Notice2024-27017
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Establish Fees for the NYSE American Aggregated Lite Data Feed
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 20, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 224 (Wednesday, November 20, 2024)</title>
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[Federal Register Volume 89, Number 224 (Wednesday, November 20, 2024)]
[Notices]
[Pages 91831-91840]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-27017]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101628; File No. SR-NYSEAMER-2024-68]
Self-Regulatory Organizations; NYSE American LLC; Notice of
Filing and Immediate Effectiveness of Proposed Change To Establish Fees
for the NYSE American Aggregated Lite Data Feed
November 14, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on November 4, 2024, NYSE American LLC (``NYSE American'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the self-regulatory
organization. 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\ 15 U.S.C. 78a.
\3\ 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 proposes to establish fees for the NYSE American
Aggregated Lite data feed. The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, at the principal office of the
Exchange, 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, the self-regulatory organization
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 those 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend the NYSE American LLC Equities
Proprietary Market Data Fees Schedule (``Fee Schedule'') and establish
fees for the NYSE American Aggregated Lite (``NYSE American Agg Lite'')
data feed,\4\ effective November 4, 2024.\5\
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\4\ The proposed rule change establishing the NYSE American Agg
Lite data feed was immediately effective on February 27, 2024. See
Securities Exchange Act Release No. 99690 (March 7, 2024), 89 FR
18445 (March 13, 2024) (SR-NYSEAMER-2024-14) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Establish the
NYSE American Aggregated Lite Market Data Feed).
\5\ The Exchange originally filed to amend the Fee Schedule on
May 13, 2024 (SR-NYSEAMER-2024-31). On July 11, 2024, the Exchange
withdrew SR-NYSEAMER-2024-31 and replaced it with SR-NYSEAMER-2024-
44. On September 6, 2024, the Exchange withdrew SR-NYSEAMER-2024-44
and replaced it with SR-NYSEAMER-2024-55. On November 4, 2024, the
Exchange withdrew SR-NYSEAMER-2024-55 and replaced it with this
filing.
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In summary, the NYSE American Agg Lite is a NYSE American-only
frequency-based depth of book market data feed of the NYSE American's
limit order book for up to ten (10) price levels on both the bid and
offer sides of the order book for securities traded on the Exchange and
for which the Exchange reports quotes and trades under the Consolidated
Tape Association (``CTA'') Plan or the Nasdaq/UTP Plan. The NYSE
American Agg Lite is a compilation of limit order data that the
Exchange provides to vendors and subscribers. The NYSE American Agg
Lite includes partial depth of book order data as well as security
status messages. The security status message informs subscribers of
changes in the status of a specific security, such as trading halts,
short sale restriction, etc. In addition, the NYSE American Agg Lite
includes order imbalance information prior to the opening and closing
of trading.
Background
The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. In Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \6\
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\6\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final
Rule) (``Regulation NMS'').
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While Regulation NMS has enhanced competition, it has also fostered
a ``fragmented'' market structure where trading in a single stock can
occur across multiple trading centers. When multiple trading centers
compete for order flow in the same stock, the Commission has recognized
that ``such competition can lead to the fragmentation of order flow in
that stock.'' \7\ Indeed, cash equity trading is currently dispersed
across 16 exchanges,\8\ numerous alternative trading systems,\9\ and
broker-dealer internalizers and wholesalers, all competing for order
flow. Based on publicly-available information, no single exchange
currently has more than 20% market share (whether including or
excluding auction volume).\10\
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\7\ See Securities Exchange Act Release No. 61358, 75 FR 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\8\ See Cboe U.S. Equities Market Volume Summary, available at
<a href="https://markets.cboe.com/us/equities/market_share">https://markets.cboe.com/us/equities/market_share</a>. See generally
<a href="https://www.sec.gov/fastanswers/divisionsmarketregmrexchangesshtml.html">https://www.sec.gov/fastanswers/divisionsmarketregmrexchangesshtml.html</a>.
\9\ See FINRA ATS Transparency Data, available at <a href="https://otctransparency.finra.org/otctransparency/AtsIssueData">https://otctransparency.finra.org/otctransparency/AtsIssueData</a>. A list of
alternative trading systems registered with the Commission is
available at <a href="https://www.sec.gov/foia/docs/atslist.htm">https://www.sec.gov/foia/docs/atslist.htm</a>.
\10\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at <a href="http://markets.cboe.com/us/equities/market_share/">http://markets.cboe.com/us/equities/market_share/</a>.
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Proposed NYSE American Agg Lite Data Feed Fees
The Exchange proposes to establish the fees listed below for the
NYSE American Agg Lite data feed. The
[[Page 91832]]
Exchange proposes to charge fees for the same categories of market data
use as its affiliated exchanges (namely, NYSE, NYSE Arca and NYSE
National) currently charge. The Exchange believes that adopting the
same fee structure as its affiliated exchanges would reduce
administrative burdens on market data subscribers that also currently
subscribe to market data feeds from the Exchange's affiliates.
1. Access Fee. For the receipt of access to the NYSE American Agg
Lite data feed, the Exchange proposes to charge $500 per month. This
proposed Access Fee would be charged to any data recipient that
receives the NYSE American Agg Lite data feed. Data recipients that
only use display devices to view NYSE American Agg Lite market data and
do not separately receive a data feed would not be charged an Access
Fee. The proposed Access Fee would be charged only once per firm.
2. User Fees. The Exchange proposes to charge a Professional User
Fee (Per User) of $1 per month. The Exchange does not propose a fee for
Non-Professional Users. The Professional User Fee would apply to each
display device that has access to the NYSE American Agg Lite data feed.
3. Redistribution Fee. For redistribution of the NYSE American Agg
Lite data feed, the Exchange proposes to establish a fee of $250 per
month. The proposed Redistribution Fee would be charged to any
Redistributor of the NYSE American Agg Lite data feed, which is defined
to mean a vendor or any person that provides a real-time NYSE American
market data product externally to a data recipient that is not its
affiliate or wholly-owned subsidiary, or to any system that an external
data recipient uses, irrespective of the means of transmission or
access. The proposed Redistribution Fee would be charged only once per
Redistributor account. As an incentive to potential Redistributors to
subscribe to the NYSE American Agg Lite data feed, the Exchange
proposes to waive the Access Fee and Redistribution Fee for a
Redistributor if the Redistributor provides NYSE American Agg Lite
externally to at least one data feed recipient and reports such data
feed recipient or recipients to the Exchange. For example, a
Redistributor that subscribes to the NYSE American Agg Lite data feed
will have the Access Fee and Redistribution Fee waived if such
Redistributor provides NYSE American Agg Lite externally to at least
one data feed recipient and reports such data feed recipient to the
Exchange.
By targeting this proposed fee waiver to Redistributors that
provide external distribution of NYSE American Agg Lite, the Exchange
believes that this would provide an incentive for Redistributors to
make the NYSE American Agg Lite market data product available to its
customers. Specifically, if a data recipient is interested in
subscribing to NYSE American Agg Lite and relies on a Redistributor to
obtain market data products from the Exchange, that data recipient
would need its Redistributor to subscribe to and redistribute NYSE
American Agg Lite. The Exchange believes that this proposed fee waiver
for Redistributors of NYSE American Agg Lite would provide an incentive
for Redistributors to make NYSE American Agg Lite available to their
customers, which will increase the availability of the Exchange's
market data products to a larger potential population of data
recipients.
