Document ID: SEC-2018-0524-0001
Agency: sec
Document Type: Notice
Title: Filings: Consolidated Tape Association
Posted Date: 2018-03-29T04:00Z

[Federal Register Volume 83, Number 61 (Thursday, March 29, 2018)]
[Notices]
[Pages 13539-13542]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06266]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82937; File No. SR-CTA/CQ-2018-01]

Consolidated Tape Association; Notice of Filing and Immediate 
Effectiveness of the Twenty-Third Charges Amendment to the Second 
Restatement of the CTA Plan and the Fourteenth Charges Amendment to the 
Restated CQ Plan

March 23, 2018.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on March 5, 2018,\3\ the Consolidated Tape Association (``CTA'') Plan 
participants (``Participants'') \4\ filed with the Securities and 
Exchange Commission (``Commission'') a proposal to amend the Second 
Restatement of the CTA Plan and the Restated Consolidated Quotation 
(``CQ'') Plan (``Plans'').\5\ The amendment represents the twenty-third 
Charges Amendment to the CTA Plan and the fourteenth Charges Amendment 
to the CQ Plan (``Amendments''). The Amendments seek to amend the text 
of the Plans' fee schedule to adopt changes to the Broker-Dealer 
Enterprise Maximum Monthly Charge (``Enterprise Cap'') and Per-Quote-
Packet Charges.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ See Letter from Emily Kasparov to Brent J. Fields, 
Secretary, Securities and Exchange Commission, dated March 1, 2018.
    \4\ The Participants are: Cboe BYX Exchange, Inc.; Cboe BZX 
Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.; 
Cboe Exchange, Inc.; Chicago Stock Exchange, Inc.; Financial 
Industry Regulatory Authority, Inc.; Investors Exchange LLC; Nasdaq 
BX, Inc.; Nasdaq ISE, LLC; Nasdaq PHLX LLC; The Nasdaq Stock Market 
LLC; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE American 
LLC; and NYSE National, Inc. (collectively, the ``Participants'').
    \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 
a national market system plan.
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    The Participants are proposing to increase the Enterprise Cap from 
$686,400 to $1,260,000 for Network A and from $520,000 to $680,000 for 
Network B. The Participants state that the Enterprise Cap was 
established to provide incentives to entities to make market data 
available to large Nonprofessional Subscriber bases. Due to what they 
describe as ongoing industry consolidation, however, the Participants 
are proposing to increase the Enterprise Cap in order to account for 
the sudden and substantial increase of Nonprofessional Subscribers at 
entities using the Enterprise Cap.
    To make the increase of the Enterprise Cap revenue neutral (from an 
overall Plan perspective) and fee neutral (from an individual entity 
\6\ perspective), the Participants are proposing to decrease the Per-
Quote-Packet Charges for those broker-dealers with 500,000 or more 
Nonprofessional Subscribers. According to the Participants, the 
increase in fees as a result of the increase of the Enterprise Cap will 
be offset by a decrease in Per-Quote-Packet Charges for those entities 
that would be most likely affected by the raising of the cap, i.e., 
those with a large Nonprofessional Subscriber base.
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    \6\ As described below, the Plan does not require an entity that 
is registered as a broker-dealer under the Act to pay more than the 
Enterprise Cap for any month for the aggregate amount of (a) a 
network's Device charges for devices used for its Internal 
Distribution plus (b) that network's Device and Per-Quote-Packet 
charges payable in respect of services that it provides to 
Nonprofessional Subscribers that are brokerage account customers of 
the broker-dealer.
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    Pursuant to Rule 608(b)(3) under Regulation NMS,\7\ the 
Participants designate the amendment as establishing or changing a fee 
or other charge collected on their behalf in connection with access to, 
or use of, the facilities contemplated by the Plans. As a result, the 
amendment is effective upon filing with the Commission.
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    \7\ 17 CFR 242.608(b)(3)(i).
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    The Commission is publishing this notice to solicit comments from 
interested persons on the proposed Amendments. Set forth in Sections I 
and II is the statement of the purpose and summary of the Amendments, 
along with the information required by Rules 608(a) and 601(a) under 
the Act, prepared and submitted by the Participants to the Commission.

