

[Federal Register: April 7, 2006 (Volume 71, Number 67)]
[Notices]               
[Page 17934-17938]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ap06-117]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53585; File Nos. SR-NYSE-2004-43 and SR-NYSE-2005-32]

 
Self-Regulatory Organizations; New York Stock Exchange, Inc.; 
Order Approving Proposed Rule Change Relating to the Real-Time NYSE 
OpenBook[supreg] Service and OpenBook[supreg] Fees and Order Approving 
Proposed Rule Change Relating to the Contract Terms Governing Vendor 
Displays of NYSE OpenBook[supreg] Data, and Notice of Filing and Order 
Granting Accelerated Approval of Amendment No. 2 Thereto

March 31, 2006.

I. Introduction

    On August 11, 2004, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to update NYSE OpenBook[supreg] (``OpenBook'') 
limit order information in real time and to increase the monthly per-
terminal fee for the real-time OpenBook service (``Real-Time Fee 
Proposal'').\3\ The Real-Time Fee Proposal was published for comment in 
the Federal Register on September 2, 2004.\4\ The Commission received 
nine letters regarding the Real-Time Fee Proposal.\5\ Several 
commenters on the Real-Time Fee Proposal argued that the existing 
OpenBook contractual provisions, which prohibit vendors from 
consolidating OpenBook data with data from other market centers, are 
anticompetitive and discriminatory.\6\ Other commenters believed that 
the NYSE should file for public comment and Commission review and 
approval the contract terms that would govern the distribution of 
OpenBook data.\7\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ File No. SR-NYSE-2004-43.
    \4\ See Securities Exchange Act Release No. 50275 (August 26, 
2004), 69 FR 53760.
    \5\ See letters to Jonathan G. Katz, Secretary, Commission, from 
Lisa M. Utasi, President, and Kimberly Unger, Executive Director, 
The Security Traders Association of New York, Inc. (``STANY''), 
dated September 22, 2004 (``STANY Letter''); Richard A. Korhammer, 
Chief Executive Officer, Lava Trading Inc. (``Lava''), dated 
September 23, 2004 (``Lava Letter''); Thomas F. Secunda, Bloomberg 
L.P. (``Bloomberg''), dated September 23, 2004 (``Bloomberg Letter 
I''); Ellen L.S. Koplow, Executive Vice President and General 
Counsel, Ameritrade Holding Corporation, dated September 23, 2004 
(``Ameritrade Letter I''); Christopher P. Gilkerson, Vice President 
and Associate General Counsel, Charles Schwab (``Schwab''), dated 
September 23, 2004 (``Schwab Letter''); David Colker, Chief 
Executive Office and President, National Stock Exchange (``NSX''), 
dated September 24, 2004 (``NSX Letter I''); Eliot Wagner, Chair, 
Technology and Regulation Committee, the Securities Industry 
Association (``SIA''), and Christopher Gilkerson, Chair, Market Data 
Subcommittee, SIA, dated October 22, 2004 (``SIA Letter I''); Meyer 
S. Furcher, Chairman and Chief Executive Officer, Philadelphia Stock 
Exchange, Inc. dated October 11, 2004; and letter from R. Bruce 
Josten, Executive Vice President, Government Affairs, U.S. Chamber 
of Commerce, to the Honorable William Donaldson, Chairman, 
Commission, dated September 27, 2004 (``U.S. Chamber of Commerce 
Letter I'').
    \6\ See, e.g., Bloomberg Letter I (the OpenBook contract terms 
are unfairly discriminatory because some, but not all, OpenBook 
subscribers would be able to consolidate OpenBook information with 
limit order information from other markets); Schwab Letter (the 
current contractual provisions governing the distribution of 
OpenBook data discriminate against vendors and their clients, and 
are anticompetitive, because they restrict redistribution and 
consolidation with other markets' data); Ameritrade Letter I (the 
proposal discriminates among market participants because vendors, 
unlike institutions and professionals, are prohibited from enhancing 
OpenBook data or commingling it with data from other market 
centers); and SIA Letter I (some members have suggested that the 
