Federal Register / Vol. 80, No. 3 / Tuesday, January 6, 2015 / Notices 561 

88 Id. 

89 In approving the proposal, as amended, the 

Commission has considered the impact on 

efficiency, competition, and capital formation. See 

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

90 15 U.S.C. 78o–3(b)(6). 

91 15 U.S.C. 78s(b)(2). 

92 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 ‘‘Best bid and offer’’ or ‘‘BBO’’ data is sometimes 

referred to as ‘‘top-of-book’’ data. Data with respect 

to executed trades is referred to as ‘‘last sale’’ data. 

because the review must be reasonable 

based on the nature and scope of the 

activity in question and therefore 

requires a factual review. FINRA 

believes, however, that an annual 

review for on-going payments generally 

would be reasonable, absent evidence of 

activities by the recipient of the 

payments that raise red flags.88

IV. Discussion and Commission 

Findings 

The Commission has carefully 

considered the proposal, the comments 

received, and FINRA’s responses to the 

comments. Based on its review of the 

record, the Commission finds that the 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities association.89

In particular, the Commission finds 

that the proposed rule change is 

consistent with the provisions of 

Section 15A(b)(6) of the Act, which 

requires, among other things, that 

FINRA’s rules be designed to prevent 

fraudulent and manipulative acts and 

practices; promote just and equitable 

principles of trade; and, in general, 

protect investors and the public 

interest.90

The proposed rule change will clarify 

and streamline several NASD and NYSE 

rules relating to payments to 

unregistered persons for adoption as 

FINRA Rules in the new Consolidated 

FINRA Rulebook. Specifically, proposed 

FINRA Rule 2040(a) aligns with Section 

15(a) of the Exchange Act and its related 

guidance to determine whether 

registration as a broker-dealer is 

required for certain persons to receive 

transaction-related compensation; 

proposed FINRA Rule 2040(b) codifies 

existing FINRA guidance on the 

payment by members of continuing 

commissions to retiring registered 

representatives consistent with the 

Commission’s guidance in this area; and 

proposed FINRA Rule 2040(c) adopts 

the foreign finders provisions of NASD 

Rule 1060(b) and NYSE Rule 

Interpretation 345(a)(i)/03 with 

technical changes. The amendments to 

FINRA Rule 8311 eliminate duplicate 

provisions in NASD IM–2420–2 and 

clarify the scope of the rule on 

payments by members to persons 

subject to sanctions. Commenters’ 

suggestions that the SEC (or FINRA) 

provide additional guidance on 

‘‘finders’’ are outside the scope of this 

rule filing, and thus outside the scope 

of this order. 

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,91 that the 

proposed rule change (SR–FINRA– 

2014–037) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.92

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30892 Filed 1–5–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73956; File No. SR–C2– 

2014–029] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change Relating to Fees for the C2 

Book Depth Data Feed and Certain 

Other C2 Real-Time Data Feeds 

December 30, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

17, 2014, C2 Options Exchange, 

Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) 

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

C2 Options Exchange, Incorporated 

(the ‘‘Exchange’’ or ‘‘C2’’) proposes to 

establish fees for the C2 Book Depth 

Data Feed and amend fees for certain 

other C2 real-time data feeds. The text 

of the proposed rule change is available 

on the Exchange’s Web site (http://

www.c2exchange.com/Legal/), at the 

Exchange’s Office of the Secretary, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to: (1) Establish fees for the C2 

Book Depth Data Feed; (2) amend fees 

for the C2 Complex Order Book (‘‘COB’’) 

Data Feed; and (3) establish fees for 

distribution of C2 data via a ‘‘Display 

Only Service’’ (as defined below). These 

data feeds are made available by C2’s 

affiliate Market Data Express, LLC 

(‘‘MDX’’). 

BBO, Book Depth and COB Data Feeds 

BBO Data Feed: The BBO Data Feed 

is a real-time, low latency data feed that 

includes the following content: (i) 

Outstanding quotes and standing orders 

at the best available price level on each 

side of the market, with aggregate size 

(‘‘BBO data’’), and last sale data 3; (ii) 

totals of customer versus non-customer 

contracts at the BBO, (iii) All-or-None 

contingency orders priced better than or 

equal to the BBO, (iv) BBO and last sale 

data for complex strategies (e.g., 

spreads, straddles, buy-writes, etc.); (v) 

expected opening price (‘‘EOP’’) and 

expected opening size (‘‘EOS’’) 

information that is disseminated prior to 

the opening of the market and during 

trading rotations, (vi) end-of-day 

(‘‘EOD’’) summary messages that are 

disseminated after the close of a trading 

session that include summary 

information about trading in C2 listed 

options (i.e., product name, opening 

price, high and low price during the 

trading session and last sale price), (vii) 

‘‘recap messages’’ that are disseminated 

during a trading session any time there 

is a change in the open, high, low or last 

sale price of a C2 listed option, as well 

as product name and total volume 


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4MDX makes available to Customers the BBO 

data and last sale data that is included in the BBO 

Data Feed no earlier than the time at which the 

Exchange sends that data to OPRA. 

