDAQ OMX BX ................ 3.3 

Other Registered Exchanges 3.7 

ECNs: 

5 ECNS ................................. 10.8 

Dark Pools: 

32 Dark Pools (Estimated) .... 7.9 

Broker-Dealer Internalization: 


sroberts on DSKD5P82C1PROD with NOTICES
31488 Federal Register / Vol. 75, No. 106 / Thursday, June 3, 2010 / Notices 

21See NYSE Arca Order at 74783. 

22See 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 Railway Co. v. U.S., 356 

U.S. 1 (1958). 

23See NYSE Arca Order at 74783. 

24 Id. 

25 Id. 

26 15 U.S.C. 78s(b)(2). 

27 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. 61914 

(April 15, 2010), 75 FR 21077. 

TABLE 1—TRADING CENTERS AND ESTIMATED % OF SHARE VOLUME IN

NMS STOCKS SEPTEMBER 2009— 

Continued 

Trading venue 

Share volume in NMS 

stocks 

(percent) 

200+ Broker-Dealers (Estimated) ............................... 17.5 

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. 

This compelling 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 seeks to charge unreasonably high 

data fees would risk alienating many of 

the same customers on whose orders it 

depends for competitive survival.21

In addition to the need to attract order 

flow, the availability of alternatives to 

NYSE Arca Market Data significantly 

affect the terms on which NYSE Arca 

can distribute this market data.22 In 

setting the fees for NYSE Arca Market 

Data, NYSE Arca must consider the 

extent to which market participants 

would choose one or more alternatives 

instead of purchasing the exchange’s 

data.23 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.24 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.25 The 

various self-regulatory organizations, 

the several Trade Reporting Facilities of 

FINRA, and ECNs that produce 

proprietary data are all sources of 

competition. 

In sum, there are a variety of 

alternative sources of information that 

impose significant competitive 

pressures on NYSE Arca in setting the 

terms for distributing its NYSE Arca 

Market Data. The Commission believes 

that the availability of those 

alternatives, as well as NYSE Amex’s 

compelling need to attract order flow, 

imposed significant competitive 

pressure on NYSE Amex 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. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,26 that the 

proposed rule change (SR–NYSEArca– 

2010–23) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–13334 Filed 6–2–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62181; File No. SR–NYSE– 

2010–30] 

Self-Regulatory Organizations; New 

York Stock Exchange, LLC; Order 

Approving Proposed Rule Change To 

Establish the NYSE BBO Service 

May 26, 2010. 

I. Introduction 

On April 1, 2010, the New York Stock 

Exchange, LLC (‘‘NYSE’’ or the 

‘‘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 

establish the NYSE BBO Service, a 

service that will make available the 

Exchange’s best bids and offers and to 

establish fees for that service. The 

proposed rule change was published for 

comment in the Federal Register on 

April 22, 2010.3 The Commission 

received no comment letters on the 

proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

a. Subscribers and Data Feed Recipients 

The NYSE BBO Service is a NYSEonly market data service that allows a 

vendor to redistribute on a real-time 

basis the same best-bid-and-offer 

information that NYSE reports under 

the CQ Plan for inclusion in the CQ 

Plan’s consolidated quotation 

information data stream (‘‘NYSE BBO 

Information’’). NYSE BBO Information 

would include the best bids and offers 

for all securities that are traded on the 

Exchange and for which NYSE reports 

quotes under the CQ Plan. NYSE will 

make the NYSE BBO Service available 

over a single datafeed, regardless of the 

markets on which the securities are 

listed. 

The NYSE BBO Service would allow 

vendors, broker-dealers, private network 

providers and other entities (‘‘NYSEOnly Vendors’’) to make NYSE BBO 

Information available on a real-time 

basis. NYSE-Only Vendors may 

distribute the NYSE BBO Service to 

both professional and nonprofessional 

subscribers. 

The Exchange would make NYSE 

BBO Information available through its 

new NYSE BBO Service no earlier than 


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