
[Federal Register Volume 80, Number 184 (Wednesday, September 23, 2015)]
[Notices]
[Pages 57408-57410]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24061]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75937; File Nos. SR-NYSE-2015-31; SR-NYSEMKT-2015-56]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
MKT LLC; Order Instituting Proceedings To Determine Whether To 
Disapprove the Proposed Rule Changes Amending the NYSE Trades Market 
Data and NYSE MKT Trades Market Data Product Offerings

September 17, 2015.

I. Introduction

    On July 16, 2015, New York Stock Exchange LLC (``NYSE'') and NYSE 
MKT LLC (``NYSE MKT'') (collectively, the ``Exchanges'') separately 
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\ proposed rule changes to 
amend, respectively, the NYSE Trades market data product offering and 
the NYSE MKT Trades market data product offering. The proposed rule 
changes were published for comment in the Federal Register on August 5, 
2015.\3\ The Commission has received two comments on the proposals.\4\ 
This order institutes proceedings under Section 19(b)(2)(B) of the Act 
\5\ to determine whether to disapprove the proposed rule changes.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release Nos. 75556 (July 30, 
2015), 80 FR 46628 (SR-NYSE-2015-31) and 75559 (July 30, 2015), 80 
FR 46642 (SR-NYSEMKT-2015-56) (``Notices'').
    \4\ See Letter from Eric S. Hunsader, Nanex, LLC, dated August 
14, 2015 (``Nanex Letter''); Letter from John Ramsay, Chief Market 
Policy Officer, IEX Group, Inc., to Brent J. Fields, Secretary, 
Commission, dated August 20, 2015 (``IEX Letter'').
    \5\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposals

    NYSE and NYSE MKT propose to modify the data content of their 
respective proprietary market data feeds: NYSE Trades and NYSE MKT 
Trades (collectively, the ``Trades Feeds'').\6\
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    \6\ NYSE Trades is an NYSE-only last-sale market data feed and 
NYSE MKT Trades is a NYSE MKT-only last-sale market data feed.
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    The Trades Feeds currently provides subscribers and users on a 
real-time basis with the same last-sale information that each Exchange 
reports to the Consolidated Tape Association (``CTA'') for inclusion in 
the CTA Plan's consolidated data streams. Specifically, each Exchange's 
Trades Feeds includes, for each security traded on that Exchange, the 
real-time last-sale price, time and size information, bid/ask 
quotations, and a stock summary message. The stock summary message 
updates every minute and includes the offering Exchange's opening 
price, high price, low price, closing price, and cumulative volume for 
the security.\7\
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    \7\ See Securities Exchange Act Release Nos. 62187 (May 27, 
2010), 75 FR 31500 (June 3, 2010) (SR-NYSEAmex-2010-35), 70065 (July 
30, 2013), 78 FR 47450 (Aug. 5, 2013) (SR-NYSEMKT-2013-64) and 69273 
(April 2, 2013), 78 FR 20969 (April 8, 2013) (SR-NYSEMKT-2013-30).
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    Each Exchange currently reports to the CTA and distributes on a 
real-time basis via the Trades Feeds its market's last-sale information 
based on the completed execution of an arriving order. For example, 
currently, if an arriving order of 1,000 shares trades with five 
resting orders of 200 shares on NYSE, NYSE would bundle the executions 
and report a single completed trade of 1,000 shares both to the CTA and 
through NYSE Trades. NYSE MKT Trades operates in the same way.
    Each Exchange now proposes to distribute its last-sale information 
on its respective Trades Feed in a different manner than it distributes 
last-sale information to the CTA. Each Exchange would continue to 
distribute last-sale information to the CTA as described above, but 
last-sale information distributed via the Exchange's Trades Feed would 
be based on the individual resting orders that are executed in the 
total completed trade and would not be bundled for reporting purposes. 
In the example above, NYSE would distribute via NYSE Trades the real-
time NYSE last-sale information of five executions of 200 shares 
each,\8\ but would report to CTA a single completed trade of 1,000 
shares.
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    \8\ Each Exchange has proposed that the five transactions in 
such an example would have the same time stamp.
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    The Exchanges have represented that they would continue to make 
their last-sale information available through their Trades Feeds 
immediately after providing the last-sale information to the processor 
under the CTA Plan. The Exchanges have argued that reporting last-sale 
information in an unbundled format, based on execution of the 
individual resting orders, rather than in an bundled format based on 
the completed execution of an incoming order would remove impediments 
to and perfect the mechanism of a free and open market by providing 
more granular trade information to vendors and subscribers who desire 
it, thus promoting competition and innovation.
    Each Exchanges has also proposed to remove the bid/ask data from 
its Trades Feed. Each Exchange currently has a data feed--the NYSE BBO 
data feed and the NYSE MKT BBO data feed--that includes the same bid/
ask data currently included in the Exchange's Trades Feed, and each 
Exchange has represented that its respective BBO feed would continue to 
include the best bids and offers for all securities that are traded on 
its facilities and for which it reports quotes to the Consolidated 
Quotation Association (``CQA'') under the Consolidated Quotation 
(``CQ'') Plan for inclusion in the CQ Plan's consolidated quotation 
information data stream.\9\ Each Exchange has stated that removing the 
bid/ask data from its Trades Feeds would streamline its products and 
would align them with last-sale data feeds offered by other exchanges 
that offer last-sale data products, which do not include bid and offer 
information.\10\
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    \9\ See, e.g., Securities Exchange Act Release No. 72326 (June 
5, 2014), 79 FR 33605 (June 11, 2014) (SR-NYSEMKT-2014-49).
    \10\ As examples, the Exchanges cited to the last-sale data 
products offered by The Nasdaq Stock Market, LLC and BATS, Inc. See 
NASDAQ Rule 7039 (Nasdaq Last Sale) and BATS Rule 11.22(g) (BATS 
Last Sale).
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    Each Exchange has stated that it expects to offer both the current 
Trades Feed and the proposed Trades Feed for a limited transition 
period, after which it would stop offering the current Trades Feed and 
offer only the Trades Feed proposed in its filing. Each Exchange has 
stated that it would announce the transition dates in advance. Each 
Exchange has also stated that there would be no change to the fees for 
the Trades Feed in connection with the proposed changes.

