[Federal Register Volume 61, Number 112 (Monday, June 10, 1996)]
[Notices]
[Pages 29438-29444]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14590]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37273; File No. SR-NYSE-95-47]


Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change Relating to the 
Exclusion of Competing Market Maker Orders From Trading at No Charge

June 4, 1996.

I. Introduction

    On December 29, 1995, the New York Stock Exchange, Inc. (``NYSE'' 
or ``Exchange'') submitted to the Securities and Exchange Commission 
(``SEC'' or ``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 exclude orders of nonmember 
competing market makers from the NYSE's no charge provision for system 
orders of 100 to 2,099 shares.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on January 5, 1996.\3\ The Commission initially received a 
total of four comment letters opposing the proposal.\4\ On April 26, 
1996, the NYSE submitted its response to these comment letters.\5\ 
After receiving the NYSE's response, the Commission received four 
additional comment letters.\6\ For the reasons discussed below, the 
Commission, after careful consideration, has decided to approve the 
NYSE's proposal.
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    \3\ Securities Exchange Act Release No. 36658 (Dec. 29, 1995), 
61 FR 436.
    \4\ See letter from John I. Fitzgerald, Executive Vice 
President, Legal Affairs and Trading Services, Boston Stock 
Exchange, Inc. (``BSE''), to Jonathan G. Katz, Secretary, SEC, dated 
February 21, 1996 (``BSE February 21, 1996 Letter''); letter from 
George T. Simon, Foley & Lardner, on behalf of the Chicago Stock 
Exchange, Incorporated (``CHX''), to Jonathan G. Katz, Secretary, 
SEC, dated March 4, 1996 (``CHX March 4, 1996 Letter''); letter from 
William W. Uchimoto, First Vice President and General Counsel, 
Philadelphia Stock Exchange, Inc. (``Phlx''), to Jonathan G. Katz, 
Secretary, SEC, dated February 23, 1996 (``Phlx February 23, 1996 
Letter''); letter from David P. Semak, Vice President, Regulation, 
Pacific Stock Exchange Incorporate (``PSE''), to Jonathan G. Katz, 
Secretary, SEC, dated March 4, 1996 (``PSE March 4, 1996 Letter'').
    \5\ See letter from James E. Buck, Senior Vice President and 
Secretary, NYSE, to Jonathan Katz, Secretary, SEC, dated April 25, 
1996 (``NYSE April 25, 1996 Letter''). Previously, the NYSE had 
granted the Commission an extension of 30 days after the date of the 
Commission's receipt of the Exchange's response within which to act 
on the NYSE's proposal. See letter from James E. Buck, Senior Vice 
President and Secretary, NYSE, to Glen Barrentine, SEC, dated March 
13, 1996.
    \6\ See letter from George W. Mann, Jr., Senior Vice President 
and General Counsel, BSE, to Jonathan G. Katz, Secretary, SEC, dated 
April 23, 1996 (``BSE April 23, 1996 Letter''); letter from John I. 
Fitzgerald, Executive Vice President, Legal Affairs and Trading 
Services, BSE, to Jonathan G. Katz, Secretary, SEC, dated May 6, 
1996 (``BSE May 6, 1996 Letter''); letter from J. Craig Long, Foley 
& Lardner, on behalf of the CHX, to Jonathan G. Katz, Secretary, 
SEC, dated May 6, 1996 (``CHX May 6, 1996 Letter''); letter from 
William W. Uchimoto, First Vice President and General Counsel, Phlx, 
to Jonathan G. Katz, Secretary, SEC, dated May 3, 1996 (``Phlx May 
3, 1996 Letter'').
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II. Background and Description of the Proposal

A. Transaction Credits

    On November 7, 1995, the NYSE, pursuant to Section 19(b)(3)(A) of 
the Act,\7\ filed a rule change with the Commission that made a series 
of revisions to the Exchange's equity \8\ transaction fee schedule, 
including the exclusion of nonmember competing market makers from the 
NYSE's no charge provision for system orders of 100 to 2,099 shares.\9\ 
Prior to such filing, the NYSE's transaction fee schedule imposed on 
all public agency,\10\ equity transactions the following charges:

    \7\ 15 U.S.C. 78s(b)(3)(A). Pursuant to Section 19(b)(3)(A), a 
proposed rule change may take effect upon filing with the Commission 
if designated by the self-regulatory organization as, among other 
matters, establishing or changing a due, fee, or other charge 
imposed by the self-regulatory organization.
    \8\ The NYSE's transaction fee schedule defines the term 
``equity'' to include shares, rights, and warrants.
    \9\ Securities Exchange Act Release No. 36465 (Nov. 8, 1995), 60 
FR 57473 (publishing SR-NYSE-95-38.
    \10\ Equity public agency transaction fees and credits do not 
apply to principal transactions by NYSE members for their own 
accounts. See NYSE Transaction Fee Schedule n.1.
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$0.00265 per share for the first 5,000 shares;
$0.00010 per share for 5,001 to 672,500 shares; and no charge for all 
shares in excess of 672,500.

    The NYSE's transaction fee schedule also provided for a credit of 
$0.30 per order for all orders of 100 to 2,099 shares that were placed 
through the NYSE's Common Message Switch (``CMS'')\11\ and an 
additional credit of $1.30 for all Individual \12\ or Agency \13\ 
market orders of 100 to 2,099 shares placed through the NYSE's CMS. 
Orders executed by members and member organizations for the account of 
a competing market maker,\14\ however, were not eligible for the 
additional system credit. This additional system credit was applied on 
a monthly basis against the member or member organization's total 
transaction charges.
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    \11\ The Common Message Switch is a data communications 
application that accommodates a wide variety of member firm computer 
and technical connections, enabling a member firm to send orders 
directly to the appropriate floor booth for execution by the firm's 
floor broker or by SuperDot to the appropriate specialist post. 
Accordingly, the NYSE's transaction fee schedule provided credits 
for SuperDot orders. See Securities Exchange Act Release No. 28655 
(Nov. 29, 1990), 55 FR 50260, at n.1 (publishing SR-NYSE-90-54).
    \12\ An Individual order is an order for the account of any 
customer who is an individual as defined by NYSE Rule 80A. See 
Securities Exchange Act Release No. 29866 (Oct. 28, 1991), 56 FR 
56432. That rule, in turn, cites Section 11(a)(1)(E) of the Act, 
which defines an individual investor as a natural person. See 
Securities Exchange Act Release No. 32377 (May 27, 1993), 58 FR 
31568, at n.7 (approving NYSE's limitation on the additional system 
credit concerning nonmember competing market makers).
    \13\ An Agency order is an order for the account of any 
customer, other than a natural person, who is a nonmember of 
nonmember organization. Id. at n.8.
    \14\ The proposed rule change defines a competing market maker 
as ``a specialist or market maker registered as such on a registered 
stock exchange (other than the NYSE), or a market maker bidding and 
offering over-the-counter in a New York Stock Exchange-traded 
security.''
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B. Payment for Order Flow

