Federal Register / Vol. 80, No. 8 / Tuesday, January 13, 2015 / Notices 1681 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4 ‘‘Redistributor’’ means a vendor or any other 

person that provides an NYSE data product to a 

data recipient or to any system that a data recipient 

uses, irrespective of the means of transmission or 

access. 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) governing the 

security-based swap data repository 

(‘‘SDR’’) registration process, the duties 

of such repositories, and the core 

principles applicable to such 

repositories. 

• The Commission will consider 

whether to adopt Regulation SBSR 

under the Exchange Act to provide for 

regulatory reporting of security-based 

swap information and the public 

dissemination of security-based swap 

transaction, volume, and pricing 

information by registered SDRs. 

• The Commission will consider 

whether to propose certain new rules, 

rule amendments, and guidance to 

Regulation SBSR under the Exchange 

Act to address, among other things, the 

reporting duties for cleared and 

platform-executed security-based swap 

transactions. 

The duty officer determined that no 

earlier notice thereof was possible. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted, or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: January 8, 2015. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00418 Filed 1–9–15; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Closed Meeting 

on Thursday, January 15, 2015 at 2:00 

p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or her designee, has 

certified that, in her opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (5), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matter at the Closed Meeting. 

Commissioner Gallagher, as duty 

officer, voted to consider the items 

listed for the Closed Meeting in closed 

session. 

The subject matter of the Closed 

Meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact the Office of the Secretary at 

(202) 551–5400. 

Dated: January 8, 2015. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00419 Filed 1–9–15; 4:15 pm] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74011; File No. SR– 

NYSEARCA–2014–149] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending the Fees for 

NYSE ArcaBook 

January 7, 2015. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

24, 2014, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) 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 selfregulatory 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 

fees for NYSE ArcaBook to: (1) Establish 

eligibility requirements for 

redistribution on a managed nondisplay basis and add an access fee for 

managed non-display data recipients, 

operative on January 1, 2015; and (2) 

establish a fee cap for redistributor 

internal support use, operative on 

March 1, 2015. 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 proposes to amend the 

fees for NYSE ArcaBook, as set forth on 

the NYSE Arca Equities Proprietary 

Market Data Fee Schedule (‘‘Fee 

Schedule’’), as follows: 

• To establish eligibility requirements 

for redistribution of market data on a 

Managed Non-Display basis and 

establish an access fee for Managed 

Non-Display data recipients, operative 

on January 1, 2015; and 

• To establish a fee cap for 

redistributor internal support use, 

operative on March 1, 2015. 

Proposed Changes to Managed NonDisplay Services and Fees 

Non-Display Use of NYSE Arca 

Equities market data means accessing, 

processing, or consuming NYSE Arca 

Equities market data delivered via direct 

and/or Redistributor 4 data feeds for a 

purpose other than in support of a data 

recipient’s display or further internal or 

external redistribution. A Redistributor 

approved for Managed Non-Display 

Services manages and controls the 

access to NYSE ArcaBook and does not 

allow for further internal distribution or 

external redistribution of NYSE 

ArcaBook by the data recipients. 

Managed Non-Display Services Fees 

apply when a data recipient’s nonVerDate Sep<11>2014 17:10 Jan 12, 2015 Jkt 235001 PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 E:\FR\FM\13JAN1.SGM 13JAN1

asabaliauskas on DSK5VPTVN1PROD with NOTICES
1682 Federal Register / Vol. 80, No. 8 / Tuesday, January 13, 2015 / Notices 

5See Securities Exchange Act Release Nos. 69315 

(Apr. 5, 2013), 78 FR 21668 (Apr. 11, 2013) (SR– 

NYSEArca–2013–37) and 73011 (Sept. 5, 2014), 79 

FR 54315 (Sept. 11, 2014) (SR–NYSEArca–2014–93) 

(‘‘Non-Display Fee filings’’). 

6See Securities Exchange Act Release No. 62188 

(May 27, 2010), 75 FR 70311 (Nov. 17, 2010) (SR– 

NYSEArca–2010–23) (establishing Unit-of-Count 

Policy for NYSE Arca BBO and NYSE Arca Trades). 

NYSE ArcaBook uses the Unit-of-Count Policy for 

purposes of determining eligibility for Managed 

Non-Display Services. 

7The Exchange has separately proposed to retire 

the Unit-of-Count Policy and modify the eligibility 

requirements for Managed Non-Display Services for 

all of its proprietary market data products, 

including NYSE ArcaBook, and thereby harmonize 

the eligibility requirements for all NYSE Arca 

Equities data products that have Managed NonDisplay fees. See SR–NYSEArca–2014–147 (filing 

for NYSE Arca BBO and NYSE Arca Trades) and 

SR–NYSEArca–2014–148 (filing for NYSE Arca 

Integrated Feed) (collectively, ‘‘NYSE Arca 2014 

Filings’’). 

