

[Federal Register: October 20, 2006 (Volume 71, Number 203)]
[Notices]               
[Page 62029-62033]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20oc06-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54597; File No. SR-NYSEArca-2006-21]

 
Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change Relating to NYSE Arca Data

October 12, 2006.

I. Introduction

    On May 23, 2006, the NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC''), 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 establish fees for the receipt 
and use of certain market data that the Exchange makes available. The 
proposal was published for comment in the Federal Register on June 9, 
2006.\3\ The Commission received four comment letters regarding the 
proposal.\4\ On July 25, 2006, and August 25, 2006, the Exchange filed 
letters responding to the issues raised in the

[[Page 62030]]

comment letters.\5\ This order approves the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 53952 (June 7, 
2006), 71 FR 33496.
    \4\ See letters from Gregory Babyak, Chair, Market Data 
Subcommittee, the Securities Industry Association (``SIA''), and 
Christopher Gilkerson, Chair, Technology and Regulation Committee, 
SIA, to Nancy M. Morris, Secretary, SEC, dated June 30, 2006 (``SIA 
Letter I''), and August 18, 2006 (``SIA Letter II''); web comment 
from Steven C. Spencer, Esq., dated June 18, 2006 (``Spencer 
Letter''); and letter from Markham C. Erickson, Executive Director 
and General Counsel, Netcoalition, to the Honorable Christopher Cox, 
Chairman, SEC, dated August 9, 2006 (``Netcoalition Letter''). SIA 
Letters I and II also provide comments concerning File No. SR-NYSE 
Arca-2006-23, NYSE Arca's proposal to establish a pilot program 
setting fees for the receipt and use of market data relating to NYSE 
Arca's best bids and offers. The Netcoalition Letter's comments also 
apply to File Nos. SR-NYSE Arca-2006-23; SR-NASD-2005-056; and SR-
NASD-2006-072.
    \5\ See letters from Janet Angstadt, Acting General Counsel, 
NYSE Arca, Inc., to Nancy M. Morris, Secretary, SEC, dated July 25, 
2006 (``NYSE Arca Response I'') and August 25, 2006 (``NYSE Arca 
Response II'').
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II. Description of the Proposal

