Document ID: SEC-2008-0842-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2008-06-20T04:00Z

[Federal Register: June 20, 2008 (Volume 73, Number 120)]
[Notices]               
[Page 35182-35183]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jn08-105]                         

[[Page 35182]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57966; File No. SR-NYSE-2007-04]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Amendment Nos. 1 and 2 and Order Granting 
Accelerated Approval to Proposed Rule Change, as Modified by Amendment 
Nos. 1 and 2 Thereto, Relating to Approval of Fee for NYSE Real-Time 
Reference Prices

June 16, 2008.

I. Introduction

    On January 12, 2007, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to establish a flat monthly fee 
for the receipt and use of real-time last sale prices of transactions 
that take place on the Exchange (``Last Sale Proposal''). The proposal 
was published for comment in the Federal Register on March 5, 2007.\3\ 
On March 30, 2007, NYSE filed Amendment No. 1 to the Last Sale 
Proposal.\4\ The Commission received six comment letters regarding the 
proposal.\5\ On November 30, 2007, NYSE responded to the comment 
letters.\6\ On June 11, 2008, NYSE filed Amendment No. 2 to the Last 
Sale Proposal. In Amendment No. 2, NYSE proposed to impose fees for the 
Last Sale Proposal only for a four-month pilot period beginning July 1, 
2008.\7\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55354 (February 26, 
2007), 72 FR 9817 (``Notice'').
    \4\ In Amendment No. 1, the Exchange submitted a copy of the 
Exhibit C that the Exchange described in the Notice. As described 
below, the contractual terms of this Exhibit C would govern how 
vendors receive and redistribute the NYSE last sale market data.
    \5\ See letters from Alan Davidson, Senior Policy Counsel, 
Google Inc., to the Honorable Christopher Cox, Chairman, SEC, dated 
June 12, 2007 (``Google Letter''); Chuck Thompson, President, 
eSignal, to Nancy M. Morris, Secretary, SEC, dated March 27, 2007 
(``eSignal Letter''); Gregory Babyak and Christopher Gilkerson, Co-
Chairs of the Market Data Subcommittee of the Technology and 
Regulation Committee, the Securities Industry and Financial Markets 
Association (``SIFMA''), to Nancy M. Morris, Secretary, SEC, dated 
March 26, 2007 (``SIFMA Letter''); Scott Drake, Vice President, 
Digital Products, CNBC, to Nancy M. Morris, Secretary, SEC, dated 
February 16, 2007 (``CNBC Letter''); David Keith, Vice President, 
The Globe and Mail, to the Honorable Christopher Cox, Chairman, SEC, 
dated January 17, 2007 (``Globe and Mail Letter''); and Clem 
Chambers, CEO, ADVFN, to Nancy Morris, Secretary, SEC, dated January 
16, 2007 (``ADVFN Letter'').
    \6\ See letter from Mary Yeager, Assistant Secretary, NYSE, to 
Nancy M. Morris, Secretary, SEC, dated November 30, 2007.
    \7\ In Amendment No. 2, the Exchange removed language regarding 
syndication of the NYSE RTRP and stated that the Exchange may 
provide NYSE RTRP without charge upon Commission approval prior to 
July 1, 2008.
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    The Commission is publishing this notice to solicit comments on the 
proposed rule change as modified by Amendment Nos. 1 and 2 and is 
simultaneously approving the proposed rule change, as modified by 
Amendment Nos. 1 and 2, on an accelerated basis.

