[Federal Register: January 21, 2009 (Volume 74, Number 12)]
[Notices]
[Page 3659-3661]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ja09-137]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59230; File No. SR-CTA/CQ-2008-05]
Consolidated Tape Association; Notice of Filing of the Thirteenth
Substantive Amendment to the Second Restatement of the Consolidated
Tape Association Plan and Ninth Substantive Amendment to the Restated
Consolidated Quotation Plan
January 12, 2009.
Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that
on December 15, 2008, 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 CTA and CQ Plans
(collectively, the ``Plans'').\4\ The
[[Page 3660]]
proposals represent the thirteenth substantive amendment made to the
Second Restatement of the CTA Plan (``Thirteenth Amendment to the CTA
Plan'') and the ninth substantive amendment to the Restated CQ Plan
(``Ninth Amendment to the CQ Plan''), and reflect changes unanimously
adopted by the participants. The Thirteenth Amendment to the CTA Plan
and the Ninth Amendment to the CQ Plan (``Amendments'') would amend the
Plans to provide that the Participants will pay the Network A
Administrator a fixed annual fee in exchange for its performance of
Network A administrator functions under the Plans. The Commission is
publishing this notice to solicit comments from interested persons on
the proposed Amendments.
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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 the American Stock Exchange LLC (n/k/a NYSE
Alternext US LLC); Boston Stock Exchange, Inc. (n/k/a NASDAQ OMX BX,
Inc.); Chicago Board Options Exchange, Incorporated; Chicago Stock
Exchange, Inc.; Financial Industry Regulatory Authority, Inc.,
International Securities Exchange, LLC; The NASDAQ Stock Market LLC;
National Stock Exchange, Inc.; New York Stock Exchange LLC
(``NYSE''); NYSE Arca, Inc.; and Philadelphia Stock Exchange, Inc.
(n/k/a NASDAQ OMX PHLX, Inc.).
\4\ See Securities Exchange Act Release Nos. 10787 (May 10,
1974), 39 FR 17799 (order approving CTA Plan); 15009 (July 28,
1978), 43 FR 34851 (August 7, 1978) (order temporarily approving CQ
Plan); and 16518 (January 22, 1980), 45 FR 6521 (order permanently
approving 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 also a ``national market system plan''
under Rule 608 under the Act, 17 CFR 242.608.
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I. Rule 608(a)
A. Description and Purpose of the Amendment
Network Administrator Fees under the Plans. Section XII
(``Financial Matters'') of the CTA Plan and Section IX (``Financial
Matters'') of the CQ Plan each provides that a network's Operating
Expenses are to be deducted from the network's Gross Income in
determining the amounts that the network's administrator distributes to
the Participants. Both Section XII(c)(i) (``Determination of Operating
Expenses'') of the CTA Plan and Section IX(c)(i) (``Determination of
Operating Expenses'') of the CQ Plan currently provide that a network's
Operating Expenses include all costs and expenses that the network's
administrator incurs in ``collecting, processing and making available
Network A market data.''
Proposed Revision. The Network A Administrator has informed the
Participants that accounting for operating costs is administratively
burdensome, especially the allocation of organization overhead costs to
the Network A Administrator function. As a result, the Network A
Participants have determined that paying the Network A Administrator a
fixed fee in exchange for its Network A administrative services would
be more efficient.
Therefore, the Participants propose to replace their payment to the
Network A Administrator of Operating Costs with payment to the Network
A Administrator of a fixed fee. (The Participants understand that
Nasdaq similarly receives a fixed fee for its performance of
administrative functions under the ``Joint Self-Regulatory Organization
Plan Governing the Collection, Consolidation and Dissemination of
Quotation and Transaction Information for Nasdaq-Listed Securities
Traded on Exchanges on Unlisted Trading Privileges Basis.'')
For calendar year 2008, the Network A Participants propose to set
the fixed fee at $6,000,000. This amount will compensate the Network A
Administrator for its Network A administrative services during 2008
under both the CTA and CQ Plans.
Determination of Operating Expenses. In the case of NYSE as the CTA
and CQ Network A Administrator, the Participants deem ``Operating
Expenses'' for any calendar year to equal: (1) The ``Annual Fixed
Payment'' for that year; plus (2) ``Extraordinary Expenses.''
