Document ID: SEC-2010-0496-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2010-04-01T04:00Z

[Federal Register: April 1, 2010 (Volume 75, Number 62)]
[Notices]               
[Page 16535-16537]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01ap10-131]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61780; File No. SR-NYSE-2010-21]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Order Granting Accelerated Approval of Proposed 
Rule Change To Extend the Pilot Period for a Revised Unit-of-Count 
Methodology for NYSE OpenBook

March 25, 2010.
    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 March 11, 2010, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared substantially by the

[[Page 16536]]

Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons and is granting 
accelerated approval to the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE proposes to extend the expiration date of its pilot program 
for a revised unit-of-count methodology for NYSE OpenBook until July 
31, 2010. The text of the proposed rule change is available on the 
Exchange's Web site at http://www.nyse.com, on the Commission's Web 
site at http://www.sec.gov, at NYSE, 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, NYSE included statements 
concerning the purpose of, and basis for, the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item III below. NYSE has prepared summaries, set forth in Sections A, 
B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On March 9, 2009, the Commission approved a pilot program by which 
the Exchange redefines some of the basic ``units of measure'' that 
Vendors are required to report to the Exchange and on which the 
Exchange bases its fees for its NYSE OpenBook product packages.\3\ 
Under the proposal, the Exchange no longer defines the Vendor-
Subscriber relationship based on the manner in which a data feed 
recipient or subscriber receives data (i.e., through controlled 
displays or through data feeds). Instead, the pilot program adopts more 
objective billing criteria that requires Vendors to count every 
subscriber entitlement, whether it be an individual person or a device.
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    \3\ See Securities Exchange Act Release No. 59544 (March 9, 
2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131).
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    Thus, the Vendor includes in the count every person and device that 
has access to the data, regardless of the purposes for which the 
individual or device uses the data. The pilot program eliminates 
current exceptions to the device-reporting obligation in order to 
subject the count to a more objective process and simplify the 
reporting obligation for Vendors. (For instance, the Exchange 
previously has not required Vendors to report certain programmers and 
other individuals who receive access to data for certain specific, non-
trading purposes.) These exceptions require the Exchange to monitor the 
manner end-users consume data, which in turn adds cost for both the 
Exchange and customers.
    The Exchange's experience with the pilot program has been 
successful. A number of the Exchange's customers have embraced the 
pilot program and the Exchange intends to submit to the Commission a 
proposed rule change that would seek permanent approval of the revised 
unit-of-count methodology.
    The Exchange established March 31, 2010, as the expiration date for 
the pilot program. The Exchange now seeks to extend the expiration date 
of the pilot program to July 30, 2010, by which time, the Exchange 
intends to have submitted the proposed rule change seeking permanent 
approval.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'') 
for this proposed rule change is the requirement under Section 6(b)(4) 
\4\ that an exchange have rules that provide for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and other persons using its facilities and the requirements under 
Section 6(b)(5) \5\ that the rules of an exchange be designed to 
promote just and equitable principles of trade and not to permit unfair 
discrimination between customers, issuers, brokers or dealers.
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    \4\ 15 U.S.C. 78f(b)(4).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the pilot program benefits investors 
because it is more closely aligned with current data consumption, 
reduces costs for the Exchange's customers, and potentially serves as a 
model for additional pricing efficiencies.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that this proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has not received any unsolicited written comments from 
members or other interested parties.

III. 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NYSE-2010-21 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-NYSE-2010-21. 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 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 filing also will be available for 
inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions

[[Page 16537]]

should refer to File Number SR-NYSE-2010-21 and should be submitted on 
or before April 22, 2010.

IV. Commission's Findings and Order Granting Accelerated Approval of 
the Proposed Rule Change

    After careful consideration, 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, it is consistent with Section 6(b)(4) of 
the Act,\7\ 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,\8\ 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 not be designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers.
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    \6\ In approving this 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)(4).
    \8\ 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,\9\ 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,\10\ 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.\11\
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    \9\ 15 U.S.C. 78f(b)(8).
    \10\ 17 CFR 242.603(a).
    \11\ NYSE is an exclusive processor of NYSE depth-of-book 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 information with respect to quotations or 
transactions on an exclusive basis on its own behalf.
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    This proposal would extend the expiration date of the Unit of Count 
pilot program to July 30, 2010. The Commission has reviewed the 
proposal using the approach set forth in the NYSE Arca Order for non-
core market data fees.\12\ The Commission recently found that NYSE was 
subject to significant competitive forces in setting fees for its 
depth-of-book order data in the Unit of Count Filing.\13\ There are a 
variety of alternative sources of information that impose significant 
competitive pressures on the NYSE in setting the terms for distributing 
its depth-of-book order data. The Commission believes that the 
availability of those alternatives, as well as the NYSE's compelling 
need to attract order flow, imposed significant competitive pressure on 
the NYSE to act equitably, fairly, and reasonably in setting the terms 
of its proposal.
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    \12\ Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21) (``NYSE 
Arca Order''). In the NYSE Arca Order, the Commission describes in 
great detail the competitive factors that apply to non-core market 
data products. The Commission hereby incorporates by reference the 
data and analysis from the NYSE Arca Order into this order.
    \13\ See Securities Exchange Act Release No. 59544 (March 9, 
2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131).
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    Because the NYSE was subject to significant competitive forces in 
setting the terms of the proposal, the Commission will approve the 
proposal in the absence of a substantial countervailing basis to find 
that its terms nevertheless fail to meet an applicable requirement of 
the Act or the rules thereunder. An analysis of the proposal does not 
provide such a basis.
    The Commission finds good cause for approving this proposal before 
the 30th day after the publication of notice thereof in the Federal 
Register. The Commission believes that accelerating approval of this 
proposal is appropriate and would ensure that the Exchange could 
continue to offer Unit of Count billing on their market data products 
under the existing pilot program.\14\
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    \14\ The Commission notes that that the Exchange has also 
recently filed a proposed rule change seeking permanent approval of 
the pilot program for the Unit of Count billing methodology for NYSE 
OpenBook. See Securities Exchange Act Release No. 61779 (March 25, 
2010) (SR-NYSE-2010-22).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-NYSE-2010-21), be, and it 
hereby is, approved on an accelerated basis.
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    \15\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-7363 Filed 3-31-10; 8:45 am]
BILLING CODE 8011-01-P