Document ID: SEC-2006-0746-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2006-06-09T04:00Z

[Federal Register: June 9, 2006 (Volume 71, Number 111)]
[Notices]               
[Page 33496-33500]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jn06-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53592; File No. SR-NYSEArca-2006-21]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Relating to Approval of Market Data Fees for 
NYSE Arca Data

June 7, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 23, 2006, the NYSE Arca, Inc. (``Exchange'') 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 Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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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

    The Exchange, through its wholly owned subsidiary, NYSE Arca 
Equities, Inc. (``NYSE Arca Equities''), proposes to establish market 
data fees for the receipt and use of market data that the Exchange 
makes available. The text of the proposed rule change is available 
below. Proposed new language is italicized.
* * * * *

Schedule of NYSE Arca Market Data Fees

    1. Monthly Access Fees.
    A. Direct Access: $750 per set of four Logons
    B. Indirect Access: $750
    2. Monthly Device Fees
    A. Professional Subscribers
    i. For ArcaBook information relating to Exchange-Traded Funds and 
CTA Plan Securities: $15.00
    ii. For ArcaBook information relating to UTP Plan Securities (other 
than Exchange-Traded Funds): $15.00

[[Page 33497]]

    iii. For limit order information and last sale price information 
relating to bonds that are traded through NYSE Arca facilities: No 
charge.
    B. Nonprofessional Subscribers 
    i. For ArcaBook information relating to Exchange-Traded Funds and 
CTA Plan Securities: $5.00
    ii. For ArcaBook information relating to UTP Plan Securities (other 
than Exchange-Traded Funds): $5.00
    iii. For limit order information and last sale price information 
relating to bonds that are traded through NYSE Arca facilities: No 
charge.
    C. Maximum Monthly Device Fee Payments. An entity that is 
registered as a broker-dealer under the Securities Exchange Act of 1934 
is not required to pay more than the monthly broker-dealer ``Maximum 
Amount'' for device fees payable in respect of services that it 
provides to:
    (i) Nonprofessional Subscribers that maintain brokerage accounts 
with the broker-dealer; and
    (ii) Professional Subscribers that are not affiliated with the 
broker-dealer or any affiliate of the broker-dealer (either as an 
officer, partner or employee or otherwise) and that maintain brokerage 
accounts directly with the broker-dealer (that is, with the broker-
dealer rather than with a correspondent firm of the broker dealer);

provided, however, that Nonprofessional Subscribers must comprise no 
less than 90 percent of the pool of subscribers as to which the monthly 
Maximum Amount applies. The ``Maximum Amount'' for any month in 
calendar year 2006 shall equal $20,000. The ``Maximum Amount'' for the 
months falling in a subsequent calendar year shall increase by the 
percentage increase (if any) in the annual composite share volume for 
the calendar year preceding that subsequent calendar year, subject to a 
maximum annual increase of five percent.
    For example, if the annual composite share volume for calendar year 
2006 increases by three percent over the annual composite share volume 
for calendar year 2005, then the monthly Maximum Amount for months 
falling in calendar year 2007 would increase by three percent to 
$20,600.
    D. Free Trial Period--No device fees apply in respect of the 
receipt of NYSE Arca Market Data by a Professional Subscriber or 
Nonprofessional Subscriber in the calendar month in which the 
subscriber first becomes authorized to receive the data. For example, 
if a subscriber becomes authorized to receive NYSE Arca Market Data on 
May 10, the device fees will not apply during that month of May.
    For the purposes of this Market Data Fee Schedule, the following 
definitions shall apply:
    1. ``CTA Plan'' means the plan pursuant to which national 
securities exchanges disseminate last sale prices of transactions in 
CTA Plan Securities in compliance with Rule 601 under Regulation NMS. 
The CTA Plan can be found at http://www.nysedata.com/nysedata/Default.aspx?tabid=227
.