III. Comment Letters

    The Commission has received two comment letters on the 
proposals.\11\ Both commenters are opposed to the proposals. The 
commenters note that the NYSE and its affiliated exchanges are the only 
national securities exchanges that report their last-sale information 
to the securities information processor (``SIP'') in a

[[Page 57409]]

bundled format and that all the other national securities exchanges 
report the last-sale information for each individual trade to the SIP.
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    \11\ See supra note 4.
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    Both commenters argue that the proposals would be contrary to 
Regulation NMS. One commenter states that the proposals go against a 
core principle of Regulation NMS, namely, the prohibition of providing 
core data in a private feed before it sends it to the SIP. The 
commenter states that, in this case, the delay is not a few 
microseconds, but rather forever.\12\ The commenter also notes that the 
proposals put investors in the position of having to subscribe to the 
Exchanges' feeds to get the very same data that every other non-NYSE- 
affiliated exchange already sends to the SIP, which the commenter 
contends is a ``preposterous proposition.'' \13\
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    \12\ See Nanex Letter.
    \13\ Id.
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    The other commenter believes that the proposals would be 
unreasonably discriminatory in the dissemination of market data in 
violation of Rule 603(a)(2).\14\ This commenter states that exchanges 
should not be allowed to provide an inferior view of core market data 
to the general public, compared to an enhanced view offered to 
subscribers who are willing to pay a premium for it, where the enhanced 
view could be provided through CTA or another SIP. The commenter notes 
that the Exchanges are the exclusive source of the individual trade 
data and that no one else can compete in the delivery of that specific 
information. The commenter states that preventing investors and market 
participants from receiving consolidated trade data that accurately 
reflects the sequence and size of individual transactions unless they 
pay a premium necessarily discriminates in the dissemination of data 
that the Commission has found to be a keystone element of the national 
market system. The commenter argues that, in terms of advancing 
national market system goals, the result of the proposals would be no 
more ``fair and reasonable,'' and no less ``unreasonably 
discriminatory,'' than the practices providing timeliness advantages to 
proprietary data over consolidated data that the Commission has found 
to violate regulatory standards.\15\ The commenter also contends that, 
while the Exchanges have stated that the proposals are a means to 
disseminate the same trade information but with more granularity with 
regards to the individual trades, such granularity is only of 
additional value because of the Exchanges' peculiar practice of 
aggregating the trade information for the CTA.
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    \14\ See IEX Letter at 5.
    \15\ See IEX Letter at 6.
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    Both commenters also argue that the Exchanges' current practice of 
sending bundled transaction information to the SIP has presented some 
problems and that the Exchanges should report each individual trade to 
the SIP. One commenter states the bundled transaction information has 
presented problems in the course of investigating questionable 
trades.\16\ The other commenter states reporting the individual trade 
information to the SIP would provide market participants the 
transparency they need to easily identify, based on price, size, and 
time stamp data, and circumstances where a large incoming order is able 
to match with multiple resting orders.\17\
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    \16\ See Nanex Letter.
    \17\ See IEX Letter at 4.
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IV. Proceedings To Determine Whether To Disapprove SR-NYSE-2015-31 and 
NYSEMKT-2015-56 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \18\ to determine whether the proposals should 
be disapproved. Institution of such proceedings is appropriate at this 
time in view of the legal and policy issues raised by the proposals. 
Institution of disapproval proceedings does not indicate that the 
Commission has reached any conclusions with respect to any of the 
issues involved. Rather, as described in greater detail below, the 
Commission seeks and encourages interested persons to provide 
additional comment on the proposals.
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    \18\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B),\19\ the Commission is providing 
notice of the grounds for disapproval under consideration. The 
Exchanges' proposals, if approved, would allow a national securities 
exchange to offer different last-sale information through its 
proprietary market data products than it reports to the CTA.\20\ Under 
Regulation NMS, last-sale transaction information is considered ``core 