8See Securities Exchange Act Release Nos. 70748 

(Oct. 23, 2013), 70748 (Oct. 23, 2013), 78 FR 64569 

(Oct. 29, 2013) (SR–Phlx–2013–105) (notice of filing 

and immediate effectiveness of proposed rule 

change to establish non-display Managed Data 

Solution for NASDAQ OMX PHLX (‘‘Phlx’’)); 70269 

(Aug. 27, 2013), 78 FR 54336 (Sept. 3, 2013) (SR– 

NASDAQ–2013–106) (notice of filing and 

immediate effectiveness of proposed rule change to 

establish non-display Managed Data Solution for 

NASDAQ Stock Market (‘‘NASDAQ’’)); and 69182 

(Mar. 19, 2013), 78 FR 18378 (Mar. 26, 2013) (SR– 

Phlx–2013–28) (notice of filing and immediate 

effectiveness of proposed rule change to establish 

non-display Managed Data Solution for Phlx 

equities market PSX). 

9 In order to harmonize its approach to fees for 

its market data products, the Exchange is proposing 

to establish access fees for Managed Non-Display 

Services for NYSE Arca BBO, NYSE Arca Trades, 

and NYSE Arca Integrated Feed that are also half 

of the existing access fee for each respective data 

feed. See NYSE Arca 2014 Filings, supra note 7. 

10See Nasdaq Global Data Policies, Oct. 10, 2014, 

http://www.nasdaqtrader.com/content/

AdministrationSupport/AgreementsData/data

policies.pdf (last visited Dec. 15, 2014), ‘‘NonBillable: Internal Administrative Usage Policy,’’ 

which establishes similar standards for internal 

administrative usage on a non-billable basis. 

display applications are hosted by a 

Redistributor that has been approved for 

Managed Non-Display Services.5

A Redistributor approved for 

Managed Non-Display Services is 

required to report to the Exchange on a 

monthly basis the data recipients that 

are receiving NYSE ArcaBook through 

the Redistributor’s Managed NonDisplay Service. A data recipient 

receiving NYSE ArcaBook through a 

Redistributor’s Managed Non-Display 

Service does not have any reporting 

requirements. 

Currently, to be approved for 

Managed Non-Display Services, a 

Redistributor of the Managed NonDisplay Services must be approved 

under the Unit-of-Count policy.6 In 

connection with the retirement of the 

Unit-of-Count Policy,7 eligibility for 

Managed Non-Display Services of NYSE 

ArcaBook would no longer be based on 

eligibility under the Unit-of-Count 

Policy. The Exchange proposes instead 

to establish eligibility requirements 

specifically for the redistribution of 

market data for Managed Non-Display 

Services. The Exchange also proposes to 

add an access fee that would apply to 

a data recipient that receives NYSE 

ArcaBook from an approved 

Redistributor of Managed Non-Display 

Services. 

The proposed eligibility requirements 

for the provision of Managed NonDisplay Services would be similar to the 

eligibility requirements for the Unit-ofCount Policy in that they would require 

the Redistributor to manage and control 

the access to NYSE ArcaBook for data 

recipients’ non-display applications and 

not allow for further internal 

distribution or external redistribution of 

the information by data recipients. In 

addition, to be eligible to provide 

Managed Non-Display Services, the 

Redistributor would be required to (a) 

host the data recipients’ non-display 

applications in equipment located in the 

Redistributor’s data center and/or 

hosted space/cage and (b) offer NYSE 

ArcaBook in the Redistributor’s own 

messaging formats (rather than using 

raw message formats) by reformatting 

and/or altering NYSE ArcaBook prior to 

retransmission without affecting the 

integrity of NYSE ArcaBook and 

without rendering NYSE ArcaBook 

inaccurate, unfair, uninformative, 

fictitious, misleading or discriminatory. 

The proposed eligibility requirements 

are similar to data distribution models 

currently in use and align the Exchange 

with other markets.8

The reporting requirements associated 

with the Managed Non-Display Service 

would not change. A Redistributor 

approved for Managed Non-Display 

Service would be required to report to 

the Exchange on a monthly basis the 

data recipients that are receiving NYSE 

ArcaBook through the Redistributor’s 

Managed Non-Display Service. A data 

recipient receiving NYSE ArcaBook 

through a Redistributor’s Managed NonDisplay Service would continue not to 

have any reporting requirements. 

In addition, the Exchange proposes to 

adopt an Access Fee of $1,000/month 

applicable only to data recipients that 

receive NYSE ArcaBook from an 

approved Redistributor of Managed 

Non-Display Services, operative January 

1, 2015. Currently, data recipients are 

required to pay an Access Fee of $2,000/ 

month to receive NYSE ArcaBook, 

which has not been charged to data 

recipients of Managed Non-Display 

Services of NYSE ArcaBook. Because 

the purpose of an access fee is to charge 

data recipients for access to the 

Exchange’s proprietary market data, the 

Exchange believes it is appropriate to 

charge an access fee to all data 

recipients, including recipients of 

Managed Non-Display Services.9 In 

recognition that data recipients of 

Managed Non-Display Services receive 

NYSE ArcaBook in a controlled format, 

the Exchange proposes to establish an 

Access Fee that would be applicable 

only to data recipients of Managed NonDisplay Services and that would be half 

the size of the current Access Fee. In 

connection with this change, the 

Exchange also proposes to amend the 

Fee Schedule to specify that the current 

Access Fee of $2,000/month is charged 

to data recipients other than those 

receiving data through Managed NonDisplay Services. The proposed 

Managed Non-Display Access fee would 

be in addition to the current Managed 

Non-Display Services Fee of $1,800/

month by each data recipient. 

