[Federal Register Volume 87, Number 158 (Wednesday, August 17, 2022)]
[Notices]
[Pages 50677-50680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17670]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95481; File No. SR-NYSEARCA-2022-49]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change to the NYSE Arca 
Equities Proprietary Market Data Fees To Adopt an Enterprise Fee for 
Broker-Dealer Subscribers of NYSE ArcaBook

August 11, 2022.
    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 August 1, 2022, NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III 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 changes to the NYSE Arca Equities Proprietary 
Market Data Fees (``Fee Schedule'') to adopt an Enterprise Fee for 
Broker-Dealer subscribers of NYSE ArcaBook. The proposed rule change is 
available on the Exchange's website at www.nyse.com, 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 changes to the Fee Schedule to adopt an 
Enterprise Fee for Broker-Dealer subscribers of NYSE ArcaBook. The 
Exchange proposes to make the fee change operative on August 1, 2022.
    The Exchange currently offers a Professional User Fee Cap for 
broker-dealers that are subscribers of NYSE ArcaBook at $75,000 per 
month.\4\ To illustrate the application of the Professional User Fee 
Cap, a broker-dealer with 2,500 internal professional users who 
receives NYSE ArcaBook would pay $110,000 per month in professional 
user fees (500 users at $60 per month plus 2,000 users at $40 per 
month).\5\ This broker-dealer's fees, however, are currently capped at 
$75,000 per month.
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    \4\ See Securities Exchange Act Release No. 82100 (November 16, 
2017), 82 FR 55660 (November 22, 2017) (SR-NYSEARCA-2017-130) 
(Notice of Filing and Immediate Effectiveness of Proposed Rule 
Changes to the NYSE Arca Equities Proprietary Market Data Fees). The 
Professional User Fee Cap applies to internal users of a broker-
dealer subscriber.
    \5\ The Professional User Fees for broker-dealer subscribers of 
NYSE ArcaBook is $60 per month for 1-500 users and $40 per month for 
501 or more users. See Fee Schedule, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf.
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    The Exchange also currently offers a Non-Professional User Fee Cap 
for broker-dealers that are subscribers of NYSE ArcaBook at $40,000 per 
month.\6\ To illustrate the application of the Non-Professional User 
Fee Cap, a broker-dealer with 10,000 non-professional users who 
receives NYSE ArcaBook would pay $45,000 per month in non-professional 
user fees (1,500 users at $10 per month plus 1,500 users at $6 per 
month plus 7,000 users at $3 per month).\7\ This broker-dealer's fees, 
however, are also currently capped at $40,000 per month.
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    \6\ See Securities Exchange Act Release No. 72560 (July 8, 
2014), 79 FR 40801 (July 14, 2014) (SR-NYSEARCA-2014-72) (Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Amending 
the Fees for NYSE ArcaBook).
    \7\ The Non-Professional User Fees for broker-dealer subscribers 
of NYSE ArcaBook is $10 per month for 1-1,500 users, $6 per month 
for 1,501-3,000 users and $3 per month for 3,001 or more users. See 
Fee Schedule, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf.
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    Subscribers whose fees are capped are required to count and report 
to the Exchange the total number of professional users and non-
professional users that are permissioned to receive the data feed.

[[Page 50678]]

