2148 Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices 

17 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release Nos. 59544 

(Mar. 9, 2009), 74 FR 11162 (Mar. 16, 2009) (SR– 

NYSE–2008–131) and 62038 (May 5, 2010), 75 FR 

26825 (May 12, 2010) (SR–NYSE–2010–22) (‘‘Unitof-Count Policy filings’’). See also Securities 

Exchange Act Release Nos. 69278 (Apr. 2, 2013), 78 

FR 20973 (April 8, 2013) (SR–2013–25) and 72923 

(Aug. 26, 2014), 79 FR 52079 (Sept. 2, 2014) (SR– 

NYSE–2014–43) (‘‘Non-Display Fee filings’’). 

5A $25,000 per month cap on non-professional 

user fees applies to broker-dealers only. 6See Unit-of-Count Policy filings supra note 4. 7Existing customers approved for the Unit-ofCount Policy for display usage have continued to 

follow the Policy in anticipation of new display fees 

being implemented. 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

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– 

BX–2015–002 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BX–2015–002. 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 such 

filing also will be available for 

inspection and copying at the principal 

offices 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–BX– 

2015–002, and should be submitted on 

or before February 5, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00528 Filed 1–14–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74027; File No. SR–NYSE– 

2014–76] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending the 

Fees for NYSE OpenBook 

January 9, 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 

31, 2014, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) 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 OpenBook to: (1) Change 

the way the user fee is calculated and 

applied, operative on January 1, 2015; 

(2) establish eligibility requirements for 

redistribution on a managed nondisplay basis and an access fee for 

managed non-display data recipients, 

operative on January 1, 2015; and (3) 

increase the 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 OpenBook,4 as set forth 

on the NYSE Proprietary Market Data 

Fee Schedule (‘‘Fee Schedule’’), as 

follows: 

• To change the way the user fees are 

calculated and applied by eliminating 

the unit-of-count policy, operative on 

January 1, 2015; 

• 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 increase the fee cap for 

redistributor internal support use, 

operative on March 1, 2015. 

Changes to the Method of Calculating 

and Applying User Fees 

For display use of the NYSE 

OpenBook data feed, the Fee Schedule 

sets forth a Professional User Fee of $60 

per month or a Non-Professional User 

Fee of $15 per month.5 These user fees 

generally apply to each display device 

that has access to NYSE OpenBook. 

Vendors and subscribers that are 

eligible for the Unit-of-Count Policy 

may avail themselves of an alternative 

method for counting how many user 

fees should be charged for display use 

of the NYSE OpenBook data feed. The 

Unit-of-Count Policy was first 

introduced as an NYSE OpenBook pilot 

in 2009.6 Since April 2013, the Unit-ofCount Policy has applied only to user 

fees associated with display usage.7


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices 2149 

8The Unit-of-Count Policy is available for NYSE 

OpenBook, NYSE Trades and NYSE BBO as a 

method for counting users. The Exchange is 

proposing to retire the Unit-of-Count Policy with 

respect to all of these products and thereby 

harmonize the methods for counting users among 

all NYSE data products. See SR–NYSE–2014–75. 

9 ‘‘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. 

10See Unit-of-Count Policy filings, supra note 4. 

11See 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 

the 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). 

12 In order to harmonize its approach to fees for 

its market data products, the Exchange is proposing 

to establish an access fee for Managed Non-Display 

Services for NYSE BBO, NYSE Trades, and NYSE 

Order Imbalance t that are also half of the existing 

access fee for each respective data feed. See SR– 

NYSE–2014–75 and SR–NYSE–2014–77. 

13See Securities Exchange Act Release No. 59898 

(May 11, 2009), 74 FR 22989 (May 14, 2009) (SR– 

NYSE–2009–37). One customer is currently paying 

the cap for Redistributor internal use. 

The effect of the Unit-of-Count Policy 

for these subscribers is that a single user 

fee applies to individual users that 

receive multiple display device services, 

i.e. multiple devices displaying NYSE 

OpenBook, referred to as ‘‘netting.’’ The 

Exchange proposes to retire the Unit-ofCount Policy effective January 1, 2015. 

As a result, as of January 1, 2015, 

subscribers that are currently eligible for 

‘‘netting’’ under the Unit-of-Count 

Policy would pay the user fee for each 

display device that has access to NYSE 

OpenBook, even if a single user is 

receiving NYSE OpenBook over 

multiple devices, as well as all other 

applicable fees set forth on the Fee 

Schedule.8

Proposed Changes to Managed NonDisplay Services and Fees 

Non-Display Use of NYSE market data 

means accessing, processing, or 

consuming NYSE market data delivered 

via direct and/or Redistributor 9 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 OpenBook and does not allow for 

further internal distribution or external 

redistribution of NYSE OpenBook by 

the data recipients. Managed NonDisplay Services Fees apply when a data 

recipient’s non-display applications are 

hosted by a Redistributor that has been 

approved for Managed Non-Display 

Services. 

