[Federal Register Volume 78, Number 143 (Thursday, July 25, 2013)]
[Notices]
[Pages 44984-44994]
[FR Doc No: 2013-17860]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70010; File No. SR-CTA/CQ-2013-04]

Consolidated Tape Association; Notice of Filing and Immediate
Effectiveness of the Nineteenth Charges Amendment to the Second
Restatement of the CTA Plan and Eleventh Charges Amendment to the
Restated CQ Plan

July 19, 2013.
    Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that
on July 10, 2013, the Consolidated Tape Association (``CTA'') Plan and
Consolidated Quotation (``CQ'') Plan participants (``Participants'')
\3\ filed with the Securities and Exchange Commission (``Commission'')
a proposal to amend the Second Restatement of the CTA Plan and Restated
CQ Plan (collectively, the ``Plans'').\4\ The amendments (``June Fee
Simplification Amendments'') respond to requests from industry
representatives that sit on the Plans' Advisory Committees that the
Participants simplify the Plans' existing market data fee schedules and
reduce associated administrative burdens. The Advisory Committee
consists of individuals representing the key market data customer
segments, including retail brokers, broker-dealers, alternative trading
systems and vendors. Acting on the recommendations of the Advisory
Committee, the Participants seek to compress the current 14-tier
Network A device rate schedule into just four tiers, consolidate the
Plans' eight fee schedules into one, update that fee schedule, and
realign the Plans' charges more closely with the services the Plans
provide (collectively, the ``Fee Changes''), without materially
changing the revenues the current fee schedules generate.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ Each participant executed the proposed amendment. The
Participants are: BATS Exchange, Inc., BATS-Y Exchange, Inc.,
Chicago Board Options Exchange, Incorporated, Chicago Stock
Exchange, Inc., EDGA Exchange, Inc. (``EDGA''), EDGX Exchange, Inc.
(``EDGX''), Financial Industry Regulatory Authority, Inc.
(``FINRA''), International Securities Exchange, LLC, NASDAQ OMX BX,
Inc. (``Nasdaq BX''), NASDAQ OMX PHLX, Inc. (``Nasdaq PSX''), Nasdaq
Stock Market LLC, National Stock Exchange, New York Stock Exchange
LLC (``NYSE''), NYSE MKT LLC (formerly NYSE Amex, Inc.), and NYSE
Arca, Inc. (``NYSE Arca'').
    \4\ See Securities Exchange Act Release Nos. 10787 (May 10,
1974), 39 FR 17799 (May 20, 1974) (declaring the CTA Plan
effective); 15009 (July 28, 1978), 43 FR 34851 (August 7, 1978)
(temporarily authorizing the CQ Plan); and 16518 (January 22, 1980),
45 FR 6521 (January 28, 1980) (permanently authorizing the CQ Plan).
The most recent restatement of both Plans was in 1995. The CTA Plan,
pursuant to which markets collect and disseminate last sale price
information for non-NASDAQ listed securities, is a ``transaction
reporting plan'' under Rule 601 under the Act, 17 CFR 242.601, and a
``national market system plan'' under Rule 608 under the Act, 17 CFR
242.608. The CQ Plan, pursuant to which markets collect and
disseminate bid/ask quotation information for listed securities, is
a ``national market system plan'' under Rule 608 under the Act, 17
CFR 242.608.
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    The Participants first introduced the Fee Changes in the Sixteenth
Charges Amendment to the CTA Plan \5\, as modified by the Seventeenth
Charges Amendment to the CTA Plan \6\ and in the Eighth Charges
Amendment to the CQ Plan \7\, as modified by the Ninth Charges
Amendment to the CQ Plan \8\ (collectively, the ``March Fee
Simplification Amendments''). On May 10, 2013, the Participants filed
Amendments to reverse the Fee Changes introduced in the March Fee
Simplification Amendments in the Eighteenth Charges Amendment to the
CTA Plan \9\ and the Tenth Charges Amendment to the CQ Plan (``Reversal
Amendments'') \10\. The June Fee Simplification Amendments propose to
re-introduce them.
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    \5\ See Securities Exchange Act Release No. 69157 (March 18,
2013), 78 FR 17946 (March 25, 2013) (File No. SR-CTA/CQ-2013-01).
    \6\ See Securities Exchange Act Release No. 69318 (April 5,
2013), 78 FR 21648 (April 11, 2013) (File No. SR-CTA/CQ-2013-02).
    \7\ See supra note 5.
    \8\ See supra note 6.
    \9\ See Securities Exchange Act Release No. 69593 (May 16,
2013), 78 FR 30365 (May 22, 2013) (File No. SR-CTA/CQ-2013-03)
    \10\ See id.
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    The Commission received two comment letters regarding the Sixteenth
Charges Amendment to the CTA Plan and the Eighth Charges Amendment to
the CQ Plan \11\ and received one comment letter regarding the
Seventeenth Charges Amendment to the CQ Plan and the Ninth Charges
Amendment to the CQ Plan.\12\
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    \11\ See Letter to Elizabeth M. Murphy, Secretary, Commission,
from Henry Schwartz, President and Founder, Trade Alert LLC (``Trade
Alerts''), dated March 20, 2013 (``Trade Alerts Letter'') and from
Kimberly Unger, Esq., CEO and Executive Director, The Security
Traders Association of New York, Inc. (``STANY''), dated April 10,
2013 (``STANY Letter'').
    \12\ See Letter to the Commission from James Smith, Director,
Hoffman Estates, IL, dated April 8, 2013.
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    Pursuant to Rule 608(b)(3)(i) under Regulation NMS,\13\ the
Participants

designated the June Fee Simplification Amendments as establishing or
changing a fee or other charge collected on their behalf in connection
with access to, or use of, the facilities contemplated by the Plans. As
a result, the June Fee Simplification Amendments became effective upon
filing with the Commission. At any time within 60 days of the filing of
the June Simplification Amendments, the Commission may summarily
abrogate the June Fee Simplification Amendments and require that the
June Fee Simplification Amendments be refiled in accordance with
paragraph (a)(1) of Rule 608 and reviewed in accordance with paragraph
(b)(2) of Rule 608, if it appears to the Commission that such action is
necessary or appropriate in the public interest, for the protection of
investors, or the maintenance of fair and orderly markets, to remove
impediments to, and perfect the mechanisms of, a national market system
or otherwise in furtherance of the purposes of the Act.
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    \13\ 17 CFR 242.608(b)(3)(i).
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    The Commission is publishing this notice to solicit comments from
interested persons on the proposed June Fee Simplification Amendments.