data.'' All broker-dealers are required to purchase core data from the 
SIPs,\21\ and all of the national securities exchanges share in the 
revenues received from the sale of this data. Regulation NMS permits 
the national securities exchanges to provide the same core data that is 
reported to the SIP on their own data feeds, subject to the condition 
that such data be provided on terms that are fair and reasonable and 
not unreasonably discriminatory. The Commission believes that 
permitting exchanges to provide different information about trade 
executions through their own proprietary feeds than they report to the 
SIP presents a novel issue that implicates the Regulation NMS 
requirements regarding ``core data'' and warrants further 
consideration.
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    \19\ See id.
    \20\ The CTA is the SIP for last-sale transaction information 
for equities trades from all national securities exchanges, and, 
under CTA Plan, collects and distributes this last-sale transaction 
information. The CQA is the SIP for best bid and offer quotation 
information for equities quoted on all national securities 
exchanges, and, under CQ Plan, collects and distributes this last-
sale transaction information.
    \21\ See Exchange Act Rule 603(c)(1).
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    Accordingly, the Commission is instituting proceedings to allow for 
additional analysis of, and input from commenters with respect to, the 
proposed rule change's consistency with Section 6(b)(5) of the Act, 
Section 11A of the Act, and Rule 603(a) of Regulation NMS. Section 
6(b)(5) provides that the rules of an exchange must 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 system, and in general to 
protect investors and the public interest. Section 11A prohibits a 
self-regulatory organization from collecting, processing, distributing, 
publishing, or preparing for distribution any information with respect 
to quotations for or transactions in any security other than an 
exempted security, in contravention of such rules and regulations that 
the Commission shall prescribe furtherance of the purposes of this 
title to, among other things, assure the prompt, accurate, reliable, 
and fair collection, processing, distribution, and publication of 
information with respect to quotations for and transactions in such 
securities and the fairness and usefulness of the form and content of 
such information and assure that all securities information processors 
may, for purposes of distribution and publication, obtain on fair and 
reasonable terms such information with respect to quotations for and 
transactions in such securities as is collected, processed, or prepared 
for distribution or publication by any exclusive processor of such 
information acting in such capacity. Rule 603(a) provides that any 
exclusive processor that distributes information with respect to 
quotations or transactions in an NMS stock to a securities information 
processor do so on terms that are fair

[[Page 57410]]

and reasonable and any national securities exchange that distributes 
such information do so on terms that are not unreasonably 
discriminatory.

V. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
concerns identified above or any others they may have with the proposed 
rule changes. In particular, the Commission invites the written views 
of interested persons concerning whether the proposed rule changes are 
inconsistent with Sections 11A and 6(b)(5) of the Act or any other 
provision of the Act, and Rule 603 thereunder or any other rules and 
regulation thereunder. Although there do not appear to be any issues 
relevant to approval or disapproval which would be facilitated by an 
oral presentation of views, data, and arguments, the Commission will 
consider, pursuant to Rule 19b-4, any request for an opportunity to 
make an oral presentation.\22\
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    \22\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposed rule changes should be 
approved or disapproved by October 14, 2015. Any person who wishes to 
file a rebuttal to any other person's submission must file that 
rebuttal by October 28, 2015.
    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 email to rule-comments@sec.gov. Please include 
File Numbers SR-NYSE-2015-31 or NYSEMKT-2015-56 on the subject line.

Paper Comments

     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 Numbers SR-NYSE-2015-31, NYSEMKT-
2015-56, or both. These file numbers 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 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 changes 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 Web site 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 10:00 a.m. and 3:00 p.m. 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 publicly available. All 
submissions should refer to File Numbers SR-NYSE-2015-31, NYSEMKT-2015-
56, or both and should be submitted on or before October 14, 2015. 
Rebuttal comments should be submitted by October 28, 2015.
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    \23\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
Brent J. Fields,
Secretary.
[FR Doc. 2015-24061 Filed 9-22-15; 8:45 am]
 BILLING CODE 8011-01-P