    On October 27, 1994, the Commission adopted Rule 11Ac1-3 \15\ and 
amendments to Rule 10b-10 \16\ under the Act concerning payment for 
order flow practices.\17\ These provisions were designed to improve the 
information available to investors about their broker-dealer's order 
routing practices and disclose to investors whether the broker-dealer 
received market center \18\ inducements for routing unspecified order 
flow to a particular market.\19\ In defining payment for order flow, 
the Commission took a very broad approach so that all forms or 
arrangements whereby a broker-dealer received compensation for 
directing order flow to a particular market were included. 
Specifically, payment for order flow was designed to include any 
credit, rebate, or discount against execution fees that exceeds the fee 
charged for executing the order.\20\ As a result, credits received by 
NYSE members under the NYSE's transaction fee schedule constituted

[[Page 29439]]

payment for order flow where such credit exceeded the transaction 
charged associated with such order.\21\ In response to these new 
disclosure requirements, the NYSE decided to revise its transaction fee 
schedule so that its members would not be required to comply with Rule 
11Ac1-3 \22\ and Rule 10b-10 \23\ regarding disclosure of the receipt 
of payment for order flow.\24\
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    \15\ 17 CFR 240.11Ac1-3.
    \16\ 17 CFR 240.10b-10.
    \17\ See Securities Exchange Act Release No. 34902 (Oct. 27, 
1994), 59 FR 55006 [hereinafter Payment for Order Flow Release].
    \18\ See 17 CFR 240.11Ac1-2(a)(14) (defining ``reporting market 
center'').
    \19\ See Payment for Order Flow Release, supra note 17.
    \20\ See Payment for Order Flow Release, supra note 17.
    \21\ For example, under the NYSE's transaction fee schedule, 
NYSE members and member organizations were receiving payment for 
order flow for certain system orders of 100 to 603 shares. For 
orders greater than 603 shares, the NYSE equity transaction charges 
exceeded the $1.60 credit granted.
    \22\ 17 CFR 240.11Ac1-3.
    \23\ 17 CFR 240.10b-10.
    \24\ On October 13, 1995, the Commission issued a letter to the 
Securities Industry Association granting all registered broker-
dealers a temporary exemption from the confirmation disclosure 
requirements of Rule 10b-10(a)(2)(C) and a no-action position 
regarding the account opening provisions of Rule 11Ac1-3. This 
exemption and no-action position expired on November 5, 1995. 
Subsequently, the Commission issued another similar letter to the 
NYSE effective from November 6, 1995 to December 31, 1995. See 
letter from Brandon Becker, (then) Director, Division of Market 
Regulation, SEC, to Edward A. Kwalwasser, Group Executive Vice 
President, Regulation, NYSE, dated November 8, 1995.
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C. SR-NYSE-95-38

    On November 7, 1995, the NYSE submitted a rule filing pursuant to 
Section 19(b)(3)(A) of the Act \25\ that revised its equity transaction 
charges, effective January 2, 1996.\26\ Among other things, this 
filing: (1) eliminated all SuperDot system credits, (2) reduced the 
equity transaction fees on orders for 5,000 shares and under from 
$0.00265 per share to $0.0019 per share,\27\ (3) eliminated the equity 
transaction charges for SuperDot system orders of 100 to 2,099 shares, 
except for orders of competing market makers, and (4) capped monthly 
equity transaction fees at $400,000. The Commission published the 
notice of filing and immediate effectiveness of this rule change on 
November 8, 1995.\28\ Subsequently, the Commission received three 
comment letters regarding this rule change.\29\
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    \25\ 15 U.S.C. 78s(b)(3)(A). See supra note 7 (detailing which 
rule filings may be submitted pursuant to this section for immediate 
effectiveness).
    \26\ Securities Exchange Act Release No. 36465 (Nov. 8, 1995), 
60 FR 57473 (publishing the notice and immediate effectiveness of 
SR-NYSE-95-38).
    \27\ See supra note 10 (noting that the fees and credits 
concerning equity public agency transactions do not apply to 
principal transactions by members for their own accounts).
    \28\ Securities Exchange Act Release No. 36465 (Nov. 8, 1995), 
60 FR 57473.
    \29\ See letter from Samuel F. Lek, Chief Executive Officer, 
Lek, Schoenau & Company, Inc., to Secretary, SEC, dated November 14, 
1995 (opposing the monthly equity transaction fee cap); letter from 
William W. Uchimoto, First Vice President and General Counsel, Phlx, 
to Jonathan Katz, Secretary, SEC, dated November 27, 1995 (opposing 
the disparate treatment of competing market maker orders and 
requesting that the NYSE withdraw that portion of the filing and 
refile it for notice and action pursuant to Section 19(b)(2) of the 
Act); letter from David P. Semak, Vice President of Regulation, PSE, 
to Jonathan Katz, Secretary, SEC, dated December 7, 1995 (opposing 
the disparate treatment of competing market maker orders and 
requesting that the NYSE withdraw that portion of the filing and 
refile it for notice and action pursuant to section 19(b)(2) of the 
Act).
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D. SR-NYSE-95-46