5See Securities Exchange Act Release No. 71773 

(March 24, 2014), 79 FR 17611 (March 28, 2014). 

6A BBO Data Feed ‘‘Customer’’ is currently 

defined as any entity that receives the BBO Data 

Feed either directly from MDX’s system or through 

a connection to MDX provided by an approved 

redistributor (i.e., a market data vendor or an 

extranet service provider) and distributes it 

externally or uses it internally. The MDX fee 

schedule for CBOE data is located at https://

www.cboe.org/MDX/CSM/OBOOKMain.aspx. 

7A ‘‘Device’’ means any computer, workstation or 

other item of equipment, fixed or portable, that 

receives, accesses and/or displays data in visual, 

audible or other form. 

8A Customer may choose to receive the data from 

another Customer rather than directly from MDX’s 

system because it does not want to or is not 

equipped to manage the technology necessary to 

establish a direct connection to MDX. 

9Such Customers would still be subject to 

Display Only Service User Fees as described below. 

10A COB Data Feed Customer is currently defined 

as any entity that receives the COB Data Feed, 

either directly from MDX’s system or through a 

connection to MDX provided by an approved 

redistributor (i.e., a market data vendor or an 

extranet service provider), and distributes it 

externally or uses it internally, except that an entity 

or person that receives the COB Data Feed from a 

Customer and only uses it internally is not a 

‘‘Customer’’ if it receives the COB Data Feed from 

a Customer subject to a form of ‘‘Subscriber 

Agreement’’ that has been approved by MDX. 

11Such COB Data Feed Customers are still subject 

to User Fees as described below. 

12A ‘‘Professional User’’ is any natural person 

recipient of Data who is not a Non-Professional 

User. User Fees for Professional Users are payable 

for both ‘‘internal’’ Professional Users (Devices or 

user IDs of employees of a Customer) and 

‘‘external’’ Professional Users (Devices or user IDs 

of Professional Users who receive the Data from a 

Customer and are not employed by the Customer). 

(Non-Professional Users must be external since a 

person who uses the COB Data Feed for a 

commercial purpose cannot be a Non-Professional 

User.) 

13A ‘‘Non-Professional User’’ is a natural person 

who uses the COB Data Feed only for personal 

purposes and not for any commercial purpose and 

who, if he or she works in the United States, is not: 

(i) Registered or qualified in any capacity 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; (ii) engaged as an 

‘‘investment adviser’’ as that term is defined in 

Section 201(11) of the Investment Advisors Act of 

1940 (whether or not registered or qualified under 

traded in the product during the trading 

session; and (viii) product IDs and codes 

for all C2 listed options contracts. The 

data in the BBO Data Feed is refreshed 

periodically during the trading session. 

The BBO and last sale data contained in 

the BBO Data Feed is identical to the 

data sent to the Options Price Reporting 

Authority (‘‘OPRA’’) for redistribution 

to the public.4

Book Depth Data Feed: The Book 

Depth Data Feed is a real-time, low 

latency data feed that includes all 

outstanding quotes and standing orders 

up to the first five price levels on each 

side of the market, with aggregate size 

(‘‘Book Depth’’). The Book Depth Data 

Feed includes all of the other data 

contained in the BBO Data Feed (as 

described above), including last sale, 

BBO and Book Depth data for complex 

strategies.5

COB Data Feed: The COB Data Feed 

is a subset of the Book Depth Data Feed. 

It is a real-time data feed that includes 

data regarding the Exchange’s Complex 

Order Book and related complex order 

information. The COB Data Feed 

includes BBO, Book Depth and last sale 

data for all C2-traded complex order 

strategies and identifies customer orders 

and trades. 

Fees 

BBO Data Feed Fees: MDX currently 

charges a ‘‘Data Fee’’, payable by a 

Customer, of $1,000 per month for 

internal use and external redistribution 

of the BBO Data Feed.6 The Data Fee 

entitles a Customer to provide the BBO 

Data Feed to an unlimited number of 

internal users and Devices 7 within the 

Customer. A Customer receiving the 

BBO Data Feed from another Customer 

is assessed the Data Fee by MDX 

pursuant to its own market data 

agreement with MDX, and is entitled to 

use the Data internally and/or distribute 

it externally.8 All Customers have the 

same rights to utilize the data internally 

and/or distribute it externally as long as 

the Customer has entered into a written 

agreement with MDX for the data and 

pays the Data Fee. 

