Notice2024-30924
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Certain Fees for the NYSE Integrated Data Feed
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Published
December 30, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 249 (Monday, December 30, 2024)</title>
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[Federal Register Volume 89, Number 249 (Monday, December 30, 2024)]
[Notices]
[Pages 106685-106688]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-30924]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102007; File No. SR-NYSE-2024-80]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Certain Fees for the NYSE Integrated Data Feed
December 19, 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 December 16, 2024, New York Stock Exchange LLC (``NYSE'' 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 amend certain fees for the NYSE Integrated
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 Proprietary Market Data
Fees Schedule (``Fee Schedule'') to amend certain fees for the NYSE
Integrated data feed (``NYSE Integrated Feed'') that would be operative
February 3, 2025. Specifically, the Exchange proposes a one-time
adjustment to certain of its fees for subscribing to the NYSE
Integrated Feed,\4\ with certain exceptions. The Fee Schedule includes
the Exchange's fees for subscribing to the NYSE Integrated Feed,
including an Access Fee, Redistribution Fee, Per User fees for
Professional and Non-Professional Users, various categories of Non-
Display Fees, a Non-Display Declaration Late Fee and a Multiple Data
Feed Fee.\5\ With the exception of the Non-Professional User Fee, the
Non-Display Declaration Late Fee and the Multiple Data Feed Fee, the
Exchange proposes to increase the remaining fees by up to 12.31% on a
one-time basis.\6\
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\4\ The proposed rule change establishing the NYSE Integrated
Feed was immediately effective on January 21, 2015. See Securities
Exchange Act Release No. 74128 (January 23, 2015), 80 FR 4951
(January 29, 2015) (SR-NYSE-2015-03) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change Establishing the NYSE
Integrated Feed Data Feed).
\5\ See Securities Exchange Act Release Nos. 76485 (November 20,
2015), 80 FR 74158 (November 27, 2015) (SR-NYSE-2015-57)
(establishing access fee, user fees, non-display use fees, non-
display declaration late fee and redistribution fee for NYSE
Integrated Feed); and 76973 (January 26, 2016), 81 FR 5158 (February
1, 2016) (SR-NYSE-2016-09) (amending fees for NYSE Integrated Feed
by adopting a multiple data feed fee).
\6\ The Exchange proposes to exclude the Non-Display Declaration
Late Fee and the Multiple Data Feed Fee from the proposed fee
increase because unlike the other fees for subscribing to the NYSE
Integrated Feed, the Non-Display Declaration Late Fee and the
Multiple Data Feed Fee are administrative fees and are uniform
across all of the Exchange's market data products. The Exchange also
proposes to exclude the Non-Professional User fees from the proposed
fee increase because these fees are applicable to retail investors.
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The Exchange currently charges the following fees to subscribe to
the NYSE Integrated Feed on a monthly basis: an Access Fee of $7,500; a
Redistribution Fee of $4,000; a Professional User Fee and Non-
Professional User Fee, on a per user basis, of $70 and $16,
respectively; a Non-Display Fee of $20,000, whether the use is for
category 1, category 2 or category 3, with a category 3 cap of $60,000;
\7\ a Non-Display Declaration Late Fee of $1,000; and a Multiple Data
Feed Fee of $200. The Exchange proposes to increase the aforementioned
fees on a one-time basis as follows: the Access Fee, from $7,500/month
to $8,400/month; the Redistribution Fee from $4,000/month to $4,400/
month; the Professional User Fee (Per User) from $70/month to $78/
month; and the Non-Display Fee from $20,000/month to $22,400/month,
whether the use is for category 1, category 2 or category 3, with a
category 3 cap of $67,200/month. The Exchange's proposal to adjust fees
excludes the Non-Professional User fee, the Non-Display Declaration
Late fee and the Multiple Data Feed fee.
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\7\ Category 1 Fees apply when a data recipient's Non-Display
Use of real-time market data is on its own behalf as opposed to use
on behalf of its clients. Category 2 Fees apply when a data
recipient's Non-Display Use of real-time market data is on behalf of
its clients as opposed to use on its own behalf. Category 3 Fees
apply when a data recipient's Non-Display Use of real-time market
data is for the purpose of internally matching buy and sell orders
within an organization, including matching customer orders on a data
recipient's own behalf and/or on behalf of its clients.