    In response to these comment letters, the Commission requested that 
the NYSE withdraw that portion of the filing concerning the exclusion 
of competing market maker orders from the NYSE's no charge policy and 
resubmit it pursuant to Section 19(b)(1) \30\ for notice and action 
pursuant to Section 19(b)(2).\31\ This would provide sufficient time 
for the Commission to consider, and interested parties to comment on, 
that portion of the filing.\32\ In complying with the Commission's 
request, on December 29, 1995, the NYSE submitted two related rule 
filings: SR-NYSE-95-46 and the current proposal, SR-NYSE-95-47.
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    \30\ 15 U.S.C. 78s(b)(1).
    \31\ 15 U.S.C. 78s(b)(2).
    \32\ Section 19(b)(2) requires that a notice be published in the 
Federal Register for the statutory comment period and provides that 
changes pursuant to this section are not effective until the 
Commission issues an approval order.
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    In SR-NYSE-95-46, the NYSE revised its equity transaction charges, 
effective January 2, 1996,\33\ to eliminate the exclusion of competing 
market maker orders from the no charge provision for SuperDot system 
orders of 100 to 2,099 shares. The Exchange, however, also reserved the 
right to collect, retroactive to January 2, 1996, the fees on such 
trading in the event the Commission approved SR-NYSE-95-47.\34\ The 
Commission published the notice of filing and immediate effectiveness 
of this rule change on December 29, 1995.\35\
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    \33\ This rule change became effective upon filing with the 
Commission pursuant to Section 19(b)(3)(A) of the Act.
    \34\ The effect of this rule change was to require members and 
member organizations to report competing market maker system orders 
of 100 to 2,099 shares to the Exchange. The amount of fees due would 
be $0.0019 per share for all such competing market maker orders 
executed by NYSE members on the Exchange from January 2, 1996 to the 
present.
    \35\ Securities Exchange Act Release No. 36659 (Dec. 29, 1995), 
61 FR 432.
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E. The Current Proposal

    The Exchange now proposes to amend its fee schedule to re-institute 
the exclusion of competing market maker SuperDot system orders of 100 
to 2,099 shares from the NYSE's no charge policy. This change, in 
effect, would impose a charge of $0.0019 per share on competing market 
maker SuperDot system orders of 100 to 2,099 shares and, furthermore, 
allow the Exchange to collect equity transaction charges on all such 
orders that have been executed on the NYSE since January 2, 1996.\36\
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    \36\ Currently, the NYSE waives the equity transaction fees for 
all SuperDot system orders of 100 to 2,099 shares.
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III. Summary of Comments

    The Commission received a total of eight comment letters from the 
BSE, the CHX, the PHlx, and the PSE (collectively referred to herein as 
the ``commenters'') regarding the exclusion of competing market maker 
system orders from the Exchange's no charge provision.\37\ In its 
response, the NYSE supports its proposal and responds to the first four 
comment letters.\38\ The issues raised by the commenters are discussed 
below.
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    \37\ See supra notes 4 and 6.
    \38\ See supra note 5.
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A. Equitable Allocation of a Reasonable Fee

    The commenters believe that the proposal is inconsistent with 
Section 6(b)(4) of the Act \39\ because it constitutes an inequitable 
allocation of fees \40\ and further assert that the proposal is 
inconsistent with Section 6(b)(5)\41\ because it unfairly discriminates 
among certain brokers, dealers, and customers,\42\ as well as 
compromises the existence of a free and open market.\43\
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    \39\ 15 U.S.C. 78f(b)(4). Section 6(b)(4) requires 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.
    \40\ See BSE February 21, 1996 Letter, supra note 4; PSE March 
4, 1996 Letter, supra note 4.
    \41\ 15 U.S.C. 78f(b)(5). Among other things, Section 6(b)(5) 
requires that the rules of an exchange be designed to promote just 
and equitable principles of trade, to perfect the mechanism of a 
free and open market and a national market system, and, in general, 
to protect investors and the public interest. Section 6(b)(5) also 
requires that the rules of an exchange not be designed to permit 
unfair discrimination between customers, issuers, brokers, or 
dealers.
    \42\ See BSE February 21, 1996 Letter, supra note 4; BSE April 
23, 1996 Letter, supra note 6; CHX March 4, 1996 Letter, supra note 
4; Phlx February 23, 1996 Letter, supra note 4; PSE March 4, 1996 
Letter, supra note 4.
    \43\ See BSE February 21, 1996 Letter, supra note 4.
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    To support its opposition to the proposal, the CHX explains that 
nonmember competing market makers do not receive any trading advantage 
on the NYSE Floor that justifies this disparate treatment, and that 
this proposal does not provide any benefit to

[[Page 29440]]

the public.\44\ Therefore, the CHX argues, there is no valid 
justification or legally sufficient rational basis why nonmember 
competing market makers should pay more than all other nonmembers for 
such orders.\45\
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    \44\ See CHX March 4, 1996 Letter, supra note 4.
    \45\ See CHX March 4, 1996 Letter, supra note 4.
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    Separately, the Phlx contends that competing market makers will be 
required to subsidize all of the NYSE's other system orders of this 
size and, therefore, this fee should be cost based.\46\
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    \46\ SEE Phlx February 23, 1996 Letter, supra note 4.
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    In its response, the NYSE charges that the commenters fundamentally 
misread the provisions of the Act dealing with competition in the 
national market system (``NMS''). The NYSE argues that the proposal 
does not constitute either an inequitable allocation of fees or unfair 
discrimination among brokers and dealers because the affected parties 
are in direct competition with each other. This competition, the 
Exchange asserts, justifies the disparate treatment in this instance 
because to require otherwise would obligate the NYSE to subsidize its 
competitors.
    The CHX characterizes the NYSE's logic as specious. The CHX asserts 
that the proposal does not achieve one of its stated purposes, to avoid 
subsidizing the NYSE's competitors, because proprietary orders of 
regional exchange specialists and third market makers that are 
affiliated with a NYSE member are included in the NYSE's no charge 
policy. Therefore, the CHX argues that the NYSE's justification is 
inadequate because the proposal does subsidize some NYSE 
competitors.\47\
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    \47\ See CHX May 6, 1996 Letter, supra note 6.
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B. Burden on Competition