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 OpenBook through 

the Redistributor’s Managed NonDisplay Service. A data recipient 

receiving NYSE OpenBook 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.10 In 

connection with the retirement of the 

Unit-of-Count Policy, eligibility for 

Managed Non-Display Services of NYSE 

Open Book 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 

Open Book 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 OpenBook 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 

OpenBook in the Redistributor’s own 

messaging formats (rather than using 

raw NYSE message formats) by 

reformatting and/or altering NYSE 

OpenBook prior to retransmission 

without affecting the integrity of NYSE 

OpenBook and without rendering NYSE 

OpenBook 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.11

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 

OpenBook through the Redistributor’s 

Managed Non-Display Service. A data 

recipient receiving NYSE OpenBook 

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 $2,500/month 

applicable only to data recipients that 

receive NYSE OpenBook from an 

approved Redistributor of Managed 

Non-Display Services, operative January 

1, 2015. Currently, data recipients are 

required to pay an Access Fee of $5,000/ 

month to receive NYSE OpenBook, 

which has not been charged to data 

recipients of Managed Non-Display 

Services of NYSE OpenBook. 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.12 In 

recognition that data recipients of 

Managed Non-Display Services receive 

NYSE OpenBook 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 $5,000/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 $2,400/

month by each data recipient. 

Proposed Redistributor Internal Support 

User Fee Cap 

The Exchange proposes to increase 

the Redistributor Support Fee Cap to 

$3,000/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. This 

increases the fee cap from $1,500/

month, as set by the Exchange in 2009.13

Specifically, the cap on user fees 

would apply to a Redistributor’s 

internal users who receive the NYSE 

OpenBook data feed and provide 

support to the Redistributor of the NYSE 


rljohnson on DSK3VPTVN1PROD with NOTICES
2150 Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices 

14See 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. 

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

16 15 U.S.C. 78f(b)(4), (5). 

17See supra note 11. 

18See supra note 11. 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 (Oct. 23, 

2013), 78 FR 64569 (Oct. 29, 2013) (SR–Phlx–2013– 

105). 

OpenBook 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 OpenBook only on 

the Redistributor’s platform. Internal 

users using NYSE OpenBook 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.14

Redistributors would have to request 

that their Professional User Fees related 

to such internal support functions be 

counted towards the Redistributor 

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 use 

of NYSE OpenBook. 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 OpenBook, upon 

request. If an employee’s use of NYSE 

OpenBook 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,15

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

6(b)(5) of the Act,16 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 it is 

reasonable to retire the Unit-of-Count 

Policy. First, as evidenced by the low 

number of eligible subscribers, the Unitof-Count Policy is not currently 

considered useful to market data 

recipients as a method for counting 

users. In addition, as the Exchange 

noted in the 2013 Non-Display Filing, 

the Exchange determined at that time 

that its fee structure, which was based 

primarily on counting devices, both 

display and non-display, and included 

the Unit-of-Count Policy, was no longer 

appropriate in light of market and 

technology developments. In addition to 

implementing the non-display pricing to 

address the difficulties of counting nondisplay devices, and to reflect the value 

of non-display data to customers, the 

Exchange noted that it anticipated 

implementing a new display use fee 

structure later. Retiring the Unit-ofCount Policy, which now applies only 

to display use, would allow the 

Exchange to apply a consistent method 

for counting users among all customers 

using NYSE OpenBook, whether on a 

display or non-display basis. 

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.17

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. The 

NASDAQ and Phlx also both offer 

managed non-display data solutions and 

charge access fees for such services.18

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 OpenBook. 

The Exchange believes that it is 

reasonable to raise the Redistributor 

Support Fee Cap. The purpose of the 

Professional User Fee is to charge for 

each use of NYSE OpenBook 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 Redistributors provide to their 

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 OpenBook, which is 

why the Exchange provides for a 

Redistributor Support Fee Cap. The 

Exchange believes it is reasonable to 

increase the 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 

OpenBook is entirely optional. The 

Exchange is not required to make NYSE 

OpenBook available or to offer any 

specific pricing alternatives to any 

customers, nor is any firm required to 

purchase NYSE OpenBook. Firms that 

do purchase NYSE OpenBook do so for 

the primary goals of using it to increase 

revenues, reduce expenses, and in some 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices 2151 

19See NASDAQ Rule 7023 (Nasdaq Totalview) 

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

and Multicast Pitch). 

20See 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). 

21For 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/. 

22NetCoalition, 615 F.3d at 535. 

23The 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. 

24Press 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 (DC Dist.) ¶ 24 

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

in the provision of real-time proprietary equity data 

products.’’). 

instances compete directly with the 

Exchange (including for order flow); 

those firms are able to determine for 

themselves whether NYSE OpenBook or 

any other similar products are 

attractively priced or not. 