existing OpenBook contractual provisions may be anticompetitive 
because they restrict redistribution and consolidation with other 
markets' data), supra note 5.
    \7\ See, e.g., Schwab Letter, SIA Letter I, and U.S. Chamber of 
Commerce Letter I, supra note 5. See also NSX Letter I and Lava 
Letter, supra note 5 (the contract terms should be included so that 
the public can assess the impact of the proposal on transparency and 
competition among market centers).
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    On May 13, 2005, the NYSE filed a proposed rule change containing 
proposed contract terms, set forth in a revised version of Exhibit C to 
the ``Agreement for the Receipt and Use of Market Data,'' that would 
govern the displays and dissemination of OpenBook data (the ``Exhibit C 
Proposal'').\8\ The NYSE filed Amendment No. 1 to the Exhibit C 
Proposal on June 16, 2005.\9\ The Exhibit C Proposal, as amended by 
Amendment No. 1 (``Original Exhibit C Proposal''), was published for 
comment in the Federal Register on July 1, 2005.\10\ The Commission 
received six comment letters regarding the Original Exhibit C 
Proposal.\11\ The NYSE responded to the comments regarding the Real-
Time Fee Proposal and the Original Exhibit C Proposal on September 30, 
2005.\12\ The NYSE filed Amendment No. 2 to the Exhibit C Proposal on 
February 26, 2006.\13\ This order approves the Real-Time Fee Proposal 
and the Exhibit C Proposal, as amended by Amendment No. 2. In addition, 
the Commission is publishing notice to solicit comment on, and is 
simultaneously approving, on an accelerated basis, Amendment No. 2 to 
the Exhibit C Proposal.
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    \8\ File No. SR-NYSE-2005-32. The Commission received a comment 
letter on June 3, 2005 from Bloomberg. See letter from Kim Borg, 
Bloomberg, to Annette L. Nazareth, Director, Division of Market 
Regulation, Commission, dated June 2, 2005. Bloomberg resubmitted 
this comment letter on July 22, 2005. See supra note 11.
    \9\ In Amendment No. 1 provided a copy of its current Exhibit C 
marked to indicate the changes that the NYSE proposed. NYSE did not 
propose any substantive changes to the proposal in Amendment No. 1.
    \10\ See Securities Exchange Act Release No. 51925 (June 24, 
2005), 70 FR 38226.
    \11\ See letters to Jonathan G. Katz, Secretary, Commission, 
from David Colker, Chief Executive Officer and President, NSX, dated 
July 20, 2005 (``NSX Letter II''); Phylis M. Esposito, Executive 
Vice President, Chief Strategy Officer, Ameritrade, dated July 22, 
2005 (``Ameritrade Letter II''); Christopher Gilkerson, Chair, SIA 
Technology and Regulation Committee and Andrew Wels, Chair, SIA 
Market Data Subcommittee, dated July 22, 2005 (``SIA Letter II''); 
Kim Bang, Bloomberg, dated July 22, 2005 (``Bloomberg Letter II''); 
Kim Bang, Bloomberg, dated October 19, 2005 (``Bloomberg Letter 
III''); and letter to the Honorable Cynthia Glassman, Acting 
Chairman, Commission, from R. Bruce Josten, Executive Vice 
President, Government Affairs, U.S. Chamber of Commerce, dated July 
22, 2005 (``U.S. Chamber of Commerce Letter II'').
    \12\ See letters from Mary Yeager, Assistant Secretary, NYSE, to 
Jonathan G. Katz, Secretary, Commission, dated September 30, 2005 
(``NYSE Response Letters''). One of the NYSE Response Letters 
addresses the comments raised by Bloomberg, while the other NYSE 
Response Letter addresses the comments of the remaining commenters.
    \13\ As described more fully below, Amendment No. 2 revises 
Exhibit C to permit a vendor to provide a display that integrates 
OpenBook information with information from other markets without 
attributing the OpenBook information to the NYSE, provided the 
vendor satisfies certain requirements. Amendment No. 2 replaces and 
supersedes the originally proposed Exhibit C in its entirety.
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II. Background