    The commenters also argue that the proposal is inconsistent with 
Section 6(b)(8) \48\ and Section 11A(a)(1)(C) \49\ of the Act because 
it raises the costs of competing market makers without sufficient 
justification and, therefore, places an unnecessary and inappropriate 
burden on competition.\50\ The commenters contend that raising the 
costs of competing market makers in this case will harm the depth and 
liquidity of the market.\51\ One commenter also believes that it will 
reduce price improvement opportunities, impair the ability of competing 
market makers to perform their required market making functions, and, 
in general, disrupt the equilibrium of the NMS.\52\
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    \48\ See BSE February 21, 1996 Letter, supra note 4; BSE April 
23, 1996 Letter, supra note 6; CHX March 4, 1996 Letter, supra note 
4; CHX May 6, 1996 Letter, supra note 6; Phlx February 23, 1996 
Letter, supra note 4; PSE March 4, 1996 Letter, supra note 4.
    \49\ See BSE February 21, 1996 Letter, supra note 4; BSE April 
23, 1996 Letter, supra note 6; PSE March 4, 1996 Letter, supra note 
4.
    \50\ See 15 U.S.C. 78f(b)(8) and 78k-1(a)(1)(C). Section 6(b)(8) 
prohibits the rules of a national securities exchange from imposing 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. In Section 11A(a)(1)(C), 
Congress found that, among other things, it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to ensure fair competition 
among brokers and dealers, among exchange markets, and between 
exchange markets and markets other than exchange markets.
    \51\ See CHX March 4, 1996 Letter, supra note 4; PSE March 4, 
1996 Letter, supra note 4.
    \52\ See PSE March 4, 1996 Letter, supra note 4.
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    Several commenters also claim the impetus for this filing is 
similar to a prior American Stock Exchange, Inc. (``Amex'') competing 
dealer rule proposal that was eventually withdrawn. In analogizing the 
NYSE proposal to the prior Amex proposal, the commenters claim the NYSE 
is seeking to implement rules that disadvantage its competition for 
purely competitive reasons.\53\
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    \53\ See BSE February 21, 1996 Letter, supra note 4; CHX March 
4, 1996 Letter, supra note 4; Phlx February 23, 1996 Letter, supra 
note 4; Phlx May 3, 1996 Letter, supra note 6. In its competing 
dealer filing, the Amex proposed that orders for a competing dealer 
would: (1) yield priority and parity to all other off-floor orders, 
(2) accept parity with orders for an account of an Amex specialist, 
and (3) be excluded from the Amex's order routing system, the Post 
Execution Reporting System (``PER''). The Amex subsequently amended 
this proposal in December 1991, among other things, to: (1) provide 
that orders for the account of a competing dealer that better the 
existing market do not have to yield priority and parity to off-
floor orders, (2) withdraw the portion of the proposal that would 
have placed orders for the account of a competing dealer on parity 
with orders for the account of an Amex specialist, and (3) request 
that the Commission temporarily defer its consideration of the 
proposed prohibition of competing dealer access to PER. See 
Securities Exchange Act Release No. 30161 (Jan. 7, 1992), 57 FR 1502 
(File No. SR-Amex-90-29). The Amex thereafter withdrew this filing 
at the request of Commission staff. See Division of Market 
Regulation, SEC, Market 2000, An Examination of Current Equity 
Market Developments Study III-11 (Jan. 1994) [hereinafter Market 
2000] (recommending that the Amex amend or withdraw SR-Amex-90-29).
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    The NYSE argues that the proposal does not impose an inappropriate 
burden on competition because competing market makers already have 
cost-free access to the NYSE through the Intermarket Trading System 
(``ITS'').\54\ The NYSE characterizes ITS as a carefully-constructed 
\55\ market linkage that has evolved over the past twenty years to 
successfully balance the goals enumerated in Section 11A(a)(1)(D) of 
the Act.\56\
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    \54\ ITS provides facilities and procedures for: (1) the display 
of composite quotation information at each participant market so 
that brokers can readily determine the best available price for a 
particular security, (2) the execution of orders between broker-
dealers at respective ITS market centers, and (3) the coordination 
of market openings among the linked markets.
    Brokers may execute orders in other ITS market centers by 
entering a ``commitment to trade'' into their ITS computer terminal. 
Currently, the Amex, the BSE, the Chicago Board Options Exchange, 
Incorporated, the CHX, The Cincinnati Stock Exchange, the National 
Association of Securities Dealers, Inc., the NYSE, the Phlx, and the 
PSE are all ITS participants. See Market 2000, supra note 53, at 
Appendix II (providing the history of ITS).
    \55\ The NYSE notes that, in addition to itself and other 
markets, all of the commenters were involved in the development of 
ITS and that this development was supervised by the Commission. See 
also Market 2000, supra note 53, at Appendix II.
    \56\ 15 U.S.C. 78k-1(a)(1)(D) (finding that the linking of all 
markets will foster efficiency, enhance competition, increase the 
information available to brokers, dealers, and investors, facilitate 
the offsetting of investors' orders, and contribute to the best 
execution of such orders).
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    By utilizing ITS, the NYSE explains, competing market makers still 
can lay off their excess positions and interact with trading interest 
on the NYSE. In support of this argument, the NYSE states that the 
commenters' ITS commitments executed on the Exchange during the first 
three months of 1996 accounted for over twenty-one percent of the total 
share volume reported by the commenters during this time period.
    As further support that the filing does not impose an inappropriate 
burden on competition, the NYSE notes that this proposal seeks to 
maintain the prior relationship between member proprietary and 
nonmember competing market maker activities in Exchange-listed 
securities.\57\ The Exchange asserts that although the proposal 
replaces the credit system with a discount system, it maintains the 
status quo because the economic effect is unchanged.
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    \57\ According to the prior fee schedule, neither order type was 
eligible for the NYSE's additional system credit. See supra note 10.
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    Finally, the NYSE argues that the proposed fee for competing market 
maker orders is lower than the fee structure previously in effect and, 
therefore, does not impose an inappropriate burden on competition. The 
NYSE emphasizes that the proposal lowers the fee charged from $0.00265 
per share to $0.0019 per share \58\ and, in any event, the amount 
charged is nominal.\59\
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    \58\ Without adjusting for the lost system credit, the NYSE 
represents this as a reduction of 28%. See NYSE April 25, 1996 
Letter, supra note 5.
    \59\ The greatest differential exists between a nonmember 
competing market maker system order of 2,099 shares and another 
system order of 2,099 shares that qualifies for the NYSE's no charge 
policy. Under these circumstances, the competing market maker order 
would incur a charge of $3.99 (2,099 shares * $0.0019 per share), 
while the other order would incur no fees at all. In underscoring 
its argument that this fee is nominal, the NYSE points out that for 
a $30 stock the $3.99 fee would represent .006% of the $62,970 value 
of the trade. See NYSE April 25, 1996 Letter, supra note 5.