Further, the Exchange proposes to adopt a credit that would be
applicable to Redistributors that provide external distribution of NYSE
American Agg Lite to Professional and Non-Professional Users. As
proposed, such Redistributors would receive a credit equal to the
amount of the monthly Professional User and Non-Professional User Fees
for such external distribution, up to a maximum of the combination of
the Access Fee and Redistribution Fee for NYSE American Agg Lite that
the Redistributor would otherwise be required to pay to the Exchange.
For example, a Redistributor that reports external Professional Users
in a month totaling $750 or more would receive a maximum credit of $750
for that month, which could effectively reduce its monthly fee for
access and redistribution to zero. If that same Redistributor were to
report external User quantities in a month totaling $600 of monthly
usage, that Redistributor would receive a credit of $600. The Exchange
believes the proposed credit would provide Redistributors with an
incentive to increase their redistribution of NYSE American Agg Lite
because the credit they would be eligible to receive would increase if
they report additional external User quantities.
4. Enterprise Fees.
The Exchange proposes to establish an enterprise license that will
reduce Exchange fees and administrative costs for subscribers that
disseminate NYSE American Agg Lite. Subscribers that are broker-dealers
will be able to distribute the NYSE American Agg Lite data feed for
display usage to an unlimited number of recipients (professional users
and non-professional users) for a monthly fee of $550, with an
opportunity to lower that fee to $500 per month if they contract for
twelve months of service in advance.
As proposed, the NYSE American Agg Lite data feed may be
distributed pursuant to the proposed market data enterprise license
only for display usage and in the context of a brokerage relationship
with a broker-dealer through such broker-dealer's own devices. Purchase
of an enterprise license would eliminate per User subscriber fees for
NYSE American Agg Lite. Further, the Exchange proposes to waive the
Access Fee and the Redistribution Fee for NYSE American Agg lite for
Redistributors that pay the Professional and Non-Professional
Enterprise Fee. The Exchange believes the proposed fee waiver would
provide an incentive for Redistributors to subscribe to the NYSE
American Agg Lite market data product at the enterprise level to reduce
the fees it would pay to the Exchange and without having to report the
number of users that receive the data feed from the Redistributor.
Subscribers that intend to purchase a market data enterprise
license for at least twelve months may elect to purchase this product
in advance for a monthly fee of $500 per month for distribution to an
unlimited number of professional users and non-professional users. This
feature is intended to simplify cost projections and budgeting for both
subscribers and the Exchange. Subscribers that elect not to purchase
this particular feature will nevertheless be able to obtain all of the
market data information offered by NYSE American Agg Lite by paying the
standard fee of $550 per month for distribution to an unlimited number
of professional users and non-professional users. Subscribers that
elect to pay the monthly fee will be able to switch to the annual fee
at any time, and those that elect to purchase the annual contract would
be able to change to the monthly contract, with notice, at the end of
the twelve-month period.
The Exchange believes that the proposed market data enterprise
license will reduce exchange fees, lower administrative costs for
subscribers, and help expand the availability of market information to
investors, and thereby increase participation in financial markets.
5. Non-Display Use Fees.
The Exchange proposes to establish non-display fees \11\ for the
NYSE American Agg Lite data feed that are based on the non-display use
categories charged by NYSE, NYSE Arca, NYSE National, the CTA, and the
UTP Plan for
[[Page 91833]]
non-display use.\12\ Non-display use would mean accessing, processing,
or consuming the NYSE American Agg Lite data feed delivered directly or
through a Redistributor, for a purpose other than in support of a data
recipient's display or further internal or external redistribution
(``Non-Display Use''). Non-Display Use would include trading uses such
as high frequency or algorithmic trading as well as any trading in any
asset class, automated order or quote generation and/or order pegging,
price referencing for algorithmic trading or smart order routing,
operations control programs, investment analysis, order verification,
surveillance programs, risk management, compliance, and portfolio
management.
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\11\ See infra, note 15.
\12\ See Endnote 1 to the NYSE Proprietary Market Data Fees,
available here: <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf</a>; Endnote 1 to the NYSE Arca
Equities Proprietary Market Data Fees, available here: <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf</a>; Endnote 1 to
the NYSE National Equities Proprietary Market Data Fees, available
here: <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_National_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_National_Market_Data_Fee_Schedule.pdf</a>; Endnote 8 to the
Schedule of Market Data Charges for the CTA, available here: <a href="https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Schedule%20Of%20Market%20Data%20Charges%20-%20January%201,%202015.pdf">https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Schedule%20Of%20Market%20Data%20Charges%20-%20January%201,%202015.pdf</a>; and Non-Display Usage Fees as set forth
in the UTP Plan Fee Schedule and Non-Display Policy, available here:
<a href="http://utpplan.com/DOC/Datapolicies.pdf">http://utpplan.com/DOC/Datapolicies.pdf</a>. See, e.g., Securities
Exchange Act Release Nos. 69285 (April 3, 2013), 78 FR 21172 (April
9, 2013) (SR-NYSEMKT-2013-32) and 72020 (September 9, 2014), 79 FR
55040 (September 15, 2014) (SR-NYSEMKT-2014-72).
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Under the proposal, for Non-Display Use of NYSE American Agg Lite,
there would be three categories of, and fees applicable, to data
recipients. One, two, or three categories of Non-Display Use may apply
to a data recipient.
<bullet> As proposed, the Category 1 Fee would be $1,000 per month
and would apply when a data recipient's Non-Display Use of the NYSE
American Agg Lite data feed is on its own behalf, not on behalf of its
clients.
<bullet> As proposed, Category 2 Fees would be $1,000 per month and
would apply to a data recipient's Non-Display Use of the NYSE American
Agg Lite data feed on behalf of its clients.
<bullet> As proposed, Category 3 Fees would be $1,000 per month and
would apply to a data recipient's Non-Display Use of the NYSE American
Agg Lite data feed for the purpose of internally matching buy and sell
orders within an organization, including matching customer orders for a
data recipient's own behalf and/or on behalf of its clients. This
category would apply to Non-Display Use in trading platforms, such as,
but not restricted to, alternative trading systems (``ATSs''), broker
crossing networks, broker crossing systems not filed as ATSs, dark
pools, multilateral trading facilities, exchanges and systematic
internalization systems. A data recipient will be charged $1,000 per
month for each platform on which it uses the Non-Display data
internally to match buy and sell orders, up to a cap of $3,000 per
month; even if the data recipient uses the NYSE American Agg Lite data
feed for more than three platforms, it will not pay more than $3,000
for such Category 3 use per month.