    Through NYSE Arca, LLC, the equities trading facility of NYSE Arca 
Equities, Inc., the Exchange makes available on a real-time basis 
ArcaBook,\SM\ a compilation of all limit orders resident in the NYSE 
Arca limit order book. In addition, the Exchange makes available real-
time information relating to transactions and limit orders in debt 
securities that are traded through the Exchange's facilities. The 
Exchange makes ArcaBook and the bond transaction and limit order 
information (collectively, ``NYSE Arca Data'') available to market data 
vendors, broker-dealers, private network providers, and other entities 
by means of data feeds. Currently, the Exchange does not charge fees 
for the use receipt and use of NYSE Arca Data.
    The Exchange proposes to establish fees for the receipt and use of 
NYSE Arca Data. Specifically, the Exchange proposes to establish a $750 
per month access fee for access to the Exchange's data feeds that carry 
the NYSE Arca Data.
    The Exchange also proposes to establish professional and non-
professional device fees for the NYSE Arca Data.\6\ For professional 
subscribers, the Exchange proposes to establish a monthly fee of $15 
per device for the receipt of ArcaBook data relating to exchange-traded 
funds (``ETFs'') and those equity securities for which reporting is 
governed by the CTA Plan (``CTA Plan and ETF Securities'') and a 
monthly fee of $15 per device for the receipt of ArcaBook data relating 
to those equity securities, excluding ETFs, for which reporting is 
governed by the Nasdaq UTP Plan (``Nasdaq UTP Plan Securities'').\7\ 
For non-professional subscribers, the Exchange proposes to establish a 
monthly fee of $5 per device for the receipt of ArcaBook data relating 
to CTA Plan and ETF Securities and a monthly fee of $5 per device for 
the receipt of ArcaBook data relating to Nasdaq UTP Plan Securities.\8\
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    \6\ In differentiating between professional and non-professional 
subscribers, the Exchange proposes to apply the same criteria used 
by the Consolidated Tape Association Plan (``CTA Plan'') and the 
Consolidated Quotation System Plan (``CQ Plan'') for qualification 
as a non-professional subscriber.
    \7\ The ``Nasdaq UTP Plan'' is the Joint Self-Regulatory 
Organization Plan Governing the Collection, Consolidation and 
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading 
Privileges Basis.
    \8\ There will be no monthly device fees for limit order and 
last sale price information relating to debt securities traded 
through the Exchange's facilities.
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    The Exchange also proposes a maximum monthly payment for device 
fees paid by any broker-dealer for non-professional subscribers that 
maintain brokerage accounts with the broker-dealer.\9\ For 2006, the 
Exchange proposes a $20,000 maximum monthly payment. For the months 
falling in a subsequent calendar year, the maximum monthly payment 
shall increase (but not decrease) by the percentage increase (if any) 
in the annual composite share volume \10\ for the calendar year 
preceding that subsequent calendar year, subject to a maximum annual 
increase of five percent.
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    \9\ Professional subscribers may be included in the calculation 
of the monthly maximum amount so long as (i) nonprofessional 
subscribers comprise no less than 90 percent of the pool of 
subscribers that are included in the calculation; (ii) each 
professional subscriber that is included in the calculation is not 
affiliated with the broker-dealer or any of its affiliates (either 
as an officer, partner or employee or otherwise); and (iii) each 
such professional subscriber maintains a brokerage account directly 
with the broker-dealer (that is, with the broker-dealer rather than 
with a correspondent firm of the broker-dealer).
    \10\ ``Composite share volume'' for a calendar year refers to 
the aggregate number of shares in all securities that trade over 
NYSE Arca facilities for that calendar year.
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    Lastly, the Exchange proposes to waive the device fees for ArcaBook 
data during the duration of the billable month in which a subscriber 
first gains access to the data.

III. Summary of Comments

    The Commission received four comment letters from three commenters 
regarding the proposal.\11\ All of the commenters objected to the 
proposal. Two commenters argued that the advent of for-profit exchanges 
raises significant issues, including the potential for conflicts of 
interest between an exchange's self-regulatory obligations and its 
obligations to shareholders.\12\ One commenter urged the Commission to 
consider significant market data proposals, such as the current 
proposal, in the context of its pending review of self-regulatory 
organizations (``SROs'').\13\
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    \11\ See note 4, supra.
    \12\ See SIA Letter I and Netcoalition Letter, supra note 4.
    \13\ See Netcoalition Letter, supra note 4. Specifically, the 
commenter urged the Commission to consider these issues in the 
context of the Concept Release concerning self-regulation. See 
Securities Exchange Act Release No. 50700 (November 18, 2004), 69 FR 
71256 (December 8, 2004).
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    Two commenters argued that the proposal reflects changes in the 
Exchange's policies due to its recent merger with the New York Stock 
Exchange, Inc. (``NYSE'').\14\ One commenter stated that the merger 
eliminated the Exchange's incentive to compete with the NYSE and 
resulted in the Exchange's proposal to implement fees for its market 
data.\15\ This commenter argued that all investors should be allowed to 
view market data free of charge.
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    \14\ See SIA Letter I and Spencer Letter, supra note 4.
    \15\ See Spencer Letter, supra note 4.
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    Another commenter noted that ``[i]n the aftermath of a merger 
promising the new owners of the [E]xchange new revenue opportunities, 
the [E]xchange has fundamentally altered the role and distribution of, 
and changed the rules regarding access to, [the Exchange's] market 
data.'' \16\ This commenter noted that the Exchange currently provides 
its data for free and that the Exchange's post-merger decision to 
charge fees for its data and require vendors to enter into contracts 
governing the distribution of its data diminish market transparency and 
impede competition, which the commenter asserted was inconsistent with 
the requirements of Section 6(b)(5) of the Act.\17\ Further, the 
commenter stated that the proposed fees would be prohibitively 
expensive for the ``vast majority'' of retail investors and could 
result in a two-tier market for transparency.\18\
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    \16\ See SIA Letter I, supra note 4.
    \17\ See SIA Letter I, supra note 4. The commenter also argued 
that the Exchange failed to address whether the proposal imposed a 
burden on competition and the statutory basis for the proposal. See 
also SIA Letter II supra note 4.
    \18\ See SIA Letter I, supra note 4.
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    Two commenters also argued that the proposal was deficient because 
the Exchange failed to adequately justify the reasonableness of the 
proposed fees.\19\ Specifically, one commenter argued that the Exchange 
failed to provide the information necessary to determine whether the 
proposed fees bear any relation to costs, or whether they constitute an 
equitable allocation of the costs associated with using the Exchange's 
facilities.\20\ The commenter also noted that the Exchange failed to 
provide the methodology it used to determine the proposed fees.\21\ The 
commenter asserted that without the foregoing information, the 
Commission lacks a legally sufficient foundation to approve the 
proposed fees.\22\ Another commenter argued that the Exchange provided 
no basis for assessing how the