[[Page 13540]]

I. Rule 608(a)

A. Purpose of the Amendments

1. Background
Broker-Dealer Enterprise Maximum Monthly Charge
    The Plans require an entity that is registered as a broker-dealer 
under the Act to pay no more than the Enterprise Cap for any month for 
the aggregate amount of (a) a network's Device charges for devices used 
for its Internal Distribution plus (b) that network's Device and Per-
Quote-Packet charges payable in respect of services that it provides to 
Nonprofessional Subscribers that are brokerage account customers of the 
broker-dealer. In 2013, the Participants set the amount of the 
Enterprise Cap to $686,400 for Network A and $520,000 for Network B.\8\
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    \8\ See Securities Exchange Act Release No. 70010 (Jul. 19, 
2013), 78 FR 44984 (Jul. 25, 2013) (``2013 Filing'').
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    In the 2013 Filing, the Participants changed the mechanism for 
increasing the Enterprise Cap. The Enterprise Cap was previously 
increased based on the percentage increase in the annual composite 
share volume for the preceding calendar year, subject to an annual 
maximum increase of five percent. In 2013, the Participants permitted 
such annual increases in the monthly Enterprise Cap as to which they 
agreed by a majority vote, subject to a maximum increase in any 
calendar year of four percent. At that time, the Participants believed 
that this provision permitted an annual increase by a two-thirds vote 
of the Participants without requiring a corresponding rule filing with 
the Securities and Exchange Commission. Nevertheless, the Participants 
have not increased the Enterprise Cap since this change was adopted in 
2013.\9\ This filing proposes to remove that provision.
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    \9\ As described below, the Participants believe that this 
provision should be deleted and that any changes to the Enterprise 
Cap should be submitted to the Commission for review and public 
comment.
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Per Quote Packet Charges
    As an alternative to monthly Professional Subscriber and 
Nonprofessional Subscriber fees, a vendor may respond to end-user 
queries for quote and trade information and pay a fee for each such 
response. The Participants first established the Per-Quote-Packet 
Charges in 1991 as a pilot at $0.005 per query.\10\ In 1999, a pilot 
implementing a three-tiered rate structure was introduced, which was 
eventually replaced with a one-tier rate at $0.005 per query.\11\ In 
2014, the Participants increased the fee to $0.0075 per query to offset 
the revenue loss resulting from decreases in the Professional 
Subscriber device fee.\12\
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    \10\ See Securities Exchange Act Release No. 39235 (Oct. 14, 
1997), 62 FR 54886 (Oct. 22, 1997).
    \11\ See Securities Exchange Act Release No. 41977 (Oct. 5, 
1999), 64 FR 55503 (Oct. 13, 1999).
    \12\ See Securities Exchange Act Release No. 73278 (Oct. 1, 
2014), 79 FR 60536 (Oct. 7, 2014).
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2. Amendment to Enterprise Cap
    The Participants are proposing to increase the Enterprise Cap from 
$686,400 to $1,260,000 for Network A and from $520,000 to $680,000 for 
Network B. As a result of industry consolidation, the Nonprofessional 
Subscriber base for entities subject to the cap may suddenly increase, 
and where before two entities may have slightly benefited from the 
Enterprise Cap, a combined entity could find a substantial decrease in 
fees by using the Enterprise Cap. Consequently, the increase of the 
Enterprise Cap is designed to maintain the status quo and should not, 
in conjunction with the Per-Quote-Packet Charges change described 
below, result in an increase of revenue to the Plans or fees for any 
particular entity.\13\
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    \13\ The Participants note that a very small number of entities 
take advantage of the Enterprise Cap.
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    Additionally, the Participants are proposing to remove a provision 
related to an annual increase of the Enterprise Cap after a two-thirds 
vote of the Participants. In the 2013 Filing, the Participants amended 
the mechanism by which the Enterprise Cap would increase, from an 
automatic increase based on volume to an affirmative vote requirement 
by the Participants.
    Since 2013, the Enterprise Cap has not been increased using this 
mechanism, and the Participants believe that any future changes to the 
Enterprise Cap should be submitted via a filing with the Securities and 
Exchange Commission and subject to public comment. Consequently, the 
Participants are proposing to delete this particular provision.
3. Per-Quote-Packet Charges Change to Remain Revenue Neutral
    Because of the increase in the Enterprise Cap, there could be 
broker-dealers looking to use the Enterprise Cap that, without a 
corresponding offset, could face an increase in fees. To offset a 
potential fee increase, the Participants are proposing a decrease in 
the Per-Quote-Packet Charges where a broker-dealer has 500,000 or more 
Nonprofessional Subscribers. For such entities, the Per-Quote-Packet 
Charges would be decreased from $.0075 to $.0025. By implementing a 
tiered structure for Per-Quote-Packet Charges, the proposal is designed 
to provide an offset to those firms most likely affected by the 
Enterprise Cap increase (i.e., those with a large Nonprofessional 
Subscriber base).
    Additionally, the proposal will align Network A and Network B with 
a similar tiered structure being proposed for Network C.

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of the Amendments

    Pursuant to Rule 608(b)(3)(i) under Regulation NMS, the 
Participants have designated the proposed amendment as establishing or 
changing fees and are submitting the amendment for immediate 
effectiveness.

D. Development and Implementation Phases

    See Item C above.