II. Description of the Last Sale Proposal

    The Exchange proposes to establish a four-month pilot program 
beginning on July 1, 2008, called NYSE Real-Time Reference Prices 
(``NYSE RTRP'') \8\ that would allow vendors to receive and 
redistribute, on a real-time basis, last sale prices of transactions 
that take place on the Exchange (``NYSE Trade Prices'') and to 
establish a flat monthly fee for this service. The NYSE RTRP would only 
include pricing information for the securities transactions. The 
Exchange intends to make the NYSE RTRP available to internet service 
providers, traditional market data vendors, and others (``NYSE-Only 
Vendors''). The Exchange has represented that it would not permit any 
NYSE-Only Vendor to provide NYSE Trade Prices in a context in which a 
trading or order-routing decision can be implemented unless the NYSE-
Only Vendor also provides consolidated displays of Network A last sale 
prices in accordance with Rule 603(c)(1) of Regulation NMS.
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    \8\ In Amendment No. 2, the Exchange also changed the name of 
the service from NYSE Real-Time Trade Prices to NYSE Real-Time 
Reference Prices.
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    The Exchange proposes to establish a flat monthly fee of $100,000 
for NYSE-Only Vendors to receive access to the NYSE RTRP data feed. The 
NYSE-Only Vendor may use that access to provide unlimited NYSE Trade 
Prices to an unlimited number of the NYSE-Only Vendor's subscribers and 
customers. The Exchange will not impose any device or end-user fee for 
the NYSE-Only Vendors' distribution of NYSE Trade Prices. The Exchange 
would also require the NYSE-Only Vendor to identify the NYSE trade 
price by placing the text ``NYSE Data'' in close proximity to the 
display of each NYSE Trade Price or series of NYSE Trade Prices.
    The Exchange proposes to allow NYSE-Only Vendors to provide NYSE 
Trade Prices to their subscribers and customers without requiring the 
end-users to enter into contracts for the benefit of the Exchange. 
Instead, the Exchange will require NYSE-Only Vendors to provide a 
readily visible hyperlink that will send the end-user to a warning 
notice about the end-user's receipt and use of market data.
    The Exchange also proposes to use the existing CTA and CQ Plan 
vendor contracts (``Network A Vendor Form'') to govern the distribution 
of the NYSE Trade Prices to the NYSE-Only Vendors. The Exchange 
proposes supplementing the Network A Vendor Form with an Exhibit C that 
would include terms that will govern such things as (i) the restriction 
against providing the service in the context of a trading or order-
routing service, (ii) the replacement of end-user agreements with a 
hyperlink to a notice, (iii) the substance of the notice, and (iv) the 
``NYSE Data'' labeling requirement. In addition, Exhibit C will specify 
that the NYSE-Only Vendor's authorization to provide the service will 
terminate at the expiration date of the pilot program unless the 
Exchange submits a proposed rule change to extend the program or to 
make it permanent and the Commission approves that proposed rule 
change. Lastly, Exhibit C would require NYSE-Only Vendors to share with 
the Exchange any research they may conduct regarding the pilot program 
or the results of their experience with the program and to consult with 
the Exchange regarding their views of NYSE RTRP.

III. Discussion

    The Commission finds that the proposed rule change, to be 
implemented on a four-month pilot basis, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\9\ In particular, it is 
consistent with Section 6(b)(4) of the Act,\10\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other parties using its facilities, and Section 
6(b)(5) of the Act,\11\ which requires, among other things, that the 
rules of a national securities exchange be designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, to protect investors and the public interest, and

[[Page 35183]]