Annual Increases. For each subsequent calendar year the Annual
Fixed Payment shall increase (but not decrease) by the percentage
increase (if any) in the annual cost-of-living adjustment (``COLA'')
that the U.S. Social Security Administration applies to the
Supplemental Security Income for the calendar year preceding that
subsequent year, subject to a maximum annual increase of five percent.
For example, if the Social Security Administration's COLA is three
percent for calendar year 2008, then the Annual Fixed Payment for
calendar year 2009 would increase by three percent to $6,180,000.
Biannual Review. Every two years the Network A Administrator will
provide a report highlighting any significant changes to the CTA
Network A and CQ Network A administrative expenses during the preceding
two years, and the Participants will review the Annual Fixed Payment
and determine by majority vote whether to continue it at its then
current level.
Payment of the Fee. On a quarterly basis, NYSE shall deduct one-
quarter of each calendar year's Annual Fixed Payment from the aggregate
of CTA Network A Gross Income and CQ Network A Gross Income under the
CQ Plan, before determining that quarter's distributable Net Income
under the Plans. If a Participant's share of Net Income for CTA Network
A and CQ Network A for any calendar year is less than its pro rata
share of the Annual Fixed Payment for that calendar year, the
Participant shall be responsible for the difference.
Extraordinary Expenses. Extraordinary Expenses include that portion
of legal and audit expenses and marketing and consulting fees that are
outside of the ordinary and customary functions that a network
administrator performs. For instance, Extraordinary Expenses would
include such things as legal fees related to prosecution of a legal
proceeding against a vendor that fails to pay applicable charges and
fees relating to a marketing campaign that Participants determine to
undertake to popularize stock trading.\5\
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\5\ The Commission notes that the Transmittal Letter
accompanying the proposed Amendments included language not voted on
by the Participants and thus not included in the proposed
Amendments: ``Network A Administrator will not incur any
extraordinary expense on behalf of the Network A Participants unless
the Network A Participants determine by majority vote to approve the
incurrence of that extraordinary expense.'' This language is not
part of the proposed Amendments.
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The text of the proposed Amendments is available on the CTA's Web
site (http://www.nysedata.com/cta), at the principal office of the CTA,
and at the Commission's Public Reference Room.
B. Additional Information Required by Rule 608(a)
1. Governing or Constituent Documents
Not applicable.
2. Implementation of the Amendment
Upon Commission approval of the Amendment, the Participants intend
to implement the fixed fee immediately in order to make it applicable
for the 2008 calendar year. That is, for all of 2008, the Network A
Participants would pay the Network A Administrator the fixed fee rather
than operating costs.
3. Development and Implementation Phases
See Item I(B)(2) above.
4. Analysis of Impact on Competition
The Amendments will impose no burden on competition.
5. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plan
The Participants have no written understandings or agreements
relating to interpretation of the Plans as a result of the Amendments.
6. Approval by Sponsors in Accordance With Plan
Under Section IV(b) of the CTA Plan and Section IV(c) of the CQ
Plan, each Plan Participant must execute a written amendment to the CTA
Plan before the
[[Page 3661]]
amendment can become effective. The Amendments are so executed.
7. Description of Operation of Facility Contemplated by the Proposed
Amendment
a. Terms and Conditions of Access: Not applicable.
b. Method of Determination and Imposition, and Amount of, Fees and
Charges: Not applicable.
c. Method of Frequency of Processor Evaluation: Not applicable.
d. Dispute Resolution: Not applicable.
II. Rule 601(a)
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
Not applicable.
H. Identification of Marketplace 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
Thirteenth Substantive Amendment to the CTA Plan and the Ninth
Amendment to the CQ Plan 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 e-mail to rule-comments@sec.gov. Please include
File Number SR-CTA-2008-05 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-2008-05. This file
number should be included on the subject line if e-mail 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 Plan amendment that are filed
with the Commission, and all written communications relating to the
Plan amendment 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 on official business
days between the hours of 10 a.m. and 3 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-
2008-05 and should be submitted on or before February 11, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(27).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-1021 Filed 1-16-09; 8:45 am]
BILLING CODE 8011-01-P