    As part of the Exchange's efforts to ease administrative burdens on 
its customers and expand enterprise coverage to external professional 
users to whom customers may redistribute NYSE ArcaBook data, the 
Exchange proposes to adopt an Enterprise Fee for broker-dealers that 
are subscribers of NYSE ArcaBook of $115,000 per month. The proposed 
fee is the sum of the Professional User Fee Cap of $75,000 per month 
and the Non-Professional User Fee Cap of $40,000 per month. To 
illustrate the application of the proposed Enterprise Fee, a broker-
dealer with 2,500 internal professional users and 10,000 non-
professional users, would currently be capped at $115,000 per month 
($75,000 per month under the Professional User Fee Cap plus $40,000 per 
month under the Non-Professional User Fee Cap).
Applicability of Proposed Rule Change
    The purpose of the proposal is to offer customers an additional 
subscription method without imposing any new or higher fees, and to 
lower the administrative burden on broker-dealer subscribers by not 
requiring the broker-dealer to count and report to the Exchange the 
number of professional users and non-professional users separately and 
expand enterprise coverage to external professional users to which a 
broker-dealer subscriber redistributes NYSE ArcaBook data feed under 
the broker-dealer's subscription. The Exchange believes eliminating the 
distinction between professional users and non-professional users in a 
brokerage relationship will lessen current distinctions among broker-
dealers. As proposed, all broker-dealers that choose to utilize the 
enterprise license will be treated the same in that each broker-dealer 
that chooses an enterprise license would pay the same amount of the fee 
without having to count and report the number of professional users and 
non-professional users separately. With the proposed fee change, the 
broker-dealer in the above example could choose an enterprise license 
and would continue to pay the same amount as it does today and would be 
able to provide NYSE ArcaBook to internal and external professional and 
non-professional users at no additional cost. The proposed change will 
not increase any fee or charge to current subscribers.
    As noted above, no current subscriber will be subject to higher 
fees by the proposed fee change. To the extent a current subscriber 
pays the capped fees of $75,000 per month for professional users and 
$40,000 per month for non-professional users, the subscriber can simply 
choose to amend its subscription to an enterprise license and continue 
to pay $115,000 per month, the same amount the subscriber pays 
currently, with the added benefit of not counting the number of 
professional users and non-professional users.
    The proposed Enterprise Fee for NYSE ArcaBook will result in a fee 
reduction for broker-dealer subscribers with sufficiently large numbers 
of professional and non-professional users, as described in the example 
above. Broker-dealers that purchase NYSE ArcaBook typically have 
thousands of users. If a broker-dealer subscriber has a smaller number 
of professional and/or non-professional users of NYSE ArcaBook, then it 
may continue to use the per user fee structure and the fees it pays 
will not change. By providing an enterprise license for broker-dealers 
with a large number of professional and non-professional users, the 
Exchange believes that more broker-dealers may choose to offer NYSE 
ArcaBook, thereby expanding the distribution of this market data for 
the benefit of investors. The Exchange also believes that offering an 
enterprise license expands the range of options for offering NYSE 
ArcaBook and would allow broker-dealers greater choice in selecting the 
most appropriate level of data and fees for the professional and non-
professional users they are servicing. The Exchange also notes that the 
concept of adopting an enterprise license fee is not novel.\8\ In 
addition, the Exchange currently has an enterprise license applicable 
to subscribers to NYSE Arca BBO and NYSE Arca Trades market data 
feeds.\9\
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    \8\ See e.g., Section 123(c) Enterprise License Fees for Nasdaq 
Depth-of-Book Data at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/Nasdaq%20Equity%207.
    \9\ See NYSE Arca Equities Proprietary Market Data Fees at 
https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\10\ in general, and 
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4), (5).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations (``SROs'') and broker-dealers increased authority and 
flexibility to offer new and unique market data to the public. The 
Commission has repeatedly expressed its preference for competition over 
regulatory intervention in determining prices, products, and services 
in the securities markets. Specifically, in Regulation NMS, the 
Commission highlighted the importance of market forces in determining 
prices and SRO revenues, and also recognized that current regulation of 
the market system ``has been remarkably successful in promoting market 
competition in its broader forms that are most important to investors 
and listed companies.'' \12\
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    \12\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule).
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    With respect to market data, the decision of the United States 
Court of Appeals for the District of Columbia Circuit in NetCoalition 
v. SEC upheld the Commission's reliance on the existence of competitive 
market mechanisms to evaluate the reasonableness and fairness of fees 
for proprietary market data:

    In fact, the legislative history indicates that the Congress 
intended that the market system ``evolve through the interplay of 
competitive forces as unnecessary regulatory restrictions are 
removed'' and that the SEC wield its regulatory power ``in those 
situations where competition may not be sufficient,'' such as in the 
creation of a ``consolidated transactional reporting system.'' \13\
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    \13\ NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) 
(quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975 
U.S.C.C.A.N. 323).

    The court agreed with the Commission's conclusion that ``Congress 
intended that `competitive forces should dictate the services and 
practices that constitute the U.S. national market system for trading 
equity securities.' '' \14\
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    \14\ Id. at 535.
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    More recently, the Commission confirmed that it applies a ``market-
based'' test in its assessment of market data fees, and that under that 
test:

the Commission considers whether the exchange was subject to 
significant competitive forces in setting the terms of its proposal 
for [market data], including the level of any fees. If an exchange 
meets this burden, the Commission will find that its fee rule is 
consistent with the Act unless there is a substantial countervailing 
basis to find that the terms of the rule violate the Act or the 
rules thereunder.\15\
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    \15\ See Securities Exchange Act Release No. 34-90217 (October 
16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) 
(Order Approving a Proposed Rule Change to Establish Fees for the 
NYSE National Integrated Feed) (internal quotation marks omitted), 
quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74781 (December 9, 2008) (NYSE ArcaBook Approval 
Order).


[[Page 50679]]