Firms that do not wish to purchase 

NYSE OpenBook at the new prices have 

a variety of alternative market data 

products from which to choose,19 or if 

NYSE OpenBook 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 OpenBook. The Exchange notes 

that broker-dealers are not required to 

purchase proprietary market data to 

comply with their best execution 

obligations.20 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 alternative 

trading systems (‘‘ATSs’’) have chosen 

not to do so.21

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 

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.’ ’’ 22

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.23

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.’’ 24

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 


rljohnson on DSK3VPTVN1PROD with NOTICES
2152 Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices 

25Concept 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. 

26Mary 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. 

27See 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). 

28See 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.’’). 

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.’’ 25 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.26

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 

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 

OpenBook unless their customers 

request it, and customers will not elect 

to pay the proposed fees unless NYSE 

OpenBook 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 and NYSE’s 

affiliates NYSE Arca, Inc. (‘‘NYSE 

Arca’’) 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 supra-competitive 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.27 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.28

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. 


rljohnson on DSK3VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices 2153 

29FINRA’s Alternative Display Facility also 

receives over-the-counter trade reports that it sends 

to CTA. 

30This 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. 

31See ‘‘LavaFlow—ADF Migration,’’ available at 

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

ADF_Migration.pdf. 32See supra note 19. 

33See supra note 31. 

34 15 U.S.C. 78s(b)(3)(A). 

35 17 CFR 240.19b–4(f)(2). 

36 15 U.S.C. 78s(b)(2)(B). 

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.29

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.30 Similarly, LavaFlow ECN 

provides market data to its subscribers 

at no charge.31 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 MKT, NYSE Arca, 

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 OpenBook, 

competitors offer close substitute 

products.32 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.33

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)34 of the Act and 

subparagraph (f)(2) of Rule 19b–4 35

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) 36 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 


rljohnson on DSK3VPTVN1PROD with NOTICES
2154 Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices 

37 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5The term ‘‘Member’’ is defined as ‘‘any 

registered broker or dealer, or any person associated 

with a registered broker or dealer, that has been 

admitted to membership in the Exchange. A 

Member will have the status of a ‘‘member’’ of the 

Exchange as that term is defined in Section 3(a)(3) 

of the Act.’’ See Exchange Rule 1.5(n). 

6See Securities Exchange Act Release No. 71449 

(January 30, 2014), 79 FR 6961 (February 5, 2014) 

(SR–EDGX–2013–43; SR–EDGA–2013–34). 

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– 

NYSE–2014–76 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–NYSE–2014–76. 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 Web site 

viewing and printing 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–NYSE– 

2014–76 and should be submitted on or 

before February 5, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.37

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–00530 Filed 1–14–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74025; File No. SR–EDGA– 

2014–36] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change to Related to Fees for 

Use of EDGA Exchange, Inc. 

January 9, 2015. 

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 

30, 2014, EDGA Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGA’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated the proposed rule change as 

one establishing or changing a member 

due, fee, or other charge imposed by the 

Exchange under Section 19(b)(3)(A)(ii) 

of the Act 3 and Rule 19b–4(f)(2) 

thereunder,4 which renders the 

proposed rule change effective upon 

filing with the Commission. 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 filed a proposal to 

amend its fees and rebates applicable to 

Members 5 of the Exchange pursuant to 

EDGA Rule 15.1(a) and (c) (‘‘Fee 

Schedule’’) to amend: (i) The definitions 

of Average Daily Trading Volume 

(‘‘ADV’’) and Total Consolidated 

Volume (‘‘TCV’’) to exclude shares on 

each day from January 12, 2015 up to 

and including January 16, 2015; (ii) 

increase the annual Membership fee 

from $2,000 to $2,500; (iii) eliminate the 

Trading Rights Fee and Market 

Participant Identifier (‘‘MPID’’) Fee; and 

(iv) make a number of non-substantive 

amendments and clarifications. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.directedge.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 

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 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 its 

Fee Schedule to amend: (i) The 

definitions of ADV and TCV to exclude 

shares on each day from January 12, 

2015 up to and including January 16, 

2015; (ii) increase the annual 

Membership fee from $2,000 to $2,500; 

(iii) eliminate the Trading Rights Fee 

and MPID Fee; and (iv) make a number 

of non-substantive amendments and 

clarifications. 

ADV and TCV Definitions 

Earlier this year, the Exchange and its 

affiliate, EDGX Exchange, Inc. (‘‘EDGX’’) 

received approval to effect a merger (the 

‘‘Merger’’) of the Exchange’s parent 

company, Direct Edge Holdings LLC, 

with BATS Global Markets, Inc., the 

parent of BATS (together with BATS, 

EDGA and EDGX, the ‘‘BGM Affiliated 

Exchanges’’).6 In the context of the 

Merger, the BGM Affiliated Exchanges 

are working to migrate EDGX and EDGA 

onto the BATS technology platform, and 

align certain system functionality, 

retaining only intended differences 

between the BGM Affiliated Exchanges. 

The migration is currently scheduled for 

the week of January 12, 2015. 

Currently, the Exchange determines 

the tiered pricing that it will provide to 

Members based on the Exchange’s tiered 


rljohnson on DSK3VPTVN1PROD with NOTICES