The Exchange is not proposing to 

amend the Data Fee. The Exchange 

proposes to establish a ‘‘User Fee’’, 

payable by a Customer, of $50 per 

month per Device or user ID for use of 

data in the BBO Data Feed by ‘‘Display 

Only Service’’ users. A ‘‘Display Only 

Service’’ would allow a natural person 

end-user to view and manipulate data 

using a Customer’s computerized 

service, but not to save, copy, export or 

transfer the data or any results of the 

manipulation to any other computer 

hardware, software or media, except for 

printing it to paper or other nonmagnetic media. User fees would be 

payable only for ‘‘external’’ Display 

Only Service users (Devices or user IDs 

of users who are not employees or 

natural person independent contractors 

of the Customer, the Customer’s 

affiliates or an authorized service 

facilitator). 

The Exchange proposes to amend the 

definition of a ‘‘Customer’’ to make it 

uniformly applicable to the BBO Data 

Feed and the other C2 real-time data 

feeds described above. The term 

‘‘Customer’’ would mean any person, 

company or other entity that, pursuant 

to a market data agreement with MDX, 

is entitled to receive data, either directly 

from MDX or through an authorized 

redistributor (i.e., a Customer or an 

extranet service provider), whether that 

data is distributed externally or used 

internally. An entity or person that 

receives BBO data from a Customer 

through a Display Only Service is not a 

‘‘Customer’’ unless it has a market data 

agreement in place with MDX. 

Book Depth Data Feed Fees: The 

Exchange proposes to amend the MDX 

fee schedule to establish fees for the 

Book Depth Data Feed. MDX would 

charge a ‘‘Data Fee’’, payable by a 

Customer (as defined above), of $1,000 

per month for internal use and external 

redistribution of the Book Depth Data 

Feed. The Data Fee for the Book Depth 

Data Feed would entitle a Customer to 

provide the Book Depth Data Feed to an 

unlimited number of internal users and 

Devices within the Customer. A 

Customer receiving the Book Depth Data 

Feed from another Customer would be 

assessed the Data Fee by MDX pursuant 

to its own market data agreement with 

MDX, and would be entitled to use the 

Data internally and/or distribute it 

externally. All Customers would have 

the same rights to utilize the Book 

Depth data internally and/or distribute 

it externally as long as the Customer has 

entered into a written agreement with 

MDX for the data and pays the Data Fee. 

BBO Data Feed Customers could 

upgrade to become Book Depth Data 

Feed Customers without paying any 

additional Data Fee.9

MDX would also charge a Book Depth 

Data Feed Customer a User Fee of $50 

per month per Device or user ID for use 

of the data in the Book Depth Data Feed 

by Display Only Service users (as 

defined above). User Fees would be 

payable only for ‘‘external’’ Display 

Only Service Users (as defined above). 

An entity or person that receives Book 

Depth data from a Customer through a 

Display Only Service is not a 

‘‘Customer’’ unless it has a market data 

agreement in place with MDX. 

COB Data Feed Fees: MDX currently 

charges Customers of the COB Data Feed 

a Data Fee of $500 per month plus 

applicable User Fees.10 The Data Fee for 

the COB Data Feed is waived for 

Customers of the BBO Data Feed.11

MDX currently charges a Customer 

User Fees of $25 per month per Device 

or user ID for receipt of the data by 

‘‘Professional Users’’ 12 and $1 per 

month for receipt of the data by ‘‘NonProfessional Users.’’ 13 User Fees are 


tkelley on DSK3SPTVN1PROD with NOTICES
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that Act); or (iii) employed by a bank or other 

organization exempt from registration under federal 

or state securities laws to perform functions that 

would require registration or qualification if such 

functions were performed for an organization not so 

exempt; or, if he or she works outside of the United 

States, does not perform the same functions as 

someone who would qualify as a Non-Professional 

User if he or she worked in the United States. 

14The Exchange proposes to amend the definition 

of ‘‘Non-Professional User’’ so that it is consistent 

with the definition of ‘‘Non-Professional User’’ used 

by OPRA. See OPRA Addendum for 

Nonprofessionals, which is part of Attachments 

B–1 and B–2 to OPRA’s Vendor Agreement. A 

‘‘Non-Professional User’’ would mean a natural 

person or qualifying trust that uses Data only for 

personal purposes and not for any commercial 

purpose and, for a natural person who works in the 

United States, is not: (i) Registered or qualified in 

any capacity 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; (ii) engaged as an ‘‘investment adviser’’ 

as that term is defined in Section 201(11) of the 

Investment Advisors Act of 1940 (whether or not 

registered or qualified under that Act); or (iii) 

employed by a bank or other organization exempt 

from registration under federal or state securities 

laws to perform functions that would require 

registration or qualification if such functions were 

performed for an organization not so exempt; or, for 

a natural person who works outside of the United 

States, does not perform the same functions as 

would disqualify such person as a Non-Professional 

User if he or she worked in the United States. 