Proposed Redistributor Internal Support 

User Fee Cap 

The Exchange currently charges a 

Professional User Fee of $40/month. 

This user fee generally applies to each 

display device that has access to NYSE 

ArcaBook. The Exchange proposes to 

establish a Redistributor Support Fee 

Cap of $2,000/month, the equivalent of 

fees payable for 50 Professional Users 

per month, effective as of March 1, 

2015, and to add the Redistributor 

Support Fee Cap to the Fee Schedule. 

The proposed cap on user fees would 

apply to a Redistributor’s internal users 

who receive the NYSE ArcaBook data 

feed and provide support to the 

Redistributor for the NYSE ArcaBook 

data feed in the areas of customer 

service, data quality, development, 

software product management, product 

development, programming, technical 

operations, technical support, and sales. 

These internal users would be required 

to be located on the Redistributor’s 

premises or to access NYSE ArcaBook 

only on the Redistributor’s platform. 

Internal users using NYSE ArcaBook in 

connection with trading, investment 

advice, newsroom activities, research, 

algorithmic programming for trading 

systems, free trials/sales promotions, 

personal use, or to perform any other 

functions not related to the provision of 

support functions to the Redistributor’s 

external customers would not be 

included in the Redistributor Support 

Fee Cap.10

Redistributors would have to request 

that their Professional User Fees related 

to such internal support functions be 

counted towards the Redistributor 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 8 / Tuesday, January 13, 2015 / Notices 1683 

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

12 15 U.S.C. 78f(b)(4), (5). 

13See supra note 8. 

14See supra note 8. NASDAQ offers a Managed 

Data Solution that assesses a monthly Managed 

Data Solution Administration fee of $1,500 and 

monthly Subscriber fees of $60 for nonprofessionals to $300 for professionals. See 

NASDAQ Rule 7026(b). Phlx charges a monthly 

Managed Data Solution Administration fee of 

$2,000 and a monthly Subscriber fee of $500. The 

monthly License fee is in addition to the monthly 

Distributor fee of $3,500 (for external usage), and 

the $500 monthly Subscriber fee is assessed for 

each Subscriber of a Managed Data Solution. See 

Securities Exchange Act Release No. 70748 (October 

23, 2013), 78 FR 64569 (October 29, 2013) (SR– 

Phlx–2013–105). 

15See NASDAQ Rule 7023 (Nasdaq Totalview) 

and BATS Rule 11.22(a) and (c) (BATS TCP Pitch 

and Multicast Pitch). 16See In the Matter of the Application of 

Securities Industry And Financial Markets 

Association For Review of Actions Taken by SelfRegulatory Organizations, Release Nos. 34–72182; 

AP–3–15350; AP–3–15351 (May 16, 2014). 17For example, Goldman Sachs Execution and 

Clearing, L.P. has disclosed that it does not use 

proprietary market data in connection with Sigma 

X, its ATS. See response to Question E3, available 

at http://www.goldmansachs.com/media-relations/

in-the-news/current/pdf-media/gsec-orderhandling-practices-ats-specific.pdf. By way of 

comparison, IEX has disclosed that it uses 

proprietary market data feeds from all registered 

stock exchanges and the LavaFlow ECN. See 

http://www.iextrading.com/about/. 

Support Fee Cap. To be eligible for the 

fee cap, a Redistributor would have to 

provide the Exchange with a list of all 

employees who would be reported as 

eligible internal users, and to include in 

the list the job functions of the 

employees and explanations of their 

uses of NYSE ArcaBook. The Exchange 

reserves the right under its contracts 

with Redistributors to monitor use 

closely and be provided with updated 

lists of employees, their job functions 

and their use of NYSE ArcaBook, upon 

request. If an employee’s use of NYSE 

ArcaBook does not meet the 

requirements of internal support 

function described above, it would not 

be eligible for the Redistributor Support 

Fee Cap and would be charged a 

separate Professional User Fee. 

The proposed Redistributor Support 

Fee Cap would be operative March 1, 

2015. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

the provisions of Section 6 of the Act,11

in general, and Sections 6(b)(4) and 

6(b)(5) of the Act,12 in particular, in that 

it provides an equitable allocation of 

reasonable fees among users and 

recipients of the data and is not 

designed to permit unfair 

discrimination among customers, 

issuers, and brokers. 

The Exchange believes that revising 

the eligibility requirements for Managed 

Non-Display Services so that the 

requirements are more closely aligned 

with the nature of the services being 

provided is reasonable. The proposed 

additional requirements for hosting in 

the Redistributor’s data center and for 

reformatting and/or altering the market 

data prior to retransmission are also 

consistent with similar requirements of 

other markets for the provision of 

managed data.13

The Exchange believes that the 

proposed Access Fee for Managed NonDisplay Services is reasonable, because 

the data is of value to recipients, and it 

is reasonable to charge them a lower 

access fee because they are receiving the 

data through a Redistributor in a 

controlled form rather than from the 

Exchange in raw form. The Exchange 

believes that the proposed fee directly 

and appropriately reflects the significant 

value of using non-display data in a 

wide range of computer-automated 

functions relating to both trading and 

non-trading activities and that the 

number and range of these functions 

continue to grow through innovation 

and technology developments. 