    The OpenBook service is a compilation of limit order data that the 
NYSE provides to market data vendors, broker-dealers, private network 
providers, and other entities through a data feed. The Commission 
approved the current fees for the OpenBook service in 2001.\14\ In its 
2001 OpenBook proposal, the NYSE described, but did not file with the 
Commission, the contractual provisions governing market data vendors' 
receipt and display of OpenBook data. These provisions, which are in 
effect today, prohibit market data vendors from providing displays that 
integrate OpenBook data

[[Page 17935]]

with limit order data from other markets or trading systems.\15\ In the 
OpenBook Fee Order, the Commission indicated specifically that it was 
not approving or disapproving the OpenBook contract terms and, in fact, 
signaled that the contractual provisions restricting vendor 
redissemination of OpenBook data, including the prohibition on 
providing enhanced, integrated, or consolidated data, were ``on their 
face discriminatory and may raise fair access [issues] under the Act.'' 
\16\
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    \14\ See Securities Exchange Act Release No. 45138 (December 7, 
2001), 66 FR 64895 (December 14, 2001) (order approving File No. SR-
NYSE-2001-42) (``OpenBook Fee Order'').
    \15\ Specifically, the contract terms governing the receipt of 
OpenBook data: (1) Prohibit vendors from providing displays that 
integrate OpenBook data with limit order data from other markets or 
trading systems, although a vendor may allow its subscribers to view 
other entities' limit orders side-by-side with, or on the same page 
as, displays of OpenBook information; and (2) preclude a data feed 
recipient from retransmitting the OpenBook data feed. See OpenBook 
Fee Order, supra note 14.
    \16\ See OpenBook Fee Order, supra note 14.
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    In October 2002, the NYSE filed a proposal to permit the display 
and use of quotations in NYSE-traded stocks to show additional depth in 
the market for those stocks, i.e., Liquidity Quotes.\17\ The Commission 
approved the Liquidity Quote proposal on the condition that the NYSE 
remove from the contract terms governing the receipt of Liquidity Quote 
data the prohibition on data feed recipients, including vendors, 
integrating Liquidity Quote data with other markets' data or with the 
display of other markets' data.\18\ However, the Commission concluded 
that the NYSE could require that vendors: (1) Provide the NYSE with 
attribution in any display that included Liquidity Quote data; and (2) 
make Liquidity Quote available to their customers as a separate branded 
package.\19\
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    \17\ Liquidity Quote data reflected aggregated NYSE trading 
interest at a specific price interval below the best bid (in the 
case of a liquidity bid) or at a specific price interval above the 
best offer (in the case of a liquidity offer).
    \18\ See Securities Exchange Act Release No. 47614 (April 2, 
2003), 68 FR 17140 (April 8, 2003) (order conditionally approving 
File No. SR-NYSE-2002-55) (``Liquidity Quote Conditional Order''). 
Although the NYSE had not filed the Liquidity Quote contract terms 
with the Commission, the Commission concluded that it was required 
to consider comments regarding the contract terms because they 
related to the manner in which the Liquidity Quote proposal would 
operate. See Liquidity Quote Conditional Order at note 39 and 
accompanying text.
    \19\ See Liquidity Quote Conditional Order, supra note 18.
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    After agreeing to the conditions in the Liquidity Quote Conditional 
Order, the NYSE revised the Liquidity Quote contract terms by removing 
the prohibition on integrating Liquidity Quote data with other markets' 
data. In addition, the NYSE sought to revise the contract terms to 
establish new display requirements for vendors. Bloomberg successfully 
challenged these display requirements as constituting a denial of 
access under Sections 19(d) and 19(f) of the Act.\20\ In the Bloomberg 
Order, the Commission found that the contract terms governing the 
display of Liquidity Quote data were NYSE rules that were required to 
be filed and approved pursuant to Section 19(b) of the Act.\21\
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    \20\ See Securities Exchange Act Release No. 49076 (January 14, 
2004) (Administrative Proceeding File No. 3-11129) (In the Matter of 
Bloomberg L.P. for Review of Action Taken by the NYSE) (``Bloomberg 
Order'').
    \21\ See Bloomberg Order, supra note 20. Because the NYSE had 
not filed the Liquidity Quote contract terms with the Commission, 
the Commission concluded that the contract terms could not provide a 
basis for the NYSE's denial of Bloomberg's access to Liquidity Quote 
data.
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    The NYSE subsequently filed the Liquidity Quote contract terms with 
the Commission as a proposed rule change, which the Commission 
approved.\22\ Among other things, the Liquidity Quote contract terms 
required that vendors: (1) Indicate the number of shares attributable 
to Liquidity Quote bids and offers in any display that aggregated 
Liquidity Quote bids and offers with interest from other markets; (2) 
identify each element or line of Liquidity Quote information included 
in an integrated display or montage with either ``NYSE Liquidity 
Quote'' or ``NYLQ''; (3) offer its subscribers a Liquidity Quote 
product that was separate and apart from information products that 
included other markets' data; and (4) provide the NYSE with sample 
screen shots of displays that included Liquidity Quote information at 
the time the vendor commences to provide the display to 
subscribers.\23\ As described more fully below, the contract terms that 
the NYSE filed in the Original Exhibit C Proposal were similar to the 
contract terms that the Commission approved for the Liquidity Quote 
data product.
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    \22\ See Securities Exchange Act Release No. 51438 (March 28, 
2005), 70 FR 17137 (April 4, 2005) (order approving File No. SR-
NYSE-2004-32) (``Liquidity Quote Order'').
    \23\ See Liquidity Quote Order, supra note 22. In the Liquidity 
Quote Order, the Commission stated that the Liquidity Quote contract 
terms ``do not apply and have not been considered or approved by the 
Commission as acceptable for the distribution of NYSE OpenBook 
data.'' See Liquidity Quote Order, supra note 22, at note 41 and 
accompanying text.
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III. Description of the Proposals