[[Page 62031]]

fees were determined and noted that the Exchange's only guidance was an 
assertion that its fees are in line with fees charged by other 
SROs.\23\
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    \19\ See SIA Letters I and II, and Netcoalition Letter, supra 
note 4.
    \20\ See SIA Letters I and II, supra note 4.
    \21\ Id.
    \22\ See SIA Letter I, supra note 4.
    \23\ See Netcoalition Letter, supra note 4.
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    One commenter argued that the proposal should not be approved 
because the Exchange failed to include the contract terms which would 
govern the distribution and access to the NYSE Arca Data.\24\ The 
commenter believed that the Exchange should have to file the terms of 
its vendor contract with Commission for public comment and review 
because they will ``restrict access and set material terms'' for access 
to the NYSE Arca Data.\25\
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    \24\ See SIA Letters I and II, supra note 4.
    \25\ See SIA Letter I, supra note 4. See also SIA Letter II, 
supra note 4.
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    Further, the commenter argued that Regulation NMS established that 
broker-dealers can distribute their own data so long as the terms of 
distribution are fair and reasonable and not unreasonably 
discriminatory.\26\ The commenter asserted that the Exchange failed to 
``recognize [these] rights reflected in Regulation NMS'' or ``to 
negotiate with the industry a reciprocal licensing agreement.'' \27\
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    \26\ See SIA Letters I and II, supra note 4.
    \27\ Id.
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    Finally, one commenter argued that the Exchange failed to consider 
the administrative burdens associated with implementing the 
proposal.\28\ This commenter noted that firms would be required to 
track access and usage, which could impose ``significant development 
costs.'' \29\
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    \28\ See SIA Letter I, supra note 4.
    \29\ See SIA Letter I, supra note 4.
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IV. Exchange's Responses to Comments