NASDAQ and Phlx also both offer 

managed non-display data solutions and 

charge access fees for such services.14

The fee is also equitable and not 

unfairly discriminatory because it 

would apply to all data recipients that 

choose to subscribe to Managed NonDisplay Services for NYSE ArcaBook. 

The Exchange believes that it is 

reasonable to establish the Redistributor 

Support Fee Cap. The purpose of the 

Professional User Fee is to charge for 

each use of NYSE ArcaBook data feed. 

The Exchange believes it is appropriate 

to charge user fees for employees who 

provide internal support functions at 

Redistributors because the business 

model of Redistributors is distributing 

data, and as a related function, 

providing support functions for such 

distribution of data. Accordingly, the 

internal support functions at a 

Redistributor contribute to the value 

that such Redistributor provides to its 

own customers, and are therefore an 

integral part of a Redistributor’s 

business model. While such internal use 

is a value to a Redistributor and its 

customers, the Exchange recognizes that 

internal support functions differ from 

other uses of NYSE ArcaBook, which is 

why the Exchange provides for a 

Redistributor Support Fee Cap. The 

Exchange believes it is reasonable to 

establish a fee cap to reflect the value 

that such support functions serve within 

a Redistributor. While the NYSE 

anticipates that only the largest vendors 

would devote sufficient personnel to 

administrative functions to take 

advantage of the proposed increased fee 

cap, in the Exchange’s view, limiting the 

fee exposure of its largest vendors does 

not unreasonably discriminate against 

other vendors under Section 603(a)(2) of 

Regulation NMS. 

The fees are also equitable and not 

unfairly discriminatory because they 

will apply to all data recipients that 

choose to subscribe to the feeds. 

The Exchange notes that NYSE 

ArcaBook is entirely optional. The 

Exchange is not required to make NYSE 

ArcaBook available or to offer any 

specific pricing alternatives to any 

customers, nor is any firm required to 

purchase NYSE ArcaBook. Firms that do 

purchase NYSE ArcaBook do so for the 

primary goals of using it to increase 

revenues, reduce expenses, and in some 

instances compete directly with the 

Exchange (including for order flow); 

those firms are able to determine for 

themselves whether NYSE ArcaBook or 

any other similar products are 

attractively priced or not. 

Firms that do not wish to purchase 

NYSE ArcaBook at the new prices have 

a variety of alternative market data 

products from which to choose,15 or if 

NYSE ArcaBook does not provide 

sufficient value to firms as offered based 

on the uses those firms have or planned 

to make of it, such firms may simply 

choose to conduct their business 

operations in ways that do not use 

NYSE ArcaBook. The Exchange notes 

that broker-dealers are not required to 

purchase proprietary market data to 

comply with their best execution 

obligations.16 Similarly, there is no 

requirement in Regulation NMS or any 

other rule that proprietary data be 

utilized for order routing decisions, and 

some broker-dealers and ATSs have 

chosen not to do so.17

The decision of the United States 

Court of Appeals for the District of 

Columbia Circuit in NetCoalition v. 

SEC, 615 F.3d 525 (D.C. Cir. 2010), 

upheld reliance by the Securities and 

Exchange Commission (‘‘Commission’’) 

upon the existence of competitive 

market mechanisms to set reasonable 

and equitably allocated fees for 

proprietary market data: 

In fact, the legislative history indicates that 

the Congress intended that the market system 

‘evolve through the interplay of competitive 

forces as unnecessary regulatory restrictions 

are removed’ and that the SEC wield its 

regulatory power ‘in those situations where 

competition may not be sufficient,’ such as 

in the creation of a ‘consolidated 

transactional reporting system.’ 

Id. at 535 (quoting H.R. Rep. No. 94– 

229 at 92 (1975), as reprinted in 1975 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
1684 Federal Register / Vol. 80, No. 8 / Tuesday, January 13, 2015 / Notices 

18NetCoalition, 615 F.3d at 535. 

19The Exchange believes that cost-based pricing 

would be impractical because it would create 

enormous administrative burdens for all parties and 

the Commission, to cost-regulate a large number of 

participants and standardize and analyze 

extraordinary amounts of information, accounts, 

and reports. In addition, and as described below, it 

is impossible to regulate market data prices in 

isolation from prices charged by markets for other 

services that are joint products. Cost-based rate 

regulation would also lead to litigation and may 

distort incentives, including those to minimize 

costs and to innovate, leading to further waste. 

Under cost-based pricing, the Commission would 

be burdened with determining a fair rate of return, 

and the industry could experience frequent rate 

increases based on escalating expense levels. Even 

in industries historically subject to utility 

regulation, cost-based ratemaking has been 

discredited. As such, the Exchange believes that 

cost-based ratemaking would be inappropriate for 

proprietary market data and inconsistent with 

Congress’s direction that the Commission use its 

authority to foster the development of the national 

market system, and that market forces will continue 

to provide appropriate pricing discipline. See 

Appendix C to NYSE’s comments to the 

Commission’s 2000 Concept Release on the 

Regulation of Market Information Fees and 

Revenues, which can be found on the Commission’s 

Web site at http://www.sec.gov/rules/concept/

s72899/buck1.htm. 