I. Rule 608(a)

A. Purpose of the Amendments

1. In General
    Prior to the March Fee Simplification Amendments, the Participants
last filed a fee structure change in 1986. Since then, however,
significant change has characterized the industry, stemming in large
measure from technological advances, the advent of trading algorithms
and automated trading, new investment patterns, new securities
products, unprecedented levels of trading, decimalization,
internationalization and developments in portfolio analysis and
securities research.
    Industry representatives who sit on the Plans' Advisory Committee
have noted these changes and have urged adoption of a modernized,
simpler, easier to read fee schedule. Despite the STANY Letter's
assertions to the contrary, the Participants have discussed the
proposed fee changes with those industry representatives on multiple
occasions. The Participants recommend that STANY speak with the
Advisory Committee and incorporate their views into any future comment
letter. The industry representatives have requested a reduction in the
rate spread inherent in the 14-tier Network A device rate structure,
reduced administrative burdens and a simplified pricing structure that
is consistent with current technology and that promotes the use of
real-time market data. Those are the goals of the Fee Changes.
    The Fee Changes also move in the direction of harmonizing fees
between Network A and Network B and of harmonizing fees under the Plans
with fees under two other national market system plans: The Joint Self-
Regulatory 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 (the ``Nasdaq/UTP Plan'') and the OPRA Plan. This would reduce
administrative burdens for broker-dealers and other market data users
and simplify fee calculations.
    The June Fee Simplification Amendments also propose to consolidate,
simplify and update the market data fee schedules under both Plans to
arrive at a single, consolidated CTA/CQ Fee Schedule. This would make
it easier for market data users to understand and apply the fee
schedule.
    The proposed Fee Changes rebalance the fee schedule but are
approximately revenue neutral to the overall market data revenues
generated under the Plans.
2. The Proposed Fee Schedule Changes
a. Professional Subscriber Charges
i. Network A
    A principal purpose of the proposed Fee Changes is to address the
14-tier fee structure that the Participants have in place for Network A
professional subscribers. That structure has been in place for more
than 25 years. Under the tiered structure, a firm reports how many
display devices the professional subscribers it employs use and that
number then is used to determine the tier within which the firm falls.
    For reporting purposes, a display device is any device capable of
displaying market data. Where a professional subscriber receives market
data services from multiple vendors, separate device fees apply for
each vendor's service. Where a vendor provides market data to a
professional subscriber by means of multiple applications, separate
device fees apply for each application.
    At one extreme, the current Network A fee tiered structure imposes
a monthly charge of $18.75 per device for firms employing professional
subscribers who use more than 10,000 devices. At the other extreme, it
imposes a monthly charge of $127.25 per device for a single
professional subscriber. (For Network A, the rates entitle the
professional subscriber to receive both Network A last sale information
under the CTA Plan and Network A quotation information under the CQ
Plan.)
    Market data users have told the Participants that they find the 14-
tier structure challenging to administer and the $18.75-to-$127.25
spread between the highest and lowest tiers too wide. The proposed
changes seek to address both concerns. The Participants propose a new
four-tier monthly Network A fee structure for the display units of
professional subscribers, as follows:

1. 1-2 devices..........................................          $50.00
2. 3-999 devices........................................           30.00
3. 1,000-9,999 devices..................................           25.00
4. 10,000 devices or more...............................           20.00

    The proposed narrowing of the gap between the highest rates and the
lowest rates would result in a more equitable rate distribution and
benefit both individuals who have not qualified as nonprofessional
subscribers and smaller firms. In particular, individuals and firms
having one device would see their monthly Network A rate drop from
$127.25 to $50, and firms having two devices would see their monthly
Network A rate drop from $79.50 per device to $50 per device. Firms
whose professional subscriber employees use between 3 and 29 devices
would also have lower rates.
    On the other hand, larger firms would see higher rates in respect
of their internal distribution of market data to their employees. For
example, the rates for firms whose employees use between 750 devices
and 9,999 devices would rise from $19.75 or $20.75 per device to $25
per device, and the rates for firms whose employees use more than
10,000 devices would rise from $18.75 to $20.00.
    Many firms distribute market data to ``Customers'' and pay CTA/CQ
fees on behalf of those Customers. Those firms should pay less for
their external distribution to each Customer because the rates that
they would pay on behalf of each Customer would drop (assuming that the
firm does not provide service to more than 29 devices of the Customer).
The amount of the decrease would depend on the tier into which the
Customer falls.
    ``Customer'' refers to a consultant to the firm, an individual
client of the firm, an independent contractor who may be associated
with the firm but is not an employee of the firm, a trading company
that receives market data from the firm for use by its traders (who may
or may not be employees of that trading company), and any other
corporate, broker-dealer or other entity to which the firm provides
data.

    A firm may only include its own employees in determining the tier
applicable to it. It may not include in that determination any Customer
to which it provides market data or the employees of any Customer. The
rate applicable to each Customer is separately determined based on the
tier into which the Customer falls.
    In monitoring compliance by market data recipients, the Network A
Administrator has discovered improper use of the employee-independent
contractor distinction. Some firms with non-employment ties to traders
and others have inappropriately characterized those traders and others
as ``employees,'' thereby causing those persons to be included in the
firm's tier and allowing a lower per-device rate to apply to those
persons.
    For that reason, the amendments propose to add a footnote (proposed
footnote 2) to clarify that a firm may only include employees and not
independent contractors in the firm's tier for purposes of determining
the device fee rate applicable to data recipients.
    The footnote does not propose to change the Participant's long-
standing policy regarding the employee-independent contractor
distinction. CTA deems a person to be an ``employee'' of a data
recipient if the data recipient deems the person to be an employee in
its dealings with the Internal Revenue Service; that is, if the data
recipient issues a Form W-2 in respect of the person, rather than a
Form 1099 or another Internal Revenue Service form. Persons that are
not W-2 employees maintain independent contractor status or some other
status. For any person located in a country other than the United
States, the person would qualify as an ``employee'' for market data
purposes if the firm characterizes the person as an ``employee'' for
tax purposes under that country's income tax laws and rules. If a
country does not have tax laws and rules that differentiate an employee
from an independent contractor, the firm should apply the standard that
the United States Internal Revenue Service uses to determine whether a
person qualifies as an employee.\14\ In addition, if a firm holds an
active Form U-4 for an individual, and that individual is engaged in
the securities business of the firm, the individual shall be deemed to
be an ``employee'' of the firm for Network A professional subscriber
device fee purposes.
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    \14\ The Internal Revenue Service describes more fully who
qualifies as an employee and who qualifies as an independent
contractor in a publication that can be found at http://www.irs.gov/
pub/irs[hyphen]pdf/p15a.pdf.
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    CTA maintains a written statement of its employee-independent
contractor policy on its Web site at http://www.nyxdata.com/Docs/Market-Data/Policies. It also describes the ``employee'' definition in
its ``Multiple Installations, Single User'' (``MISU'') policy, which
can be found at the same Web site.
    Also for purposes of discouraging abuse, the amendments propose to
eliminate the reference to a firm's officers and partners as authorized
internal distributees of a firm, entitled to be included in the firm's
tier for per-device rate purposes.
    Together with the other proposed amendments to the fee schedule, it
is anticipated that the changes to the Network A professional
subscriber tiered fee structure would not result in a material change
in overall revenues under the Plans.
ii. Network B
    Professional subscribers currently pay one amount for Network B
last sale information and a separate amount for Network B quotation
information. Firms that are members of a Participant currently pay
slightly less than non-members. A member pays $27.25 per month per
device to receive both last sale and quotation Network B information
and a non-member pays $30.20. Network B is the only network that still
distinguishes between members and non-members.
    To simplify Network B professional subscriber rates and to remove
the differential, the Participants propose a single monthly rate of
$24.00 per device, applicable to both members and non-members.
    The $24.00 Network B rate would amount to a savings for most
professional subscribers, the majority of which currently receive both
last sale and quotation information. Network B has a small number of
data recipients who receive last sale information or quotation
information, but not both. The change would amount to a fee increase
for them. The Network B Participants note that Network A and the
Participants in the Nasdaq/UTP Plan and the OPRA Plan have not charged
separately for last sale information and quotation information for many
years.
    The Participants believe that a single fee for Network B devices
would prove administratively efficient for data users and the network
administrators. They note that the Nasdaq/UTP Plan imposes a single fee
of $20 for each device and that the OPRA Plan imposes a single fee
(currently $25) for each device.
iii. Broker-Dealer Enterprise Maximums
    Currently, the monthly broker-dealer enterprise maximums are set at
$660,000 per month for Network A and $500,000 per month for Network B.
For that amount, the enterprise maximums allow a broker-dealer to
provide last sale and quotation information to an unlimited number of
its own employees and its nonprofessional subscriber brokerage account
customers. The Plans provide that the amounts of the broker-dealer
enterprise maximums increase each calendar year by an amount equal to
the percentage increase in the annual composite share volume for the
preceding calendar year, subject to a maximum annual increase of five
percent.
    The Participants propose to modify the means for determining the
increase in the broker-dealer enterprise maximums. Under the proposal,
the Participants may increase the broker-dealer enterprise maximums for
Network A and Network B by the affirmative vote of not less than two-
thirds of the Participants, provided, however, that they may not
increase either network's enterprise maximum by more than four percent
for any calendar year. The Participants may elect not to increase the
fee for any calendar year.
    This proposed means for determining the increase in the broker-
dealer enterprise maximums would reduce the amount of any one year's
permissible increase from five percent to four percent and would better
reflect inflation than does the current means. The maximum four percent
increase is consistent with the average annual cost of living
adjustment (``COLA'') as published by the Social Security
Administration for Supplemental Security Income for the past 38
years.\15\
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    \15\ The Participants use COLA as the measure for the annual
increase in the fixed fee that they pay to the network
administrators for the administrators' services.
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    The Participants have not increased the Network A broker-dealer
enterprise maximum for more than five years. They have not increased
the Network B broker-dealer enterprise maximum since they first adopted
it in 1999. They propose to increase the amount of both networks'
enterprise maximums for 2013. As a result, the monthly Network A
broker-dealer enterprise maximum would increase to $686,400 and the
monthly Network B broker-dealer enterprise maximum would increase to
$520,000. These changes would not take effect until the implementation
date for the other changes set forth in the amendments. Currently, only
one firm reaches the enterprise caps and, in the

