Document ID: SEC-2010-0197-0001
Agency: sec
Document Type: Notice
Title: Filing of the Fifteenth Substantive Amendment to the Second Restatement: Consolidated Tape Association, etc.
Posted Date: 2010-02-08T05:00Z

[Federal Register: February 8, 2010 (Volume 75, Number 25)]
[Notices]               
[Page 6229-6231]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08fe10-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61457; File No. SR-CTA/CQ-2009-03]

 
Consolidated Tape Association; Notice of Filing of the Fifteenth 
Substantive Amendment to the Second Restatement of the Consolidated 
Tape Association Plan and Eleventh Substantive Amendment to the 
Restated Consolidated Quotation Plan

February 1, 2010.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on November 2, 2009, the Consolidated Tape Association (``CTA'') Plan 
and Consolidated Quotation (``CQ'') Plan participants 
(``Participants'') \3\ filed with the Securities and Exchange 
Commission (``Commission'') a proposal \4\ to amend the Second 
Restatement of the CTA Plan and Restated CQ Plan (collectively, the 
``Plans'').\5\ The proposal represents the fifteenth substantive 
amendment to the CTA Plan (``Fifteenth Amendment to the CTA Plan'') and 
the eleventh substantive amendment to the CQ Plan (``Eleventh Amendment 
to the CQ Plan''), and reflects changes unanimously adopted by the 
Participants. The Fifteenth Amendment to the CTA Plan and the Eleventh 
Amendment to the CQ Plan (``Amendments'') would amend the Plans to 
provide that the Participants pay the Network B Administrator a fixed 
annual fee in exchange for its performance of Network B administrator 
functions under the Plans. In addition, the Amendments seek to 
accommodate recent changes in names and addresses of certain 
Participants. The Commission is publishing this notice to solicit 
comments from interested persons on the proposed Amendments.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ Each participant executed the proposed amendment. The 
Participants are: BATS Exchange, Inc.; Chicago Board Options 
Exchange, Incorporated; Chicago Stock Exchange, Inc.; Financial 
Industry Regulatory Authority, Inc.; International Securities 
Exchange LLC; NASDAQ OMX BX, Inc.; NASDAQ OMX PHLX, Inc.; The NASDAQ 
Stock Market LLC; National Stock Exchange, Inc.; New York Stock 
Exchange LLC; NYSE Amex, Inc.; and NYSE Arca, Inc.
    \4\ On January 13, 2010, the CTA filed a revised transmittal 
letter indicating, among other technical changes, that the 
Participants also proposed to make changes in the names and 
addresses of certain Participants (``Transmittal Letter'').
    \5\ See Securities Exchange Act Release Nos. 10787 (May 10, 
1974), 39 FR 17799 (May 20, 1974) (declaring the CTA Plan 
effective); 15009 (July 28, 1978), 43 FR 34851 (August 7, 1978) 
(temporarily authorizing the CQ Plan); and 16518 (January 22, 1980), 
45 FR 6521 (January 28, 1980) (permanently authorizing the CQ Plan). 
The most recent restatement of both Plans was in 1995. The CTA Plan, 
pursuant to which markets collect and disseminate last sale price 
information for non-NASDAQ listed securities, is a ``transaction 
reporting plan'' under Rule 601 under the Act, 17 CFR 242.601, and a 
``national market system plan'' under Rule 608 under the Act, 17 CFR 
242.608. The CQ Plan, pursuant to which markets collect and 
disseminate bid/ask quotation information for listed securities, is 
also a ``national market system plan'' under Rule 608 under the Act, 
17 CFR 242.608.
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I. Rule 608(a)