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The NYSE Integrated Feed was established almost a decade ago. The
[[Page 106686]]
Exchange has not amended fees for the NYSE Integrated Feed since the
fees were initially adopted in 2016. Between the implementation of fees
for the NYSE Integrated Feed in January 2016 and October 2024, there
was a remarkable increase in the number of messages processed by the
Exchange. The following message rate metrics illustrate this increase
in throughput: \8\
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\8\ The message rate metrics are for the period from January
2017 through October 2024.
<bullet> Peak Rate by Millisecond: up approximately 116%
<bullet> Average Rate per Millisecond: up approximately 27%
<bullet> Peak Rate per Second: up approximately 34% \9\
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\9\ Due to a technology upgrade, the Peak Rate per Second metric
is for the period from December 2019 through October 2024.
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<bullet> Average Rate per Second: up approximately 92%
<bullet> Peak Total Messages: up approximately 39%
<bullet> Average Total Messages: up approximately 92%
<bullet> Average Daily Volume: up approximately 32%
With this increase in message traffic the Exchange expended
significant resources to improve its market data products to meet
customer expectations, including continued investment in all aspects of
the technology ecosystem (e.g., software, hardware, and network).
During the period between 2016 (when the Exchange first adopted fees
for the NYSE Integrated Feed) and 2024, advancements in system
performance as measured by latency not only accommodated the high
message traffic volumes, but stayed well ahead of it. The following
latency metrics \10\ illustrate the increase in message processing
speed, despite the significant message traffic growth:
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\10\ These measurements compare the time difference between
events on the NYSE matching engine and the time these events are
published on the NYSE Integrated Feed. The latency metrics are for
the period from January 2017 through October 2024.
<bullet> Median: down approximately 77%
<bullet> Average: down approximately 67%
<bullet> Max: down approximately 64%
The Exchange continues to invest heavily in enhancing its
technology for the benefit and often at the behest of its customers,
and these investments have increased the performance of the NYSE
Integrated Feed. Yet the Exchange has not adjusted any of the fees
included in this proposal since 2016, to even partially offset the
costs of maintaining and enhancing its market data offerings.
As discussed below, the Exchange proposes to adjust its fees by an
industry- and product-specific inflationary measure. It is reasonable
and consistent with the Act for the Exchange to recoup its investments,
at least in part, by adjusting its fees. Continuing to operate at fees
frozen at 2016 levels impacts the Exchange's ability to enhance its
offerings and the interests of market participants and investors.
The fee increases the Exchange proposes are based on an industry-
specific Producer Price Index (PPI), which is a tailored measure of
inflation.\11\ As a general matter, the Producer Price Index is a
family of indexes that measures the average change over time in selling
prices received by domestic producers of goods and services. PPI
measures price change from the perspective of the seller. This
contrasts with other metrics, such as the Consumer Price Index (CPI),
that measure price change from the purchaser's perspective.\12\ About
10,000 PPIs for individual products and groups of products are tracked
and released each month.\13\ PPIs are available for the output of
nearly all industries in the goods-producing sectors of the U.S.
economy--mining, manufacturing, agriculture, fishing, and forestry--as
well as natural gas, electricity, and construction, among others. The
PPI program covers approximately 69 percent of the service sector's
output, as measured by revenue reported in the 2017 Economic Census.
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\11\ See <a href="https://fred.stlouisfed.org/series/PCU51825182#0">https://fred.stlouisfed.org/series/PCU51825182#0</a>.
\12\ See <a href="https://www.bls.gov/ppi/overview.htm">https://www.bls.gov/ppi/overview.htm</a>.
\13\ Id.
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For purposes of this proposal, the relevant industry-specific PPI
is the Data Processing and Related Services PPI (``Data PPI''), which
is an industry net-output PPI that measures the average change in
selling prices received by companies that provide data processing
services.
The Data PPI was introduced in January 2002 by the Bureau of Labor
Statistics (BLS) as part of an ongoing effort to expand Producer Price
Index coverage of the services sector of the U.S. economy and is
identified as NAICS--518210 in the North American Industry
Classification System.\14\ According to the BLS ``[t]he primary output
of NAICS 518210 is the provision of electronic data processing
services. In the broadest sense, computer services companies help their
customers efficiently use technology. The processing services market
consists of vendors who use their own computer systems--often utilizing
proprietary software--to process customers' transactions and data.