A. The Exhibit C Proposal

    In the Original Exhibit C Proposal, the NYSE proposed to amend the 
existing OpenBook Exhibit C to eliminate the prohibition on vendors' 
integrating OpenBook data with data from other market centers and to 
require vendors to: (1) Identify as NYSE data each element or line of 
OpenBook information included in an integrated display of trading 
interest across market centers; (2) indicate at each price level the 
number of shares attributable to OpenBook bids and offers when the 
vendor aggregates bids and offers from multiple market centers in an 
integrated display; (3) provide customers with a stand-alone OpenBook 
display if the vendor provides an integrated display; and (4) provide 
the NYSE with a sample of each new screen shot to demonstrate the 
manner in which the vendor displays OpenBook information and any 
modification to previous displays. These OpenBook vendor display 
requirements would not apply to any OpenBook subscriber's internal 
displays of OpenBook data. Thus, an OpenBook subscriber that 
distributes the data internally would be able to integrate the OpenBook 
data with data from other markets through its own applications or 
software, without the attribution requirements applicable to market 
data vendors.
    The Commission received six comment letters regarding the Original 
Exhibit C Proposal.\24\ Several commenters argued that the attribution 
requirements contained in the Original Exhibit C Proposal would act as 
a de facto ban on the commingling of market data.\25\ One commenter 
asserted that the attribution requirement would limit the visibility of 
competing market centers and diminish the amount of depth and analytics 
that could be displayed, thereby reducing transparency and market 
efficiency.\26\ Another commenter asserted that ``[t]raders need a * * 
* view of available prices without attribution that allows them to see 
a greater range of price and liquidity points than can be seen on a 
market monitor with attribution.''\27\ The commenter argued, further, 
that it would not be possible to build a readable market monitor of 
aggregated volume if market attribution were required for each market 
center included in the aggregated volume at each price point.\28\
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    \24\ See note 11, supra.
    \25\ See e.g., NSX Letter II, SIA Letter II, and U.S. Chamber of 
Commerce Letter II, supra note 11. See also Bloomberg II, supra note 
11 (proposal would prohibit the effective integration of OpenBook 
data with data from other market centers).
    \26\ See U.S Chamber of Commerce Letter II, supra note 11. See 
also NSX Letter II; SIA Letter II; Ameritrade Letter II; and 
Bloomberg Letter II, supra note 11.
    \27\ See Bloomberg Letter II, supra note 11.
    \28\ Id.
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    In addition, this commenter maintained that the Original Exhibit C 
Proposal would discriminate unfairly