    2. ``CTA Plan Security'' means a security (a) that is listed for 
trading on one or more national securities exchanges, other than those 
listed on the Nasdaq Stock Market, Inc., and (b) trades in which are 
reported pursuant to the CTA Plan
    3. ``Direct Access'' means access to NYSE Arca market data by means 
of a direct connection or linkage to NYSE Arca facilities. ``Indirect 
Access'' means access to NYSE Arca Data through an intermediary.
    4. ``Exchange-Traded Fund'' means exchange-listed securities 
representing interests in open end unit investment trusts or open-end 
management investment companies that hold securities based on an index 
or a portfolio of securities.
    5. ``Logon'' means a single means of access to one instance of an 
NYSE Arca datafeed. For example, if an access recipient gains access to 
NYSE Arca Data during a month by means of one logon to receive 
ArcaBook, a second logon to receive NYSE Arca bond information, a third 
logon to receive NYSE Arca back-up access to ArcaBook and a fourth 
logon to receive back-up access to NYSE Arca bond information, that 
recipient would have enjoyed four Logons during the month.
    6. ``Nonprofessional Subscriber'' means an authorized end-user of 
NYSE Arca Data who is a natural person and who is neither:
    (a) Registered or qualified with the Securities and Exchange 
Commission (the ``Commission''), the Commodities Futures Trading 
Commission, any state securities agency, any securities exchange or 
association, or any commodities or futures contract market or 
association;
    (b) Engaged as an ``investment advisor'' as that term is defined in 
Section 202(a)(11) of the Investment Advisers Act of 1940 (whether or 
not registered or qualified under that act); nor
    (c) Employed by a bank or other organization exempt from 
registration under Federal and/or state securities laws to perform 
functions that would require him/her to be so registered or qualified 
if he/she were to perform such functions for an organization not so 
exempt.
    7. ``Professional Subscriber'' means an authorized end-user of NYSE 
Arca Data that has not qualified as a Nonprofessional Subscriber.
    8. ``UTP Plan'' means the ``Reporting Plan for Nasdaq/National 
Market System Securities Traded on an Exchange on an Unlisted or Listed 
Basis'' pursuant to which national securities exchanges disseminate 
last sale prices of transactions in UTP Plan Securities in compliance 
with Rule 601 under Regulation NMS. The UTP Plan can be found at http://www.utpdata.com
.

    9. ``UTP Plan Security'' means a security that is listed for 
trading on the Nasdaq Stock Market, Inc. and (a) as to which unlisted 
trading privileges have been granted pursuant to Section 12(f) of the 
Exchange Act or which become eligible for such trading by order of the 
Commission or (b) which is also listed on another national securities 
exchange.
* * * * *

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 aspects of such 
statements.
    A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change
1. Purpose
    a. The Services. Through NYSE Arca, L.L.C. (``NYSE Arca''), the 
equities trading facility of NYSE Arca Equities, the Exchange makes 
ArcaBookSM, a compilation of all limit orders resident in 
the NYSE Arca limit order book, available on a real-time basis.\3\ In 
addition, the Exchange makes available real-time information relating 
to transactions and limit orders in debt

[[Page 33498]]