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

16 15 U.S.C. 78f(b)(4). 

17 Id. 

18See e.g., Securities Exchange Act Release No. 

69554 (May 10, 2013), 78 FR 28917 (May 16, 2013), 

(SR–NYSEArca–2013–47); Securities Exchange Act 

Release No. 69553 (May 10, 2013), 78 FR 28926 

(May 16, 2013), (SR–NYSEMKT–2013–40); 

Securities Exchange Act Release No. 68576 (January 

3, 2013), 78 FR 1886 (January 9, 2013), (SR–PHLX– 

2012–145); and Securities Exchange Act Release 

No. 64652 (June 13, 2011), 76 FR 35498 (June 17, 

2011), (SR–NASDAQ–2011–45). 

subject to a cap of $500 per month (i.e., 

a Customer pays no more than $500 in 

User Fees for a given month). 

The Exchange proposes to reduce the 

Data Fee from $500 per month to $100 

per month. The Data Fee would be 

waived for Customers of the Book Depth 

Data Feed. The Exchange proposes to 

reduce the User Fee for NonProfessional Users from $1 per month to 

zero.14 For the purpose of consistency, 

the Exchange proposes to amend the 

definition of a COB Data Feed Customer 

so that it is the same definition that is 

applicable to the BBO and Book Depth 

Data Feeds. 

Systems Fees: MDX currently charges 

a Port Fee of $500 per data port per 

month for receipt of a data feed through 

a connection to MDX. The Exchange 

proposes to amend the MDX Fee 

Schedule to clarify how the Port Fee is 

assessed. First, the Exchange proposes 

to clarify that the Port Fee applies to the 

receipt of any data feed through a 

connection to MDX, not only for the 

receipt of the BBO Data Feed. Second, 

the Exchange proposes to amend the 

description of the fee to clarify that it is 

payable by any Customer that receives 

data through a direct connection to 

MDX or through a connection to MDX 

provided by an extranet service 

provider. Lastly, the Exchange proposes 

to clarify that the port fee applies to 

receipt of any data feed but is only 

assessed once per data port. For 

example, if a Customer receives two 

data feeds over the same port, the Port 

Fee is only assessed once for that port. 

The Exchange also proposes to delete 

from the MDX Fee Schedule the 

statements that MDX will not charge 

fees for any of the data feeds (or the port 

fee) for any calendar month in which 

Customer commences receipt of the data 

after the 15th day of the month (or in 

the case of the port fee, establishes the 

connection after the 15th day of the 

month) or discontinues receipt of the 

data before the 15th day of the month 

(or in the case of the port fee, 

disconnects before the 15th day of the 

month). The Exchange believes it would 

be more appropriate for billing policies 

to be located within MDX’s written 

agreement with Customers. 

All of the proposed fee changes would 

be effective on January 1, 2015. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) and the rules and regulations 

thereunder applicable to the Exchange 

and, in particular, the requirements of 

Section 6(b) of the Act.15 Specifically, 

the Exchange believes the proposed rule 

change is consistent with Section 6(b)(4) 

of the Act,16 which requires that 

Exchange rules provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its Trading Permit 

Holders and other persons using its 

facilities. The Exchange also believes 

the proposed rule change is consistent 

with the Section 6(b)(5) 17 requirement 

that the rules of an exchange not be 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

BBO Data Fees 

The Exchange believes the proposed 

Display Only Service User Fee for the 

BBO Data Feed is equitable and not 

unfairly discriminatory because it 

would apply equally to all Customers 

that distribute data via a Display Only 

Service. The Exchange believes the 

proposed User Fee is reasonable because 

it compares favorably to usage fees that 

other markets charge for similar 

products. For example, NASDAQ OMX 

PHLX charges a $40 per month 

Professional Subscriber Fee for use of its 

market data products by each of internal 

and external users. The International 

Securities Exchange charges a $20 per 

month Controlled Device Fee for use of 

its Top Quote Feed and a separate $25 

per month Controlled Device Fee for use 

of its Spread Feed. NYSE charges a $50 

per month Professional User Fee for use 

of each of its NYSE ArcaBook for Amex 

Options and NYSE ArcaBook for Arca 

Options market data products that 

include top-of-book and last sale data 

similar to the data in the BBO Data 

Feed. 