[[Page 17936]]

against small and medium-sized broker-dealers that cannot afford to 
maintain research or software-development departments and must rely on 
vendors to provide aggregated market monitors.\29\ Similarly, the SIA 
stated that many of its members:
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    \29\ See Bloomberg Letters II and III, supra note 11.

    Depend on vendors to provide them with market data both to use 
internally and to disseminate to investors. The NYSE proposal 
mandates that vendors provide special `attribution' for all NYSE 
OpenBook data * * * This compulsory identifier would consume finite 
screen space, reducing the amount of trading depth vendors could 
display, undermining their ability to create analytics, and 
negatively impacting the market data ultimately made available to * 
* * members and clients. At the same time, the NYSE attribution 
requirement would crowd competing market centers off data vendor 
screens. These restrictions could significantly decrease the 
transparency of the securities markets and inhibit competition among 
markets.\30\
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    \30\ See SIA Letter II, supra note 11.

    This commenter also maintained that the Original Exhibit C Proposal 
would impose an unnecessary burden on competition because its 
requirements would ``impede alternative uses of data and require a 
particular display that gives preeminence to the NYSE's data and 
branding.'' \31\
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    \31\ See SIA Letter II, supra note 11. Another commenter 
contended that the NYSE lacks the authority to regulate the 
activities of entities that are not NYSE members, including market 
data vendors. See Bloomberg Letter III, supra note 11. In this 
regard, the commenter notes that Section 6(b)(5) of the Act 
prohibits a national securities exchange from regulating ``by virtue 
of any authority conferred by this title matters not related to the 
purposes of this title or the administration of the exchange.'' This 
commenter argues that the Original Exhibit C Proposal is 
inconsistent with Section 6(b)(5) of the Act because it represents 
an attempt by the NYSE to use its regulatory authority to further 
its private commercial interests.
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B. Amendment No. 2 to the Exhibit C Proposal