A. Description and Purpose of the Amendments

    Network Administrator Fees under the Plans. Section XII 
(``Financial Matters'') of the CTA and Section IX (``Financial 
Matters'') of the CQ Plan each provides that a network's Operating 
Expenses are to be deducted from the network's Gross Income in 
determining the amounts that the network's administrator distributes to 
the Participants. Section XII(c)(i) (``Determination of Operating 
Expenses'') of the CTA Plan currently provides that a CTA network's 
Operating Expenses include all costs and expenses ``associated with, 
relating to, or resulting from, the generation, consolidation or 
dissemination of the CTA's network's last sale price information.'' 
Likewise, Section IX(c)(i) (``Determination of Operating Expenses'') of 
the CQ Plan currently provide that a network's

[[Page 6230]]

Operating Expenses include all costs and expenses that the network's 
administrator incurs in ``collecting, processing and making available 
that CQ network's quotation information.''
    Proposed Revision. The Network B Administrator has noted that 
accounting for operating costs is administratively burdensome, 
especially the allocation of organization overhead costs to the Network 
B Administrator function. As a result, the Network B Participants have 
determined that paying the Network B Administrator a fixed fee in 
exchange for its Network B administrative services would be more 
efficient.
    Therefore, the Participants propose to replace their payment to the 
Network B Administrator of Operating Costs with their payment to the 
Network B Administrator of a fixed fee. (The Network A Administrator 
similarly receives a fixed fee for its performance of administrative 
functions under the CTA and CQ Plans and the Participants understand 
that Nasdaq receives a fixed fee for its performance of administrative 
functions under the ``Joint Self-Regulatory Organization Plan Governing 
the Collection, Consolidation and Dissemination of Quotation and 
Transaction Information for Nasdaq-Listed Securities Traded on 
Exchanges on an Unlisted Trading Privileges Basis.'')
    For calendar year 2009, the Network B Participants propose to set 
the fixed fee at $3,000,000. This amount will compensate the Network B 
Administrator for its Network B Administrative services during 2009 
under both the CTA Plan and the CQ Plan.
    Annual Increase. For each subsequent calendar year, the Network B 
Participants propose to increase (but not decrease) the amount of the 
payment by the percentage increase (if any) in the annual cost-of-
living adjustment that the U.S. Social Security Administration applies 
to Supplemental Security Income for the calendar year preceding that 
subsequent calendar year, subject to a maximum annual increase of five 
percent. For example, if the Social Security Administration's cost of 
living adjustment for Supplemental Security Income were to be three 
percent for calendar year 2010, then the Participants' fixed payment to 
the Network B Administrator for 2010 would increase by three percent to 
$3,090,000.
    Biannual Review. To assure that the fixed fee bears some 
relationship to the costs that the Network B Administrator incurs in 
providing Network B administrative services, the Network B 
Administrator will provide a report every two years that highlights any 
significant changes to CTA Network B and CQ Network B administrative 
expenses during the preceding two years. The Participants will review 
the report and determine by majority vote whether to continue to pay 
the fixed fee at its then current level or to adjust the fee in some 
manner.
    Payment of the Fee. In order to pay the fee to the Network B 
Administrator, the Participants authorize the Network B Administrator 
to deduct, on a quarterly basis, one-quarter of that calendar year's 
fixed payment from the aggregate of CTA Network B Gross Income and CQ 
Network B Gross Income before determining that quarter's Net Income 
under the CTA Plan and the CQ Plan.
    If any Participant's share of Net Income for CTA Network B and CQ 
Network B for any calendar year is less than its pro rata share of the 
annual fixed payment for that year, the Participant shall be 
responsible for the difference.
    Extraordinary Expenses. The Participants' payment of the fixed fee 
will compensate the Network B Administrator for all ordinary and 
customary operating expenses that it incurs in performing the network 
administrator functions under the CTA and CQ Plans. However, it does 
not compensate the Network B Administrator for extraordinary expenses 
that the Network B Administrator may incur on behalf of the Network B 
Participants.
    Extraordinary expenses include such things as that portion of legal 
and audit expenses and marketing and consulting fees that are outside 
of the ordinary functions that the Network B Administrator performs. 
For example, extraordinary expenses would include such costs as legal 
fees related to prosecution of a legal proceeding against a vendor that 
fails to pay applicable charges and fees relating to a marketing 
campaign that the Participants may determine to undertake to popularize 
stock trading.\6\
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    \6\ The Commission notes that the Transmittal Letter 
accompanying the proposed Amendments included language not voted on 
by the Participants and thus not included in the proposed 
Amendments: ``Network B Administrator will not incur any 
extraordinary expense on behalf of the Network B Participants unless 
the Network B Participants determine by majority vote to approve the 
incurrence of that extraordinary expense.'' This language is not 
part of the proposed Amendments.
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    In addition, the Participants propose to amend the Plans to reflect 
changes in the corporate names and street addresses of NASDAQ OMX BX, 
Inc. (formerly Boston Stock Exchange, Inc.), NASDAQ OMX PHLX, Inc. 
(formerly Philadelphia Stock Exchange, Inc.) and NYSE Amex, Inc. 
(formerly American Stock Exchange LLC). They also propose to conform 
the language signifying the status of BATS Exchange, Inc. as a national 
securities exchange to the language used for the other Plan 
Participants
    The text of the proposed Amendments is available on the CTA's Web 
site (http://www.nysedata.com/cta,) at the principal office of the CTA, 
and at the Commission's Public Reference Room.