Companies that offer processing services collect, organize, and store a
customer's transactions and other data for record-keeping purposes.
Price movements for the NAICS 518210 index are based on changes in the
revenue received by companies that provide data processing services.
Each month, companies provide net transaction prices for a specified
service. The transaction is an actual contract selected by probability,
where the price-determining characteristics are held constant while the
service is repriced. The prices used in index calculation are the
actual prices billed for the selected service contract.'' \15\
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\14\ NAICS appears in table 5 of the PPI Detailed Report and is
available at <a href="https://data.bls.gov/timeseries/PCU518210518210">https://data.bls.gov/timeseries/PCU518210518210</a>.
\15\ See <a href="https://www.bls.gov/ppi/factsheets/producer-price-index-for-the-data-processing-and-related-services-industry-naics-518210.htm">https://www.bls.gov/ppi/factsheets/producer-price-index-for-the-data-processing-and-related-services-industry-naics-518210.htm</a>.
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The Exchange believes the Data PPI is an appropriate measure to be
considered in the context of the proposed rule change to modify the fee
for its proprietary market data products because the Exchange uses its
``own computer systems'' and ``proprietary software,'' i.e., its own
data center and proprietary matching engine software, respectively, to
collect, organize, store and report customers' transactions in U.S.
equity securities on Pillar, the Exchange's proprietary trading
platform. In other words, the Exchange is in the business of data
processing and related services.
For purposes of this proposed rule change, the Exchange examined
the Data PPI value for the period from January 2016 to October 2024.
The Data PPI had a starting value of 103.2 in January 2016 and an
ending value of 115.902 in October 2024, a 12.31% increase. This
indicates that companies who are also in the data storage and
processing business have generally increased prices for a specified
service covered under NAICS 518210 by an average of 12.31% during this
period. Based on that percentage change, the Exchange proposes to make
a one-time fee increase by up to 12.31% for the NYSE Integrated Feed,
which reflects an increase covering the entire period since the fees
for NYSE Integrated Feed were initially adopted.
The Exchange further believes the Data PPI is an appropriate
measure for purposes of the proposed rule change on the basis that it
is a stable metric with limited volatility, unlike other consumer-side
inflation metrics. In fact, the Data PPI has not experienced a greater
than 2.16% increase for any one calendar year period since Data PPI was
introduced into the PPI in January 2002.
[[Page 106687]]
The average calendar year change from January 2002 to December 2023 was
.62%,\16\ with a cumulative increase of 15.67% over this 21-year
period. The Exchange believes the Data PPI is considerably less
volatile than other inflation metrics such as CPI, which has had
individual calendar-year increases of more than 6.5%, and a cumulative
increase of over 73% over the same period.\17\
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\16\ The Data PPI through the calendar year 2024 does not become
available until January 2025.
\17\ See <a href="https://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/">https://www.usinflationcalculator.com/inflation/consumer-price-index-and-annual-percent-changes-from-1913-to-2008/</a>.
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The Exchange believes the Data PPI, and significant investments
into, and enhanced performance of, the Exchange support the
reasonableness of the proposed fee increases.\18\
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\18\ See supra discussion of system performance advancements.
Additionally, the Exchange's affiliate, NYSE Arca, Inc. recently
increased certain fees for subscribing to the NYSE Arca Integrated
Feed, based on comparisons to inflation. See Securities Exchange Act
Release Nos. 34-100994 (September 10, 2024), 89 FR 75612 (September
16, 2024) (SR-NYSEARCA-2024-79).
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the provisions of Section 6 of the Act,\19\ in general, and Sections
6(b)(4) and 6(b)(5) of the Act,\20\ 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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\19\ 15 U.S.C. 78f(b).
\20\ 15 U.S.C. 78f(b)(4), (5).
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This belief is based on two factors. First, the current fees do not
properly reflect the quality of the services and products, as fees for
the services and products in question have been static in nominal
terms, and therefore falling in real terms due to inflation. Second,
the Exchange believes that investments made in enhancing the capacity
and speed of Exchange systems increase the performance of the services
and products.