The Exchange believes it is equitable 

and not unfairly discriminatory to 

charge a lower fee for use of BBO data 

via a Display Only Service because such 

use would be limited to display use 

only. The Display Only Service would 

only allow a natural person end-user to 

view and manipulate data using the 

Customer’s computerized service, but 

not to save, copy, export or transfer the 

data or any results of the manipulation 

to any other computer hardware, 

software or media, except for printing it 

to paper or other non-magnetic media. 

The Exchange notes other exchanges 

charge fees for market data products 

based on distinctions between ‘‘display’’ 

and ‘‘non-display’’ usage.18

Book Depth Data Fees 

The Exchange believes the proposed 

Data Fee for the Book Depth Data Feed 

is equitable and not unfairly 

discriminatory because it would apply 

equally to all Customers. All Customers 

would have the same rights to utilize 

the data (i.e., use the data internally 

and/or distribute it externally) as long as 

the Customer has entered into a market 

data agreement with MDX for the data 

and pays the Data Fee. 

The Exchange believes the proposed 

Data Fee is reasonable because it 

compares favorably to fees that other 

markets charge for similar products. For 

example, BATS BZX Exchange charges 

a $1,000 per month Internal Use Access 

Fee and a $5,000 per month External 

Distribution Access Fee for Multicast 

PITCH, which is its depth of market and 

last sale feed. NASDAQ OMX PHLX 

charges Internal Distributors a monthly 

fee of $4,000 and External Distributors 

a monthly fee of a $4,500 for its Depth 

of Market data feed that includes full 

depth of quotes and orders and last sale 

data for options listed on PHLX. NYSE 

charges a $3,000 per month Access Fee 

and $2,000 per month External 

Redistribution fee for each of its NYSE 

ArcaBook for Amex Options and NYSE 


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19For example, the Exchange believes the 

NASDAQ Options Market charges only one 

distributor fee to allow a subscriber access to its 

‘‘NASDAQ ITCH-to-Trade Options’’ (ITTO) and 

‘‘Best of NASDAQ Options’’ (BONO) products. The 

Exchange believes NASDAQ OMX BX charges only 

one distributor fee to allow a subscriber access to 

its ‘‘BX Options Depth of Market’’ (BX Depth) and 

‘‘BX Options Top of Market’’ (BX Top) products. In 

addition, the Exchange believes the International 

Securities Exchange charges no additional fee to 

subscribers of its ‘‘Depth of Market’’ Feed that also 

access its Top Quote Feed. 

20Supra footnote 18. 

21Supra footnote 19. 

22The Commission has previously made a finding 

that the options industry is subject to significant 

competitive forces. See e.g., Securities Exchange 

Act Release No. 59949 (May 20, 2009), 74 FR 25593 

(May 28, 2009) (SR–ISE–2009–97) (order approving 

ISE’s proposal to establish fees for a real-time depth 

of market data offering). 

ArcaBook for Arca Options market data 

products that include top-of-book, last 

sale and depth of quote data. 

The Exchange believes the proposal to 

allow BBO Data Feed Customers to 

upgrade to become Book Depth Data 

Feed Customers without any additional 

Data Fee is equitable and not unfairly 

discriminatory because it would apply 

equally to all BBO Data Feed Customers. 

BBO Data Feed Customers currently pay 

MDX $1,000 per month for the right to 

use and redistribute the data in the BBO 

Data Feed. The Book Depth Data Feed 

includes all of the data in the BBO Data 

Feed. The proposed fee arrangement 

would allow a Book Depth Data Feed 

Customer who has upgraded from a 

BBO Data Feed to use and redistribute 

Book Depth data for no additional 

charge, thereby incentivizing further 

redistribution of the data in the Book 

Depth Data Feed. The Exchange notes 

other exchanges offer similar fee 

arrangements.19

The Exchange believes the proposed 

Display Only Service User Fee for the 

Book Depth Data Feed is equitable and 

not unfairly discriminatory because it 

would apply equally to all Customers 

that distribute data via a Display Only 

Service. The Exchange believes the 

proposed User Fee is reasonable because 

it compares favorably to usage fees that 

other markets charge for similar 

products. For example, NASDAQ OMX 

PHLX charges a $40 per month 

Professional Subscriber Fee for use of its 

market data products by each of internal 

and external users. The International 

Securities Exchange charges a $50 per 

month Controlled Device Fee for use of 

its Depth of Market Feed. NYSE charges 

a $50 per month Professional User Fee 

for use of each of its NYSE ArcaBook for 

Amex Options and NYSE ArcaBook for 

Arca Options market data products. 