    In response to the commenters' concerns regarding the attribution 
requirements in the Original Exhibit C Proposal, the NYSE filed 
Amendment No. 2 to the Exhibit C Proposal. Amendment No. 2 replaces and 
supersedes the originally filed Exhibit C in its entirety.
    The revised Exhibit C provided in Amendment No. 2 (the ``New 
Exhibit C'') will allow vendors to provide displays that commingle 
OpenBook information with information from other markets without 
attribution of the NYSE name or the number of shares (``Non-Attributed 
Integrated Displays''), so long as the vendors comply with the 
requirements described below.\32\ The NYSE states that it is doing so 
primarily because the NYSE wishes to respond to the increasing demand 
from professional investors for a real-time OpenBook product and 
because the NYSE realizes that order book information is already 
prevalent in the marketplace and that investors have become accustomed 
to screen displays that aggregate the liquidity of multiple markets' 
books without attribution.
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    \32\ Under both the Original Exhibit C Proposal and the New 
Exhibit C, the display requirements do not apply to a data recipient 
that distributes OpenBook data to its officers, partners, and 
employees or to those of its affiliates.
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    In the New Exhibit C, the Exchange proposes to require a vendor 
that makes Non-Attributed Integrated Displays available to also make 
available a second display that includes the ``NYSE'' identifier and 
the number of shares attributable to OpenBook bids and offers 
(``Attributed Integrated Displays''). The vendor must make the 
Attributed Integrated Displays available in a manner that allows the 
user to have easy and ready access to them from the Non-Attributed 
Integrated Display screens.
    As in the Original Exhibit C Proposal, a vendor that makes 
Integrated Displays available must also make OpenBook information 
available as a product that is separate and apart from information 
products that include other market centers' information.
    The New Exhibit C also would require the vendor:
    (a) To make its subscribers aware of the availability of the 
Attributed Integrated Displays and the stand-alone OpenBook product in 
the same manner as it makes its subscribers aware of Non-Attributed 
Integrated Displays; and
    (b) No later than at the time it first commences to provide a new 
or modified Attributed Integrated Display, or an OpenBook-only display, 
to others, to submit to the Exchange for inclusion in Exhibit A a 
screen shot of that Attributed Integrated Display or OpenBook-only 
display and a description of the means of access to that screen.
    In addition, the NYSE represents that it intends to review with the 
industry whether there is sufficient demand for depth-of-book 
information among nonprofessional subscribers to justify a depth-of-
book product and fee for nonprofessional subscribers. The Exchange 
notes that its Hybrid initiative may have an impact on the demand for 
such a product.

C. The Real-Time Fee Proposal

    The NYSE currently updates OpenBook information every five seconds. 
The current fee for the OpenBook service is comprised of two 
components: (1) $5,000 per month for receipt of and the right to 
redistribute the OpenBook data feed; and (2) $50.00 per month for each 
terminal through which an end user displays OpenBook data. In the Real-
Time Fee Proposal, the NYSE proposes to make available a second 
OpenBook service that would update OpenBook limit order information in 
real time. The $5,000 per month fee would entitle an entity to receive 
and redistribute the five-second delayed data feed, the real-time data 
feed, or both. In addition, the NYSE proposes to increase the per-
terminal component of the real-time OpenBook service fee to $60.00 per 
month.
    The Commission received nine comments regarding the Real-Time Fee 
Proposal.\33\ Two commenters supported NYSE's proposal to make OpenBook 
data available on a real-time basis. However, these commenters raised 
concerns about the contract terms and fees associated with 
OpenBook.\34\ Several commenters argued that the NYSE has failed to 
justify the amount of the proposed real-time OpenBook fee.\35\ In 
particular, the commenters maintained that the NYSE has not provided 
the data necessary to determine whether the $60 per terminal fee has 
any relation to costs, or whether it is an equitable allocation of the 
costs associated with using its facilities.\36\ Similarly, one 
commenter asserted that the NYSE's fees for market data ``bear no 
demonstrated relation to the costs the NYSE incurs in collecting and 
disseminating the data,'' and that the Act requires that such fees ``be 
subjected to a rigorous cost-based analysis.'' \37\ Another commenter 
noted that the NYSE provided no data regarding its costs or the formula 
it uses to determine the equitable allocation of its costs.\38\ The 
commenter believed that without this information, the Commission lacks

[[Page 17937]]