The description of the three non-display use categories is set
forth in the Fee Schedule in endnote 1 and that endnote would be
referenced in the NYSE American Agg Lite data feed fees on the Fee
Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE American Agg Lite data feed
for Non-Display Use would be required to complete and submit a Non-
Display Use Declaration before they would be authorized to receive the
feed. A firm subject to Category 3 Fees would be required to identify
each platform that uses the NYSE American Agg Lite data feed for a
Category 3 Non-Display Use basis, such as ATSs and broker crossing
systems not registered as ATSs, as part of the Non-Display Use
Declaration.
6. Non-Display Use Declaration Late Fee. Data recipients that
receive the NYSE American Agg Lite data feed for Non-Display Use would
be required to complete and submit a Non-Display Use Declaration before
they would be authorized to receive the feed. Beginning in 2025, NYSE
American Agg Lite data feed recipients would be required to submit, by
January 31 of each year, the Non-Display Use Declaration. The
requirement to submit a Non-Display Use Declaration applies to all
real-time NYSE American data feed product recipients. The Exchange
proposes to charge a Non-Display Use Declaration Late Fee of $1,000 per
month to any data recipient that pays an Access Fee for the NYSE
American Agg Lite data feed that has failed to timely complete and
submit a Non-Display Use Declaration. Specifically, with respect to the
Non-Display Use Declaration due by January 31 of each year, the Non-
Display Use Declaration Late Fee would apply to data recipients that
fail to complete and submit the Non-Display Use Declaration by the
January 31 due date, and would apply beginning February 1 and for each
month thereafter until the data recipient has completed and submitted
the annual Non-Display Use Declaration.
The proposed Non-Display Use Declaration Late Fee applicable to
NYSE American Agg Lite data feed would be set forth in endnote 2 on the
Fee Schedule. As proposed, endnote 2 would be amended with the proposed
addition of the following new text: ``The Non-Display Declaration Late
Fee will apply, beginning in 2025, to NYSE American Aggregated Lite
data recipients that fail to complete and submit the annual Non-Display
Use Declaration by the January 31st due date, and applies beginning
February 1st and for each month thereafter until the data recipient has
completed and submitted the annual Non-Display use Declaration.''
In addition, if a data recipient's use of the NYSE American Agg
Lite data feed changes at any time after the data recipient submits a
Non-Display Use Declaration, the data recipient must inform the
Exchange of the change by completing and submitting at the time of the
change an updated declaration reflecting the change of use.
7. Multiple Data Feed Fee. The Exchange proposes to establish a
monthly fee, the ``Multiple Data Feed Fee,'' that would apply to data
recipients that take a data feed for a market data product in more than
two locations. Data recipients taking the NYSE American Agg Lite data
feed in more than two locations would be charged $200 per additional
location per month. No new reporting would be required.\13\
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\13\ Data vendors currently report a unique Vendor Account
Number for each location at which they provide a data feed to a data
recipient. The Exchange considers each Vendor Account Number a
location. For example, if a data recipient has five Vendor Account
Numbers, representing five locations, for the receipt of the NYSE
American Agg Lite data feed, that data recipient will pay the
Multiple Data Feed fee with respect to three of the five locations.
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8. Three-Month Fee Waiver. The Exchange currently provides a one-
month free trial to any firm that subscribes to a particular NYSE
American market data product for the first time. Under the current one-
month trial, a first-time subscriber is not charged the Access Fee,
Non-Display Fee, any applicable Professional and Non-Professional User
Fee and Redistribution Fee for one calendar month.\14\ The Exchange now
proposes an additional three-month fee waiver for any Redistributor
that subscribes to a particular NYSE American market data product for
the first time for external redistribution. As proposed, a first-time
Redistributor would be any firm that has
[[Page 91834]]
not previously subscribed to and externally redistributed a particular
NYSE American market data product listed on the Fee Schedule. As
proposed, a first-time Redistributor that subscribes to a particular
NYSE American market data product would not be charged the Access Fee
and the Redistribution Fee for that product for three calendar months.
Any other fees, including but not limited to, Non-Display Fee, any
applicable Professional and Non-Professional User Fee, and Enterprise
Fee would be billable after the first calendar month after a first-time
Redistributor subscribes to a particular NYSE American market data
product. For example, a first-time Redistributor that chooses to
subscribe to NYSE American Agg Lite on September 24, 2024 would not be
charged the Access Fee and the Redistribution Fee for the months of
October, November, and December 2024. The proposed fee waiver would be
for the three calendar months following the date a Redistributor is
approved to receive access to the particular NYSE American market data
product. The Exchange would provide the three-month fee waiver for each
particular product to each Redistributor once.
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\14\ See Fee Schedule.
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The Exchange believes that providing a three-month fee waiver to
NYSE American market data products listed on the Fee Schedule would
enable potential Redistributors to determine whether a particular NYSE
American market data product is useful to their business models before
fully committing to expend development and implementation costs related
to the receipt of that product, and is intended to encourage increased
use of the Exchange's market data products by defraying some of the
development and implementation costs Redistributors would ordinarily
have to expend before using a product. The proposed three-month fee
waiver would also provide Redistributors with time to begin onboarding
new clients prior to being liable to the Access Fee and the
Redistribution Fee, allowing time to choose how to allocate costs and
increase revenues to defray costs associated with providing a new feed
to its customers.
Application of Proposed Fees
The Exchange is not required to make the NYSE American Agg Lite
data feed available or to offer any specific pricing alternatives to
any customers, nor is any firm required to purchase the NYSE American
Agg Lite data feed. Firms that choose to purchase the NYSE American Agg
Lite data feed do so for the primary goals of using it to increase
their revenues, reduce their expenses, and in some instances to compete
directly with the Exchange (including for order flow). Those firms are
able to determine for themselves whether or not the NYSE American Agg
Lite data feed or any other similar products are attractively priced.
The Exchange believes the proposed rule change would provide an
incentive both for data subscribers to subscribe to NYSE American Agg
Lite and for Redistributors to subscribe to the product for purposes of
providing external distribution of NYSE American Agg Lite. The Exchange
believes that this proposed rule change also has the potential to
attract new Redistributors for NYSE American Agg Lite.
The proposed fee structure is not novel as it is based on the fee
structure currently in place for the NYSE American OpenBook feed. The
Exchange is proposing fees for the NYSE American Agg Lite data feed
that are based on the existing fee structure and rates that data
recipients already pay for the NYSE American OpenBook feed.
Specifically, the fees for the NYSE American OpenBook feed--which like
the NYSE American Agg Lite data feed, includes depth of book and
security status messages--consist of an Access Fee of $1,000 per month,
a Professional User Fee (Per User) of $5 per month, a Non-Professional
User Fee (Per User) of $1 per month, Non-Display Fees \15\ of $2,000
per month for each of Categories 1, 2 and 3. The Exchange does not
currently charge a Redistribution Fee for NYSE American OpenBook. The
Exchange also charges a Non-Display Use Declaration Late Fee of $1,000
per month and a Multiple Data Feed Fee of $200 per month for NYSE
American OpenBook.\16\
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\15\ The Exchange does not anticipate that data recipients would
use NYSE American Agg Lite for non-display purpose. However, the
Exchange is adopting Non-Display use fees so that the proposed fees
for NYSE American Agg Lite are consistent with the Exchange's fee
structure for its other proprietary market data products.