    In its responses to the commenters, the Exchange acknowledged that 
it was seeking to impose fees for data it currently distributes for 
free. The Exchange noted, however, that Regulation NMS allows each 
national securities exchange to distribute market data outside of the 
national market system plans so long as the terms of distribution are 
fair, reasonable, and not unreasonably discriminatory.\30\ The Exchange 
argued that the proposal is consistent with these requirements and 
reflects an equitable allocation of the Exchange's overall costs to 
users of its facilities.\31\ NYSE Arca also noted its ``desire to 
participate in a revenue stream that is growing increasingly 
significant for its primary competitors.'' \32\
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    \30\ See NYSE Arca Response I and II, supra note 5.
    \31\ See NYSE Arca Response I, supra note 5.
    \32\ See NYSE Arca Response II, supra note 5.
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    The Exchange argued that the proposal establishes ``a framework for 
distributing data in which all vendors and end users are permitted to 
receive and use the Exchange's market data on equal, non-discriminatory 
terms.'' \33\ The Exchange reiterated its assertion that the proposed 
professional and non-professional device fees for the NYSE Arca Data 
were fair and reasonable because they ``are far lower than those 
already established--and approved by the Commission--for similar 
products offered by other U.S. equity exchanges and stock markets.'' 
\34\ In particular, the Exchange noted that the proposed $15 per month 
device fee for each of the ArcaBook data products is less than both the 
$60 per month and $70 per month device fees that the NYSE and Nasdaq, 
respectively, charge for comparable market data products.\35\
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    \33\ See NYSE Arca Response I, supra note 5.
    \34\ See NYSE Arca Response I, supra note 5.
    \35\ See NYSE Arca Response I, supra note 5. See also NYSE Arca 
Response II, supra note 5.
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    With respect to its proposed fees, the Exchange noted, further, 
that it had invested significantly in its ArcaBook products, including 
making technological enhancements that allowed the Exchange to expand 
capacity and improve processing efficiency as message traffic 
increased, thereby reducing the latency associated with the 
distribution of ArcaBook data.\36\ The Exchange stated that ``[i]n 
determining to invest the resources necessary to enhance ArcaBook 
technology, the Exchange contemplated that it would seek to charge for 
the receipt and use of ArcaBook data.'' \37\ The Exchange also 
emphasized the quality of its market data relative to other comparable 
products, asserting, for example, that ``NYSE Arca is at the inside 
price virtually as often as Nasdaq, yet the proposed fee for ArcaBook 
is merely one-fifth of the TotalView fee.'' \38\
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    \36\ See NYSE Arca Response II, supra note 5.
    \37\ See NYSE Arca Response II, supra note 5.
    \38\ See NYSE Arca Response II, supra note 5.
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    The Exchange stated that it proposes to use the CTA and CQ Plan 
contracts to govern the distribution of NYSE Arca Data and that it was 
not amending the terms of these existing contracts or imposing 
restrictions on the use or display of its data beyond those that are 
currently set forth in the contracts.\39\ Further, the Exchange 
specifically noted that these contracts do not prohibit a broker-dealer 
from making its own data available outside of the CTA and CQ Plans. 
Finally, the Exchange argued that by using this current structure, it 
believes that the administrative burdens on firms and vendors should be 
low.\40\
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    \39\ See NYSE Arca Response I, supra note 5.
    \40\ See NYSE Arca Response I, supra note 5.
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    The Exchange also argued that it believes that the proposal would 
foster competition because the proposed fees (i) will apply equally to 
all subscribers; (ii) will allow the Exchange to further diversify its 
revenue stream to compete with its rivals; and (iii) may provide a 
competitive advantage to those markets that elect not to charge 
fees.\41\
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    \41\ See NYSE Arca Response I, supra note 5.
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V. Discussion

    After careful review, the Commission finds that the proposal is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange 
and, in particular, with the requirements of Section 6(b)(4) of the 
Act,\42\ 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, and with Section 6(b)(5) of the Act,\43\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest.\44\
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    \42\ 15 U.S.C. 78f(b)(4).
    \43\ 15 U.S.C. 78f(b)(5).
    \44\ In approving the proposed rule change, the Commission 
considered the proposal's impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
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    As described more fully above, the proposal establishes fees for 
NYSE Arca Data, including a $750 per month access fee and device fees 
of $30 per month for professional subscribers and $10 per month for 
non-professional subscribers.\45\ The Commission finds that these fees 
are consistent with Section 6(b)(4) of the Act because they are 
reasonable when compared to the fees charged by other markets for 
similar products. In this regard, the Commission notes that the NYSE 
has established an access fee of $5,000 per month for the receipt of 
its OpenBook data feed, with a $60 per month