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    More specifically, the proposed rule change will expand competition 
by providing customers an additional subscription method (without 
imposing any new or higher fees) that would reduce the administrative 
burden of counting and reporting to the Exchange the number of 
professional and non-professional users. With this proposed rule 
change, customers will have the ability to choose which subscription 
options suits its needs best. For the broker-dealers who have a large 
user base of professional and non-Professional users, the ability to 
subscribe to an enterprise license would eliminate their administrative 
burden of counting and reporting users, as well as eliminate the burden 
to validate the non-professional user status to ensure accurate non-
professional user count, and would cap their Arcabook device fees at 
the enterprise rate. If a current broker-dealer subscriber has a 
smaller number of professional and/or non-professional users of NYSE 
ArcaBook, then it may continue to use the per user fee structure and 
the fees it pays will not change or increase. As proposed, all broker-
dealers that choose to utilize the proposed enterprise license would 
pay the same amount of the fee without having to count and report to 
the number of professional users and non-professional users separately 
and will not need to validate non-professional user status.
    The Exchange notes that NYSE ArcaBook is entirely optional. The 
Exchange is not required to make NYSE ArcaBook available or to offer 
any specific pricing alternatives to any customers, nor is any firm 
required to purchase NYSE ArcaBook. Unlike some other data products 
(e.g., the consolidated quotation and last-sale information feeds) that 
firms are required to purchase in order to fulfil regulatory 
obligations,\16\ a customer's decision whether to purchase any of the 
Exchange's proprietary market data feeds is entirely discretionary. 
Most firms that choose to subscribe to proprietary market data products 
from the Exchange and its affiliates do so for the primary goals of 
using them to increase their revenues, reduce their expenses, and in 
some instances compete directly with the Exchange (including for order 
flow); those firms are able to determine for themselves whether NYSE 
ArcaBook or any other similar products are attractively priced or not.
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    \16\ The Exchange notes that broker-dealers are not required to 
purchase proprietary market data to comply with their best execution 
obligations. See In the Matter of the Application of Securities 
Industry and Financial Markets Association for Review of Actions 
Taken by Self-Regulatory Organizations, Release Nos. 34- 72182; AP-
3-15350; AP-3-15351 (May 16, 2014). Similarly, there is no 
requirement in Regulation NMS or any other rule that proprietary 
data be utilized for order routing decisions, and some broker-
dealers and ATSs have chosen not to do so.
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    Firms that do not wish to purchase NYSE ArcaBook have a variety of 
alternative market data products from which to choose. For example, the 
Nasdaq Stock Market (``Nasdaq'') provides an enterprise license for the 
dissemination of Nasdaq TotalView, which competes with NYSE ArcaBook. 
More specifically, Nasdaq provides broker-dealer subscribers an 
enterprise license that permits internal and external distribution to 
both professional and non-professional users for a monthly fee of 
$500,000.\17\ Alternatively, if NYSE ArcaBook does not provide 
sufficient value to firms as offered based on the uses those firms have 
or planned to make of it, such firms may simply choose to conduct their 
business operations in ways that do not use NYSE ArcaBook or use them 
at different levels or in different configurations.
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    \17\ See Nasdaq TotalView, Enterprise License Option, available 
at http://www.nasdaqtrader.com/Trader.aspx?id=DPUSData.
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    In setting the proposed fees, the Exchange considered the 
competitiveness of the market for proprietary data and all of the 
implications of that competition. The Exchange believes that it has 
considered all relevant factors and has not considered irrelevant 
factors in order to establish reasonable fees. The existence of 
numerous alternatives to the Exchange's offering, including proprietary 
data from other sources, ensures that the Exchange cannot set 
unreasonable fees when subscribers can elect these alternatives or 
choose not to purchase a specific proprietary data product if the 
attendant fees are not justified by the returns that any particular 
data recipient would achieve through the purchase.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. As noted above, the proposed 
rule change will expand competition by providing customers with an 
additional subscription method that would reduce the administrative 
burden and cap the fees. Customers that choose to purchase the proposed 
enterprise license will benefit from the ability to grow their use base 
without paying additional incremental fees, reduced administrative 
burden by eliminating the need to validate non-professional user 
status, and eliminating the need to count and report the number of 
professional and/or non-professional users. Customers that choose not 
to purchase the proposed enterprise license can continue to use the 
current fee structure and the fees it pays will not change.
    Intramarket Competition. The Exchange believes that the proposed 
rule change does not put any market participant at a relative 
disadvantage compared to other market participants. As noted above, the 
proposed fee schedule would apply to all subscribers of NYSE ArcaBook, 
and customers may not only choose whether to subscribe to the feed at 
all but may tailor their subscription to include only the products and 
uses that they deem suitable for their business needs. The Exchange 
also believes that the proposed rule change neither favors nor 
penalizes one or more categories of market participants in a manner 
that would impose an undue market on competition.
    Intermarket Competition. The Exchange believes that the proposed 
rule change does not impose a burden on competition on other exchanges 
that is not necessary or appropriate; indeed, the Exchange believes the 
proposed rule change would have the effect of increasing competition. 
In setting fees at issue here, the Exchange is constrained by the fact 
that, if its pricing is unattractive to customers, customers will have 
its pick of an increasing number of alternative venues to use instead 
of the Exchange. Given this competition, no one exchange's market data 
fees can impose an unnecessary burden on competition, and the 
Exchange's proposed fees do not do so here.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \18\ of the Act and

[[Page 50680]]

subparagraph (f)(2) of Rule 19b-4 \19\ thereunder, because it 
establishes a due, fee, or other charge imposed by the Exchange.
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    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 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) \20\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \20\ 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

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEARCA-2022-49 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 Number SR-NYSEARCA-2022-49. 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 (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 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 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSEARCA-2022-49 and should be submitted 
on or before September 7, 2022.
    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17670 Filed 8-16-22; 8:45 am]
BILLING CODE 8011-01-P