a legally sufficient foundation to approve the proposed fee.\39\
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    \33\ See note 5, supra.
    \34\ See Ameritrade Letter I and STANY Letter supra note 5.
    \35\ See, e.g., Ameritrade Letter I; Bloomberg Letter I; U.S. 
Chamber of Commerce Letter I; Schwab Letter, supra note 5; and SIA 
Letter II, supra note 11.
    \36\ See Schwab Letter, supra note 5, and SIA Letter II, supra 
note 11. See also Ameritrade Letter I (the Commission should require 
the NYSE to support its OpenBook fees by detailing the costs of 
providing the data), supra note 5; and U.S. Chamber of Commerce 
Letters I and II (asserting that ``there is no way to ascertain 
whether the $60 per month terminal fee bears any relationship to 
costs, whether those costs are reasonably allocated, [and] whether 
the Congressional mandate that market data fees be `fair and 
reasonable' is being met''), supra notes 5 and 11.
    \37\ See Bloomberg Letter I, supra note 5.
    \38\ See Ameritrade Letter II, supra note 11. See also SIA 
Letter II, supra note 11.
    \39\ See Ameritrade Letter II, supra note 11.
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    Some commenters criticized the lack of a separate OpenBook fee for 
non-professional investors.\40\ One commenter maintained that the 
NYSE's proposal fails to explain how the lack of a non-professional 
OpenBook fee meets the requirements of Section 6(b)(5) of the Act, 
which, among other things, requires that the rules of a national 
securities exchange be designed to promote a free and open market and a 
national market system, to protect investors and the public interest, 
and to prevent unfair discrimination between customers, brokers, and 
dealers.\41\ The commenter asserted that the proposed OpenBook fee 
places retail investors at a disadvantage and operates as a denial of 
access to retail investors, including active traders.\42\ Similarly, 
another commenter believed that the NYSE's proposal ``would create a 
bifurcated market in which retail investors are clearly 
disadvantaged.'' \43\ The commenters also noted that Nasdaq provides a 
non-professional fee for its similar TotalView product.\44\
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    \40\ See Schwab Letter, supra note 5, and SIA Letters I and II, 
supra notes 5 and 11. See also Ameritrade Letter I, supra note 5 
(the Commission should require the NYSE to revise its fee structure 
so that OpenBook data may be ``provided to retail investors at a 
cost reasonably related to the actual cost of providing the data 
feed'').
    \41\ See Schwab Letter, supra note 5.
    \42\ See Schwab Letter, supra note 5.
    \43\ See Ameritrade Letter I, supra note 5.
    \44\ See SIA Letters I and II, supra notes 5 and 11, and Schwab 
Letter, supra note 5.
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    In its response to the commenters, the NYSE reiterated its 
assertion that the $60 per month per terminal fee for the real-time 
OpenBook service reflects an equitable allocation of the overall costs 
of using the NYSE's facilities.\45\ The NYSE also noted that in 
approving the current OpenBook fees, the Commission found that the fees 
were consistent with Section 6(b)(4) of the Act and were reasonable 
when compared to similar types of services provided by other 
markets.\46\ In addition, the NYSE stated that the Commission has 
approved a monthly $70 charge for professional subscribers to Nasdaq's 
TotalView service, which is comparable to the OpenBook service.\47\
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    \45\ See NYSE Response Letters, supra note 12.
    \46\ See NYSE Response Letters, supra note 12, citing the 
OpenBook Fee Order, supra note 14.
    \47\ See NYSE Response Letters, supra note 12. See also NASD 
Rule 7010(q), ``Nasdaq TotalView.''
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    With respect to the lack of a non-professional fee for the OpenBook 
service, the NYSE asserted that it has ``noted no discernible demand 
for OpenBook from retail investors.'' \48\ However, the NYSE 
represented that it intends to review with the industry whether there 
is sufficient demand for depth-of-book information among non-
professional subscribers to justify a depth-of-book product and fee for 
non-professional subscribers.\49\ The NYSE also noted that its Hybrid 
initiative may have an impact on the demand for such a product.\50\
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    \48\ See NYSE Response Letters, supra note 12.
    \49\ See Amendment No. 2 to the Exhibit C Proposal.
    \50\ See Amendment No. 2 to the Exhibit C Proposal.
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IV. Discussion and Commission Findings

    For the reasons discussed below, the Commission finds that the 
Exhibit C Proposal, as amended by Amendment No. 2, and the Real-Time 
Fee Proposal, are consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange.\51\
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    \51\ In approving these rules, the Commission has considered 
their impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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A. Exhibit C Proposal