E. Analysis of Impact on Competition

    The proposed amendments do not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. The proposed increase in the Enterprise Cap is designed to 
account for industry consolidation.
    Without this adjustment, the Plans' revenue will suddenly decrease 
due to a broker-dealer increasing its Nonprofessional Subscriber base 
through a merger with another broker-dealer. As detailed further below, 
while the Enterprise Cap is being increased, the Plans' revenue and 
fees collected from affected entities will be maintained at their 
current levels. Any potential fee increase for broker-dealers taking 
advantage of the Enterprise Cap will be offset by a decrease in the 
Per-Quote-Packet Charges for broker-dealers with large Nonprofessional 
Subscriber bases. The combination of the Enterprise Cap increase and 
the Per-Quote-Packet Charges decrease will ensure that the fee changes 
proposed herein remain revenue neutral.
    The Participants therefore believe that the proposed fee changes 
are carefully calibrated to maintain the status quo and, as a result, 
do not impose any burden on competition that is not necessary or 
appropriate.

F. Written Understanding or Agreements relating To Interpretation of, 
or Participation in, Plan

    Not applicable.

G. Approval by Sponsors in Accordance With Plan

    Section XII (b)(iii) of the CTA Plan provides that ``[a]ny addition 
of any

[[Page 13541]]

charge to . . . the charges set forth in Exhibit E . . . shall be 
effected by an amendment to this CTA Plan . . . that is approved by 
affirmative vote of not less than two-thirds of all of the then voting 
members of CTA. Any such amendment shall be executed on behalf of each 
Participant that appointed a voting member of CTA who approves such 
amendment and shall be filed with the SEC.'' Further, Section 
IX(b)(iii) of the CQ Plan provides that ``additions, deletions, or 
modifications to any charges under this CQ Plan shall be effected by an 
amendment . . . that is approved by affirmative vote of two-thirds of 
all the members of the Operating Committee.''
    The Participants have executed this Amendment and represent not 
less than two-thirds of all of the parties to the Plans. That satisfies 
the Plans' Participant-approval requirements.

H. Description of Operation of Facility Contemplated by the Proposed 
Amendments

    Not applicable.

I. Terms and Conditions of Access

    Not applicable.

J. Method of Determination and Imposition, and Amount of, Fees and 
Charges

    The Participants are proposing to increase the Enterprise Cap by an 
amount to ensure that industry consolidation would not result in a 
sudden decrease in Plan revenue, thereby avoiding any single entity 
from getting a disproportionate benefit from the Enterprise Cap. The 
Participants propose to decrease the Per-Quote-Packet Charges for 
broker-dealers with a large Nonprofessional Subscriber base. The amount 
of the proposed decrease is specifically tailored to ensure that the 
increase in fees as a result of raising the Enterprise Cap would be 
offset and that the proposed amendment would remain revenue neutral.
    Because the Participants have data showing the current benefit of 
the Enterprise Cap and the number of queries of those potentially 
affected by the change in the Enterprise Cap, the Participants were 
able to calibrate the Per-Quote-Packet Charges in order to make the 
changes proposed herein revenue neutral. As previously stated, the 
proposed change will not only maintain the status quo on an overall 
Plan revenue basis, but also maintain the status quo with respect to 
the fees charged to individual entities.
    The proposed fee changes were distributed to and discussed with 
members of the Plans' Advisory Committee, and were discussed and voted 
on during the General Session of the Operating Committee in the 
presence of the Advisory Committee.

K. Method and Frequency of Processor Evaluation

    Not applicable.

L. 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 of Execution

    Not applicable.

III. Solicitation of Comments

    The Commission seeks comment on the Amendments. In particular, the 
Commission seeks comment on the following: (1) Is the anticipated 
impact on revenue to the Plans consistent with the Participants' 
representations; (2) is the anticipated impact on costs to consumers of 
market data, including broker-dealers and their non-professional 
customers, consistent with the Participants' representations; (3) is 
there supporting data to illustrate that the proposed changes are 
``revenue neutral'' as asserted by the Participants; (4) could the fee 
changes have a disproportionate impact on particular data recipients; 
(5) what, if any, supporting data could inform whether the changes 
would maintain the status quo and therefore do not impose any burden on 
competition that is not necessary or appropriate as asserted by the 
Participants; and (6) whether the impact of potential industry 
consolidation on the revenue of the Plans is consistent with the 
representations of the Participants? 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 email to [email protected]. Please include 
File Number SR-CTA/CQ-2018-01 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-CTA/CQ-2018-01. 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 website (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 website viewing and printing in the 
Commission's Public Reference Room on official business days between 
the hours of 10:00 a.m. and 3:00 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. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CTA/CQ-2018-01 and should be 
submitted on or before April 19, 2018.

[[Page 13542]]

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2018-06266 Filed 3-28-18; 8:45 am]
 BILLING CODE 8011-01-P