securities that are traded through the Exchange's facilities.
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    \3\ The Exchange notes that it makes available to vendors the 
best bids and offers that are included in ArcaBook data no earlier 
than it makes those best bids and offers available to the processors 
under the Consolidated Quotation System Plan (``CQ Plan'') and the 
``Reporting Plan for Nasdaq/National Market System Securities Traded 
on an Exchange on an Unlisted or Listed Basis'' (``UTP Plan'').
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    The Exchange makes ArcaBook and the bond trade and limit order 
information (collectively, ``NYSE Arca Data'') available to market data 
vendors, broker-dealers, private network providers and other entities 
by means of data feeds. By making NYSE Arca Data available, ArcaBook 
enhances market transparency and fosters competition among orders and 
markets.
    b. Fees. The Exchange proposes to establish the Market Data Fee 
Schedule to the proposed rule change for the receipt and use of NYSE 
Arca Data. As the Market Data Fee Schedule details, the Exchange is 
proposing to assess access fees and professional and nonprofessional 
device fees, categories of fees that are consistent with the fees that 
the New York Stock Exchange (``NYSE'') and the Nasdaq Stock Market 
(``Nasdaq''), and the Participants in the Consolidated Tape Association 
(``CTA''), CQ, UTP and Options Pricing Reporting Authority (``OPRA'') 
Plans, charge for the receipt and use of their market data.
    i. Access Fees. The Exchange proposes to impose a monthly $750 fee 
for a data recipient to gain direct access to the datafeeds through 
which the Exchange makes NYSE Arca Data available. This fee would 
entitle the datafeed recipient to gain access to NYSE Arca Data for a 
set of up to four ``Logons.'' A ``Logon'' is activation of a means of 
direct access to any of the NYSE Arca datafeeds. For instance, if a 
datafeed recipient gains access to NYSE Arca Data one or more times 
during a month using an Exchange-provided and approved logon that 
provides access to the ArcaBook datafeed, that would constitute a 
``Logon.'' If, during that month, the datafeed recipient uses a 
different logon name that allows for access to a server that provides 
access to the ArcaBook datafeed, that would constitute a second 
``Logon.''
    The Exchange proposes to impose a monthly $750 fee for a data 
recipient to gain indirect access to the datafeeds through which the 
Exchange makes NYSE Arca Data available for any number of Logons. 
``Indirect access'' refers to access to a NYSE Arca Datafeed indirectly 
through one or more intermediaries, rather than by means of a direct 
connection or linkage with the Exchange's facilities.
    ii. Device Fees. The Exchange proposes to establish device fees for 
professional and nonprofessional subscribers for the display of 
ArcaBook. In differentiating between professional and nonprofessional 
subscribers, the Exchange proposes to apply the same criteria for 
qualification as a nonprofessional subscriber as the CTA and CQ Plan 
Participants use.
    a. For Professional Subscribers. For professional subscribers, the 
Exchange is proposing to establish (i) a monthly fee of $15 per device 
for the receipt of ArcaBook data relating to Exchange-Traded Funds and 
those equity securities for which reporting is governed by the CTA Plan 
(``CTA Plan and ETF Securities'') and (ii) a monthly fee of $15 per 
device for the receipt of ArcaBook data relating to those equity 
securities for which reporting is governed by the UTP Plan (excluding 
Exchange-Traded Funds; ``UTP Plan Securities'').
    The combined monthly professional subscriber device fee of $30 
(i.e., for receipt of Arca data relating to CTA Plan and ETF Securities 
and to UTP Plan Securities) compares favorably with comparable fees 
charged by other exchanges for similar services. For instance, for 
professional subscribers, Nasdaq charges $76 for its combined TotalView 
\4\ and OpenView \5\ products and NYSE charges $60 for NYSE 
OpenBook.\6\
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    \4\ Through TotalView, Nasdaq provides information relating to 
the displayed quotes and orders of Nasdaq participants in UTP Plan 
Securities. TotalView displays quotes and orders at multiple prices 
and is similar to ArcaBook.
    \5\ Through OpenView, Nasdaq provides information relating to 
the displayed quotes and orders of Nasdaq participants in CTA Plan 
Securities. OpenView displays quotes and orders at multiple prices 
and is similar to ArcaBook.
    \6\ Through NYSE OpenBook, NYSE provides information relating to 
limit orders.
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    b. For Nonprofessional subscribers. For nonprofessional 
subscribers, the Exchange is proposing to reduce those monthly fees to 
$5 per device for the receipt of ArcaBook data relating to CTA Plan and 
ETF Securities and $5 per device for the receipt of ArcaBook data 
relating to UTP Plan Securities (i.e., a combined fee of $10 for both 
CTA Plan and ETF Securities and UTP Plan Securities).
    The Exchange proposes to limit for any one month the maximum amount 
of device fees payable by any broker-dealers in respect of 
nonprofessional subscribers that maintain brokerage accounts with the 
broker-dealer. Professional subscribers may be included in the 
calculation of the monthly maximum amount, so long as:
    (1) Nonprofessional subscribers comprise no less than 90 percent of 
the pool of subscribers that are included in the calculation;
    (2) Each professional subscriber that is included in the 
calculation is not affiliated with the broker-dealer or any of its 
affiliates (either as an officer, partner or employee or otherwise); 
and
    (3) Each such professional subscriber maintains a brokerage account 
directly with the broker-dealer (that is, with the broker-dealer rather 
than with a correspondent firm of the broker dealer).
    For 2006, the maximum amount for any calendar month shall equal 
$20,000. For the months falling in a subsequent calendar year, the 
maximum monthly payment shall increase (but not decrease) by the 
percentage increase (if any) in the annual composite share volume \7\ 
for the calendar year preceding that subsequent calendar year, subject 
to a maximum annual increase of five percent.\8\ For example, if the 
annual composite share volume for calendar year 2006 increases by three 
percent over the annual composite share volume for calendar year 2005, 
then the monthly ``Maximum Amount'' for months falling in calendar year 
2007 would increase by three percent to $20,600.
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    \7\ ``Composite share volume'' for a calendar year refers to the 
aggregate number of shares in all securities that trade over NYSE 
Arca facilities for that calendar year.
    \8\ This is the same annual increase calculation that the 
Commission approved for the CTA Monthly Maximum. See Securities Act 
Release No. 34-41977 (October 5, 1999) (File No. SR-CTA/CQ-99-01).
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    The Maximum Amount compares favorably with monthly maximums payable 
to Nasdaq and to the CTA Plan Participants. Nasdaq set the maximum at 
$25,000 per month for nonprofessional subscribers' receipt of 
TotalView, though it does not apply to OpenView or to Level 1 or NQDS 
services. The CTA Plan Participants currently set the maximum at 
$630,000 per month for internal distribution within a broker-dealer's 
organization and for the broker-dealer's distribution to 
nonprofessional subscribers that maintain brokerage accounts (the ``CTA 
Monthly Maximum'').
    The Exchange notes that these device fees are lower than the fees 
that NYSE and Nasdaq charge for their limit order data services.
    The Exchange does not presently propose to impose device fees for 
the display of limit order, quotation and last sale price information 
relating to bonds that are traded through the Exchange's facilities. 
The Exchange will not establish device fees for that information 
without first filing with the Commission a proposed rule change on Form 
19b-4 and receiving Commission approval.
    iii. Free Trial Period. As an incentive to prospective subscribers, 
the Exchange proposes to offer subscribers the right to receive NYSE 
Arca Data free of charge