20Press Release, U.S. Department of Justice, 

Assistant Attorney General Christine Varney Holds 

Conference Call Regarding NASDAQ OMX Group 

Inc. and IntercontinentalExchange Inc. Abandoning 

Their Bid for NYSE Euronext (May 16, 2011), 

available at http://www.justice.gov/iso/opa/atr/

speeches/2011/at-speech-110516.html; see also 

Complaint in U.S. v. Deutsche Borse AG and NYSE 

Euronext, Case No. 11–cv–2280 (D.C. Dist.) ¶ 24 

(‘‘NYSE and Direct Edge compete head-to-head . . . 

in the provision of real-time proprietary equity data 

products.’’) 

21Concept Release on Equity Market Structure, 

Securities Exchange Act Release No. 61358 (Jan. 14, 

2010), 75 FR 3594 (Jan. 21, 2010) (File No. S7–02– 

10). This Concept Release included data from the 

third quarter of 2009 showing that no market center 

traded more than 20% of the volume of listed 

stocks, further evidencing the dispersal of and 

competition for trading activity. Id. at 3598. Data 

available on ArcaVision show that from June 30, 

2013 to June 30, 2014, no exchange traded more 

than 12% of the volume of listed stocks by either 

trade or dollar volume, further evidencing the 

continued dispersal of and fierce competition for 

trading activity. See https://www.arcavision.com/

Arcavision/arcalogin.jsp. 

22Mary Jo White, Enhancing Our Equity Market 

Structure, Sandler O’Neill & Partners, L.P. Global 

Exchange and Brokerage Conference (June 5, 2014) 

(available on the Commission Web site), citing 

Tuttle, Laura, 2014, ‘‘OTC Trading: Description of 

Non-ATS OTC Trading in National Market System 

Stocks,’’ at 7–8. 

U.S.C.C.A.N. 323). The court agreed 

with the Commission’s conclusion that 

‘‘Congress intended that ‘competitive 

forces should dictate the services and 

practices that constitute the U.S. 

national market system for trading 

equity securities.’ ’’ 18

As explained below in the Exchange’s 

Statement on Burden on Competition, 

the Exchange believes that there is 

substantial evidence of competition in 

the marketplace for proprietary market 

data and that the Commission can rely 

upon such evidence in concluding that 

the fees established in this filing are the 

product of competition and therefore 

satisfy the relevant statutory standards. 

In addition, the existence of alternatives 

to these data products, such as 

consolidated data and proprietary data 

from other sources, as described below, 

further ensures that the Exchange 

cannot set unreasonable fees, or fees 

that are unreasonably discriminatory, 

when vendors and subscribers can 

select such alternatives. 

As the NetCoalition decision noted, 

the Commission is not required to 

undertake a cost-of-service or 

ratemaking approach. The Exchange 

believes that, even if it were possible as 

a matter of economic theory, cost-based 

pricing for non-core market data would 

be so complicated that it could not be 

done practically or offer any significant 

benefits.19

For these reasons, the Exchange 

believes that the proposed fees are 

reasonable, equitable, and not unfairly 

discriminatory. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. An 

exchange’s ability to price its 

proprietary market data feed products is 

constrained by actual competition for 

the sale of proprietary market data 

products, the joint product nature of 

exchange platforms, and the existence of 

alternatives to the Exchange’s 

proprietary data. 

The Existence of Actual Competition 

The market for proprietary data 

products is currently competitive and 

inherently contestable because there is 

fierce competition for the inputs 

necessary for the creation of proprietary 

data and strict pricing discipline for the 

proprietary products themselves. 

Numerous exchanges compete with one 

another for listings and order flow and 

sales of market data itself, providing 

ample opportunities for entrepreneurs 

who wish to compete in any or all of 

those areas, including producing and 

distributing their own market data. 

Proprietary data products are produced 

and distributed by each individual 

exchange, as well as other entities, in a 

vigorously competitive market. Indeed, 

the U.S. Department of Justice (‘‘DOJ’’) 

(the primary antitrust regulator) has 

expressly acknowledged the aggressive 

actual competition among exchanges, 

including for the sale of proprietary 

market data. In 2011, the DOJ stated that 

exchanges ‘‘compete head to head to 

offer real-time equity data products. 

These data products include the best bid 

and offer of every exchange and 

information on each equity trade, 

including the last sale.’’ 20

Moreover, competitive markets for 

listings, order flow, executions, and 

transaction reports provide pricing 

discipline for the inputs of proprietary 

data products and therefore constrain 

markets from overpricing proprietary 

market data. Broker-dealers send their 

order flow and transaction reports to 

multiple venues, rather than providing 

them all to a single venue, which in turn 

reinforces this competitive constraint. 

As a 2010 Commission Concept Release 

noted, the ‘‘current market structure can 

be described as dispersed and complex’’ 

with ‘‘trading volume . . . dispersed 

among many highly automated trading 

centers that compete for order flow in 

the same stocks’’ and ‘‘trading centers 

offer[ing] a wide range of services that 

are designed to attract different types of 

market participants with varying trading 

needs.’’ 21 More recently, SEC Chair 

Mary Jo White has noted that 

competition for order flow in exchangelisted equities is ‘‘intense’’ and divided 

among many trading venues, including 

exchanges, more than 40 alternative 

trading systems, and more than 250 

broker-dealers.22

If an exchange succeeds in its 

competition for quotations, order flow, 

and trade executions, then it earns 

trading revenues and increases the value 

of its proprietary market data products 

because they will contain greater quote 

and trade information. Conversely, if an 

exchange is less successful in attracting 

quotes, order flow, and trade 

executions, then its market data 

products may be less desirable to 

customers using them in support of 

order routing and trading decisions in 

light of the diminished content; data 

products offered by competing venues 

may become correspondingly more 

attractive. Thus, competition for 

quotations, order flow, and trade 

executions puts significant pressure on 

an exchange to maintain both execution 

and data fees at reasonable levels. 