not be designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \9\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds that the proposed rule change is 
consistent with the provisions of Section 6(b)(8) of the Act,\12\ which 
requires that the rules of an exchange not impose any burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Act. Finally, the Commission finds that the proposed rule change 
is consistent with Rule 603(a) of Regulation NMS,\13\ adopted under 
Section 11A(c)(1) of the Act, which requires an exclusive processor 
that distributes information with respect to quotations for or 
transactions in an NMS stock to do so on terms that are fair and 
reasonable and that are not unreasonably discriminatory.\14\
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    \12\ 15 U.S.C. 78f(b)(8).
    \13\ 17 CFR 242.603(a).
    \14\ NYSE is an exclusive processor of its last sale data under 
Section 3(a)(22)(B) of the Act, 15 U.S.C. 78c(a)(22)(B), which 
defines an exclusive processor as, among other things, an exchange 
that distributes data on an exclusive basis on its own behalf.
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    The Commission received four comment letters expressing concern 
over the proposed rule change and two comment letters supporting the 
proposed rule change. Generally, SIFMA, Globe and Mail, eSignal, and 
ADVFN each suggested that NYSE did not adequately demonstrate that the 
proposed rule change was consistent with the Act.\15\ SIFMA asserted 
that NYSE had failed to demonstrate that its proposal met the relevant 
requirements of the Act, including that its market data fees be fair 
and reasonable and not unreasonably discriminatory.\16\ SIFMA, Globe 
and Mail, eSignal, and ADVFN each asserted that the NYSE proposal would 
unreasonably discriminate against smaller market data distributors.\17\ 
Google and CNBC, however, expressed strong support for the proposal and 
noted their enthusiasm regarding the opportunity to give more of their 
users access to real-time financial information online.\18\
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    \15\ See SIFMA Letter, Globe and Mail Letter, eSignal Letter and 
ADVFN Letter.
    \16\ See SIFMA Letter.
    \17\ See SIFMA Letter, Globe and Mail Letter, eSignal Letter and 
ADVFN Letter.
    \18\ See Google Letter and CNBC Letter.
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    The Commission notes that NYSE amended the proposed rule change so 
that its fees would be imposed only for a four-month pilot period. On 
June 4, 2008, the Commission published for public comment a draft 
approval order that sets forth a market-based approach for analyzing 
proposals by self-regulatory organizations to impose fees for ``non-
core'' market data products that would encompass the NYSE RTRP.\19\ The 
Commission believes that NYSE's proposal is consistent with the Act for 
the reasons noted preliminarily in the Draft Approval Order. Pending 
review by the Commission of comments received on the Draft Approval 
Order, and final Commission action thereon, the Commission believes 
that approving NYSE's proposal on a pilot basis would be beneficial to 
investors and in the public interest, in that it should result in broad 
public dissemination of real-time pricing information. Therefore, the 
Commission is approving NYSE's proposed fees for a four-month pilot 
beginning July 1, 2008. The broader approach ultimately taken by the 
Commission with respect to non-core market data fees will necessarily 
guide Commission action regarding fees for the NYSE RTRP beyond the 
four-month pilot period.
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    \19\ See Securities Exchange Act Release No. 57917 (June 4, 
2008), 73 FR 32751 (June 10, 2008) (Notice of Proposed Order 
Approving Proposal by NYSE Arca, Inc. to Establish Fees for Certain 
Market Data and Request for Comment) (``Draft Approval Order'').
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    The Commission finds good cause for approving the proposed rule 
change, as modified by Amendment Nos. 1 and 2 thereto, before the 
thirtieth day after the date of publication of notice of filing thereof 
in the Federal Register. As noted above, accelerating approval of this 
proposal should benefit investors by facilitating their prompt access 
to widespread, free, real-time pricing information contained in the 
NYSE Trade Prices. In addition, the Commission notes that the proposal 
is approved only on a four-month pilot period while the Commission 
analyzes comments on the Draft Approval Order. Therefore, the 
Commission finds good cause, consistent with Section 19(b)(2) of the 
Act,\20\ to approve the proposed rule change, as modified by Amendment 
Nos. 1 and 2, on an accelerated basis.
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    \20\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment Nos. 1 and 2 to the Last Sale Proposal, 
including whether Amendment Nos. 1 and 2 to the Last Sale Proposal are 
consistent with the Act. Comments may be submitted by any of the 
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml ); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File No. SR-NYSE-2007-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, Station Place, 100 F Street, NE., Washington, 
DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2007-04. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml 
). Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of such filing also will be available for inspection and 
copying at the principal office of NYSE. 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-2007-04 and should be submitted on 
or before July 11, 2008.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-NYSE-2007-04), as modified 
by Amendment Nos. 1 and 2, be, and it hereby is, approved on an 
accelerated basis until October 31, 2008.
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    \21\ 15 U.S.C. 78s(b)(2).

    By the Commission.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-13956 Filed 6-19-08; 8:45 am]

BILLING CODE 8010-01-P