\16\ See NYSE American LLC Equities Proprietary Market Data Fees
at <a href="https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf</a>.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\17\ in general, and
Sections 6(b)(4) and 6(b)(5) of the Act,\18\ in particular, in that it
provides an equitable allocation of reasonable fees among users and
recipients of the data and is not designed to permit unfair
discrimination among customers, issuers, and brokers.
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\17\ 15 U.S.C. 78f(b).
\18\ 15 U.S.C. 78f(b)(4), (5).
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The Proposed Rule Change Is Reasonable
In adopting Regulation NMS, the Commission granted SROs and broker-
dealers increased authority and flexibility to offer new and unique
market data to the public. The Commission has repeatedly expressed its
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. Specifically,
in Regulation NMS, the Commission highlighted the importance of market
forces in determining prices and SRO revenues, and also recognized that
current regulation of the market system ``has been remarkably
successful in promoting market competition in its broader forms that
are most important to investors and listed companies.'' \19\
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\19\ See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
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With respect to market data, the decision of the United States
Court of Appeals for the District of Columbia Circuit in NetCoalition
v. SEC upheld the Commission's reliance on the existence of competitive
market mechanisms to evaluate the reasonableness and fairness of fees
for proprietary market data:
In fact, the legislative history indicates that the Congress
intended that the market system ``evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed'' and that the SEC wield its regulatory power ``in those
situations where competition may not be sufficient,'' such as in the
creation of a ``consolidated transactional reporting system.'' \20\
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\20\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010)
(``NetCoalition I'') (quoting H.R. Rep. No. 94-229 at 92 (1975), as
reprinted in 1975 U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that ``Congress
intended that `competitive forces should dictate the services and
practices that constitute the U.S. national market system for trading
equity securities.' '' \21\
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\21\ Id. at 535.
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More recently, the Commission confirmed that it applies a ``market-
based'' test in its assessment of market data fees, and that under that
test:
the Commission considers whether the exchange was subject to
significant competitive forces in setting the terms of its proposal
for [market data], including the level of any fees. If an exchange
meets this burden, the Commission will find that its fee rule is
consistent with the Act unless there is a substantial countervailing
basis to find
[[Page 91835]]
that the terms of the rule violate the Act or the rules
thereunder.\22\
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\22\ See Securities Exchange Act Release No. 34-90217 (October
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05)
(``National IF Approval Order'') (internal quotation marks omitted),
quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74781 (December 9, 2008).
As discussed below, the Exchange believes that its proposed fees
are constrained by competitive forces.
As the D.C. Circuit recognized in NetCoalition I, ``[n]o one
disputes that competition for order flow is fierce.'' \23\ The court
further noted that ``no exchange possesses a monopoly, regulatory or
otherwise, in the execution of order flow from broker dealers,'' and
that an exchange ``must compete vigorously for order flow to maintain
its share of trading volume.'' \24\
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\23\ NetCoalition I, 615 F.3d at 544 (internal quotation
omitted).
\24\ Id.
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As noted above, while Regulation NMS has enhanced competition, it
has also fostered a ``fragmented'' market structure where trading in a
single stock can occur across multiple trading centers. When multiple
trading centers compete for order flow in the same stock, the
Commission has recognized that ``such competition can lead to the
fragmentation of order flow in that stock.'' \25\ Indeed, today, equity
trading is currently dispersed across 16 exchanges,\26\ numerous
alternative trading systems,\27\ broker-dealer internalizers and
wholesalers, all competing for order flow. Based on publicly-available
information, no single exchange currently has more than 20% market
share.\28\
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\25\ See Securities Exchange Act Release No. 61358, 75 3594,
3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on
Equity Market Structure).
\26\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at <a href="http://markets.cboe.com/us/equities/market_share/">http://markets.cboe.com/us/equities/market_share/</a>.
\27\ See FINRA ATS Transparency Data, available at <a href="https://otctransparency.finra.org/otctransparency/AtsIssueData">https://otctransparency.finra.org/otctransparency/AtsIssueData</a>. A list of
alternative trading systems registered with the Commission is
available at <a href="https://www.sec.gov/foia/docs/atslist.htm">https://www.sec.gov/foia/docs/atslist.htm</a>.
\28\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at <a href="http://markets.cboe.com/us/equities/market_share/">http://markets.cboe.com/us/equities/market_share/</a>.
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Further, low barriers to entry mean that new exchanges may rapidly
and inexpensively enter the market to compete with the Exchange. For
example, since 2020, three new ones have entered the market: Long Term
Stock Exchange (LTSE), which began operations as an exchange on August
28, 2020; \29\ Members Exchange (MEMX), which began operations as an
exchange on September 29, 2020; \30\ and Miami International Holdings
(MIAX), which began operations of its first equities exchange on
September 29, 2020.\31\
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\29\ See LTSE Market Announcement: MA-2020-020, dated August 14,
2020, announcing LTSE production securities phase-in planned for
August 28, available here: <a href="https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf">https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf</a> and
LTSE Market Announcement: MA-2020-025, available here: <a href="https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf">https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf</a>.
\30\ As of October 29, 2020, MEMX is trading all NMS symbols.
See <a href="https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/">https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/</a>.
\31\ See MIAX Pearl Press release, dated September 29, 2020,
available here: <a href="https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf">https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf</a>.
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More specifically, in setting fees for the NYSE American Agg Lite
data feed, the Exchange is constrained by the fact that, if its pricing
is unattractive to customers, customers have their pick of alternatives
to purchase similar data from instead of purchasing it from the
Exchange. The existence of alternatives to the Exchange's data product
ensures that the Exchange cannot set unreasonable market data fees
without suffering the negative effects of that decision in the
competitive market for non-latency-sensitive proprietary partial depth
of book market data.
The Exchange notes that the NYSE American Agg Lite is entirely
optional. The Exchange is not required to make the NYSE American Agg
Lite available to any customers, nor is any customer required to
purchase the NYSE American Agg Lite market data feed. Unlike some other
data products (e.g., the consolidated quotation and last-sale
information feeds) that firms are required to purchase in order to
fulfil regulatory obligations,\32\ a customer's decision whether to
purchase the NYSE American Agg Lite is entirely discretionary. The
Exchange believes NYSE American Agg Lite would provide high-quality,
comprehensive partial depth of book data that an anticipated end user
might use for purposes of identifying an indicative price of Tape A, B
and C securities without having to purchase consolidated data and thus
it would not be a latency-sensitive product. The Exchange does not
anticipate that an end user would, or could, use NYSE American Agg Lite
data for purposes of making order-routing or trading decisions. Firms
that choose to subscribe to NYSE American Agg Lite are able to
determine for themselves whether the NYSE American Agg Lite data feed
is necessary for their business needs, and if so, whether or not it is
attractively priced. If the NYSE American Agg Lite data feed does not
provide sufficient benefit to firms based on the uses those firms may
have for it, such firms may simply choose to conduct their business
operations in ways that do not use the NYSE American Agg Lite data
feed.