aggregate, the Fee Changes would reduce the fees payable by that firm
by 13 percent, based on its April 2013 level of activity.
    The STANY Letter expresses concern ``that the change gives the
Participants the opportunity to increase monthly Network A and B fees
without correlation to volume increases.'' First, we note that after
many years of experience with the enterprise cap, the Participants have
come to realize that year-to-year changes in volume do not reflect
changes in data message traffic or inflation as well as the 38-year
record of four percent increases in COLA. In recent years, message
traffic has continued to grow, while volume remains lower than it was
five years ago.
    Additionally, it is possible that firms may reach the enterprise
caps by means of merger, which could materially impact overall market
data revenue without natural growth in the market. The reduction of the
maximum annual increase from five percent to four percent, as well as
the discretion given to the Participants to agree annually to a lower
increase, or to no increase at all, should make the proposed change
more palatable to the very small number of entities that take advantage
of the enterprise cap.\16\
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    \16\ Currently, only one firm takes advantage of the Network A
enterprise cap and only one firm takes advantage of the Network B
enterprise cap.
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b. Nonprofessional Subscriber Charges
    Currently, a firm pays $1.00 per month in respect of its first
250,000 Network A nonprofessional subscribers and $0.50 for Network A
nonprofessional subscribers in excess of 250,000. A firm pays $1.00 per
month for each of its Network B nonprofessional subscribers, regardless
of how many such subscribers a firm has.
    The Participants propose to harmonize the treatment of large and
small firms by applying the $1.00 per month rate in respect of all
Network A nonprofessional subscribers, regardless of the number of
nonprofessional subscribers. This would also harmonize the Network A
nonprofessional subscriber fee with the Network B nonprofessional
subscriber fee, as well as the $1.00 nonprofessional subscriber fee
payable under the Nasdaq/UTP Plan. (The fee applicable to
nonprofessional subscribers under the OPRA Plan is $1.25.) The
Participants note that the number of firms that have more than 250,000
Network A nonprofessional subscribers is very small.
c. Per-Query Charges
    Currently, Network A and Network B impose identical three-tiered
per-query rates as follows:

------------------------------------------------------------------------

------------------------------------------------------------------------
1 to 20 million quotes....................  $.0075 each.
20 to 40 million quotes...................  $.005 each.
Over 40 million quotes....................  $.0025 each.
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    The Participants propose to modify their per-query rate structure
by replacing the three-tier structure with the same one-tier rate as
the Nasdaq/UTP Plan and the OPRA Plan imposes: $.005 for each inquiry
for both Network A and Network B.
    As before, a vendor's per-query fee exposure for any
nonprofessional subscriber is limited to $1.00 per month (i.e., the
nonprofessional subscriber rate.)
    The single-tiered rate would simplify per-query calculations. It
would also harmonize the Network A and Network B per-query fees with
the Nasdaq/UTP Plan and the OPRA Plan per-query fees.
d. Access Fees
    Current and proposed access fees for direct access to last sale
prices are as follows:
    Current Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................       $1,000.00
Network B...............................................          350.00
------------------------------------------------------------------------

    Proposed Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................       $1,250.00
Network B...............................................          750.00
------------------------------------------------------------------------

    Current and proposed access fees for indirect access to last sale
prices are as follows:
    Current Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................         $500.00
Network B...............................................          200.00
------------------------------------------------------------------------

    Proposed Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................         $750.00
Network B...............................................          400.00
------------------------------------------------------------------------

    Current and proposed access fees for direct access to quotation
information are as follows:
    Current Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................       $1,100.00
Network B...............................................          400.00
------------------------------------------------------------------------

    Proposed Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................       $1,750.00
Network B...............................................        1,250.00
------------------------------------------------------------------------

    Current and proposed access fees for indirect access to quotation
information are as follows:
    Current Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................         $700.00
Network B...............................................          250.00
------------------------------------------------------------------------

    Proposed Fees:

------------------------------------------------------------------------

------------------------------------------------------------------------
Network A...............................................       $1,250.00
Network B...............................................          600.00
------------------------------------------------------------------------

    Access fees are charged to those who obtain Network A and Network B
data feeds. Consistent with current practice, within each of a firm's
billable accounts, the Participants only charge one access fee for last
sale information and one access fee for quotation information,
regardless of the number of data feeds that the firm receives for that
account. The Participants believe that increases in these fees are fair
and reasonable because today's data feeds provide significant
incremental value in comparison to the data feeds that the Participants
provided when they first set the access fees.
    For example, the data feeds contain a vastly larger number of last
sale prices and bids and offers. Since April 2006, the growth of quotes
and trades per second has increased over 12,200 percent and 2500
percent, respectively. Additionally, the growth in Exchange Traded
Products (``ETPs'') has contributed to a significant increase in
Network B activity. For example, in April 2013, Network B listed 1,362
ETPs, which accounted for 93 percent of volume. The data feeds also
contain far more information beyond prices and quotes, such as the
national best bid and offer (``NBBO''), short sale restriction
indications, circuit breaker tabs, retail price improvement
indications, and, since April 2013, limit up/limit down information. In
addition to the vast increase in content, there has been significant
improvement in the latency of the data feeds.
    Further, data feeds have become more valuable, as recipients now
use them to perform a far larger array of non-display functions. Some
firms even base their business models on the incorporation of data
feeds into black boxes and application programming interfaces that
apply trading algorithms to the data, but that do not require
widespread data access by the firm's employees. As a result, these
firms pay little for data usage beyond access fees, yet their data
access and usage is critical to their businesses.
    The Participants estimate the revenues resulting from the revised
access fees would increase total Network A and Network B revenues by
six percent, but this increase would be largely offset by an estimated
five

percent decrease in total revenues resulting from the revised
professional subscriber device fees and an estimated two percent
decrease resulting from the revised quote usage fees. The majority of
customers taking data feeds would also benefit from lower professional
subscriber fees and/or lower quote-usage fees.
    CTA and CQ data feeds include a full consolidated data set of last
sale and quotation information across all Participants, including
FINRA's Trade Reporting Facilities (``TRFs''). In contrast, the data
feeds found in the proprietary data products of individual exchanges
contain a far more limited set of data. Of the firms that are charged
an access fee for consolidated data, 86 percent take the cheaper data
feed through indirect access. The following chart compares access fees
for the receipt of last sale information and quotation information:

Proposed CTA Network A:
    Direct Access: $3,000
    Indirect Access: $2,000
Proposed CQ Network B:
    Direct Access: $2,000
    Indirect Access: $1,000
NYSE: $5,000
Nasdaq: $2,000
Nasdaq BX: $1,000
Nasdaq PSX: $1,000
NYSE Arca: $750
EDGA: $500
EDGX: $500
e. Data Redistribution Charges
    The Participants propose to establish a new monthly charge of
$1,000 for the redistribution of Network A last sale price information
and/or Network A quotation information and a similar $1,000 monthly
charge for the redistribution of Network B last sale price information
and/or Network B quotation information. This will not necessitate any
additional reporting obligations.
    The redistribution charges would apply to any entity that makes
last sale information or quotation information available to any other
entity or to any person other than its own employees, irrespective of
the means of transmission or access. That is, all firms that
redistribute market data outside of their organization would be
required to pay the redistribution fee. The fee would not apply to a
firm whose receipt, use and distribution of market data is limited to
its own employees in a controlled environment.
    The proposed redistribution charge harmonizes CTA/CQ fees with OPRA
Plan fees, which impose a redistribution charge on every vendor that
redistributes OPRA data to any person. OPRA's redistribution fee is
$1,500 per month (or $650 for an internet-only service). Redistribution
fees are also common for exchange proprietary data products.
    Revenues from the redistribution charge along with the access fees
would help to offset anticipated decreases in revenues resulting from
the proposed changes to the professional subscriber device fees.
    In its comment letter, Trade Alerts wrote that it is a small
financial technology company that vends proprietary trading systems
that allow individuals to trade securities, that its clients include
the largest Wall Street broker-dealers and active retail investors, and
that the new redistribution fee would substantially increase its
monthly market data costs. It also notes that the redistribution fee
favors large vendors because the fee is the same amount for all
redistributors.
    Market data redistributors like Trade Alerts, however, base their
business models on procuring data from exchanges and turning around and
redistributing that data to their customers and subscribers. The costs
that redistributors incur for acquiring their inventory (i.e., CTA/CQ
market data) are very low, sometimes amounting only to their payment of
access fees. Some vendors convert this low-cost inventory into large
profits, charging fees for the Participants' market data that are not
subject to regulation. The proposed redistribution charges would
require them to contribute somewhat more, relative to the end-user
community. Regarding Trade Alerts suggestion that the redistribution
fee should provide a discount for smaller redistributors, we are not
aware of any market or NMS Plan that provides a discount based on the
size of the redistributor. We believe that the redistribution fee is
consistent with a fair and equitable allocation of charges among
industry participants.
f. Television Broadcast Charges
    The Participants do not propose to make any changes to current
television broadcast charges. In the case of Network A, the
Participants do not propose to change the maximum amount payable for
television broadcasts. However, the Plans provide for an annual
increase to that maximum amount. The Network A Participants in some
years have elected not to apply the annual increase. The Network A
Participants propose to codify the practice of voting to waive a
calendar year's maximum increase by adding footnote language to that
effect.
g. Multiple Data Feed Charges
    The Participants propose to establish a new monthly fee for firms
that take more than one primary data feed and one backup data feed.
(This will not necessitate any additional reporting obligations.) The
fee would be as follows:

$50 for Network A last sale information data feeds
$50 for Network A quotation information data feeds
$50 for Network B last sale information data feeds
$50 for Network B quotation information data feeds

    For both last sale and bid-ask data feeds, this charge would apply
to each data feed that a data recipient receives in excess of the data
recipient's receipt of one primary data feed and one backup data feed.
    To date, the Participants have not required data recipients that
receive multiple data feeds to pay any more than data recipients that
receive one primary and one back up data feed. The Participants believe
that it is appropriate to have them do so. The fee would encourage
firms to better manage their requests for additional data feeds and to
monitor their usage of data feeds. Participants note that the OPRA Plan
imposes a charge of $100 per connection for circuit connections in
addition to the primary and backup connections.
h. Late/Clearly Erroneous Reporting Charges
    The Participants propose to establish a new monthly fee for firms
that fail to comply with their reporting obligations in a timely
manner. The charge is $2500 for each network. The charge would not be
assessed until a firm fails to report its data usage and entitlements
for more than three months. A report is not considered to have been
provided if the report is clearly incomplete or inaccurate, such as a
report that fails to report all data products or a report for which the
reporting party did not make a good faith effort to assure the accuracy
of data usage and entitlements.
    The late reporting charges would be assessed for each month in
which there is a failure to provide a network's required data-usage
report, commencing with reporting failures lasting more than three
months from the date on which the report is first due. By way of
example, if a network's data-usage report is due on May 31, the charge
would commence to apply as of September 1 and would appear on the
market data invoice for September. The network administrator would
assess the charge as of September 1, and would

continue to assess the charge each month until the network
administrator receives the firm's complete and accurate data-usage
report.
    In the Participants' experience, some data recipients fail to
report data-usage activity in a timely or compliant manner. This leads
to administrative burdens and late payments. The purpose of the charges
is to provide incentives to delinquent firms to report properly and to
place them on a level playing field with compliant firms.
i. Network B Ticker Charge
    As part of the process of simplifying the fee structure, the
Participants have determined to eliminate the Network B ticker charge.
This would harmonize Network B rates with those of Network A (which
phased out its ticker charge many years ago), and with the Nasdaq/UTP
Plan and the OPRA Plan, neither of which imposes a ticker charge.
3. Changes to the Form of the CTA/CQ Fee Schedule
    The amendments propose to simplify, consolidate, and update the
market data fee schedules under both Plans to arrive at a single,
consolidated CTA/CQ Fee Schedule that sets forth the applicable charges
from time to time in effect under both Plans. The Participants propose
to set forth the CTA/CQ Fee Schedule in Exhibit E to the CTA Plan. It
would replace the eight CTA/CQ fee schedules currently in effect:
Schedules A-1 through A-4 of Exhibit E to the CTA Plan and Schedules A-
1 through A-4 of Exhibit E to the CQ Plan. As a result, Exhibit E to
the CTA Plan would contain the entire CTA/CQ Fee Schedule and Exhibit E
to the CQ Plan would be eliminated.
    The simplifications and updates that the consolidated CTA/CQ Fee
Schedule proposes include the following:
     Adopting changes that make fee-disclosure more
transparent, such as the addition of descriptions of what constitutes
internal and external distribution;
     removing the Network B communications facilities and line
splitter charges, which no longer apply;
     removing outdated footnotes that no longer apply;
     posting the amounts of the broker/dealer enterprise charge
and the maximum television broadcast charge on the CTA Web site
(although the amounts would also remain on the CTA/CQ Fee Schedule);
     granting the Participants the authority to waive the
annual increase for any calendar year for the Network A and Network B
broker-dealer enterprise charges and the Network A maximum television
broadcast charge; and
     changing references to the ``high speed line'' to read
``output feed.''
4. Impact of the Proposed Fee Changes
    As with any reorganization of a fee schedule, these changes may
result in some data recipients paying higher total market data fees and
in others paying lower total market data fees. On balance, the
Participants estimate that the fee changes could increase the market
data revenue pool for Network A and Network B by no more than 1.7
percent (or roughly $390,000 per month),\17\ assuming no diminution of
customer usage. Several customer usage trends, however, have declined
year-over-year since 2008, particularly declines in professional
subscribers. (More information on these declines can be found in the
Participants' Consolidated Data Quarterly Operating Metrics Reports.
Those reports can be found at http://www.nyxdata.com/CTA). The declines
in professional subscribers has resulted from a challenging financial
environment, corporate downsizing and competition from lower-cost
proprietary data product offerings.
---------------------------------------------------------------------------

    \17\ The estimate of 1.7 percent is based on March 2013 data
reports. This is a downward revision to the estimate set forth in
the March Fee Simplification Amendments, which was based on February
2012 data.
---------------------------------------------------------------------------

    As a result, revenues generated under the Plans have declined
significantly. Furthermore, the rise in off-exchange trading has meant
that a smaller portion of those revenues are allocated to exchanges.
Since 2008, CTA/UTP market data revenue has declined 21 percent from
approximately $483 million in 2008 to $382 million annualized through
March of 2013, of which about $321 million was allocated to exchanges
and $61 million to FINRA. The significant portion of consolidated
revenue allocated to FINRA ($61 million) reflects the growing share of
off-exchange trading by brokers, which is largely rebated back to
broker-dealers and significantly reduces the consolidated market data
revenue allocated to exchanges. For these reasons, and despite a
contrary assertion in the STANY Letter, the Participants believe that
the Fee Changes would not result in a material increase in overall
revenues under the Plans.