In addition, in the case of products 

that are also redistributed through 

market data vendors, such as Bloomberg 

and Thompson Reuters, the vendors 

themselves provide additional price 

discipline for proprietary data products 

because they control the primary means 

of access to certain end users. These 

vendors impose price discipline based 

upon their business models. For 

example, vendors that assess a 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 8 / Tuesday, January 13, 2015 / Notices 1685 

23See Securities Exchange Act Release No. 72153 

(May 12, 2014), 79 FR 28575, 28578 n.15 (May 16, 

2014) (SR–NASDAQ–2014–045) (‘‘[A]ll of the 

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.’’). See also Securities Exchange Act 

Release No. 62907 (Sept. 14, 2010), 75 FR 57314, 

57317 (Sept. 20, 2010) (SR–NASDAQ–2010–110), 

and Securities Exchange Act Release No. 62908 

(Sept. 14, 2010), 75 FR 57321, 57324 (Sept. 20, 

2010) (SR–NASDAQ–2010–111). 

24See generally Mark Hirschey, Fundamentals of 

Managerial Economics, at 600 (2009) (‘‘It is 

important to note, however, that although it is 

possible to determine the separate marginal costs of 

goods produced in variable proportions, it is 

impossible to determine their individual average 

costs. This is because common costs are expenses 

necessary for manufacture of a joint product. 

Common costs of production—raw material and 

equipment costs, management expenses, and other 

overhead—cannot be allocated to each individual 

by-product on any economically sound basis. . . . 

Any allocation of common costs is wrong and 

arbitrary.’’). This is not new economic theory. See, 

e.g., F.W. Taussig, ‘‘A Contribution to the Theory 

of Railway Rates,’’ Quarterly Journal of Economics 

V(4) 438, 465 (July 1891) (‘‘Yet, surely, the division 

is purely arbitrary. These items of cost, in fact, are 

jointly incurred for both sorts of traffic; and I cannot 

share the hope entertained by the statistician of the 

Commission, Professor Henry C. Adams, that we 

shall ever reach a mode of apportionment that will 

lead to trustworthy results.’’). 

25FINRA’s Alternative Display Facility also 

receives over-the-counter trade reports that it sends 

to CTA. 

26This is simply a securities market-specific 

example of the well-established principle that in 

certain circumstances more sales at lower margins 

can be more profitable than fewer sales at higher 

margins; this example is additional evidence that 

market data is an inherent part of a market’s joint 

platform. 

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. Vendors 

will not elect to make available NYSE 

ArcaBook unless their customers 

request it, and customers will not elect 

to pay the proposed fees unless NYSE 

ArcaBook can provide value by 

sufficiently increasing revenues or 

reducing costs in the customer’s 

business in a manner that will offset the 

fees. All of these factors operate as 

constraints on pricing proprietary data 

products. 

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, proprietary market data and trade 

executions are a paradigmatic example 

of joint products with joint costs. The 

decision of 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 availability and 

quality, and price and distribution of 

data products. Without a platform to 

post quotations, receive orders, and 

execute trades, exchange data products 

would not exist. 

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 platform for 

posting quotes, accepting orders, and 

executing transactions 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 brokerdealer customers generally view the 

costs of transaction executions and 

market data as a unified cost of doing 

business with the exchange. A brokerdealer will only choose to direct orders 

to an exchange if the revenue from the 

transaction exceeds its cost, including 

the cost of any market data that the 

broker-dealer chooses to buy in support 

of its order routing and trading 

decisions. If the costs of the transaction 

are not offset by its value, then the 

broker-dealer may choose instead not to 

purchase the product and trade away 

from that exchange. There is substantial 

evidence of the strong correlation 

between order flow and market data 

purchases. For example, in November 

2014 more than 80% of the transaction 

volume on each of NYSE Arca Equities 

and the Exchange’s affiliates New York 

Stock Exchange LLC (‘‘NYSE’’) and 

NYSE MKT LLC (‘‘NYSE MKT’’), was 

executed by market participants that 

purchased one or more proprietary 

market data products (the 20 firms were 

not the same for each market). A supracompetitive increase in the fees for 

either executions or market data would 

create a risk of reducing an exchange’s 

revenues from both products. 

Other market participants have noted 

that proprietary market data and trade 

executions are joint products of a joint 

platform and have common costs.23 The 

Exchange agrees with and adopts those 

discussions and the arguments therein. 

The Exchange also notes that the 

economics literature confirms that there 

is no way to allocate common costs 

between joint products that would shed 

any light on competitive or efficient 

pricing.24

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 because it is 

impossible to obtain the data inputs to 

create market data products without a 

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

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. 