[[Page 62032]]

terminal fee.\46\ Similarly, Nasdaq charges access fees ranging from 
$1,000 to $5,000 per month for its TotalView product, and $1,000 to 
$5,000 per month for its OpenView product, with a combined monthly 
device fee of $76 for both products for professional subscribers and a 
monthly fee of $14 for non-professional subscribers to TotalView.\47\
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    \45\ Professional subscribers would pay a monthly fee of $15 per 
device for the receipt of ArcaBook data relating to CTA Plan and ETF 
Securities, and $15 per device for the receipt of ArcaBook data 
relating to Nasdaq UTP Plan Securities. Non-professional subscribers 
would pay a monthly fee of $5 per device for the receipt of ArcaBook 
data relating to CTA Plan and ETF Securities, and $5 per device for 
the receipt of ArcaBook data relating to Nasdaq UTP Plan Securities.
    \46\ See Securities Exchange Act Release No. 53585 (March 31, 
2006), 71 FR 17934 (April 7, 2006) (order approving File Nos. SR-
NYSE-2004-43 and SR-NYSE-2005-32).
    \47\ According to the Exchange, Nasdaq does not offer a 
nonprofessional subscriber rate for OpenView.
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    In the proposal, the Exchange analyzes its proposed fees in 
comparison with the fees that other U.S. markets, and the CTA and 
Nasdaq UTP Plans, charge for comparable products.\48\ As described more 
fully above,\49\ the Exchange also asserts that it devoted resources to 
enhancing ArcaBook's technology and that it considered the quantity and 
quality of ArcaBook data relative to comparable market data products in 
setting fees for NYSE Arca Data.\50\ Accordingly, the Commission 
disagrees with commenters' assertion \51\ that the Exchange has failed 
to justify its proposed fees.
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    \48\ The Exchange provides an additional discussion of its 
proposed fees in NYSE Arca Responses I and II, supra note 5.
    \49\ See notes 30--32, supra, and accompanying text.
    \50\ See NYSE Arca Response II, supra note 5. In this regard, 
the Exchange states that ``[f]or ArcaBook, the Exchange examined the 
quantity and quality of the market data relative to other similar 
products and determined to comparatively under-price the product so 
as to minimize the impact on market data budgets as ArcaBook 
transitions to a fee-liable product.'' See NYSE Arca Response II, 
supra note 5.
    \51\ See SIA Letters I and II and Netcoalition Letter, supra 
note 4.
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    As discussed more fully above, one commenter also asserts that the 
imposition of fees for NYSE Arca Data, which previously was distributed 
without charge, would diminish market transparency and impede 
competition,\52\ and make NYSE Arca Data prohibitively expensive for 
most retail investors, thereby creating a ``two-tier market for 
transparency'' that is ``contrary to the fairness goals of the Order 
Protection Rule.'' \53\ Another commenter believes that investors 
should be able to view market data free of charge.\54\
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    \52\ See SIA Letter I, supra note 4.
    \53\ See SIA Letters I and II, supra note 4.
    \54\ See Spencer Letter, supra note 4.
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    As the Commission stated in adopting Regulation NMS, Exchange Act 
Rule 601 \55\ rescinded the prohibition on SROs and their members 
disseminating their trade reports independently, with or without 
fees.\56\ The Commission noted, further, that Exchange Act Rule 603(a) 
\57\ establishes uniform standards for the distribution of quotations 
and trades that creates an equivalent regulatory regime for all types 
of markets.\58\ In this regard, Exchange Act Rule 603(a)(1) requires 
that any market information distributed by an exclusive processor, or 
by a broker or dealer that is the exclusive source of information, be 
made available to securities information processors on terms that are 
fair and reasonable.\59\ Exchange Act Rule 603(a)(2) requires any SRO, 
broker, or dealer that distributes market information to do so on terms 
that are not unreasonably discriminatory. As the Commission stated:
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    \55\ 17 CFR 242.601.
    \56\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005) (``Regulation NMS Adopting 
Release''), at Section V.B.3.a.
    \57\ 17 CFR 242.603(a).
    \58\ See Regulation NMS Adopting Release, supra note 56, at 
Section V.B.3.a.
    \59\ See Regulation NMS Adopting Release, supra note 56, at 
Section V.B.3.a.