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of the Amendments

    Pursuant to Rule 608(b)(3)(i) under Regulation NMS, the
Participants have designated the June Fee Simplification Amendments as
establishing or changing fees and submitted the June Fee Simplification
Amendments for immediate effectiveness. The Participants anticipate
implementing the proposed fee changes on September 1, 2013, after
giving notice to data recipients and end users of the Fee Changes.
    The STANY Letter comments that the March Fee Simplification
Amendments ``contemplate significant structural changes in the method
of calculation of fees which we believe necessitates a notice and
comment period longer than the 21 days provided.'' \18\ It also states
that the Fee Changes ``require that the Amendments be refiled in
accordance with paragraph (a)(1) of Rule 608 and reviewed in accordance
with paragraph (b)(2) of Rule 608.''
---------------------------------------------------------------------------

    \18\ See STANY Letter at 2.
---------------------------------------------------------------------------

    First, Commission practice does not preclude the submission of
comment letters after the 21 day period. The Federal Register notice in
the March Fee Simplification Amendments provides that comments ``should
be provided on or before'' the date 21 days following publication in
the Federal Register. [emphasis added.] Regulation NMS Rule 608(b)(i)
provides that ``The Commission . . . shall provide interested persons
an opportunity to submit written comments.'' Nowhere does it specify
that the comment period must be 21 days from the date of publication.
    In practice, the Commission accepts comments received after the 21
day deadline. In this case, The Participants notified the industry of
the Fee Changes on February 22, 2013 and first filed the Fee Changes on
March 11. It appeared in the Federal Register on March 25. The
Participants submitted the filing that reversed the Fee Changes on May
10, 2013 and that filing appeared in the Federal Register on May 22,
2013. As a result, as a practical matter, commenters had two months to
submit comments.
    Second, Rule 608(b)(3)(i) of Regulation NMS permits the
Participants to designate a proposed plan amendment as establishing or
changing fees and other charges, and to place such an amendment into
effect upon filing with the Commission. As mentioned above, the
Participants have made that designation. The rule does not put any
limitations on which particular fee changes qualify for immediate
effectiveness. Rather, if the Commission believes that a longer comment
period is appropriate for a particular filing, it may extend the
comment period or abrogate the filing.

    Third, ample precedents exist for the filing of multiple or even
complex fee changes to the CTA and CQ Plans on an immediately effective
basis over the past thirty years.\19\
---------------------------------------------------------------------------

    \19\ See, e.g., Fifth Charges Amendment to the First Restatement
of the CTA Plan, File No. S7-433, Release No. 34-19342, 47 Fed Reg
57369-03 (December, 23, 1982); Fourteenth Charges Amendment to the
First Restatement of the CTA Plan and Fifth Charges Amendment to the
original CQ Plan, File No. S7-30-91, Release No. 34-29863, 56 Fed
Reg 56429-01 (November 4, 1991); Second Charges Amendment to the CTA
Plan and First Charges Amendment to the CQ Plan, SR-CTA/CQ-97-2,
Release No. 34-39235, 62 Fed Reg 54886-01 (October 14, 1997); OPRA
Plan amendment SR-OPRA-2004-01, Release No. 34-49382, 69 Fed Reg
12377-01 (March 16, 2004); OPRA Plan amendment SR-OPRA-2007-04,
Release No. 34-56950, 72 Fed Reg 71722-01 (December 18, 2007); OPRA
Plan amendment SR-OPRA-2012-02, Release No. 34-66564, 77 Fed Reg
15833-01 (March 16, 2012).
---------------------------------------------------------------------------

    Finally, the Fee Changes respond to appeals for the changes from
industry representatives on the Advisory Committee. The sooner those
changes become effective, the sooner the industry may enjoy the
benefits they offer. As a result, the Participants believe that
immediate effectiveness is warranted.
    The STANY Letter also comments that firms need more notice of the
Fee Changes than the Participants provided under the March Fee
Simplification Amendments in order to make the systems changes
necessary to implement the changes. Aside from the fact that each STANY
member agreed in its market data contract with the Participants that 30
days' notice of fee changes would be sufficient, this objection has
become irrelevant because the industry first learned of the Fee Changes
on February 22, 2013, and the changes will not become effective until
September 1. Additionally, because CTA uses a direct bill model, the
CTA network administrators, rather than CTA's customers, do the
majority of work needed to implement any fee changes. Therefore, it is
unlikely that vendors and end users will need more time to change their
data administration systems to accommodate the Fee Changes.

D. Development and Implementation Phases

    See Item I(C) above.

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 Exchange Act. The proposed fee changes directly respond to the
suggestions and requests of industry representatives and reflect the
Participants' own views that it is appropriate to establish a
simplified pricing structure that is consistent with current
technology, that reduces administrative burdens and that promotes the
use of real-time market data.
    The Participants have not significantly revised the CTA and CQ
market data fee schedules in many years. They adopted the 14-tier
Network A professional subscriber rate structure in 1986 and that
structure has changed very little ever since. Numerous technological
advances, the advent of trading algorithms and automated trading,
different investment patterns, a plethora of new securities products,
unprecedented levels of trading, decimalization, internationalization
and developments in portfolio analysis and securities research warrant
this revision.
    In general, the proposed fee changes would cause Network A fees to
sync more closely with Network B fees and would cause Network A and
Network B fees to sync more closely with fees payable under the Nasdaq/
UTP Plan and the OPRA Plan. The proposed fees would compare favorably
with the fees payable under those other Plans and with the fees charged
for their market data by the largest stock exchanges around the world.
    As a result, the Fee Changes promote consistency in price
structures among the national market system plans, as well as
consistency with the preponderance of other market data providers. This
would make market data fees easier to administer. It would enable data
recipients to compare their charges under the respective national
market system plans more easily. It also would make for a more
straightforward and streamlined administrative process for market data
users, as the reporting rules and fee arrangements under the national
market system plans become more homogenous.
    In the Participants' view, the proposed fee schedule would allow
each category of data recipient and data user to contribute an
appropriate amount for their receipt and use of market data under the
Plans. The proposed fee schedule would provide for an equitable
allocation of dues, fees, and other charges among broker-dealers,
vendors, end users and others receiving and using market data made
available under the Plans by recalibrating the fees to more closely
correspond to the different benefits different categories of users
derive from their different uses of the market data made available
under the Plans.
    The STANY Letter comments that the continuing decline in trading
volume makes increases in data fees inappropriate and that the
increases are part of a growing trend of increasing market data costs
without any corresponding business benefit or correlation to the rising
operational cost of delivering services. STANY ignores that the vast
majority of its members will pay lower market data fees, that its
members have repeatedly received business benefits as the Participants
have added more and more types of information to the data feeds and as
the quantity of quotes and prices has grown, and that ``the rising
operational cost of delivering services'' applies to the Participants
as well as to STANY members.
    The STANY Letter also characterizes the Fee Changes as amounting to
significant increases in amounts payable by larger firms. However,
STANY's comment ignores the context in which the Fee Changes are being
introduced. Under the current 14-tier Network A rate structure, the
biggest firms pay $18.75 per device per month while the one-device
investor pays 127.25. The Fee Changes reduce that differential by
charging the big firms $20 and charging the one-device investor $50.
The Participants predict that the Fee Changes would allow more than
16,000 firms to pay less for Network A data than they do now, with most
firms paying saving up to $500 per month. The Participants predict that
fewer than 1,400 firms would pay more for Network A data, with most
firms' cost increases amounting to less than $500 per month. The
Participants also predict that the Fee Changes would cause more than
12,500 firms to pay less for Network B data, with most firms saving up
to $500 per month. The Participants predict that approximately 1,000
firms would pay more for Network B data, with most firms' cost
increases amounting to less than $500 per month.
    The STANY Letter also asserts that the Fee Changes may drive some
small firms out of business. As an initial matter, that professed
concern is speculative: STANY provides no data to suggest that any
changes effected by the Fee Changes would have such a significant
effect on any particular firm that they would drive that firm out of
business. Nor is there any realistic basis to engage in such
speculation, because of the undisputed fact that there would be a
significant reduction in rates for professional device fees for firms
with 29 or fewer devices.
    The Participants propose to apply the revised fee schedule
uniformly to all constituents (including members of the Participant
markets and non-members). The Participants do not believe that the