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[[Page 29441]]

    In commenting further on the proposal, the BSE, the CHX, and the 
Phlx refute the NYSE's claim that ITS provides adequate access to the 
NYSE's market.\60\ They claim that ITS is too limited in its 
capabilities. The CHX adds that its specialists choose to ignore free 
ITS access and pay for access to the NYSE's SuperDot system simply 
because SuperDot is better; \61\ while the BSE asserts that its 
specialists are forced to use SuperDot because ITS commitments do not 
have the same status as orders on the NYSE and do not have any standing 
in the trading crowd.\62\
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    \60\ See BSE May 6, 1996 Letter, supra note 6; CHX May 6, 1996 
Letter, supra note 6; Phlx May 3, 1996 Letter, supra note 6.
    \61\ See CHX May 6, 1996 Letter, supra note 6.
    \62\ See BSE May 6, 1996 Letter, supra note 6.
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C. Proposed Order Handling Rules \63\

    Finally, the BSE urges the Commission to consider the possible 
impact this proposal will have in conjunction with the Commission's 
``Proposed Limit Order Rule'' \64\ and ``Proposed Price Improvement 
Rule.'' \65\ The BSE is concerned that a NYSE specialist availing 
itself of the proposed rules' exceptions concerning the immediate 
delivery of an Order to another market maker or system would be charged 
a different fee than a BSE specialist doing likewise.
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    \63\ On October 10, 1995, the Commission proposed two rules and 
amendments to a rule to improve the handling and execution of 
customer orders. The Proposed Limit Order Rule, Proposed Rule 11Ac1-
4, would require covered market makers to immediately reflect in 
their bid or offer the price and size of each customer limit order 
they hold in a covered security at a price that would improve their 
bid or offer in the security unless an exception applies. The 
Proposed Price Improvement Rule, Proposed Rule 11Ac1-5, would 
require each specialist or OTC market maker in a covered security 
that accepts a customer market order to provide that order with an 
opportunity for price improvement unless an exception applies. Both 
of these rules contain an exception for orders that are delivered 
immediately to a market maker or system that complies with the 
requirements of the applicable rule with respect to that order. See 
Securities Exchange Act Release No. 36310 (Oct. 10, 1995), 60 FR 
52792 (publishing File No. S7-30-95 for comment); Proposed 11Ac1-
4(c)(5); Proposed 11Ac1-5(e)(4).
    \64\ See BSE February 21, 1996 Letter, supra note 4.
    \65\ See BSE April 23, 1996 Letter, supra note 6.
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    The NYSE did not address this issue in its response.

D. Antitrust Considerations \66\

    The Phlx also requests the Commission to consider the possible 
antitrust implications this proposal presents.\67\ The Phlx contends 
that the NYSE enjoys a ``strategic dominance'' and that the antitrust 
law's ``essential facility'' doctrine is germane to the Commission's 
analysis of this proposal. In support of this argument, the Phlx claims 
the proposal effectively and inappropriately excludes competing market 
makers equal access to the primary market simply because they are 
competitors.
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    \66\ See infra notes 101, 102 (discussing the applicability of 
the antitrust laws and the essential facility doctrine).
    \67\ See Phlx February 23, 1996 Letter, supra note 4.
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    The NYSE disputes the Phlx's premise that the NYSE is an essential 
facility. The NYSE supports its position by asserting that: (1) the 
NYSE is not a monopoly (as evidenced by the existence of multiple other 
securities markets in the United States) and (2) competing market 
makers will continue to have two forms of access to the NYSE's market--
``one free and another at near-zero price.'' \68\
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    \68\ See NYSE April 25, 1996 Letter, supra note 5.
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IV. Discussion

    Under Section 19(b)(2) of the Act,\69\ the Commission must approve 
the NYSE's proposed rule change if it finds that the proposed rule 
change is consistent with the requirements of the Act and the rules 
thereunder applicable to a national securities exchange. If the 
Commission is unable to make that finding, it must institute 
proceedings to consider whether to disapprove the proposed rule change.
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    \69\ 15 U.S.C. 78s(b)(2).
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    The statutory requirements relevant to such a determination are 
found, for the most part, in Section 6(b) of the Act.\70\ That section 
delineates the purposes the NYSE's rules should be designed to achieve. 
Those purposes or objectives, which take the form of positive goals, 
such as investor protection, or prohibitions, such as those against 
unfair discrimination or inappropriate burdens on competition, are 
stated in the form of broad and elastic concepts. They afford the 
Commission considerable discretion to use its judgment and knowledge in 
determining whether a proposed rule complies with the requirements of 
the Act.\71\ Furthermore, the subsections of Section 6(b) \72\ must be 
read with reference to one another and to other provisions of the 
Act.\73\ Within this legal framework, the Commission must weigh and 
balance the strengths and weaknesses of a proposed rule, assess the 
views and arguments of others, and make predictive judgments about the 
consequences of approving the proposed rule.\74\
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    \70\ 15 U.S.C. 78f(b).
    \71\ Bradford National Clearing Corp. v. Securities and Exchange 
Commission, 590 F.2d 1085 (D.C. Cir. 1978).
    \72\ 15 U.S.C. 78f(b).
    \73\ See Securities Exchange Act Release No. 17371 (Dec. 12, 
1980), 45 FR 83707, 83715-19 (interpreting identical provisions of 
Section 15A(b)).
    \74\ Id.
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    With this in mind, and after careful consideration of all of the 
comments received, the Commission has determined to approve the 
proposed rule change. For the reasons discussed below, 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.
    In particular, the Commission finds that the proposal is consistent 
with the Section 6(b)(4) requirement that the rules of an exchange 
provide for the equitable allocation of reasonable fees among its 
members; \75\ the Section 6(b)(5) \76\ requirements that the rules of 
an exchange be designed to perfect the national market system, and, in 
general, to protect investors and the public interest; and not designed 
to permit unfair discrimination between brokers, dealers, and 
customers; as well as the Section 6(b)(8) \77\ requirement that the 
rules of an exchange not impose any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \75\ 15 U.S.C. 78f(b)(4).
    \76\ 15 U.S.C. 78f(b)(5).
    \77\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