    These requirements prohibit, for example, a market from making 
its `core data' (i.e., data that it is required to provide to a 
Network processor) available to vendors on a more timely basis than 
it makes available the core data to a Network processor.\60\
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    \60\  See Regulation NMS Adopting Release, supra note 56, at 
Section V.B.3.a.

    The Commission believes that the commenter's assertion that the 
proposal is inconsistent with the fairness goals of the Order 
Protection Rule fails to recognize that Exchange Act Rules 601 and 603 
permit, and establish general conditions for, the distribution of 
quotation and transaction information by SROs and other entities. 
Accordingly, the Commission believes that the proposal, which 
establishes fees and terms for the distribution of the Exchange's limit 
order data, involve activities permitted under Exchange Act Rule 603, 
subject to the requirements of Exchange Act Rule 603(a).
    The Commission does not believe that the imposition of fees for 
NYSE Arca Data will diminish market transparency or impede competition. 
In this regard, the Commission notes that NYSE Arca Data will continue 
to be available, and that, like the Exchange, other SROs, as well as 
brokers and dealers, will be free to distribute their market 
information. In addition, the Exchange believes that the fees for NYSE 
Arca Data could help it to compete more effectively with other 
markets.\61\ The Exchange also notes that its fees will apply equally 
to all professional and non-professional subscribers, and that its fee 
structure will not advantage any one subscriber relative to 
another.\62\ Accordingly, the Commission does not believe that the 
proposal will impede competition.
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    \61\ See NYSE Arca Response I, supra note 5.
    \62\ See NYSE Arca Response I, supra note 5.
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    One commenter also raises concerns regarding the contract terms 
that will govern the distribution of NYSE Arca Data. In particular, the 
commenter asserts that the Exchange has not filed its vendor 
distribution agreement with the Commission for public notice and 
comment and Commission approval, or with the CTA.\63\
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    \63\ See SIA Letters I and II, supra note 4. In this regard, the 
commenter states that, procedurally, the Exchange ``is amending and 
adding to the CTA vendor agreement without first submitting its 
contractual changes through the CTA's processes, which are subject 
to industry input through the new Advisory Committee mandated by 
Regulation NMS.'' See SIA Letter I, supra note 4.
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    The Commission disagrees with this assertion, and notes that the 
Exchange stated in its proposal that it planned to use the vendor and 
subscriber agreements used by CTA and CQ Plan Participants (the ``CTA/
CQ Vendor and Subscriber Agreements'') to govern the distribution of 
NYSE Arca Data. According to the Exchange, the CTA/CQ Vendor and 
Subscriber Agreements ``are drafted as generic one-size-fits all 
agreements and explicitly apply to the receipt and use of certain 
market data that individual exchanges make available in the same way 
that they apply to data made available under the CTA and CQ Plans,'' 
and the contracts need not be amended to cause them to govern the 
receipt and use of the Exchange's data.\64\ The Exchange maintains that 
because ``the terms and conditions of the CTA/CQ contracts do not 
change in any way with the addition of the Exchange's market data * * * 
there are no changes for the industry or Commission to review.'' \65\
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    \64\ See NYSE Arca Response I, supra note 5.
    \65\ See NYSE Arca Response I, supra note 5.
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    The Commission believes that the Exchange may use the CTA/CQ Vendor 
and Subscriber Agreements to govern the distribution of NYSE Arca 
Data.\66\

[[Page 62033]]

The Commission notes that the NYSE used the CTA Vendor Agreement to 
govern the distribution of its OpenBook and Liquidity Quote market data 
products.\67\ In addition, according to NYSE Arca, the CTA/CQ Vendor 
and Subscriber Agreements ``have been in effect for many years and 
enjoy widespread use and acceptance.'' \68\ The Exchange represents 
that, following consultations with vendors and end-users, and in 
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response to client demand, the Exchange:

chose to fold itself into an existing contract and administration 
system rather than to burden clients with another set of market data 
agreements and another market data reporting system, both of which 
would require clients to commit additional legal and technical 
resources to support the Exchange's data products.\69\

