Consolidated Tape Association; Order Approving the Fifth Substantive Amendment to the Second Restatement of the Consolidated Tape Association Plan and the Third Substantive Amendment to the Restated Consolidated Quotation Plan and Amendment No. 1 Thereto

I. Introduction

On November 28, 2003, the Consolidated Tape Association (“CTA”) Plan and Consolidated Quotation (“CQ”) Plan Participants (“Participants”) submitted to the Securities and Exchange Commission (“Commission”) a proposal to amend the CTA and CQ Plans (collectively, the “Plans”), pursuant to Rule 11Aa3-2 under the Securities Exchange Act of 1934 (“Act”). On December 23, 2003, the Participants submitted Amendment No. 1 to the proposed amendments. The proposal represents the 5th substantive amendment made to the Second Restatement of the CTA Plan (“5th Amendment”) and the 3rd substantive amendment to the Restated CQ Plan (“3rd Amendment”), and reflects several changes unanimously adopted by the Participants. The proposed amendments would delete the provisions of the Plans that exempt any Participant in the Plans from paying market data fees for the receipt of data on its trading floor for regulation or surveillance or for other specifically approved purposes (“Participant Fee Exemptions”). Notice of the proposed amendments was published in the Federal Register on December 31, 2003.

The Commission received no comments on the proposed amendments. This order approves the 5th Amendment to the CTA Plan and the 3rd Amendment to the CQ Plan.

II. Description of the Proposed Amendments

Currently, the Plans specify that each Participant is exempt from certain market data charges (other than access fees) if it is in compliance with the requisite market data contract. According to the Participant Fee Exemptions, the market data contract must require the Participant (1) to receive market data solely at premises that it occupies or on its “trading floor or trading floors” (as that term is generally understood), and (2) to use the data solely for regulatory, surveillance and other approved purposes.

The Participants propose to amend the Plans to require each Participant to pay the same fees for its receipt and use of market data as other market participants pay, regardless of whether the Participant receives the data on its trading floor or elsewhere or uses the data for surveillance or other purposes.

The Participants believe that eliminating the Participant Fee Exemptions will eliminate disputes that have arisen among the Participants regarding what constitutes a “trading floor” and will eliminate a perceived competitive advantage that the Participant Fee Exemptions give Participant markets over non-exchange markets (such as electronic communications networks and other alternative trading systems), over NASD market makers and, in the case of Participants that trade options, over non-Participant options markets.

The Participants have represented that once the proposed amendments are approved by the Commission, they will commence payment of the fees that were subject to the Participant Fee Exemptions in the billing cycle that follows the Commission's approval of the proposed amendments.

III. Discussion

The Commission finds that the proposed amendments to the Plans are consistent with the requirements of the Act and the rules and regulations thereunder, and, in particular, section 11A(a)(1) of the Act and Rule 11Aa3-2 thereunder.

The Commission notes that, under the proposed amendments, all Participants will be required to pay for market data like other market participants, regardless of how they receive or use it. The Commission believes that deleting the Participant Fee Exemptions from the Plans will eliminate any potential disputes over the applicability of the Participant Fee Exemptions and should help to eliminate any perceived competitive inequities between the Participants who currently benefit from the Participant Fee Exemptions and other market participants who pay for market data. The Commission notes that payment of fees subject to the Participant Fee Exemption will commence in the billing cycle that follows Commission approval of the proposed amendments. The Commission finds that the proposed amendments to delete the Participant Fee Exemptions from the Plans are consistent with section 11A of the Act and the rules and regulations thereunder.

IV. Conclusion

It is therefore ordered, pursuant to section 11A of the Act and paragraph (c)(2) of Rule 11Aa3-2 thereunder, that the proposed 5th Amendment to the CTA Plan and the proposed 3rd Amendment to the CQ Plan are approved, as amended.