The Exchange believes it is equitable 

and not unfairly discriminatory to 

charge a lower fee for use of Book Depth 

data via a Display Only Service because 

such use would be limited to display 

use only. The Display Only Service 

would only allow a natural person enduser to view and manipulate data using 

the Customer’s computerized service, 

but not to save, copy, export or transfer 

the data or any results of the 

manipulation to any other computer 

hardware, software or media, except for 

printing it to paper or other nonmagnetic media. As noted above, other 

exchanges charge fees for market data 

products based on distinctions between 

‘‘display’’ and ‘‘non-display’’ usage.20

COB Data Fees: The Exchange 

believes the proposed reductions of the 

Data Fee and Non-professional User Fee 

for the COB Data Feed are equitable and 

not unfairly discriminatory because they 

would apply equally to all Customers of 

the COB Data Feed. The Exchange 

believes the proposed Data Fee is 

reasonable because it compares 

favorably to fees that other markets 

charge for similar products. For 

example, as noted above, the 

International Securities Exchange 

charges distributors of its Spread Feed 

a base monthly fee of $3,000. The 

proposed lower Data Fee may permit 

wider distribution of the COB Data Feed 

at a lower cost to Customers, and the 

reduced User Fee may make it less 

costly for Customers to distribute data to 

Non-professional Users, thereby 

benefitting both Customers and Nonprofessional Users, including public 

investors. 

The Exchange believes the proposal to 

allow Book Depth Data Feed Customers 

to become COB Data Feed Customers 

without any additional Data Fee is 

equitable and not unfairly 

discriminatory because it would apply 

equally to all Book Depth Data Feed 

Customers. Book Depth Data Feed 

Customers would pay MDX $1,000 per 

month for the right to use and 

redistribute the data in the Book Depth 

Data Feed. The COB Data Feed is a 

subset of the Book Depth Data Feed. The 

proposed fee arrangement would allow 

a Book Depth Data Feed Customer to use 

and redistribute the COB Data Feed for 

no additional charge, thereby 

incentivizing further redistribution of 

the data in the COB Data Feed. The 

Exchange notes other exchanges offer 

similar fee arrangements.21

Systems Fees and Billing Policy: The 

Exchange believes the proposed changes 

to the description of the Port Fee are 

equitable, reasonable and not unfairly 

discriminatory because they would 

benefit all Customers by clarifying how 

the Port Fee is assessed. The Exchange 

believes removing the billing policy 

from the MDX Fee Schedule is 

equitable, reasonable and not unfairly 

discriminatory because MDX believes it 

would be more appropriate for billing 

policies to be located within MDX’s 

written agreement with Customers along 

with other policies related to MDX’s 

market data services. 

For the reasons cited above, the 

Exchange believes the proposed fees for 

the BBO, Book Depth and COB Data 

Feeds are equitable, reasonable and not 

unfairly discriminatory. In addition, the 

Exchange believes that no substantial 

countervailing basis exists to support a 

finding that the proposed fees for the 

BBO, Book Depth and COB Data Feeds 

fail to meet the requirements of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

C2 does not believe that the proposed 

rule change will impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. 

An exchange’s ability to price its 

proprietary data feed products is 

constrained by (1) the existence of 

actual competition for the sale of such 

data, (2) the joint product nature of 

exchange platforms, and (3) the 

existence of alternatives to proprietary 

data. 

The Existence of Actual Competition. 

The Exchange believes competition 

provides an effective constraint on the 

market data fees that the Exchange, 

through MDX, has the ability and the 

incentive to charge. C2 has a compelling 

need to attract order flow from market 

participants in order to maintain its 

share of trading volume. This 

compelling need to attract order flow 

imposes significant pressure on C2 to 

act reasonably in setting its fees for 

market data, particularly given that the 

market participants that will pay such 

fees often will be the same market 

participants from whom C2 must attract 

order flow. These market participants 

include broker-dealers that control the 

handling of a large volume of customer 

and proprietary order flow. Given the 

portability of order flow from one 

exchange to another, any exchange that 

sought to charge unreasonably high data 

fees would risk alienating many of the 

same customers on whose orders it 

depends for competitive survival. C2 

currently competes with eleven options 

exchanges (including C2’s affiliate, 

Chicago Board Options Exchange) for 

order flow.22

In addition, in the case of products 

that are distributed through market data 

vendors, the market data vendors 


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Federal Register / Vol. 80, No. 3 / Tuesday, January 6, 2015 / Notices 565 

23 15 U.S.C. 78s(b)(3)(A). 