    \66\ The Commission is not approving the CTA/CQ Vendor and 
Subscriber Agreements, which the CTA and CQ Plan Participants filed 
with the Commission as amendments to the CTA and CQ Plans that were 
effective on filing with the Commission pursuant to Exchange Act 
Rule 11Aa3-2(c)(3)(iii) (redesignated as Rule 608(b)(3)(iii) of 
Regulation NMS). See, e.g., Securities Exchange Act Release No. 
28407 (September 6, 1990), 55 FR 37276 (September 10, 1990) (File 
No. 4-2811) (notice of filing and immediate effectiveness of 
amendments to the Consolidated Tape Association Plan and the 
Consolidated Quotation Plan). Exchange Act Rule 11Aa3-2(c)(3)(iii) 
(redesignated as Rule 608(b)(3)(iii) of Regulation NMS) allows a 
proposed amendment to a national market system plan to be put into 
effect upon filing with the Commission if the plan sponsors 
designate the proposed amendment as involving solely technical or 
ministerial matters.
    \67\ See Securities Exchange Act Release Nos. 53585 (March 31, 
2006), 71 FR 17934 (April 7, 2006) (order approving File Nos. SR-
NYSE-2004-43 and NYSE-2005-32) (relating to OpenBook); and 51438 
(March 28, 2005), 70 FR 17137 (April 4, 2005) (order approving File 
No. SR-NYSE-2004-32) (relating to Liquidity Quote). For both the 
OpenBook and Liquidity Quote products, the NYSE attached to the CTA 
Vendor Agreement an Exhibit C containing additional terms governing 
the distribution of those products, which the Commission 
specifically approved. NYSE Arca is not including additional 
contract terms in its proposal.
    \68\ See NYSE Arca Response I, supra note 5.
    \69\ See NYSE Arca Response I, supra note 5.

In addition, the Commission notes that the Exchange has represented 
that it is not imposing restrictions on the use or display of its data 
beyond those set forth in the existing CTA/CQ Vendor and Subscriber 
Agreements.\70\ Because the Exchange has not proposed changes to the 
CTA/CQ Vendor and Subscriber Agreements, the Commission disagrees with 
one commenter's assertion that the Exchange is ``amending and adding to 
the CTA vendor agreement.'' \71\
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    \70\ See NYSE Arca Response I, supra note 5.
    \71\ See SIA Letter I, supra note 4.
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    This commenter also believes that the Exchange has not recognized 
the rights of a broker or dealer, established in Regulation NMS, to 
distribute its order information, subject to the condition that it does 
so on terms that are fair and reasonable and not unreasonably 
discriminatory.\72\ In response, the Exchange states that the CTA/CQ 
Vendor and Subscriber Agreements do not prohibit a broker-dealer member 
of a Plan Participant from making available to the public information 
relating to the orders and transaction reports that it provides to Plan 
Participants.\73\ Accordingly, the Commission believes that the 
Exchange has acknowledged the rights of a broker or dealer to 
distribute its market information, subject to the requirements of 
Exchange Act Rule 603(a).
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    \72\ See SIA Letters I and II, supra note 4.
    \73\ See NYSE Arca Response I, supra note 5.
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    One commenter also asserts that the Exchange has failed to consider 
the administrative burdens that the proposal would impose, including 
the need for broker-dealers to develop system controls to track 
ArcaBook access and usage.\74\ In response, the Exchange represents 
that it has communicated with its customers to ensure system readiness 
and is using a long-standing and broadly-used administrative system to 
minimize the amount of development effort required to meet the 
administrative requirements associated with the proposal.\75\ 
Accordingly, the Commission believes that the Exchange has considered 
the administrative requirements associated with the proposal.
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    \74\ See SIA Letter I, supra note 4.
    \75\ See NYSE Arca Response I, supra note 5.
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\76\ that the proposal (SR-NYSEArca-2006-21), is approved.
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    \76\ 15 U.S.C. 78s(b)(2).
    \77\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\77\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6-17539 Filed 10-19-06; 8:45 am]

BILLING CODE 8011-01-P