As noted above, the level of 

competition and contestability in the 

market is evident in the numerous 

alternative venues that compete for 

order flow, including 12 equities selfregulatory organization (‘‘SRO’’) 

markets, as well as various forms of 

ATSs, including dark pools and 

electronic communication networks 

(‘‘ECNs’’), and internalizing brokerdealers. SRO markets compete to attract 

order flow and produce transaction 

reports via trade executions, and two 

FINRA-regulated Trade Reporting 

Facilities compete to attract transaction 

reports from the non-SRO venues.25

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 trading 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. For 

example, BATS and Direct Edge, which 

previously operated as ATSs and 

obtained exchange status in 2008 and 

2010, respectively, have provided 

certain market data at no charge on their 

Web sites in order to attract more order 

flow, and use revenue rebates from 

resulting additional executions to 

maintain low execution charges for their 

users.26 Similarly, LavaFlow ECN 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
1686 Federal Register / Vol. 80, No. 8 / Tuesday, January 13, 2015 / Notices 

27See ‘‘LavaFlow—ADF Migration,’’ available at 

https://www.lavatrading.com/news/pdf/LavaFlow_

ADF_Migration.pdf. 

28See supra note 15. 

29See supra note 27. 

30 15 U.S.C. 78s(b)(3)(A). 

31 17 CFR 240.19b–4(f)(2). 

32 15 U.S.C. 78s(b)(2)(B). 

provides market data to its subscribers 

at no charge.27 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. 

Existence of Alternatives 

The large number of SROs, ATSs, and 

internalizing broker-dealers that 

currently produce proprietary data or 

are currently capable of producing it 

provides further pricing discipline for 

proprietary data products. Each SRO, 

ATS, and broker-dealer is currently 

permitted to produce and sell 

proprietary data products, and many 

currently do or have announced plans to 

do so, including but not limited to the 

Exchange, NYSE, NYSE MKT, NASDAQ 

OMX, BATS, and Direct Edge. 

The fact that proprietary data from 

ATSs, internalizing broker-dealers, and 

vendors can bypass SROs is significant 

in two respects. First, non-SROs can 

compete directly with SROs for the 

production and sale of proprietary data 

products. By way of example, BATS and 

NYSE Arca both published proprietary 

data on the Internet before registering as 

exchanges. Second, because a single 

order or transaction report can appear in 

an SRO proprietary product, a non-SRO 

proprietary product, or both, the amount 

of data available via proprietary 

products is greater in size than the 

actual number of orders and transaction 

reports that exist in the marketplace. 

With respect to NYSE ArcaBook, 

competitors offer a close substitute 

product.28 Because market data users 

can find suitable substitutes for most 

proprietary market data products, a 

market that overprices its market data 

products stands a high risk that users 

may substitute another source of market 

data information for its own. 

Those competitive pressures imposed 

by available alternatives are evident in 

the Exchange’s proposed pricing. 

In addition to the competition and 

price discipline described above, the 

market for proprietary data products is 

also highly contestable because market 

entry is rapid and inexpensive. The 

history of electronic trading is replete 

with examples of entrants that swiftly 

grew into some of the largest electronic 

trading platforms and proprietary data 

producers: Archipelago, Bloomberg 

Tradebook, Island, RediBook, Attain, 

TrackECN, BATS Trading and Direct 

Edge. As noted above, BATS launched 

as an ATS in 2006 and became an 

exchange in 2008, while Direct Edge 

began operations in 2007 and obtained 

exchange status in 2010. As noted 

above, LavaFlow ECN provides market 

data to its subscribers at no charge.29

In setting the proposed fees, the 

Exchange considered the 

competitiveness of the market for 

proprietary data and all of the 

implications of that competition. The 

Exchange believes that it has considered 

all relevant factors and has not 

considered irrelevant factors in order to 

establish fair, reasonable, and not 

unreasonably discriminatory fees and an 

equitable allocation of fees among all 

users. 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 the attendant fees are not 

justified by the returns that any 

particular vendor or data recipient 

would achieve through the purchase. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 30 of the Act and 

subparagraph (f)(2) of Rule 19b–4 31

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 32 of the Act 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– 

NYSEARCA–2014–149 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–NYSEARCA–2014–149. 

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 will also be available for 

inspection and copying at the NYSE’s 

principal office and on its Internet Web 

site at www.nyse.com. 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– 

NYSEARCA–2014–149 and should be 

submitted on or before February 3, 2015. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 8 / Tuesday, January 13, 2015 / Notices 1687 

33 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Bylaws define ‘‘Non-Affiliated Directors’’ as 

U.S. Persons who are not members of the Board of 

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

and qualify as independent under NYSE 

Regulation’s director independence policy. See 

Bylaws of NYSE Regulation, Inc., Article III, Section 

1(A); see also Securities Exchange Act Release No. 

67564 (August 1, 2012), 77 FR 47161 (August 7, 

2012) (SR–NYSE–2012–17; SR–NYSEArca–2012– 

59; SR–NYSEMKT–2012–07) (approving NYSE 

Regulation’s director independence policy). The 

Bylaws require that a majority of NYSE Regulation’s 

Board of Directors consist of Non-Affiliated 

Directors. The remaining directors are NYSE 

Regulation’s Chief Executive Officer (‘‘CEO’’) and 

members of the ICE Board of Directors that qualify 

as independent under NYSE Regulation’s director 

independence policy. The Exchange represents that 

the Bylaws do not require any affiliated directors 

other than the NYSE Regulation CEO. 