The Proposed Rule Change Is Reasonable
As noted above, the Exchange has not increased any of the fees
included in the proposal since 2016. However, in the years since the
adoption of the initial fees the Exchange has made significant
investments in upgrades to Exchange systems, enhancing the quality of
its services, as measured by, among other things, increased throughput
and faster processing speeds. In other words, Exchange customers have
greatly benefitted, while the Exchange's ability to recoup its
investments has been hampered.
Between 2016 and 2024, the inflation rate is 3.48% per year, on
average, producing a cumulative inflation rate of 31.52%.\21\ Using the
more targeted inflation number of Data PPI, the cumulative inflation
rate was 12.31%. The exchange believes the Data PPI is a reasonable
metric to base this fee increase on because it is targeted to producer-
side increases in the data processing industry, which based on the
definition adopted by BLS would include the Exchange's market data
products.
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\21\ See <a href="https://www.officialdata.org/us/inflation/2016?amount=1">https://www.officialdata.org/us/inflation/2016?amount=1</a>.
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Notwithstanding inflation, as noted above, the Exchange has not
increased its fees at all for over nine years for the subject services.
The proposed fee changes represent a modest increase from the current
fees.
The Exchange believes the proposed fee increase is reasonable in
light of the Exchange's continued expenditure in maintaining a robust
technology ecosystem. Furthermore, the Exchange continues to invest in
maintaining and enhancing its market data products--for the benefit and
often at the behest of its customers and global investors. Such
enhancements include refreshing all aspects of the technology ecosystem
including software, hardware, and network while introducing new and
innovative products.\22\ The goal of the enhancements discussed above,
among other things, is to provide faster and more consistent market
data products, while ensuring quicker processing time. Accordingly, the
Exchange continues to expend resources to innovate and modernize
technology so that it may benefit its members in offering its market
data products.
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\22\ See, e.g., Securities Exchange Act Release No. 99689 (March
7, 2024), 89 FR 18466 (March 13, 2024) (SR-NYSE-2024-12) (Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To
Establish the NYSE Aggregated Lite Market Data Feed).
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The Proposed Fees Are Equitably Allocated and Not Unfairly
Discriminatory
The Exchange believes that the proposed fee increases are equitably
allocated and not unfairly discriminatory because they would apply to
all data recipients that choose to subscribe to the NYSE Integrated
Feed. Any subscriber that chooses to subscribe to the NYSE Integrated
Feed would be 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.
Additionally, the fee increase would be applied uniformly to
subscribers without regard to Exchange membership status or the extent
of any other business with the Exchange or affiliated entities.
The Exchange also believes that the proposal represents an
equitable allocation of reasonable dues, fees and other charges because
Exchange fees have fallen in real terms during the relevant period.
Finally, the Exchange believes that the proposed fee changes are
not unfairly discriminatory because the fees would be assessed
uniformly across all market participants, in the same manner they are
today, that voluntarily subscribe to the NYSE Integrated Feed, which
would remain available for purchase by all market participants.
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 fee schedule
would continue to apply to all subscribers of the NYSE Integrated Feed
in the same manner as it does today albeit at inflation-adjusted rates
for certain fees, and customers may choose whether to subscribe to the
feed at all. The Exchange also believes that the level of 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.
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 determining the proposed fees, the
Exchange utilized an objective and stable metric with limited
volatility. Utilizing Data PPI over a specified period of time is a
reasonable means of recouping the Exchange's investment in maintaining
and enhancing the NYSE Integrated Feed. The Exchange believes utilizing
Data PPI, a tailored measure of inflation, to increase certain fees for
NYSE Integrated Feed to recoup the Exchange's investment in maintaining
and enhancing its market data products would not impose a burden on
competition.
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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) \23\ of the Act and subparagraph (f)(2) of Rule
19b-4 \24\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\23\ 15 U.S.C. 78s(b)(3)(A).
\24\ 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) \25\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\25\ 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#9be9eef7feb6f8f4f6f6fef5efe8dbe8fef8b5fcf4ed"><span class="__cf_email__" data-cfemail="a6d4d3cac38bc5c9cbcbc3c8d2d5e6d5c3c588c1c9d0">[email protected]</span></a>. Please include
file number SR-NYSE-2024-80 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-NYSE-2024-80. 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-NYSE-2024-80 and should be
submitted on or before January 21, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
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\26\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-30924 Filed 12-27-24; 8:45 am]
BILLING CODE 8011-01-P
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