[Federal Register Volume 64, Number 167 (Monday, August 30, 1999)]
[Notices]
[Pages 47204-47205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22375]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41767; File No. SR-CTA/CQ-99-02]
Consolidated Tape Association; Notice of Filing of Fifth Charges
Amendment to the Second Restatement of the Consolidated Tape
Association Plan and the Fourth Charges Amendment to the Restated
Consolidated Quotation Plan
August 19, 1999.
Pursuant to Rule 11Aa3-2 \1\ of the Securities Exchange Act of 1934
(``Act''),\2\ notice is hereby given that on August 2, 1999, the
Consolidated Tape Association (``CTA'') and the Consolidated Quotation
(``CQ'') Plan Participants (``Participants'') \3\ filed with the
Securities and Exchange Commission (``Commission'' or ``SEC'')
amendments to the Restated CTA Plan and CQ Plan.\4\ The amendments
propose (1) to modify the fees payable by vendors of the Network B
market information in respect of nonprofessional subscriber services,
(2) to introduce pay-for-use rates into the Network B rate schedules
following a pilot test that commenced in February 1997, and (3) to
grant each vendor of a pay-for-use service the ability to limit its
monthly pay-for-use obligation for each of its customers that qualifies
as a nonprofessional subscriber.
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\1\ 17 CFR 240.11Aa3-2.
\2\ 15 U.S.C. 78s(b)(1).
\3\ The amendments were executed by each Participant in each of
the Plans. The Participants include American Stock Exchange LLC,
Boston Stock Exchange, Inc., Chicago Board Options Exchange, Inc.,
Chicago Stock Exchange, Inc., Cincinnati Stock Exchange, Inc.,
National Association of Securities Dealers, Inc. New York Stock
Exchange, Inc., Pacific Exchange, Inc., and Philadelphia Stock
Exchange, Inc.
\4\ The Communications Facilities charge was incorrectly stated
on the Schedule of Fees submitted with the proposal. The charge
remains $250 for each unit as approved on October 14, 1997 in
Securities Exchange Act Rel. No. 39235, 62 FR 54886 (October 22,
1997). Telephone conversation between Kerry G. Baker, Director,
Market Data Services, Nasdaq/AMEX, and Mignon McLemore, Attorney,
Division of Market Regulation, Commission, August 19, 1999.
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Pursuant to Rule 11Aa3-2(c)(1), the CTA and CQ Participants
submitted this notice of proposed amendments to two effective national
market system plans.\5\ The Commission is publishing this notice to
solicit comments from interested persons on the amendments.
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\5\ The CTA and CQ Plans have been designated as effective
transaction reporting plans pursuant to Exchange Act Rule 11Aa3-
1(b).
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I. Description and Purpose of the Amendments
A. Rule 11Aa3-2
1. Nonprofessional Subscriber Service Rates
The Participants under the Plans that make Network B last sale
information and Network B quotation information available (the
``Network B Participants'') impose on vendors a monthly fee of $3.25
for each nonprofessional subscriber to whom the vendor provides a
Network B market data display service. These amendments propose to
reduce that monthly fee from $3.25 to $1.00 for each nonprofessional
subscriber to whom a vendor provides a Network B display service during
the month.
The objective of the proposed plan amendments is to encourage the
proliferation of those services and the widespread dissemination of
Network B market data. The Network B Participants also believe that
reductions in the nonprofessional subscriber rates respond to the
growing number of broker-dealers and vendors that wish to provide on-
line services to their customers, which services may, for example,
enable their customers to price portfolios with real-time information
and to receive ``dynamically updated'' services, such as real-time
ticker displays.
For the nonprofessional subscriber rates (rather than the much
higher professional subscriber rates) to apply to any of its
subscribers, a vendor must make certain that the subscriber qualifies
as a nonprofessional subscriber,\6\ subject to the same criteria that
have applied since 1985, when the Network B Participants first
established a reduced rate for nonprofessional subscribers.
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\6\ A ``nonprofessional subscriber'' shall receive the
information solely for his personal, non-business use. The
subscriber shall not furnish the information to any other person.
See NYSE and ASE Application and Agreement for the Privilege of
Receiving Last Sale Information & Bond Last Sale Information as a
Nonprofessional Subscriber, for the qualifications necessary to be
classified as a nonprofessional subscriber.
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Only those nonprofessional subscribers that actually gain access to
at least one real-time Network B quote or price during the month will
be charged the proposed fees by the Network B Participants.
2. Pay-for-Use Rates
Since February 1997, the Network B Participants have conducted a
pilot program pursuant to which vendors, providing Network B market
data display services to nonprofessional subscribers, have been
afforded the following tiered usage schedule as an alternative to the
flat $3.25 monthly rate the Network B Participants have historically
imposed on nonprofessional subscribers.
1-50 quotes = $0.50 per month, per quote
51-250 quotes = $3.25 per month, per user
251 + quotes = $35.00 per month, per user
Based on its experience with the tiered usage schedule and their
extensive consultation with vendors and member organizations, the
Network B Participants are proposing to alter the tiered usage schedule
and to make the altered fee structure part of the Network B rate
schedule.