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\32\ The Exchange notes that broker-dealers are not required to
purchase proprietary market data to comply with their best execution
obligations. See In the Matter of the Application of Securities
Industry and Financial Markets Association for Review of Actions
Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-
15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement
in Regulation NMS or any other rule that proprietary data be
utilized for order routing decisions, and some broker-dealers and
ATSs have chosen not to do so.
---------------------------------------------------------------------------
In setting the proposed fees for the NYSE American Agg Lite data
feed, the Exchange considered the competitiveness of the market for
non-latency-sensitive proprietary partial depth of book data and all of
the implications of that competition. The Exchange believes that it has
considered all relevant factors and has not considered irrelevant
factors in order to establish reasonable fees. The proposed fees are
therefore reasonable because in setting them, the Exchange is
constrained by the availability of substitute partial depth of book
market data products. The Commission has been clear that substitute
products need not be identical, but only substantially similar to the
product at hand.\33\
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\33\ For example, in the National IF Approval Order, the
Commission recognized that for some customers, the best bid and
offer information from consolidated data feeds may function as a
substitute for the NYSE National Integrated Feed product, which
contains order by order information. See National IF Approval Order,
supra note 22, at 67397 [release p. 21] (``[I]nformation provided by
NYSE National demonstrates that a number of executing broker-dealers
do not subscribe to the NYSE National Integrated Feed and executing
broker-dealers can otherwise obtain NYSE National best bid and offer
information from the consolidated data feeds.'' (internal quotations
omitted)).
---------------------------------------------------------------------------
The NYSE American Aggregated Lite market data feed is subject to
significant competitive forces that constrain its pricing.
Specifically, the NYSE American Agg Lite data feed competes head-to-
head with similar market data products currently offered by the four
U.S. equities exchanges operated by Cboe Exchange, Inc.--Cboe BZX
Exchange, Inc. (``BZX''), Cboe BYX Exchange, Inc. (``BYX''), Cboe EDGA
Exchange, Inc. (``EDGA''), and Cboe EDGX Exchange, Inc. (``EDGX''),
each of which offers a market data product called BZX Summary Depth,
BYX Summary Depth, EDGA Summary Depth and EDGX Summary Depth,
respectively (collectively, the ``Cboe Summary Depth'').\34\ Similar to
Cboe Summary
[[Page 91836]]
Depth, NYSE American Agg Lite can be utilized by vendors and
subscribers to quickly access and distribute aggregated order book
data. As noted above, NYSE American Agg Lite, similar to Cboe Summary
Depth, would provide aggregated depth per security, including the bid,
ask and share quantity for orders received by NYSE American, except
unlike Cboe Summary Depth, which provides aggregated depth per security
for up to five price levels, NYSE American Agg Lite would provide
aggregated depth per security for up to ten price levels on both the
bid and offer sides of the NYSE American limit order book as well as
auction imbalance data.
---------------------------------------------------------------------------
\34\ See BZX Rule 11.22(m) BZX Summary Depth; BYX Rule 11.22(k)
BYX Summary Depth; EDGA Rule 13.8(f) EDGA Summary Depth; and EDGX
Rule 13.8(f) EDGX Summary Depth. The Cboe Summary Depth offered by
BZX, BYX, EDGA and EDGX are each a data feed that offers aggregated
two-sided quotations for all displayed orders for up to five (5)
price levels and contains the individual last sale information,
market status, trading status and trade break messages.
---------------------------------------------------------------------------
The specific fees that the Exchange proposes for the NYSE American
Agg Lite data feed are reasonable for the following additional reasons.
Overall. The Exchange believes that the proposed fees for the NYSE
American Agg Lite data feed are reasonable because they would provide
vendors and subscribers with the option to subscribe to a market data
product that integrates a subset of data from existing products and
where such aggregated data is published at a pre-defined interval, thus
lowering bandwidth, infrastructure and operational requirements.
The Exchange believes the proposed fees for the NYSE American Agg
Lite data feed are also reasonable when compared to fees for comparable
products, such as the Cboe Summary Depth.\35\ Additionally, the
Exchange is proposing fees for the NYSE American Agg Lite data feed
that are based on the existing fee structure that data recipients
already pay for the NYSE American's other market data products. The
Exchange believes that adopting the same fee structure would reduce
administrative burdens on NYSE American data subscribers that also
currently subscribe to market data feeds from NYSE American.
---------------------------------------------------------------------------
\35\ See <a href="https://cdn.cboe.com/resources/membership/US_Market_Data_Product_Price_List.pdf">https://cdn.cboe.com/resources/membership/US_Market_Data_Product_Price_List.pdf</a>.
---------------------------------------------------------------------------
Access Fee. The Exchange believes that the proposed monthly Access
Fee of $500 for the NYSE American Aggregated Lite data feed is
reasonable because it is lower than the fees charged by BZX, BYX, EDGA,
and EDGX, each of which charges between $2,500 per month to $5,000 per
month for both Internal Distribution and External Distribution of the
Cboe Summary Depth market data product.\36\
---------------------------------------------------------------------------
\36\ Id.
---------------------------------------------------------------------------
User Fees. The Exchange believes that having separate Professional
and Non-Professional User fees for the NYSE American Agg Lite data feed
is reasonable because it will make the product more affordable and
result in greater availability to Professional and Non-Professional
Users. Not charging a Non-Professional User fee is reasonable because
it provides a cost-effective method for Non-Professional Users to
access the NYSE American Agg Lite data feed by providing the same data
that is available to Professional Users. The proposed monthly
Professional User Fee (Per User) of $1 and monthly Non-Professional
User Fee (Per User) of $0 are reasonable because they are comparable to
user fees generally charged by exchanges. For example, NYSE American
charges a monthly Professional User Fee (Per User) of $5 and a monthly
Non-Professional User Fee (Per User) of $1 for the NYSE American
OpenBook feed.\37\ Although the proposed User Fees for Professional and
Non-Professional Users are higher than those charged by BZX, BYX, EDGA
and EDGX, the Exchange notes that User fees are only a subset of the
total fees that vendors and subscribers pay and the lower fees proposed
to access and redistribute NYSE American Agg Lite would provide such
market data recipients with a more affordable alternative to existing
substitutes offered by the Exchange and its competitors.
---------------------------------------------------------------------------
\37\ See Fee Schedule.
---------------------------------------------------------------------------
Redistribution Fees. The Exchange believes that charging a
Redistribution Fee is reasonable because the vendors that would be
charged such a fee profit by re-transmitting the Exchange's market data
to their customers. This fee would be charged only once per month to
each vendor account that redistributes the NYSE American Agg Lite data
feed, regardless of the number of customers to which that vendor
redistributes the data. The Exchange believes the proposed monthly
Redistribution Fee of $250 for the NYSE American Agg Lite data feed is
reasonable because it is nominal and lower than the fees charged by
BZX, BYX, EDGA and EDGX, each of which charges considerably more for
both Internal Distribution and External Distribution of the Cboe
Summary Depth market data feed.\38\
---------------------------------------------------------------------------
\38\ See supra, note 35.