24 17 CFR 240.19b–4(f). 

themselves provide additional price 

discipline for proprietary data products 

because they control the primary means 

of access to certain end users. These 

vendors impose price discipline based 

upon their business models. For 

example, vendors that assess a 

surcharge on data they sell are able to 

refuse to offer proprietary products that 

their end users do not or will not 

purchase in sufficient numbers. Internet 

portals, such as Google, impose price 

discipline by providing only data that 

they believe will enable them to attract 

‘‘eyeballs’’ that contribute to their 

advertising revenue. Similarly, 

Customers will not offer the BBO, Book 

Depth or COB Data Feeds unless these 

products will help them maintain 

current users or attract new ones. For 

example, a broker-dealer will not choose 

to offer the BBO, Book Depth or COB 

Data Feeds to its retail customers unless 

the broker-dealer believes that the retail 

customers will use and value the data 

and the provision of such data will help 

the broker-dealer maintain the customer 

relationship, which allows the brokerdealer to generate profits for itself. 

Professional users will not request any 

of these feeds from Customers unless 

they can use the data for profitgenerating purposes in their businesses. 

All of these operate as constraints on 

pricing proprietary data products. 

Joint Product Nature of Exchange 

Platform. Transaction execution and 

proprietary data products are 

complementary in that market data is 

both an input and a byproduct of the 

execution service. In fact, market data 

and trade executions are a paradigmatic 

example of joint products with joint 

costs. The decision whether and on 

which platform to post an order will 

depend on the attributes of the 

platforms where the order can be 

posted, including the execution fees, 

data quality, and price and distribution 

of their data products. The more trade 

executions a platform does, the more 

valuable its market data products 

become. The costs of producing market 

data include not only the costs of the 

data distribution infrastructure, but also 

the costs of designing, maintaining, and 

operating the exchange’s transaction 

execution platform and the cost of 

regulating the exchange to ensure its fair 

operation and maintain investor 

confidence. The total return that a 

trading platform earns reflects the 

revenues it receives from both products 

and the joint costs it incurs. Moreover, 

an exchange’s broker-dealer customers 

view the costs of transaction executions 

and market data as a unified cost of 

doing business with the exchange. 

Analyzing the cost of market data 

product production and distribution in 

isolation from the cost of all of the 

inputs supporting the creation of market 

data and market data products will 

inevitably underestimate the cost of the 

data and data products. Thus, because it 

is impossible to obtain the data inputs 

to create market data products without 

a fast, technologically robust, and wellregulated execution system, system 

costs and regulatory costs affect the 

price of both obtaining the market data 

itself and creating and distributing 

market data products. It would be 

equally misleading, however, to 

attribute all of an exchange’s costs to the 

market data portion of an exchange’s 

joint products. Rather, all of an 

exchange’s costs are incurred for the 

unified purposes of attracting order 

flow, executing and/or routing orders, 

and generating and selling data about 

market activity. The total return that an 

exchange earns reflects the revenues it 

receives from the joint products and the 

total costs of the joint products. 

The level of competition and 

contestability in the market is evident in 

the numerous alternative venues that 

compete for order flow, including 12 

options self-regulatory organization 

(‘‘SRO’’) markets, as well as 

internalizing broker-dealers (‘‘BDs’’) and 

various forms of alternative trading 

systems (‘‘ATSs’’), including dark pools 

and electronic communication networks 

(‘‘ECNs’’). Competition among trading 

platforms can be expected to constrain 

the aggregate return that each platform 

earns from the sale of its joint products, 

but different platforms may choose from 

a range of possible, and equally 

reasonable, pricing strategies as the 

means of recovering total costs. For 

example, some platforms may choose to 

pay rebates to attract orders, charge 

relatively low prices for market data 

products (or provide market data 

products free of charge), and charge 

relatively high prices for accessing 

posted liquidity. Other platforms may 

choose a strategy of paying lower 

rebates (or no rebates) to attract orders, 

setting relatively high prices for market 

data products, and setting relatively low 

prices for accessing posted liquidity. In 

this environment, there is no economic 

basis for regulating maximum prices for 

one of the joint products in an industry 

in which suppliers face competitive 

constraints with regard to the joint 

offering. 

The Existence of Alternatives. C2 is 

constrained in pricing the BBO, Book 

Depth and COB Data Feeds by the 

availability to market participants of 

alternatives to purchasing these 

products. C2 must consider the extent to 

which market participants would 

choose one or more alternatives instead 

of purchasing the exchange’s data. Other 

options exchanges can and have 

produced their own top-of-book, book 

depth and complex strategies market 

data products, and thus are sources of 

potential competition for MDX. For 

example, as noted above, BATS, ISE, 

NASDAQ OMX PHLX and NYSE offer 

market data products that compete with 

the BBO, Book Depth and COB Data 

Feeds. The large number of SROs, BDs, 

and ATSs that currently produce 

proprietary data or are currently capable 

of producing it provides further pricing 

discipline for proprietary data products. 

