Document ID: SEC-2007-0106-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Philadelphia Stock Exchange, Inc.
Posted Date: 2007-01-24T05:00Z

[Federal Register: January 24, 2007 (Volume 72, Number 15)]
[Notices]               
[Page 3188]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24ja07-97]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55111; File No. SR-Phlx-2006-59]

 
Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval of Proposed Rule Change as Modified by 
Amendments No. 1 and 2 Thereto Relating to an Amendment to a 
Philadelphia Board of Trade Market Data Distribution Network Fee

January 16, 2007.

I. Introduction

    On September 26, 2006, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposal to increase a fee assessed by the Exchange's 
wholly owned subsidiary, the Philadelphia Board of Trade (``PBOT''), on 
market data vendors for certain index values that subscribers receive 
over PBOT's Market Data Distribution Network (``MDDN''). The Phlx filed 
Amendment No. 1 to the proposed rule change on November 1, 2006 and 
filed Amendment No. 2 on December 6, 2006. The proposed rule change, as 
amended, was published for comment in the Federal Register on December 
13, 2006.\3\ The Commission received no comments regarding the 
proposal. This order approves the proposed rule change, as amended.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 54890 (December 7, 
2006), 71 FR 74975.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Phlx proposes to amend one of the fees charged by the PBOT for 
certain market data disseminated over the MDDN.\4\ The Phlx has 
licensed the current and closing index values underlying most of the 
Phlx's proprietary indexes to PBOT for the purpose of selling, 
reproducing, and distributing the index values over PBOT's MDDN. On 
each trading day, the Exchange or its third party designee calculates 
and makes available to PBOT a real-time index value every 15 seconds 
and a closing index value at the end of the day. In exchange for 
subscriber fees paid to PBOT, market data vendors are allowed to widely 
disseminate this market data for all the values of Phlx's proprietary 
indexes to their subscribers.\5\
---------------------------------------------------------------------------

    \4\ The MDDN is an internet protocol multicast network developed 
by PBOT and SAVVIS Communications.
    \5\ Approximately 65 vendors, including for example Bloomberg 
L.P., Telekurs Financial Information Ltd. and Thomson Financial, 
have already entered into such market data agreements with PBOT. The 
PBOT has contracted with one or more major Market Data Vendors to 
receive real-time and closing index values over the MDDN and 
promptly redistribute such values. At least three of the vendors 
have elected to offer only the continuous real-time market data and 
will not offer snapshot or delayed data. The fees described in this 
proposed rule change cover values of all the indexes disseminated 
over the MDDN.
---------------------------------------------------------------------------

    As approved by the Commission, the market data fees charged by PBOT 
included a $.00025 per request fee for ``snapshot data,'' which is 
essentially market data that is refreshed no more frequently than once 
every 60 seconds.\6\ The Exchange is now proposing to increase that fee 
from $.00025 to $.0025 per request for snapshot data.\7\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 53790 (May 11, 
2006), 71 FR 28738 (May 17, 2006) (``Original Approval Order''). The 
subscriber fees are set out in agreements that PBOT executed with 
various market data vendors for the right to receive, store, and 
retransmit the current and closing index values transmitted over the 
MDDN. In its original proposal, the Exchange stated that, under 
these vendor agreements PBOT may change any of the fees enumerated 
in the agreement by giving the vendor or subvendor advance written 
notice of such changes. The Commission conditioned any such fee 
change on the submission by Phlx of a proposed rule change under 
Section 19(b) of the Act, and approval of such proposal. See 71 FR 
at 28740.
    \7\ The Commission notes that all market data vendors which 
provide market data to 200,000 or more Devices in any month qualify 
for a 15% Administrative Fee credit for that month, to be deducted 
from the monthly Subscriber Fees that they collect and are obligated 
to pay PBOT under the Vendor/Subvendor Agreement.
---------------------------------------------------------------------------

III. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange \8\ and, in particular, the requirements of Section 
6 of the Act.\9\ Specifically, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\10\ 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.
---------------------------------------------------------------------------

    \8\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission continues to believe that Phlx's proposal is 
consistent with Rule 603 under the Act.\11\ In this regard, the 
Commission notes that the Exchange represented that PBOT's proposed fee 
increase reflects a more accurate valuation of the value of snapshot 
data to investors than the original snapshot data fee did, consistent 
with Rule 603 under the Act.\12\ The Commission believes that the 
proposal is consistent with Section 6(b)(4) of the Act,\13\ in that the 
proposed rule change provides for the equitable allocation of 
reasonable dues, fees, and other charges among the Exchange's members 
and issuers and other persons using its facilities.
---------------------------------------------------------------------------

    \11\ 17 CFR 242.603. See Original Approval Order, 71 FR at 
28739, supra note 6, noting that the subscriber fees were consistent 
with Rule 603 under the Act.
    \12\ 17 CFR 242.603.
    \13\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\14\ that the proposed rule change (SR-Phlx-2006-59), as amended, 
is hereby approved.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-958 Filed 1-23-07; 8:45 am]

BILLING CODE 8011-01-P