    The Commission finds that the Exhibit C Proposal, as amended by 
Amendment No. 2, is consistent with Section 6(b)(5) of the Act,\52\ 
which requires, among other things, that the rules of a national 
securities exchange be designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest. In addition, the Commission finds 
that the Exhibit C Proposal, as amended by Amendment No. 2, is 
consistent with Section 6(b)(8) of the Act,\53\ which requires that the 
rules of a national securities exchange not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.
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    \52\ 15 U.S.C. 78f(b)(5).
    \53\ 15 U.S.C. 78f(b)(8).
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    The Commission has considered the comments received regarding the 
Original Exhibit C Proposal and believes that the NYSE has addressed 
the commenters' concerns in the New Exhibit C. In the New Exhibit C, 
the NYSE has decided to allow market data vendors to provide the 
integrated screens that commenters state that end users desire. The 
Commission believes that the NYSE's New Exhibit C should allow market 
data vendors to provide their subscribers with useful data without 
imposing unnecessary restrictions, which should help to perfect the 
mechanism of a free and open market.

B. Real-Time Fee Proposal

    The Commission finds that the Real-Time Fee Proposal is consistent 
with Section 6(b)(4) of the Act,\54\ which requires that the rules of a 
national securities exchange provide for the equitable allocation of 
reasonable dues, fees, and other charges among its members and issuers 
and other persons using its facilities. Specifically, the Commission 
believes that the NYSE's proposed monthly per-terminal fee of $60 for 
real-time OpenBook data is reasonable when compared to the fees for 
Nasdaq's TotalView service.\55\
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    \54\ 15 U.S.C. 78f(b)(4).
    \55\ See note 47, supra, and accompanying text. See also 
OpenBook Fee Order, supra note 14, at note 5 (discussing other 
markets' fees for limit order book information).
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    The Commission has considered the commenters' concerns that the 
proposed OpenBook fee discriminates unfairly against retail investors. 
The Commission notes, however, that the NYSE has represented that it 
intends to review with the industry whether there is sufficient demand 
for depth-of-book information among non-professional subscribers to 
justify a depth-of-book product and fee for non-professional 
subscribers.\56\ The NYSE acknowledges that its Hybrid initiative may 
have an impact on the demand for such a product.\57\
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    \56\ See Amendment No. 2 to the Exhibit C proposal.
    \57\ See Amendment No. 2 to the Exhibit C proposal.
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C. Accelerated Approval of Amendment No. 2 to the Exhibit C Proposal

    The Commission finds good cause for approving Amendment No. 2 to 
the Exhibit C Proposal prior to 30 days after the date of publication 
of notice of filing thereof in the Federal Register. The NYSE filed 
Amendment No. 2 to the Exhibit C Proposal in response to the comments 
submitted regarding the Original Exhibit C Proposal. Because Amendment 
No. 2 to the Exhibit C Proposal responds to the commenters' concerns, 
the Commission finds good cause for approving Amendment No. 2 to the 
Exhibit C Proposal on an accelerated basis.

V. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 2 to the Exhibit C Proposal, 
including whether Amendment No. 2 to the Exhibit C Proposal is 
consistent with the

[[Page 17938]]

Act. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File No. SR-NYSE-2005-32 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.

All submissions should refer to File Number SR-NYSE-2005-32. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all 

written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the NYSE. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NYSE-2005-32 and should be submitted on or before April 
28, 2006.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\58\ that the Real-Time Fee Proposal (SR-NYSE-2004-43) and the 
Exhibit C Proposal (SR-NYSE-2005-32), as amended by Amendment No. 2 to 
the Exhibit C Proposal, are approved, and that Amendment No. 2 to the 
Exhibit C Proposal is approved on an accelerated basis.
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    \58\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\59\
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    \59\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-5058 Filed 4-6-06; 8:45 am]

BILLING CODE 8010-01-P