---------------------------------------------------------------------------
Enterprise Fees. The Exchange believes the proposed enterprise
license is reasonable because it would reduce exchange fees, lower
administrative costs for subscribers that are broker-dealers and help
expand the availability of market information to investors, and thereby
increase participation in financial markets. Subscribers that are
broker-dealers would be able to disseminate the NYSE American Agg Lite
data feed for display usage to an unlimited number of professional
users and non-professional users for a monthly fee of $550, or $500 if
they contract for twelve months of service in advance. The proposed
enterprise license would result in lower fees for subscribers able to
reach the largest audience of investors, including retail investors.
Discounts for broader dissemination of market data information have
routinely been adopted by exchanges and permitted by the Commission as
equitable allocations of reasonable dues, fees and charges.\39\
---------------------------------------------------------------------------
\39\ For example, the Commission has permitted pricing discounts
for market data under Nasdaq Rules 7023(c) and 7047(b). See also
Securities Exchange Act Release No. 82182 (November 30, 2017), 82 FR
57627 (December 6, 2017) (SR-NYSE-2017-60) (changing an enterprise
fee for NYSE BBO and NYSE Trades).
---------------------------------------------------------------------------
Non-Display Use Fees.\40\ Non-display data can be used by data
recipients for a wide variety of uses, including proprietary and agency
trading and smart order routing, as well as by data recipients that
operate order matching and execution platforms. Non-display data also
can be used for a variety of non-trading purposes that indirectly
support trading, such as risk management and compliance. Although some
of these non-trading uses do not directly generate revenues, they can
nonetheless substantially reduce a recipient's costs by automating such
functions so that they can be carried out in a more efficient and
accurate manner and reduce errors and labor costs, thereby benefiting
recipients. The Exchange believes that charging for non-trading uses is
reasonable because data recipients can derive substantial benefit from
such uses, for example, by automating tasks so that they can be
performed more quickly and accurately and less expensively than if they
were performed manually.
---------------------------------------------------------------------------
\40\ See supra, note 15.
---------------------------------------------------------------------------
The Exchange believes that the proposed fees of $1,000 per month
for each of Categories 1, 2, and 3 is reasonable. These fees are
comparable to non-display use fees generally charged by exchanges. For
example, the fees for Non-Display Use of NYSE American OpenBook for
Categories 1, 2 and 3 is $2,000 per month.\41\ The Exchange believes
that it is reasonable to cap non-display use fees for Category 3 at
$3,000
[[Page 91837]]
per month per data recipient, because a higher monthly fee may
potentially dissuade subscribers from buying the NYSE American Agg Lite
data feed.
---------------------------------------------------------------------------
\41\ See Fee Schedule.
---------------------------------------------------------------------------
The proposed Non-Display Use fees for the NYSE American Agg Lite
data feed are also reasonable because they take into account the
usefulness of receiving the data for Non-Display Use on an integrated
basis.
Non-Display Use Declaration Late Fee. The Exchange believes that it
is reasonable to require annual submissions of the Non-Display Use
Declaration so that the Exchange will have current and accurate
information about the use of the NYSE American Agg Lite data feed and
can correctly assess fees for the uses of the NYSE American Agg Lite
data feed. Requiring annual submissions of such declarations is
reasonable because it also allows users to re-assess their own usage
each year.
The Exchange believes that it is reasonable to impose a late fee in
connection with the submission of the Non-Display Use Declaration. In
order to correctly assess fees for the non-display use of the NYSE
American Agg Lite data feed, the Exchange needs to have current and
accurate information about the use of the NYSE American Agg Lite data
feed. The failure of data recipients to submit the Non-Display Use
Declaration on time leads to potentially incorrect billing and
administrative burdens, including tracking and obtaining late Non-
Display Use Declarations and correcting and following up on payments
owed in connection with late Non-Display Use Declarations. The purpose
of the late fee is to incent data recipients to submit the Non-Display
Use Declaration promptly to avoid the administrative burdens associated
with the late submission of Non-Display Use Declarations.
Multiple Data Feed Fee. The Exchange believes that it is reasonable
to require data recipients to pay a modest fee for taking a data feed
for a market data product in more than two locations. In addition,
there are administrative burdens associated with tracking each location
at which a data recipient receives the product. The Multiple Data Feed
Fee is designed to encourage data recipients to better manage their
requests for additional data feeds and to monitor their usage of data
feeds. The proposed fee is designed to apply to data feeds received in
more than two locations so that each data recipient can have one
primary and one backup data location before having to pay a multiple
data feed fee.
Three-Month Fee Waiver. The Exchange believes the proposal to waive
the Access Fee and the Redistribution Fee for the NYSE American Agg
Lite data feed to new Redistributors for three calendar months is
reasonable because it would enable potential Redistributors to
determine whether a particular NYSE American market data product is
useful to their business models before fully committing to expend
development and implementation costs related to the receipt of that
product, and is intended to encourage increased use of the Exchange's
market data products by defraying some of the development and
implementation costs Redistributors would ordinarily have to expend
before using a product. The proposed fee waiver would also allow
Redistributors to become familiar with the feed and determine whether
it suits their needs without incurring fees. Making a new market data
product available without charging a fee for three months is consistent
with offerings of other exchanges. For example, BZX offers subscribers
of BZX Summary Depth a three-month credit for external distribution,
which is akin to the three-month fee waiver proposed by the
Exchange.\42\
---------------------------------------------------------------------------
\42\ See e.g., Securities Exchange Act Release No. 94432 (March
16, 2022), 87 FR 16277 (March 22, 2022) (SR-CboeBZX-2022-015)
(Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Amend the Fees Applicable to Various Market Data
Products).
---------------------------------------------------------------------------
For all of the foregoing reasons, the Exchange believes that the
proposed fees for the NYSE American Agg Lite data feed are reasonable.
The Proposed Fees Are Equitably Allocated
The Exchange believes the proposed fees for the NYSE American Agg
Lite data feed are allocated fairly and equitably among the various
categories of users of the feed, and any differences among categories
of users are justified.
Overall. The Exchange believes that the proposed fees are equitably
allocated because they will apply to all data recipients that choose to
subscribe to the NYSE American Agg Lite data feed. Any subscriber or
vendor that chooses to subscribe to the NYSE American Agg Lite data
feed is subject to the same Fee Schedule, regardless of what type of
business they operate or the use they plan to make of the data feed.
Subscribers and vendors are not required to purchase the NYSE American
Agg Lite data feed and may choose to receive the data on the NYSE
American Agg Lite data feed regardless of what type of business they
operate or the use they plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee
of $500 for the NYSE American Agg Lite data feed is equitably allocated
because it would be charged on an equal basis to all data recipients
that receive a data feed of the NYSE American Agg Lite data feed,
regardless of what type of business they operate or the use they plan
to make of the data feed.