proposed fee changes introduce terms that are unreasonably
discriminatory.

F. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plan

    Not applicable.

G. Approval by Sponsors in Accordance With Plan

    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 Changes.

H. Description of Operation of Facility Contemplated by the Proposed
Amendments

    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

1. In General
    The Participants took a number of factors into account in deciding
to propose the amendments.
    To begin, the Participants' market data staffs communicate on an
on-going basis with all sectors of their constituencies and assess and
analyze the different broker/dealer and investor business models. They
have expertise in the information needs of the Participants'
constituents and used their experience and judgment to form
recommendations regarding the Fee Changes, vetted those recommendations
with constituents and revised those recommendations based on the
vetting process.
    Most significantly, the Participants listened to the
recommendations of their Advisory Committee. The CTA and CQ Plans
require the Advisory Committee to include, at a minimum, a broker-
dealer with a substantial retail investor customer base, a broker-
dealer with a substantial institutional investor customer base, an
alternative trading system, a data vendor, and an investor.
    Advisory Committee members attend and participate in meetings of
the Participants and receive meeting materials. Members of the Advisory
Committee gave valuable input that the Participants used in crafting
the proposed fee changes. At several meetings of CTA and the CQ Plan's
Operating Committee, Advisory Committee members voiced strong support
for the Fee Changes.
    In reassessing and rebalancing market data fees as proposed in the
amendments, the Participants took a number of factors into account in
addition to the views of its constituents, including:
    (A) crafting fee changes that will not have a significant impact on
total revenues generated under the Plans;
    (B) setting fees that compare favorably with fees that the biggest
exchanges around the globe and the Nasdaq/UTP Plan and the OPRA Plan
charge for similar services;
    (C) setting fees that allow each category of market data recipient
and user to contribute market data revenues that the Participants
believe is appropriate for that category;
    (D) crafting fee changes that appropriately differentiate between
constituents in today's environment (e.g., large firms vs. small firms;
redistributors vs. end users);
    (E) crafting fees that reduce the administrative burdens of data
recipients; and
    (F) crafting a fee schedule that is easy to read and use and
minimizes administrative burdens.
2. An Overview of the Fairness and Reasonableness of Market Data Fees
and Revenues Under the Plans
a. The Fee Changes Will Have No Impact on Most Individual Investors
    The vast majority of nonprofessional subscribers (i.e., individual
investors) receive market data from their brokers and vendors. Network
A and Network B impose their nonprofessional subscriber fees on the
brokers and vendors (rather than the investors) and set those fees so
low that most brokers and vendors absorb the fees, meaning that the
vast majority of individual investors do not pay for market data. The
Fee Changes will thus have no impact on most individual investors.
b. The Fee Changes Respond to Customer Wishes
    The Fee Changes are fair and reasonable because they offer a
resolution to the call by industry participants for a simplified,
updated fee schedule that reduces administrative burdens, a resolution
that industry representatives on the Plans' Advisory Committee have
warmly embraced. And, the Fee Changes do so in a manner that is
approximately revenue neutral. Failure of the Fee Changes to take
effect would be to the detriment of many data product customers.
c. Long-Term Trend of Rate Reduction
    The existing constraints on fees for core market data under the
Plans have generally succeeded in reducing market data rates over time.
For example, when the effects of inflation are taken into account, the
average monthly rate payable for a Network A professional subscriber
device has consistently and dramatically fallen in real terms over the
past 25 years. When inflation is taken into account, the average
monthly cost of a Network A professional device was:
     $25.00 in 1987.
     $21.73 in 1990.
     $18.63 in 1995.
     $16.89 in 2000.
     $14.54 in 2005.
     $13.02 in 2010.
     $12.37 in 2013.
    Also of interest is that NYSE charged approximately $25 per month
for the NYSE ticker service in the 1880's.
d. Explosion of Data
    Although the device fees have fallen after taking inflation into
account, the amount of data message traffic that data users receive by
subscribing has skyrocketed, as has the speed at which the data is
transmitted.
i. New Data Added to Consolidated Feeds
    The Participants have continually enhanced the consolidated feeds.
The enhancements provide significant value. They are critical to the
industry in that they permit data users to do such things as view new
markets and implement new regulation. Below is a list of the more
significant recent enhancements, including the addition of new
Participants, new indicators, new sales conditions, new reason codes
and dedicated test symbols.
    CTS/CQS New/Reactivated Participants:

 NASDAQ OMX--Reactivation February 2007
 BATS--Activation April 2008
 NASDAQ OMX BX (formerly the Boston Stock Exchange)--
Reactivation January 2009
 BATS Y--Activation October 2010
 Direct Edge A--Activation July 2010
 Direct Edge X--Activation July 2010
 NASDAQ OMX PSX (formerly the Philadelphia Stock Exchange)--
Reactivation October 2010

    CTS/CQS New Indicators:

 New CTS/CQS indicator to identify Primary Listing Market--
January 2007
 New CTS Trade-Through Exempt indicator--January 2007
 New CTS/CQS Trade Reporting Facility indicator--February 2007
 New CTS Negative Index Value indicator--September 2007
 New CTS Consolidated High/Low/Last Price indicator `H'--High/
Low--July 2007
 New CTS Participant Open/High/Low/Last Price Indicator codes--
July 2007

    [cir] `L'--Open/Last
    [cir] `M'--Open/High/Low
    [cir] `N'--Open/High/Last
    [cir] `O'--Open/Low/Last
    [cir] `P'--High/Low
    [cir] `Q'--High/Low/Last
 New CTS/CQS Short Sale restriction indicator--February 2011
 New CQS SIP-generated message identifier indicator--February
2013 (denote that CQS was the originator of the Quote message, e.g.,
republished quotes, closing quote, price bands)
 New CTS/CQS Limit Up/Limit Down indicator fields and codes--
February 2013 (Dedicated Test Symbols), April 2013 (Phase I production
symbol rollout commencement). The processor calculates and distributes
the Limit Up/Limit Down price bands.
 New CQS ``Retail Interest Indicator'' field--March 2012
 New CTS/CQS ``Market-Wide Circuit Breaker'' messages--April
2013
    CTS Sale Conditions:
 New CTS Sale Condition `V'--Stock-Option Trade indicator--
January 2008
 New CTS Sale Condition `4'--Derivatively Priced Trade
indicator--April 2008
 New CTS Sale Condition `O'--Market Center Opening Trade--
September 2007
 New CTS Sale Condition `Q'--Market Center Official Open
Trade--September 2007
 New CTS Sale Condition `M'--Market Center Official Close
Trade--September 2007
 Redefined CTS Sale Condition `H' from Intraday Trade Detail to
Price Variation Trade--September 2007
 New CTS Sale Condition `X'--Cross Trade--September 2007
 Redefined CTS Sale Condition `I'--Odd Lot Trade--scheduled for
implementation in August 2013
 New CTS Sale Condition `9'--Official Consolidated Last as per
Listing Market--scheduled for implementation in August 2013