4See Securities Exchange Act Release No. 53382 

(February 27, 2006), 71 FR 11251 (March 6, 2006) 

(SR–NYSE–2005–77) (approving NYSE’s business 

combination with Archipelago Holdings, Inc.). The 

Exchange has posted a copy of the Delegation 

Agreement on its public Web site at www.nyse.com. 

5See Securities Exchange Act Release No. 73657 

(November 20, 2014), 79 FR 70608 (SR–NYSE– 

2014–62). 

6 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

7 15 U.S.C. 78f(b)(1). 

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

9 17 CFR 200.30–3(a)(12). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00295 Filed 1–12–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 74010; File No. SR–NYSE– 

2014–62] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Approving Proposed Rule Change 

Amending the Bylaws of New York 

Stock Exchange LLC’s Wholly-Owned 

Subsidiary, NYSE Regulation, Inc., To 

Provide That Non-Affiliated Directors 

of NYSE Regulation, Inc. Would Not Be 

Removed for Cause If They Are Acting 

in Good Faith in Exercising Their 

Responsibilities as Directors Related 

to NYSE Regulation’s Functions and 

Responsibilities Delegated to It Under 

the Delegation Agreement Between 

New York Stock Exchange LLC, NYSE 

Regulation and NYSE Market (DE), Inc. 

January 7, 2015. 

On November 7, 2014, the New York 

Stock Exchange LLC (‘‘NYSE’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’),1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend the Sixth Amended and Restated 

Bylaws (‘‘Bylaws’’) of its wholly-owned 

subsidiary, NYSE Regulation, Inc. 

(‘‘NYSE Regulation’’), to provide that 

non-affiliated directors of NYSE 

Regulation (‘‘Non-Affiliated 

Directors’’) 3 would not be removed for 

cause if they are acting in good faith in 

exercising their responsibilities as 

directors related to NYSE Regulation’s 

functions and responsibilities delegated 

to it under the delegation agreement 

between the Exchange, NYSE 

Regulation, and NYSE Market (DE), Inc. 

(‘‘Delegation Agreement’’).4 The 

proposed rule change was published for 

comment in the Federal Register on 

November 26, 2014.5 The Commission 

did not receive any comment letters 

regarding the proposal. This order 

approves the proposed rule change. 

The Exchange proposes to amend 

Article III, Section 4 of the Bylaws to 

provide that Non-Affiliated Directors 

would not be removed for cause if they 

are acting in good faith in exercising 

their responsibilities as directors related 

to the functions and responsibilities of 

NYSE Regulation delegated to it under 

the Delegation Agreement. The 

Exchange also proposes to make a 

conforming change to the Bylaws so that 

the title of the Bylaws would read 

‘‘Seventh Amended and Restated 

Bylaws of NYSE Regulation, Inc.’’ 

Currently, Article III, Section 4 of the 

Bylaws provides that the Exchange may 

only remove Non-Affiliated Directors for 

‘‘cause.’’ The Exchange proposes to 

amend Article III, Section 4 so that 

‘‘cause’’ would not encompass 

‘‘decisions or actions taken in good faith 

by a Non-Affiliated Director in his or 

her capacity as a Director of [NYSE 

Regulation] and related’’ to NYSE 

Regulation’s delegated regulatory 

functions and responsibilities under the 

Delegation Agreement. The Exchange 

stated that this proposed amendment to 

the Bylaws would make explicit that 

conduct consistent with a NonAffiliated Director’s duties and 

responsibilities related to NYSE 

Regulation’s delegated functions and 

responsibilities would not constitute 

grounds for removal. 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.6 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(1) of the Act,7 which requires an 

exchange to be so organized and have 

the capacity to carry out the purposes of 

the Act and to comply, and to enforce 

compliance by its members and persons 

associated with its members, with the 

Act, the rules and regulations 

thereunder, and the rules of the 

exchange. The Commission also finds 

that the proposed rule change is 

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

Act,8 which requires that the rules of an 

exchange be designed, among other 

things, to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest. 

The Commission notes that the 

proposed amendment to the Bylaws 

would make explicit that conduct 

consistent with a Non-Affiliated 

Director’s duties and responsibilities 

related to NYSE Regulation’s delegated 

functions and responsibilities would not 

constitute grounds for such director’s 

removal from NYSE Regulation’s Board 

of Directors. The Exchange stated that 

the proposed amendment to the Bylaws 

would provide Non-Affiliated Directors 

of NYSE Regulation with reasonable 

assurances that actions or decisions, 

which were consistent with their 

fiduciary duty and which such NonAffiliated Directors believed, in good 

faith, to be the proper exercise of NYSE 

Regulation’s delegated functions and 

responsibilities, could not be used as a 

basis to remove those directors from 

office. The Exchange believes that the 

proposal would remove uncertainty 

surrounding this issue and would 

contribute to a more effective, efficient, 

and orderly decision-making process by 

NYSE Regulation’s Board of Directors. 

Based on the foregoing, the Commission 

believes the proposed rule change is 

consistent with the Act. 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–NYSE–2014– 

62) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00294 Filed 1–12–15; 8:45 am] 

BILLING CODE 8011–01–P 


asabaliauskas on DSK5VPTVN1PROD with NOTICES