A. The Proposal

    The NYSE's original proposal, SR-NYSE-95-38, instituted a discount 
fee system that excluded orders of nonmember competing market makers 
from the NYSE's no charge provision for system orders of 100 to 2,099 
shares. Instead, these orders would have been subject to a fee of 
$0.0019 per share.
    This modified the NYSE's previous system--a credit fee system. The 
credit system imposed a charge of $0.00265 per share for the first 
5,000 shares on all equity public agency transactions.\78\ If such an 
order was for 100 to 2,099 shares and was placed through the NYSE's 
CMS, it earned the NYSE member a credit of $0.30 per order. If this 
also was an Individual or Agency market order, the NYSE member was 
granted an additional credit of $1.30.\79\ Orders executed by members 
and member organizations for the account of

[[Page 29442]]

a competing market maker, however, were not eligible for the additional 
system credit.
---------------------------------------------------------------------------

    \78\ See supra note 10 (noting that the fees and credits 
concerning equity public agency transactions do not apply to 
principal transactions by members for their own accounts).
    \79\ See supra notes 12 and 13 (defining Individual and Agency 
orders).
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    Prior to the effective date of the discount system, the NYSE 
suspended the effectiveness of the exclusion concerning competing 
market maker orders.\80\ Publication of the exclusion for public 
comment provided additional time for the Commission to consider, and 
interested parties to comment on, that portion of the filing. With this 
filing, the NYSE seeks approval to implement the discount system as 
originally filed.
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    \80\ See (publishing the notice and immediate effectiveness of 
SR-NYSE-95-46).
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B. Section 6(b)(4) \81\

    Several commenters have argued that the proposal violates section 
6(b)(4).\82\ The Commission disagrees and finds that the proposal 
constitutes an equitable allocation of a reasonable fee.
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    \81\ See surpa note 39 (listing the requirements of Section 
6(b)(4)).
    \82\ 15 U.S.C. 78f(b)(4).
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    The Commission believes the proposed fee is reasonable because it 
generally is a fee reduction. The Commission notes that the NTSE's new 
discount system generally grants competing market maker orders a cost 
savings over the prior credit system.\83\ The Commission believes the 
fee is an equitable allocation within the meaning of Section 6(b)(4) 
because, although the fee distinguishes between the orders of nonmember 
competing market makers and all other orders executed on the NYSE, it 
does not do so in a manner that imposes a significant cost burden on 
the nonmember competing market maker orders. In addition, the 
Commission is unable to conclude that the fee is not reasonable because 
nonmember competing market makers will be able to continue the same 
level of trading activity on the NYSE as before this fee was 
implemented, except that it now will be at a lower cost.
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    \83\ Under most circumstances, the fee imposed on competing 
market maker orders has been reduced.
---------------------------------------------------------------------------

    The following illustrates this fact:

------------------------------------------------------------------------
                                        Credit     Discount             
               Shares                   System      System      Savings 
------------------------------------------------------------------------
100................................      $(0.04)       $0.19      $-0.23
400................................        0.76         0.76        0.00
500................................        1.03         0.95        0.08
1,000..............................        2.35         1.90        0.45
1,500..............................        3.68         2.85        0.83
2,099..............................        5.26         3.99        1.27
------------------------------------------------------------------------

    The Commission emphasizes, however, that whether a proposed fee can 
be deemed an equitable allocation of a reasonable fee depends on the 
facts and circumstances under which the proposal is being made. In 
evaluating such a proposal, the Commission necessarily would weigh and 
balance all of the relevant factors. These may include, among others, 
whether the proposed fee is an increase or a decrease, who is subject 
to the fee, the basis for any classification being drawn, the potential 
impact on competition, and how any disparate treatment will impact the 
goals of the Act.\84\
---------------------------------------------------------------------------

    \84\ Of course, any fee proposal must be found to meet all 
applicable statutory standards.
---------------------------------------------------------------------------

C. Section 6(b)(5) \85\ and Section 6(b)(8) \86\

    The commenters also argue that it is inappropriate for the NYSE to 
exclude competing market maker orders from the NYSE's no charge policy 
because it will deny the Exchange's competitors effective access to the 
NYSE's market, harm the depth and liquidity of the market, disrupt the 
balance of competition in the NMS, and hamper competing market makers' 
ability to compete.
---------------------------------------------------------------------------

    \85\ See supra note 41 (listing the requirements of Section 
6(b)(5)).
    \86\ See supra note 50 (listing the requirements of Section 
6(b)(8)).
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1. National Market System
    The commenters allege that ITS, although providing them with free 
access to the NYSE, is not an effective substitute for access to 
SuperDot. In evaluating the role of ITS in the NMS, the Commission 
recognizes that the design of ITS is limited in scope. ITS is not a 
complete intermarket linkage.\87\ ITS does not provide order-by-order 
routing of customer orders, a consolidated limit order book, or 
automated or default based execution systems; it does not guarantee 
price and time priority. Rather, ITS utilizes communications and 
technological components of other NMS facilities so that trading 
interest in various market centers can be identified and accessed. It 
also provides uniform trading rules governing transactions in exchange-
listed securities.\88\ These functionalities benefit the markets, 
broker-dealers, and investors by reducing fragmentation, increasing 
opportunities to secure the best execution of customer orders, ensuring 
effective competition among qualified markets, and, in general, 
furthering the purposes of the NMS established by Congress in Section 
11A of the Act.\89\
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    \87\ See Market 2000, supra note 53, at Appendix II-12. The 
Commission previously has encouraged all ITS participants to 
continue to improve the system.
    \88\ See 15 U.S.C. 78k-1(a)(1)(D) (finding that the linkage of 
all markets will foster efficiency, enhance competition, increase 
the information available to brokers, dealers, and investors, 
facilitate the offsetting of investors' orders, and contribute to 
the best execution of such orders).
    \89\ See Market 2000, supra note 53, at Appendix II-11.
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    ITS provides an avenue for competing market makers to lay off their 
excess positions and interact with trading interest on the NYSE, fee-
free. The Commission believes that ITS will continue to provide an 
alternative means by which competing market makers can access the NYSE. 
In addition, competing market makers will continue to have access to 
the NYSE through SuperDot.
    Because access to the NYSE will not be more restrictive under the 
proposed rule change, and because competing market makers can avail 
themselves of ITS, the Commission does not believe the proposal will 
harm the depth and liquidity of the market. Moreover, the Commission 
notes that the depth and liquidity of any particular security is 
dependent on numerous variables, such as the degree of customer buying 
and selling interest in the security and the quality and capitalization 
of the issuer.\90\ Hence, the Commission believes it is unlikely that 
the cost imposed on competing market makers under the NYSE fee schedule 
will have