    Regulatory/Non-Regulatory Halts Reasons:

 ``Non-Regulatory'' Trading Halt Reasons
 CTS/CQS indicator `Y' to denote `Sub-Penny Trading'--August
2007
 ``Regulatory'' Trading Halt Reasons
 CTS/CQS indicator `M' to denote `Volatility Trading Pause'--
June 2010
    Other:
 CTS/CQS Dedicated ``Test'' symbols--October 2010
ii. Significant Improvements in Latency
    The Participants have made numerous investments to improve system
speed and capacity, investments that are often overlooked by the
industry. The Participants regularly monitor and review the performance
of their securities information processor (``SIP'') and make
performance statistics available publicly on a quarterly basis. They
make investments to upgrade technology, upgrades that enable the SIP to
collect and disseminate the data ever more quickly, even as the number
of quotes and trades continues to rise. The Participants will make
future investments to handle the expected continued rise in message
traffic, and at even faster data dissemination speeds.
    The information below shows that customers are getting the quote
and trade data feeds faster, as the latency of consolidated tape quote
and trade feeds has improved significantly in recent years. Average
quote feed latency declined from 800 milliseconds at the end of 2006 to
0.6 milliseconds in April 2013 and average trade feed latency declined
from about one second at the end of 2006 to 0.4 milliseconds in April
2013, as shown below. Latency is measured from the time a message
received from a Participant is time-stamped by the system, to the time
that processing the message is completed.
    Average Quote Latency for Network A/B:
     About 800 milliseconds at the end of 2006.
     About 20 milliseconds at the end of 2008.
     About 2.5 milliseconds at the end of 2010.
     Under 1 millisecond at the end of 2011.
     Under 1 millisecond at the end of 2012.
     About 0.6 millisecond in April 2013.
    Average Trade Latency for Network A/B:
     About 1 second at the end of 2006.
     About 50 milliseconds at the end of 2008.
     About 2.7 milliseconds at the end of 2010.
     Under 1 millisecond at the end of 2011.
     Under 1 millisecond at the end of 2012.
     About 0.4 millisecond in April 2013.
iii. Significant Improvements in System Throughput, Measured by
Messages Per Second
    Investments in hardware and software have increased processing
power and enabled the systems to handle increasing throughput levels.
This is measured by peak capacity messages per second and is monitored
by looking at actual peak messages per second. SIP throughput continues
to increase in order to push out the increasing amounts of real-time
quote and trade data.
    Given the constant rise in peak messages, the SIP significantly
increased system capacity. As shown below, the system could handle peak
quotes per second of 11,250 in 2006 and 2.5 million in 2012, an
increase of more than 20,000 percent. The Participants have a target of
handling 3 million peak quotes per second by October 2013.
    The capacity for trades per second increased from 2,500 in 2006 to
500,000 in 2012, an increase of more than 20,000 percent. The
Participants have a target of handling 600,000 trades per second by
October 2013.\20\
---------------------------------------------------------------------------

    \20\ To better manage the rise in message traffic, the
Participants anticipate that capacity planning will move from
measuring messages per second to measuring messages per millisecond.
---------------------------------------------------------------------------

    Supported Quotes per Second Capacity for Network A/B:
     11,250 in 2006.
     120,000 in 2008.
     500,000 in 2010.
     1,500,000 in 2011.
     2,500,000 in 2012.
     2013 Capacity Targets: 2,750,000 in July, 3,000,000 in
October.
    Actual Peak Quotes per Second for Network A/B:
     8,673 in 2006.
     88,249 in 2008.
     308,705 in 2010.
     580,870 in 2011.
     567,321 in 2012.
     574,891 year-to-date through April 2013.
    Supported Trades per Second Capacity:
     2,500 in 2006.
     20,000 in 2008.
     100,000 in 2010.
     300,000 in 2011.
     500,000 in 2012.
     2013 Capacity Targets: 550,000 in July, 600,000 in
October.
    Actual Peak Trades per Second for Network A/B:
     2,240 in 2006.
     15,058 in 2008.
     49,570 in 2010.
     77,841 in 2011.
     80,747 in 2012.
     67,660 year-to-date through April 2013.
e. Vendor Fees
    Fees imposed by data vendors, whom the Commission does not
regulate, account for a vast majority of the global market data fees
incurred by the financial industry, according to Burton Taylor
Associates and a research study by Atradia. In addition to charging

monthly subscription fees for terminal use, market data vendors may
apply significant administration mark-up fees on top of exchange market
data fees. These mark-ups are not regulated and there is limited
transparency into how the rates are applied. These mark-ups do not
result in any additional revenues for the Participants; the vendors
alone profit from them.
f. Declining Unit Purchase Costs for Customers
    Despite consolidated tape investments in new data items, additional
capacity demands and latency improvements, data users' unit purchase
costs for trade and quote data has declined significantly, increasing
the value of the data they receive from their subscriptions. The amount
of quote and trade data messages has increased significantly while fees
have remained unchanged, as shown below for the 2006 to 2012 timeframe.
i. Average Purchase Cost of Network A Quotes
    The average number of quotes per day increased over 580 percent
during this timeframe, rising from 44.2 million in 2006 to 301.8
million in 2012. As a result, the average unit purchase cost of a quote
for a customer incurring a monthly Network A indirect access fee of
$700 declined approximately 85 percent during this period, falling from
$0.000000754 in 2006 to $0.000000110 in 2012.
ii. Average Purchase Cost of Network B Quotes
    The average number of quotes per day increased over 2100 percent,
rising from 7.0 million in 2006 to 155.8 million in 2012. As a result,
the average unit purchase cost of a trade for a customer incurring a
monthly Network A indirect access fee of $250 declined an estimated 96
percent during this period, falling from $0.000001700 in 2006 to
$0.000000076 in 2012.
iii. Average Purchase Cost of Network A Trades
    The average number of trades per day increased over 80 percent,
rising from 8.1 million in 2006 to 14.7 million in 2012. As a result,
the average unit purchase cost of a quote for a customer incurring a
monthly Network B indirect access fee of $500 declined an estimated 45
percent during this period, falling from $0.000002939 in 2006 to
$0.000001619 in 2012.
iv. Average Purchase Cost of Network B Trades
    The average number of trades per day increased 290 percent, rising
from 659,337 in 2006 to 2.57 million in 2012. As a result, the average
unit purchase cost of a trade for a customer incurring a monthly
Network B indirect access fee of $200 declined an estimated 74 percent
during this period, falling from $0.000014444 in 2006 to $0.000003705
in 2012.
3. Increase in Costs
    The direct costs that the Plans incur for the services of the
securities information processor and network administrators to process
the data and administer the networks, as well as the cumulative total
of the indirect costs that each Participant incurs in producing and
collecting its data, have increased substantially since the
Participants last restructured their fees in 1986.
    Since 1987, the first full year for which the current 14-tier fee
structure was in effect, the direct costs of the securities information
processor and the network administrators have increased 89 percent, or
2.48 percent per year when compounded on an annual basis. When taken
over 25 years, this annual increase in direct costs easily exceeds the
1.7 percent increase in revenues that the Participants estimate the Fee
Changes will produce (exclusive of decreased customer usage as a result
of the Fee Changes), both as a percentage and as a dollar amount.
    With respect to indirect costs, the Commission has previously noted
that ``any attempt to calculate the precise cost of market information
presents severe practical difficulties.'' \21\ In commenting on the
1999 Concept Release, NYSE summarized many of the ``severe practical
difficulties'' attendant to each Participant's calculation of its data
production and collection costs and we incorporate that discussion
here.\22\ In 1987, the indirect costs of the Participants would have
included the data production and collection costs of seven national
securities exchanges \23\ and one national securities association.\24\
In 2013, that calculation would have to include the data production and
collection costs of the 15 Participants, including 14 national
securities exchanges and the Alternative Display Facility and two Trade
Reporting Facilities that FINRA, the lone national securities
association, maintains.
---------------------------------------------------------------------------