User Fees. The Exchange believes that the fee structure
differentiating Professional User fees ($1 per month per user) from
Non-Professional User fees ($0 per month per user) for display device
access to the NYSE American Agg Lite data feed is equitable. This
structure has long been used by the Exchange to reduce the price of
data to Non-Professional Users and make it more broadly available.\43\
Offering the NYSE American Agg Lite data feed to Non-Professional Users
with the same data as is available to Professional Users results in
greater equity among data recipients. These user fees would be charged
uniformly to all display devices that have access to the NYSE American
Agg Lite data feed.
---------------------------------------------------------------------------
\43\ See, e.g., Securities Exchange Act Release No. 70212
(August 15, 2013), 78 FR 51775 (August 21, 2013) (SR-NYSEMKT-2013-
69) (lowering the Non-Professional User Fee (Per User) for NYSE MKT
BBO and Trades); Securities Exchange Act Release No. 20002, File No.
S7-433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing
Non-Professional fees for CTA data); NASDAQ BX Equity 7 Pricing
Schedule, Section 123.
---------------------------------------------------------------------------
Redistribution Fees. The Exchange believes the proposed monthly fee
of $250 for redistributing the NYSE American Agg Lite data feed is
equitably allocated because it would be charged on an equal basis to
those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise
license is equitably allocated because it would be available on an
equal basis to all subscribers that are broker-dealers, each of whom
would benefit from reduced exchange fees and from lower administrative
costs. Moreover, the specific feature of the proposed enterprise
license that will allow subscribers to lower fees by subscribing to a
twelve-month contract is also an equitable allocation because all
subscribers will have the same option of choosing between the stability
of a fixed, lower rate, and the more flexible option of maintaining the
ability to change market data products after a month of service.
Subscribers will be free to move from the monthly to the annual rate at
any time, or from annual to a monthly fee, with notice, at the
expiration of the twelve-month period.
[[Page 91838]]
Non-Display Use Fees. The Exchange believes the proposed Non-
Display Use fees are equitably allocated because they would require
subscribers to pay fees only for the uses they actually make of the
data. As noted above, non-display data can be used by data recipients
for a wide variety of purposes (including trading, risk management, and
compliance) as well as purposes that reduce the recipient's costs by
automating certain functions. The Exchange believes that it is
equitable to charge non-display data subscribers a $1,000 fee for each
category of use they make of such data--namely, using the data on their
own behalf (Category 1), on behalf of their clients (Category 2), and
to internally match buy and sell orders within an organization
(Category 3)--because this fee structure results in subscribers with
greater uses of the data paying higher fees, and subscribers with fewer
uses of the data paying lower fees. This segmented fee structure is
also equitable because no subscriber of non-display data would be
charged a fee for a category of use in which it did not actually
engage.
The Exchange believes that it is equitable to cap non-display use
fees for Category 3 at $3,000 per month per data recipient, because a
higher monthly fee may potentially dissuade subscribers from buying the
NYSE American Agg Lite data feed.
Non-Display Use Declaration Late Fee. The Exchange believes that
the proposed fee of $1,000 per month for a late Non-Display Use
Declaration is equitably allocated because it applies to any data
recipient that pays an Access Fee for the NYSE American Agg Lite data
feed but has failed to complete and submit a Non-Display Use
Declaration. In addition, the Exchange believes that it is equitable to
charge a late fee to subscribers who fail to timely submit their Non-
Display Use Declarations because their failure to do so leads to
potentially incorrect billing and administrative burdens on the part of
the Exchange. The Exchange believes it is equitable to defray these
administrative costs by imposing a late fee only on subscribers' whose
declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per
month per location fee to data recipients taking the NYSE American Agg
Lite data feed in more than two locations is equitable because it would
apply to all such customers, regardless of what type of business they
operate or the use they make of the data feed. In addition, the
Exchange believes that it is equitable to charge a fee to subscribers
for taking a data feed in more than two locations because there are
administrative burdens on the part of the Exchange associated with
tracking each location at which a data recipient receives the product.
The Exchange believes that it is equitable for it to defray these
administrative costs by imposing a modest fee only on subscribers who
seek to take the feed in more than two locations, as opposed to all
subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive
the Access Fee and the Redistribution Fee for the NYSE American Agg
Lite data feed to new Redistributors for three calendar months is
equitable because it would apply to any first-time Redistributor,
regardless of the use they plan to make of the feed. As proposed, any
first-time Redistributor of the NYSE American Agg Lite data feed would
not be charged the Access Fee and the Redistribution Fee for three
calendar months. The Exchange believes it is equitable to restrict the
availability of this three-month fee waiver to Redistributors that have
not previously subscribed to and redistributed the NYSE American Agg
Lite data feed, since customers who are current or previous subscribers
of the feed are already familiar with it and are able to determine
whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the
proposed fees for the NYSE American Agg Lite data feed are equitably
allocated.
The Proposed Fees Are Not Unfairly Discriminatory
The Exchange believes the proposed fees for the NYSE American Agg
Lite data feed are not unfairly discriminatory because any differences
in the application of the fees are based on meaningful distinctions
between customers, and those meaningful distinctions are not unfairly
discriminatory between customers.
Overall. The Exchange believes that the proposed fees are not
unfairly discriminatory because they would apply to all data recipients
that choose to subscribe to the NYSE American Agg Lite data feed. Any
subscriber, including Redistributor, that chooses to subscribe to the
NYSE American Agg Lite data feed is subject to the same Fee Schedule,
regardless of what type of business they operate or the use they plan
to make of the data feed. Subscribers, including Redistributors, may
choose to receive the data on the NYSE American Agg Lite data feed
regardless of what type of business they operate or the use they plan
to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee
of $500 for the NYSE American Agg Lite data feed is not unfairly
discriminatory because it would be charged on an equal basis to all
data recipients that receive a data feed of the NYSE American Agg Lite,
regardless of what type of business they operate or the use they plan
to make of the data feed.
User Fees. The Exchange believes that the fee structure
differentiating Professional User fees ($1 per month per user) from
Non-Professional User fees ($0 per month per user) for display device
access to the NYSE American Agg Lite data feed is not unfairly
discriminatory. This structure has long been used by the Exchange to
reduce the price of data to Non-Professional Users and make it more
broadly available.\44\ Offering the NYSE American Agg Lite data feed to
Non-Professional Users with the same data as is available to
Professional Users results in greater equity among data recipients.
These user fees would be charged uniformly to all display devices that
have access to the NYSE American Agg Lite data feed.
---------------------------------------------------------------------------
\44\ Id.
---------------------------------------------------------------------------
Redistribution Fees. The Exchange believes the proposed monthly fee
of $250 for redistributing the NYSE American Agg Lite data feed is not
unfairly discriminatory because it would be charged on an equal basis
to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise
license will not unfairly discriminate between customers, issuers,
brokers or dealers. The Act does not prohibit all distinctions among
customers, but only discrimination that is unfair, and it is not unfair
discrimination to charge those subscribers that are able to reach the
largest audiences of investors, including retail investors, a lower fee
for incremental investors in order to encourage the widespread
distribution of market data. This principle has been repeatedly
endorsed by the Commission, as evidenced by the approval of enterprise
licenses for other market data products.\45\ Moreover, the proposed
enterprise license will be subject to significant competition, and that
competition will ensure that there is no unfair discrimination. Each
subscriber will be able to accept or
[[Page 91839]]
reject the license depending on whether it will or will not lower costs
for that particular subscriber, and, if the license is not sufficiently
competitive, the Exchange may lose market share. The proposed
enterprise license will compete with other enterprise licenses of the
Exchange, underlying fee schedules promulgated by the Exchange, and
enterprise licenses and fee structures implemented by other exchanges.
