Document ID: SEC-2009-0085-0001
Agency: sec
Document Type: Notice
Title: Filings: Consolidated Tape Association, etc.
Posted Date: 2009-01-21T05:00Z

[Federal Register: January 21, 2009 (Volume 74, Number 12)]
[Notices]               
[Page 3659-3661]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ja09-137]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59230; File No. SR-CTA/CQ-2008-05]

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

January 12, 2009.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on December 15, 2008, the Consolidated Tape Association (``CTA'') Plan 
and Consolidated Quotation (``CQ'') Plan participants 
(``Participants'') \3\ filed with the Securities and Exchange 
Commission (``Commission'') a proposal to amend the CTA and CQ Plans 
(collectively, the ``Plans'').\4\ The

[[Page 3660]]

proposals represent the thirteenth substantive amendment made to the 
Second Restatement of the CTA Plan (``Thirteenth Amendment to the CTA 
Plan'') and the ninth substantive amendment to the Restated CQ Plan 
(``Ninth Amendment to the CQ Plan''), and reflect changes unanimously 
adopted by the participants. The Thirteenth Amendment to the CTA Plan 
and the Ninth Amendment to the CQ Plan (``Amendments'') would amend the 
Plans to provide that the Participants will pay the Network A 
Administrator a fixed annual fee in exchange for its performance of 
Network A administrator functions under the Plans. The Commission is 
publishing this notice to solicit comments from interested persons on 
the proposed Amendments.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ Each Participant executed the proposed amendment. The 
Participants are the American Stock Exchange LLC (n/k/a NYSE 
Alternext US LLC); Boston Stock Exchange, Inc. (n/k/a NASDAQ OMX BX, 
Inc.); Chicago Board Options Exchange, Incorporated; Chicago Stock 
Exchange, Inc.; Financial Industry Regulatory Authority, Inc., 
International Securities Exchange, LLC; The NASDAQ Stock Market LLC; 
National Stock Exchange, Inc.; New York Stock Exchange LLC 
(``NYSE''); NYSE Arca, Inc.; and Philadelphia Stock Exchange, Inc. 
(n/k/a NASDAQ OMX PHLX, Inc.).
    \4\ See Securities Exchange Act Release Nos. 10787 (May 10, 
1974), 39 FR 17799 (order approving CTA Plan); 15009 (July 28, 
1978), 43 FR 34851 (August 7, 1978) (order temporarily approving CQ 
Plan); and 16518 (January 22, 1980), 45 FR 6521 (order permanently 
approving 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.
---------------------------------------------------------------------------

I. Rule 608(a)

A. Description and Purpose of the Amendment

    Network Administrator Fees under the Plans. Section XII 
(``Financial Matters'') of the CTA Plan 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. Both Section XII(c)(i) (``Determination of Operating 
Expenses'') of the CTA Plan and Section IX(c)(i) (``Determination of 
Operating Expenses'') of the CQ Plan currently provide that a network's 
Operating Expenses include all costs and expenses that the network's 
administrator incurs in ``collecting, processing and making available 
Network A market data.''
    Proposed Revision. The Network A Administrator has informed the 
Participants that accounting for operating costs is administratively 
burdensome, especially the allocation of organization overhead costs to 
the Network A Administrator function. As a result, the Network A 
Participants have determined that paying the Network A Administrator a 
fixed fee in exchange for its Network A administrative services would 
be more efficient.
    Therefore, the Participants propose to replace their payment to the 
Network A Administrator of Operating Costs with payment to the Network 
A Administrator of a fixed fee. (The Participants understand that 
Nasdaq similarly 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 Unlisted Trading Privileges Basis.'')
    For calendar year 2008, the Network A Participants propose to set 
the fixed fee at $6,000,000. This amount will compensate the Network A 
Administrator for its Network A administrative services during 2008 
under both the CTA and CQ Plans.
    Determination of Operating Expenses. In the case of NYSE as the CTA 
and CQ Network A Administrator, the Participants deem ``Operating 
Expenses'' for any calendar year to equal: (1) The ``Annual Fixed 
Payment'' for that year; plus (2) ``Extraordinary Expenses.''
    Annual Increases. For each subsequent calendar year the Annual 
Fixed Payment shall increase (but not decrease) by the percentage 
increase (if any) in the annual cost-of-living adjustment (``COLA'') 
that the U.S. Social Security Administration applies to the 
Supplemental Security Income for the calendar year preceding that 
subsequent year, subject to a maximum annual increase of five percent. 
For example, if the Social Security Administration's COLA is three 
percent for calendar year 2008, then the Annual Fixed Payment for 
calendar year 2009 would increase by three percent to $6,180,000.
    Biannual Review. Every two years the Network A Administrator will 
provide a report highlighting any significant changes to the CTA 
Network A and CQ Network A administrative expenses during the preceding 
two years, and the Participants will review the Annual Fixed Payment 
and determine by majority vote whether to continue it at its then 
current level.
    Payment of the Fee. On a quarterly basis, NYSE shall deduct one-
quarter of each calendar year's Annual Fixed Payment from the aggregate 
of CTA Network A Gross Income and CQ Network A Gross Income under the 
CQ Plan, before determining that quarter's distributable Net Income 
under the Plans. If a Participant's share of Net Income for CTA Network 
A and CQ Network A for any calendar year is less than its pro rata 
share of the Annual Fixed Payment for that calendar year, the 
Participant shall be responsible for the difference.
    Extraordinary Expenses. Extraordinary Expenses include that portion 
of legal and audit expenses and marketing and consulting fees that are 
outside of the ordinary and customary functions that a network 
administrator performs. For instance, Extraordinary Expenses would 
include such things 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 Participants determine to 
undertake to popularize stock trading.\5\
---------------------------------------------------------------------------

    \5\ 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 A Administrator will not incur any 
extraordinary expense on behalf of the Network A Participants unless 
the Network A Participants determine by majority vote to approve the 
incurrence of that extraordinary expense.'' This language is not 
part of the proposed Amendments.
---------------------------------------------------------------------------

    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 Amendment
    Upon Commission approval of the Amendment, the Participants intend 
to implement the fixed fee immediately in order to make it applicable 
for the 2008 calendar year. That is, for all of 2008, the Network A 
Participants would pay the Network A 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 Amendments 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
    Under Section IV(b) of the CTA Plan and Section IV(c) of the CQ 
Plan, each Plan Participant must execute a written amendment to the CTA 
Plan before the

[[Page 3661]]

amendment 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.
    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 
Thirteenth Substantive Amendment to the CTA Plan and the Ninth 
Amendment to the CQ Plan 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-2008-05 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-2008-05. 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 Plan amendment that are filed 
with the Commission, and all written communications relating to the 
Plan amendment 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 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-
2008-05 and should be submitted on or before February 11, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\ 17 CFR 200.30-3(a)(27).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-1021 Filed 1-16-09; 8:45 am]

BILLING CODE 8011-01-P