    \21\ See SEC 1999 Concept Release on ``Regulation of Market
Information Fees and Revenues'' (the ``1999 Concept Release'')
located at http://www.sec.gov/rules/concept/34-42208.htm.
    \22\ See footnote 11 of letter from James E. Buck, Senior Vice
President and Secretary, NYSE, April 10, 2000, located at http://www.sec.gov/rules/concept/s72899/buck1.htm.
    \23\ American Stock Exchange, Inc., Boston Stock Exchange, Inc.,
Cincinnati Stock Exchange, Inc., Midwest Stock Exchange, Inc., New
York Stock Exchange, Inc., Pacific Stock Exchange, Inc., and
Philadelphia Stock Exchange, Inc.
    \24\ National Association of Securities Dealers, Inc.
---------------------------------------------------------------------------

4. Adequate Constraints on Fees
    Constituent boards, customer control and regulatory mechanisms
constrain fees for core market data now just as they have since
Congress established the fair-and-reasonable standard in 1975.
    With respect to Network A and Network B, NYSE typically takes the
lead on pricing proposals, vetting new proposals with the other
Participants, various users, and trade and industry groups, and making
modifications which improve or reevaluate the original concept.
Proposals are then taken to each Participant for approval. But there
are significant market data user and regulatory constraints on NYSE's
ability to simply impose price changes.
    The governing body of each Participant consists of representatives
of constituent firms and a large quotient of independent directors. The
Participants' constituent board members have the ultimate say on
whether CTA and the CQ Plan Operating Committee should submit fee
proposals to the Commission and whether the costs of operating the
markets and the costs of the market data function are fairly allocated
among market data users. That is, the users of market data and non-
industry representatives who sit on Participant boards get to determine
whether to support market data fee proposals. They also get to
determine how the various types of data users should pay their fair
share and they make decisions about funding technical infrastructure
investments needed to receive, process and safe-store the orders,
quotations and trade reports that give rise to the data. This cost
allocation by consensus is buttressed by Commission review and is
superior to cost-based rate-making.
    Constituent Board members are the Participants' market data
customers. When a critical mass of them voices a point of view, they
can direct the Participants how to act. This is exactly what motivated
the Participants to propose the Fee Changes.
    The Commission's process, including public comment as appropriate
and when permitted by the statutory language, then acts as an
additional constraint on pricing. This, in turn, is

buttressed by the Commission rules that provide procedures for data
recipients to seek redress of their grievances if he or she believes
his or her access to data has been limited.
    Also, developments in technology make possible another important
constraint on market data prices for core data: There is nothing to
prevent one or more vendors, broker-dealers or other entities from
gathering prices and quotes across all Participants and creating a
consolidated data stream that would compete with the Plans' data
streams. The technology to consolidate multiple, disparate data streams
is readily available, and other markets have already begun introducing
products that compete with core data (such as Nasdaq Basic).\25\
---------------------------------------------------------------------------

    \25\ In a context in which a trading or order-routing decision
can be implemented, Regulation NMS Rule 603(c)(1) prevents a broker,
dealer or securities information processor from providing a display
of market data unless it also provides a consolidated display, such
as the consolidated displays made available under the Plans. Yet,
despite this rule, the Participants have seen reductions of customer
activity at the same time that competing non-consolidated products
have seen increases.
---------------------------------------------------------------------------

K. Method and Frequency of Processor Evaluation

    Not applicable.

L. Dispute Resolution

    Not applicable.

II. Rule 601(a) (Solely in Its Application to the Amendments to the CTA
Plan)

A. Equity Securities for Which Transaction Reports Shall Be Required by
the Plan

    Not applicable.

B. Reporting Requirements

    Not applicable.

C. Manner of Collecting, Processing, Sequencing, Making Available and
Disseminating Last Sale Information

    Not applicable.

D. Manner of Consolidation

    Not applicable.

E. Standards and Methods Ensuring Promptness, Accuracy and Completeness
of Transaction Reports

    Not applicable.

F. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination

    Not applicable.

G. Terms of Access to Transaction Reports

    See Item I(A).

H. Identification of Marketplace of Execution

    Not applicable.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed
amendments are 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_ADDRESS>Please include
File Number SR-CTA/CQ-2013-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-CTA/CQ-2013-04. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the Amendments that are filed with
the Commission, and all written communications relating to the
Amendments 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. Copies of the Amendments also will be available for
inspection and copying at the principal office of the CTA.
    All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-CTA/CQ-2013-04
and should be submitted on or before August 15, 2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(27).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-17860 Filed 7-24-13; 8:45 am]
BILLING CODE 8011-01-P


Reader’s Guide for Trinexapac-ethyl

CRM: Kylie Rothwell

EPA/OPPTS/OPP/SRRD

Reader’s Guide to Trinexapac-ethyl Docket # EPA-HQ-OPP-2008-0657

Publication Date:  September 17, 2008

The Agency is providing the “Readers Guide” to allow the reader to
more easily access and navigate the various entries contained in the
trinexapac-ethyl docket.

Federal Register and Docket Organizational Documents:

Docket Item 1. Federal Register Notice: Trinexapac-ethyl Registration
Review.

Docket Item 2. Reader’s Guide to the Trinexapac-ethyl Docket #
EPA-HQ-OPP-2008-0657

Docket Item 3. Trinexapac-ethyl  Summary Document Registration Review:
Initial Docket

Human Health Documents for Registration Review

Docket Item 4. Trinexapac-Ethyl: Revised Human Health Assessment Scoping
Document in Support of Registration Review.  September 5, 2008.

This document evaluates the status of the human health assessments to
determine the scope of work necessary to support the registration review
of the plant growth regulator trinexapac-ethyl.

Docket Item 5. Review of Trinexapac-ethyl Incident Reports. July 24,
2008.

This report represents human health incidents occurring in the United
States from 2000 to the present for the single chemical,
trinexapac-ethyl, only.

Environmental Fate and Effects Documents for Registration Review

Docket Item 6. Registration Review Preliminary Problem Formulation for
the Ecological

Risk Assessment of Trinexapac-ethyl. May 20, 2008.

This document defines the problem for the assessment, and develops a
plan for analyzing and characterizing the ecological and environmental
fate risks.

Use and Usage Information for Registration Review

Docket Item 7. Trinexapac-ethyl 112602 Screening Level Usage Analysis
(SLUA). January  2007.

This document provides available estimates of pesticide usage data for
trinexapac-ethyl in California.

Docket Item 8. SRRD Appendix A: Food/Feed & Non-Food/Non-Feed Uses
Considered for Registration Review. Trinexapac-ethyl (112602) Case
No.7228. December 12, 2007.

This table lists the food/feed and non-food/non- feed uses for
trinexapac-ethyl.