As such, it is a voluntary product for which market participants can
readily find substitutes. Accordingly, the Exchange is constrained from
introducing a fee that would be inequitable or unfairly discriminatory.
---------------------------------------------------------------------------
\45\ See e.g., Securities Exchange Act Release No. 83751 (July
31, 2018), 83 FR 38428 (August 6, 2018) (SR-NASDAQ-2018-058) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change To
Lower Fees and Administrative Costs for Distributors of Nasdaq
Basic, Nasdaq Last Sale, NLS Plus and the Nasdaq Depth-of-Book
Products Through a Consolidated Enterprise License).
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Non-Display Use Fees.\46\ The Exchange believes the proposed Non-
Display Use fees are not unfairly discriminatory because they would
require subscribers for non-display use to pay fees only for the
categories of use they actually make of the data. As noted above, non-
display data can be used by data recipients for a wide variety of
purposes (including trading, risk management, and compliance) as well
as purposes that reduce the recipient's costs by automating certain
functions. The Exchange believes that it is not unfairly discriminatory
to charge non-display data subscribers a $1,000 per month fee for each
category of use they make of such data--namely, using the data on their
own behalf (Category 1), on behalf of their clients (Category 2), and
to internally match buy and sell orders within an organization
(Category 3)--because this fee structure results in subscribers with
greater uses for the data paying higher fees, while subscribers with
fewer uses of the data pay lower fees. This segmented fee structure is
not unfairly discriminatory because no subscriber of non-display data
would be charged a fee for a category of use in which it did not
actually engage.
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\46\ See supra, note 15.
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The Exchange believes that it is not unreasonably discriminatory to
cap non-display use fees for Category 3 at $3,000 per month per data
recipient, because a higher monthly fee may potentially dissuade
subscribers from buying the NYSE American Agg Lite data feed.
Non-Display Use Declaration Late Fee. The Exchange believes that
the proposed fee of $1,000 per month for a late Non-Display Use
Declaration is not unfairly discriminatory because it applies to any
data recipient that pays an Access Fee for the NYSE American Agg Lite
data feed but has failed to complete and submit a Non-Display Use
Declaration. In addition, the Exchange believes that it is not unfairly
discriminatory to charge a late fee to subscribers who fail to timely
submit their Non-Display Use Declarations because their failure to do
so leads to potentially incorrect billing and administrative burdens on
the part of the Exchange. Nor is it unfairly discriminatory for the
Exchange to defray these administrative costs by imposing a late fee
only on subscribers' whose declarations were late, as opposed to all
subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per
month per location fee to data recipients taking the NYSE American Agg
Lite data feed in more than two locations is not unfairly
discriminatory because it would apply to all such customers, regardless
of what type of business they operate or the use they make of the data
feed. In addition, the Exchange believes that it is not unfairly
discriminatory to charge a fee to subscribers for taking a data feed in
more than two locations because there are administrative burdens on the
part of the Exchange associated with tracking each location at which a
data recipient receives the product. The Exchange believes that it is
not unfairly discriminatory for it to defray these administrative costs
by imposing a modest fee only on subscribers who seek to take the feed
in more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive
the Access Fee and the Redistribution Fee for the NYSE American Agg
Lite data feed to new Redistributors for three months is not unfairly
discriminatory because it would apply to any first-time Redistributor,
regardless of the use they plan to make of the feed. As proposed, any
first-time Redistributor of the NYSE American Agg Lite data feed would
not be charged the Access Fee and the Redistribution Fee for three
calendar months. The Exchange believes it is not unfairly
discriminatory to restrict the availability of this three-month fee
waiver to Redistributors that have not previously subscribed to the
NYSE American Agg Lite data feed, since Redistributors who are current
or previous subscribers of the feed are already familiar with it and
are able to determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the
proposed fees for the NYSE American Agg Lite data feed are not unfairly
discriminatory.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed fees will impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Intramarket Competition. The Exchange believes that the proposed
fees do not put any market participants at a relative disadvantage
compared to other market participants. As noted above, the proposed
fees would apply to all subscribers, including Redistributors, of the
NYSE American Agg Lite data feed, and customers may choose whether to
subscribe to the feed at all. The Exchange also believes that the
proposed fees neither favor nor penalize one or more categories of
market participants in a manner that would impose an undue burden on
competition. As shown above, to the extent that particular proposed
fees apply to only a subset of subscribers (e.g., Category 2 fees apply
only to those making non-display use on behalf of clients; late fees
apply only to customers who fail to timely submit their declarations),
those distinctions are not unfairly discriminatory and do not unfairly
burden one set of customers over another. To the contrary, by tailoring
the proposed fees in this manner, the Exchange believes that it has
eliminated the potential burden on competition that might result from
unfairly asking subscribers to pay fees for services they did not use,
or late fees they did not actually incur.
Intermarket Competition. The Exchange believes that the proposed
fees do not impose a burden on competition or on other SROs that is not
necessary or appropriate. In setting the proposed fees, the Exchange is
constrained by the availability of substitute partial depth of book
market data products and by the fact that if its pricing is
unattractive, customers will have their pick of alternative non-
latency-sensitive partial depth of book market data products to
purchase instead of purchasing the Exchange's products.
Specifically, the Exchange believes that the proposed fees do not
impose a burden on competition or on other exchanges that is not
necessary or appropriate because of the availability of substitute
partial depth of book market data products. As noted above, BZX, BYX,
EDGA, and EDGX each offers a proprietary data feed like the NYSE
American Agg Lite data feed, supplying partial depth of book order
data, security status updates, stock summary messages, and the
exchange's best bid and offer at any given time, on a real-time basis.
Because market data users can find suitable substitute feeds, an
exchange that overprices its market data products stands a high risk
that users
[[Page 91840]]
may purchase another market's market data product. These competitive
pressures ensure that no one exchange's market data fees can impose an
unnecessary burden on competition, and the Exchange's proposed fees do
not do so here.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \47\ of the Act and subparagraph (f)(2) of Rule
19b-4 \48\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\47\ 15 U.S.C. 78s(b)(3)(A).
\48\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \49\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\49\ 15 U.S.C. 78s(b)(2)(B).
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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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#285a5d444d054b4745454d465c5b685b4d4b064f475e"><span class="__cf_email__" data-cfemail="0371766f662e606c6e6e666d7770437066602d646c75">[email protected]</span></a>. Please include
file number SR-NYSEAMER-2024-68 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEAMER-2024-68. 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 (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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 website 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. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NYSEAMER-2024-68 and should
be submitted on or before December 11, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
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\50\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-27017 Filed 11-19-24; 8:45 am]
BILLING CODE 8011-01-P
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