B. Additional Information Required by Rule 608(a)

1. Governing or Constituent Documents
    Not applicable.
2. Implementation of the Amendments
    Upon Commission approval of the Amendments, the Participants intend 
to implement the fixed fee immediately in order to make it effective 
for the 2009 calendar year. That is, for all of 2009, the Network B 
Participants would pay the Network B Administrator the fixed fee rather 
than operating costs.
3. Development and Implementation Phases
    See Item I(B)(2) above.
4. Analysis of Impact on Competition
    The amendment will impose no burden on competition.
5. Written Understanding or Agreements Relating to Interpretation of, 
or Participation in, Plan
    The Participants have no written understandings or agreements 
relating to interpretation of the Plans as a result of the Amendments.
6. Approval by Sponsors in Accordance with Plan
    In accordance with Section IV(b) of the CTA Plan and Section IV(c) 
of the CQ Plan, each of the Participants must execute a written 
amendment to the Plans before the Amendments can become effective. The 
Amendments are so executed.
7. Description of Operation of Facility Contemplated by the Proposed 
Amendment
a. Terms and Conditions of Access
    Not applicable.
b. Method of Determination and Imposition, and Amount of, Fees and 
Charges
    Not applicable.
c. Method of Frequency of Processor Evaluation
    Not applicable.

[[Page 6231]]

d. Dispute Resolution
    Not applicable.

II. Rule 601(a)

A. Equity Securities for Which Transaction Reports Shall Be Required by 
the Plan

    Not applicable.

B. Reporting Requirements

    Not applicable.

C. Manner of Collecting, Processing, Sequencing, Making Available and 
Disseminating Last Sale Information

    Not applicable.

D. Manner of Consolidation

    Not applicable.

E. Standards and Methods Ensuring Promptness, Accuracy and Completeness 
of Transaction Reports

    Not applicable.

F. Rules and Procedures Addressed to Fraudulent or Manipulative 
Dissemination

    Not applicable.

G. Terms of Access to Transaction Reports

    Not applicable.

H. Identification of Marketplace Execution

    Not applicable.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed 
Amendments 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 Number SR-CTA/CQ-2009-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CTA/CQ-2009-03. 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 Amendments that are filed 
with the Commission, and all written communications relating to the 
Amendments 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 a.m. and 3 
p.m. Copies of the Amendments also will be available for inspection and 
copying at the principal office of the CTA. 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-CTA/CQ-2009-03 and should be submitted 
on or before March 1, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(27).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-2586 Filed 2-5-10; 8:45 am]
BILLING CODE 8011-01-P