Under the altered rates, each vendor would pay:
i. three-quarters of one cent ($0.0075) per quote packet \7\ for
each of the first 20 million quote packets that it distributes during a
month;
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\7\ A quote packet refers to any data element, or all data
elements, relating to a single issue. Last sale price, opening
price, high price, low price, volume, net change, bid, offer, size,
best bid and best offer all exemplify data elements. ``IBM''
exemplifies a single issue. An index value constitutes a single
issue data element.
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ii. one-half of one cent ($0.005) per quote packet for each of the
next 20 million quote packets that it distributes during that month
(i.e., quote packets 20,000,001 through 40,000,000 million); and
iii. one-quarter of one cent ($0.0025) for every quote packet in
excess of 40 million that it distributes during that month.
The Network B Participants believe that the proposed pay-for-use
fees may motivate additional market data vendors and broker-dealers to
provide pay-for-use services, thereby making real-time market data even
more readily available to investors through those channels.
3. Interplay of Nonprofessional-Subscriber and Pay-for-Use Rates
The Network B Participants further propose to reduce the cost
exposure of vendors and broker-dealers by permitting them to limit the
amount due from each nonprofessional subscriber each month. The vendor
and broker-dealers would be eligible to pay the lower of either (i) the
aggregate pay-per-use fees that would apply to the subscriber's usage
during the month or (ii) the flat monthly $1.00 nonprofessional
subscriber fee. The Network B Participants propose to offer this
flexibility to each subscriber that qualifies as a nonprofessional
subscriber and that has agreed to the terms and
[[Page 47205]]
conditions that apply to the receipt of market information as a
nonprofessional subscriber.
For ease of administration, the Network B Participants propose to
allow each vendor and broker-dealer to apply the $1.00 fee for any
month in which each nonprofessional subscriber retrieves 134 or more
quote packets during the month, without regard to the marginal per-
quote rate that the vendor or broker-dealer pays that month (i.e.,
three-quarters, one-half or one-quarter cent per quote packet). In
addition, each vendor may reassess each month to determine which fee is
more economical, the per-quote fee or the nonprofessional subscriber
fee.
* * * * *
This amendment furthers the objectives of the national market
system regarding the dissemination of last sale information delineated
in Sections 11A(a)(1)(C), 11A(a)(1)(D) and 11A(a)(3)(B) of the Act.
B. Governing or Constituent Documents
Not applicable.
C. Implementation of Amendment
The Participants have manifested their approval of the proposed
amendments to the CTA and CQ Network B rate schedules by means of their
execution of the amendments. The rate changes would become effective on
the first day of the month that follows the month in which the
Commission approves the proposed plan amendments.
D. Development and Implementation Phases
See Item I(C).
E. Analysis of Impact on Competition
The proposed amendments do not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act. The Network B Participants do not believe that the proposed
plan amendments introduce terms that are unreasonably discriminatory
for the purposes of Section 11A(c)(1)(D) of the Act.
F. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plan
Not applicable.
G. Approval by Sponsors in Accordance with Plans
In accordance with Section XII(b)(iii) of the CTA Plan and Section
IX(b)(iii) of the CQ Plan, each of the Participants has approved the
fee reductions.
H. Description of Operation of Facility Contemplated by the Proposed
Amendment
Not applicable.
I. Terms and Conditions of Access
See Item I(A) above.
J. Method of Determination and Imposition, and Amount of Fees and
Charges
See Item I(A) and the text of the amendments.
K. Method and Frequency of Processor Evaluation
Not applicable.
L. Dispute Resolution
Not applicable.
II. Rule 11Aa3-1 (solely in its application to the amendments to
the CTA Plan)
A. Reporting Requirements
Not applicable.
B. Manner of Collecting, Processing, Sequencing, Making Available and
Disseminating Last Sale Information
Not applicable.
C. Manner of Consolidation
Not applicable.
D. Standards and Methods Ensuring Promptness, Accuracy and Completeness
of Transaction Reports
Not applicable.
E. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination
Not applicable.
F. Terms of Access to Transaction Reports
See Item I(A).
G. Identification of Marketplace of Execution
III. Solicitation of Comments
Section 11A of the Act requires that the Commission assure fair
competition among brokers and dealers and assure the availability to
brokers, dealers and investors of information with respect to
quotations for and transactions in securities.\8\ Another provision in
this section authorizes the Commission to prescribe rules to assure
that all persons may obtain this market data on terms that are ``not
unreasonably discriminatory.''
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\8\ 15 U.S.C. 78k-1(a)(1)(C)(i) and (ii).
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Based on these standards, the Commission requests comment on
whether the tiered fee structure applicable to users is unreasonably
discriminatory.
1. The usage-based fee is structured as a fee per user with
decreases for larger numbers of users. Will this tiered fee structure
have an effect on competition among broker-dealers?
2. Will these volume discounts inure to the benefit of retail
investors equally regardless of the broker-dealer they choose?
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposal is
consistent with the Act. Persons making written submissions should file
six copies thereof with the Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 will also be available for
inspection and copying at the principal office of the CTA. All
submissions should refer to the file number in the caption above and
should be submitted by September 20, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(27).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-22375 Filed 8-27-99; 8:45 am]
BILLING CODE 8010-01-M