Each SRO, ATS, and BD is currently 

permitted to produce proprietary data 

products, and many currently do. In 

addition, the OPRA data feed is a 

significant competitive alternative to the 

BBO and last sale data included in the 

BBO and Book Depth Data Feeds. 

Further, data products are valuable to 

professional users only if they can be 

used for profit-generating purposes in 

their businesses and valuable to nonprofessional users only insofar as they 

provide information that such users 

expect will assist them in tracking 

prices and market trends and making 

trading decisions. 

The existence of numerous 

alternatives to the Exchange’s products, 

including proprietary data from other 

sources, ensures that the Exchange 

cannot set unreasonable fees, or fees 

that are unreasonably discriminatory, 

when vendors and subscribers can elect 

these alternatives or choose not to 

purchase a specific proprietary data 

product if its cost to purchase is not 

justified by the returns any particular 

vendor or subscriber would achieve 

through the purchase. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 23 and paragraph (f) of Rule 

19b–4 24 thereunder. At any time within 

60 days of the filing of the proposed rule 

change, the Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 


tkelley on DSK3SPTVN1PROD with NOTICES
566 Federal Register / Vol. 80, No. 3 / Tuesday, January 6, 2015 / Notices 

25 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 ICE owns 100% of the equity interest in ICE 

Holdings, Inc. (‘‘ICE Holdings’’), which in turn 

owns 100% of the equity interest in NYSE 

Holdings, LLC (‘‘NYSE Holdings’’). NYSE Holdings 

owns 100% of the equity interest of NYSE Group, 

Inc., which in turn directly or indirectly owns 

100% of the equity interest of three registered 

national securities exchanges and self-regulatory 

organizations—the Exchange, the New York Stock 

Exchange, LLC (‘‘NYSE’’) and NYSE MKT LLC 

(‘‘NYSE MKT’’) [sic]. 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

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 email to rule-comments@

sec.gov. Please include File Number SR– 

C2–2014–029 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–C2–2014–029. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet 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 

10:00 a.m. and 3:00 p.m. Copies of the 

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–C2– 

2014–029 and should be submitted on 

or before January 27, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.25

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30890 Filed 1–5–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73964; File No. SR– 

NYSEMKT–2014–107] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending the Bylaws of 

the Exchange’s Ultimate Parent 

Company, Intercontinental Exchange, 

Inc., To Designate Its Chief Strategic 

Officer, Chief Technology Officer and 

General Counsel as ‘‘Senior Officers’’ 

of ICE 

December 30, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that, on December 

22, 2014, NYSE MKT LLC (the 

‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Bylaws (the ‘‘ICE Bylaws’’) of the 

Exchange’s ultimate parent company, 

Intercontinental Exchange, Inc. (‘‘ICE’’), 

to designate its Chief Strategic Officer, 

Chief Technology Officer and General 

Counsel as ‘‘Senior Officers’’ of ICE. The 

text of the proposed rule change is 

available on the Exchange’s Web site at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange seeks approval for its 

ultimate parent entity ICE 3 to amend 

the ICE Bylaws to designate its Chief 

Strategic Officer, Chief Technology 

Officer and General Counsel (each, a 

‘‘Designated Officer’’ and together, the 

‘‘Designated Officers’’) as ‘‘Senior 

Officers’’ of ICE. Each Designated 

Officer was a Senior Officer under the 

ICE Bylaws prior to the acquisition by 

ICE of NYSE Euronext in 2013 because 

each also was a Senior Vice President. 

Under the ICE Bylaws, all Senior Vice 

Presidents are Senior Officers. As Senior 

Officers, the Designated Officers were 

entitled under Article X, Section 10.6 of 

the ICE Bylaws to indemnification by 

ICE against certain actions, suits and 

proceedings. 

Upon consummation of the 

acquisition of NYSE Euronext, the three 

titles were streamlined and the term 

‘‘Senior Vice President’’ was eliminated. 

Specifically, the officer whose former 

title was ‘‘Senior Vice President, Chief 

Strategic Officer’’ is now ‘‘Chief 

Strategic Officer’’; the officer whose 

former title was ‘‘Senior Vice President, 

Chief Technology Officer’’ is now 

‘‘Chief Technology Officer’’; and the 

officer whose title was formerly ‘‘Senior 

Vice President, General Counsel’’ is now 

‘‘General Counsel’’. The proposed 

amendment to the ICE Bylaws would 

assure that the Designated Officers 

continue to be identified as ‘‘Senior 


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