[[Page 29443]]

a significant impact on the willingness of these market makers to 
contribute to the depth and liquidity of NYSE listed securities.
---------------------------------------------------------------------------

    \90\ See Market 2000 supra note 53, at Study II 8-10 (discussing 
quote competition between the regional exchanges and the NYSE). See 
also Market 2000, supra note 53, at Study II-8 (finding that in 1992 
over 92% of the regional exchanges' volume derived from issues 
traded pursuant to unlisted trading privileges, rather than in 
issues where the regional exchanges are the primary market).
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2. Disparate Treatment of Competing Market Maker Orders \91\
    In determining that disparate treatment of competing market makers 
is not inconsistent with the Act in this instance, the Commission 
believes three aspects of the proposal are particularly significant. 
First, the new fee schedule generally represents a fee reduction. 
Second, the NYSE is attempting to maintain the status quo that existed 
under the previous fee structure. Third, the parties are competitors in 
the NMS.
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    \91\ The Commission does not intend this proposal to establish a 
precedent to permit a primary market to make distinctions in the 
treatment of orders on its Floor as a means to discriminate unfairly 
against its competitors. Orders for the account of nonmember 
competing market makers will continue to be treated in the same way 
as other Agency orders. See supra note 13 (defining Agency order). 
For example, the proposal does not effect any change in routing to 
the NYSE market; in the priority such orders receive on the Floor; 
or in surveillance by the NYSE. Therefore, this proposal is 
distinguishable from the one proposed by the Amex in SR-Amex-90-29. 
See Securities Exchange Act Release No. 32377 (May 27, 1993), 58 FR 
31568 (utilizing similar reasons for distinguishing SR-Amex-90-29 
from the NYSE's limitation of its additional system credit).
---------------------------------------------------------------------------

    First, as noted previously, this proposal generally reduces the fee 
heretofore imposed on competing market maker orders.\92\ The Commission 
is unable to conclude that reducing competing market makers' fees on 
most of their SuperDot system orders will have a significant, negative 
impact on the competitors' ability to perform their market making 
functions.
---------------------------------------------------------------------------

    \92\ See supra note 83.
---------------------------------------------------------------------------

    Second, the Commission has due regard for the NYSE's proffered 
intent to maintain the status quo. The Exchange decided to change from 
a credit system to a discount system in response to the Commission's 
regulatory initiatives addressing the practice of payment for order 
flow, and the NYSE has stated that excluding orders of competing market 
makers from its no charge policy is intended ``to maintain the current 
relationship between member proprietary and nonmember market maker 
activities in Exchange-listed securities.'' \93\ Orders of competing 
market makers were not entitled to the same fee treatment as other 
orders in the prior fee schedule. This proposal does not alter this 
result.\94\
---------------------------------------------------------------------------

    \93\ See NYSE April 25, 1996 Letter, supra note 5.
    \94\ Given that the fee imposed on competing market maker orders 
is being reduced from its prior level in most instances, the 
Commission does not believe that a predatory motive is the impetus 
for this filing. Contra Phlx February 23, 1996 Letter, supra note 4.
---------------------------------------------------------------------------

    Finally, the Commission does not believe that this fee change 
imposes an unnecessary burden on competition. Fair competition in the 
NMS does not require free access in all instances to a competitor's 
systems.\95\ Fair competition must take into consideration all of the 
relevant facts and circumstances. To find otherwise would negate the 
benefits of belonging to a membership organization. Also, it is 
important to note that membership carries with it certain duties, 
responsibilities, and costs not applicable to nonmembers.\96\ Thus, in 
the circumstances presented by this filing, it is not inconsistent with 
fair competition for the NYSE to charge competing market maker orders a 
reasonable fee when utilizing systems whose development has been 
financed by NYSE members.
---------------------------------------------------------------------------

    \95\ This is especially true in light of the fact that other 
means of access to the NYSE market exist.
    \96\ See Securities Exchange Act Release No. 32377 (May 27, 
1993), 58 FR 31568 (noting that the NYSE Specialist System Charge 
was used to partially fund the NYSE's credit system).
---------------------------------------------------------------------------

    For all of the above reasons, the Commission finds that the NYSE 
proposal is consistent with Section 6(b)(5) \97\ and Section 6(b)(8) 
\98\ of the Act.
---------------------------------------------------------------------------

    \97\ 15 U.S.C. 78f(b)(5).
    \98\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

D. Proposed Order Handling Rules \99\

    The BSE is concerned that BSE specialists availing themselves of 
exceptions in the Proposed Limit Order Rule and in the Proposed Price 
Improvement Rule concerning the immediate delivery of an order to a 
market maker or system complying with the applicable rule would be 
charged a different fee than a NYSE member complying with the same 
exception.\100\
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    \99\ See supra note 63 (describing the Commission's proposed 
order handling rules).
    \100\ The fifth exception to the Proposed Limit Order Rule 
applies to any customer limit order ``that is delivered immediately 
to an exchange or association sponsored system that displays limit 
orders and complies with the requirements of [the Proposed Limit 
Order Rule] with respect to that order.'' The fourth exception to 
the Proposed Price Improvement Rule applies to any customer market 
order ``that is delivered immediately to another specialist or OTC 
market maker that complies with the display requirements of [the 
Proposed Price Improvement Rule] with respect to that order.'' See 
Securities Exchange Act Release No. 36310 (Oct. 10, 1995), 60 FR 
52792 (publishing File No. S7-30-95 for comment).
---------------------------------------------------------------------------

    The BSE's comments in this connection are premature inasmuch as the 
Commission has not taken final action on the proposed rules referred to 
by the BSE. The Commission notes, however, that the Proposed Limit 
Order Rule would allow a specialist or market maker to display the 
limit order in its own quote; execute the limit order; or send the 
order to another market maker or system that would display the order in 
conformity with the rule. Thus, a competing market maker would have two 
alternatives to sending the order to another market or system. 
Similarly, the Proposed Price Improvement Rule provides market makers 
with an alternative to sending their orders to another market center.