[[Page 33499]]

for the duration of the billable month in which the subscriber first 
gains access to the data. For example, if a subscriber (whether 
professional or nonprofessional) is billed on a calendar-month basis 
and first gains access to NYSE Arca Data on May 10, the device fees set 
forth in the proposed rule change will not apply during that month of 
May.
    iv. Justification of fees. NYSE Arca believes that the proposed 
market data fees would reflect an equitable allocation of its overall 
costs to users of its facilities. The Exchange believes that the fees 
are fair and reasonable because they compare favorably to fees that 
other markets charge for similar products.
    For instance, the combined monthly professional subscriber device 
fee of $30 (i.e., for receipt of NYSE Arca data relating to CTA Plan 
and ETF Securities and to UTP Plan Securities) compares favorably with 
the $76 that Nasdaq charges professional subscribers for its combined 
TotalView and OpenView products and the $60 that NYSE charges 
professional subscribers for NYSE OpenBook.
    For nonprofessional subscribers, Nasdaq charges $14 per month for 
its TotalView product and does not offer a nonprofessional subscriber 
rate for OpenView. Similarly, NYSE does not offer a nonprofessional 
subscriber rate for its OpenBook product. NYSE Arca proposes to charge 
nonprofessional subscribers $10 per month for NYSE Arca data relating 
to CTA Plan and ETF Securities and to UTP Plan Securities.
    For direct access, NYSE Arca proposes to charge $750 per month for 
a set of up to four logons and, for indirect access, NYSE Arca proposes 
to charge $750 per month for any number of logons. In contrast, NYSE 
charges $5000 per month for direct or indirect access to OpenBook and 
Nasdaq charges $2500 per month for access to TotalView and another 
$2500 per month for access to the OpenView datafeed.
    c. Contracts. The Exchange will require each recipient of a 
datafeed containing NYSE Arca Data to enter into the form of ``vendor'' 
agreement into which the CTA and CQ Plans require recipients of the 
Network A datafeeds to enter. That agreement will authorize the 
datafeed recipient to provide NYSE Arca Data services to its customers 
or to distribute the data internally.
    In addition, the Exchange will require each professional end-user 
that receives NYSE Arca Data displays from a vendor or broker-dealer to 
enter into the form of professional subscriber agreement into which the 
CTA and CQ Plans require end users of Network A data to enter and to 
require vendors and broker-dealers to subject nonprofessional 
subscribers to the same contract requirements as the CTA and CQ Plan 
Participants require of Network A nonprofessional subscribers.
    The Network A Participants drafted the vendor and Network A 
professional subscriber agreements as one-size-fits-all forms to 
capture most categories of market data dissemination. They are 
sufficiently generic to accommodate NYSE Arca Data. The Commission has 
approved the vendor form and the professional subscriber form.\9\
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    \9\ See Securities Exchange Act Release Nos. 34-22851 (January 
31, 1986), 51 FR 5135 (February 11, 1986); 34-28407 (September 6, 
1990), 55 FR 37276 (September 10, 1990); and 34-49185 (February 4, 
2004), 69 FR 6704 (February 11, 2004).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and furthers the objectives of Section 
6(b)(4) of the Act \11\ in particular, in that it provides for the 
equitable allocation of reasonable fees, dues, and other charges among 
Exchange participants, issuers and other persons using its facilities.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that the proposed fee change will not impose 
any burden on competition that is not necessary or appropriate in the 
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 solicited, and does not intend to solicit, 
comments regarding the proposed rule change. The Exchange has not 
received any unsolicited written comments from Exchange participants or 
other interested parties.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Exchange consents, the Commission will:
    A. By order approve such proposed rule change; or
    B. Institute proceedings to determine whether the proposed rule 
change should be 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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-NYSEArca-2006-21 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2006-21. 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 inspection 
and copying in the Commission's Public Reference Room. Copies of such 
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 publicly available. All submissions should refer to 
File Number SR-NYSEArca-2006-21 and should be submitted on or before 
June 30, 2006.

[[Page 33500]]

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-5300 Filed 6-7-06; 1:12 pm]

BILLING CODE 8010-01-P