E. Antitrust Law's Essential Facility Doctrine \101\

    The Phlx urges the Commission to apply the antitrust law's 
essential facility doctrine because, in the Phlx's opinion, the NYSE is 
an essential facility.\102\ The Commission declines to do so in this 
case because, as noted previously, the NYSE is not denying the use of 
its facilities to its competitors.\103\ Competing market makers still 
have two forms of access to the NYSE--one free (ITS) and the order at a 
reduced rate (SuperDot).
---------------------------------------------------------------------------

    \101\ In Silver v. New York Stock Exchange, the Supreme Court 
ruled that certain instances of self-regulation that fall within the 
scope and purposes of the Act could protect an exchange against an 
antitrust claim. Silver, 373 U.S. 341, 360-61 (1963). In Thill 
Securities Corporation v. New York Stock Exchange, the U.S. Court of 
Appeals for the Seventh Circuit interpreted this ruling to allow the 
securities laws to act as an implied repealer of the antitrust laws, 
but only to the minimum extent necessary to make the securities laws 
work. Thill, 433 F.2d 264, 268 (7th Cir. 1970), cert. denied, 401 
U.S. 994 (1971). In determining when such antitrust immunity is 
applicable, one court explained, ``Where the concededly self-
regulatory rule or practice complained of is within the explicit 
mandate of the Exchange Act and also is actively reviewed by the 
Commission, that body may and appropriately should itself consider 
the policies of both the antitrust and the securities laws.'' Jacobi 
v. Bache & Co., Inc., 377 F. Supp. 86, 92 (S.D.N.Y. 1974), aff'd, 
520 F.2d 1231 (2d Cir. 1975), cert. denied, 423 U.S. 1053 (1976).
    \102\ The essential facility doctrine, also called the 
``bottleneck principle,'' requires the owner of a facility that 
cannot practicably be duplicated by would-be competitors to share 
this facility on fair terms. Hecht v. Pro-Football, Inc., 570 F.2d 
982, 992 (D.C. Cir. 1977), cert. denied, 436 U.S. 956 (1978). In 
determining if a facility is ``essential'' under the Sherman Act, 
courts look to whether ``duplication of the facility would be 
economically infeasible'' and if ``denial of its use inflicts a 
severe handicap on potential [or current] market entrants.'' Twin 
Laboratories, Inc. v. Weider Health & Fitness, 900 F. 2d 566, 568-69 
(2d Cir. 1990) (citing Hecht); MCI Communications Corp. v. American 
Telephone & Telegraph Co., 708 F.2d 1081, 1132-33 (7th Cir.) 
(requiring ``(1) control of the essential facility by a monopolist; 
(2) a competitor's inability practically or reasonably to duplicate 
the essential facility; (3) the denial of the use of the facility to 
a competitor; and (4) the feasibility of providing the facility''), 
cert. denied, 464 U.S. 891 (1983).
    \103\ In finding that the NYSE is not denying the use of its 
facilities to its competitors, the Commission does not reach the 
issue of whether the NYSE is, in fact, an essential facility.
---------------------------------------------------------------------------

    In addition, the Commission notes the competitive environment in 
which

[[Page 29444]]

today's market makers operate.\104\ For example, the NYSE faces 
significant competition for orders in NYSE stocks from the regional 
stock exchanges,\105\ third market makers,\106\ proprietary trading 
systems (``PTSs''),\107\ and foreign markets.\108\ Modern technology 
has facilitated this competition and should continue to do so in the 
future.\109\
---------------------------------------------------------------------------

    \104\ See Market 2000, supra note 53, at 6-12 (providing an 
overview of the intense competition that exists in the U.S. equity 
market); Market 2000, supra note 53, at Exhibit 18 (charting the 
NYSE's percentage of Consolidated Tape trades in NYSE stocks from 
1976 to 1992).
    \105\ The regional stock exchanges captured 20% of the orders in 
NYSE stocks during the first six months of 1993. Market 2000, supra 
note 53, at 8.
    \106\ OTC trading of exchange-listed securities is commonly 
known as the ``third market.'' In 1989, the third market garnered 
3.2% of reported NYSE share volume and 5% of reported trade volume. 
By 1993, third market volume had more than doubled to 7.4% of 
reported NYSE reported share volume and 9.3% of reported trade 
volume. Market 2000, supra note 53, at 9.
    \107\ A PTS is a type of automated trading system that typically 
is a screen-based system sponsored by broker-dealers. PTSs are not 
operated as or affiliated with self-regulatory organizations but 
instead are operated as independent businesses. Participation in 
these systems may be limited to institutional investors, broker-
dealers, specialists, and other market professionals.
    Although most PTS volume is in Nasdaq securities, PTSs handled 
about 1.4% of the volume in NYSE stocks in the first six months of 
1993. Market 2000, supra note 53, at 8, Study II 12-13.
    \108\ Although exact numbers are not available, the Commission 
estimates that foreign market trading in NYSE stocks amounts to 
approximately seven million shares per day. See Market 2000, supra 
note 53, at 10-11.
    \109\ See Market 2000, supra note 53, at 8-10 (noting that 
automated systems allow the regional stock exchanges, third market 
makers, and PTSs to compete for order flow with the primary 
markets).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\110\ that the proposed rule change (SR-NYSE-95-47) is approved.

    \110\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\111\
---------------------------------------------------------------------------

    \111\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland
Deputy Secretary
[FR Doc. 96-14590 Filed 6-7-96; 8:45 am]
BILLING CODE 8010-01-M