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 6th substantive amendment made to the Second Restatement of the CTA Plan (“6th Amendment”) and the 4th substantive amendment to the Restated CQ Plan (“4th Amendment”), and reflects several changes unanimously adopted by the Participants. The proposed amendments would separate the functions of administering the contracts into which vendors and others enter for the purpose of receiving and using market data. Notice of the proposed amendments was published in the Federal Register on December 31, 2003.
Each Participant executed the proposed amendments. The Participants are the American Stock Exchange LLC (“Amex”); Boston Stock Exchange, Inc.; Chicago Board Options Exchange, Inc.; Chicago Stock Exchange, Inc.; Cincinnati Stock Exchange, Inc. (now known as the National Stock Exchange, Inc.); National Association of Securities Dealers, Inc.; New York Stock Exchange, Inc. (“NYSE”); Pacific Exchange, Inc.; and Philadelphia Stock Exchange, Inc.
17 CFR 240.11Aa3-2.
See letter to Jonathan G. Katz, Secretary, Commission, from Thomas E. Haley, Chairman, CTA, dated December 22, 2003 (“Amendment No. 1”). Amendment No. 1 makes a technical correction to the proposed amendments.
See Securities Exchange Act Release No. 48984 (December 23, 2003), 68 FR 75662 (December 31, 2003).
The Commission received no comments on the proposed amendments. This order approves the 6th Amendment to the CTA Plan and the 4th Amendment to the CQ Plan.
II. Description of the Proposed Amendments
Since 1989, NYSE has performed certain administrative functions on behalf of the Amex, which is the Network B Administrator. These functions include procuring and maintaining the contracts by which vendors and others receive and use the market data that both Network A and Network B make available. NYSE executes the Consolidated Vendor Form on behalf of itself, the Network B administrator and the other Plan Participants.
In 1989, the Participants introduced the “Consolidated Vendor Form” and that form of vendor agreement is still in use. See Securities Exchange Act Release No. 27498 (December 4, 1989), 54 FR 50828 (December 11, 1989). The Consolidated Vendor Form applies to the receipt and use of Network B market data, as well as Network A market data. Pursuant to delegated authority, NYSE has administered that Consolidated Vendor Form on behalf of the Network B Participants as well as on behalf of the Network A Participants. Before the introduction of that form of vendor agreement, NYSE administered the Network A vendor agreements on behalf of the Network A Participants and the Amex administered the Network B vendor agreements on behalf of the Network B Participants.
The form of contract that is the subject of the proposal is the form of contract (the Consolidated Vendor Form) that the Participants require “Customers” to enter into for their receipt and use of the market data that the Participants make available under the Plans. “Customers” include (1) vendors, (2) internal and other data redistributors, and (3) those that internally use market data for the purposes that are subject to the Plans' program classification charges. The Consolidated Vendor Form constitutes Exhibit C to each Plan.
End users that do not redistribute data and do not use it for the purposes that are the subject of the program classification charges receive the data pursuant to “subscriber” forms of the agreement. NYSE, as the Network A administrator, currently administers the Network A form of that agreement. The Amex, as the Network B administrator, currently administers a Network B form of that agreement. The proposed amendments do not propose any change to those subscriber forms.
The Participants propose to once again divide the contract-administration function between the Network A administrator (NYSE) (for the receipt and use of Network A market data) and the Network B administrator (Amex) (for the receipt and use of Network B market data). To make the separation of contract functions possible, the amendments propose to replace the Consolidated Vendor Form with two new forms, a “Network A Consolidated Vendor Form” and a “Network B Consolidated Vendor Form.”
Under the proposal, the Amex would assume all contract-administration functions for the Network B Consolidated Vendor Form and would execute those forms on behalf of itself and the other Network B Participants. The NYSE would continue to perform the contract-administration functions for Network A and would execute the Network A Consolidated Vendor Form on behalf of itself and the other Network A Participants.
In terms of substance, the Network A Consolidated Vendor Form and the Network B Consolidated Vendor Form would offer the same terms and conditions as does the Consolidated Vendor Form. The only difference would be that the Consolidated Vendor Form governs the receipt and use of both Network A and Network B market data, whereas the Network A Consolidated Vendor Form governs the receipt and use of Network A market data and the Network B Consolidated Vendor Form will govern the receipt and use of Network B market data.
The Participants originally submitted the Consolidated Vendor Form to the Commission on October 16, 1989. They made certain revisions to the form in response to changes recommended by commenters and re-filed the Consolidated Vendor Form for immediate effectiveness in August 1990. In conjunction with its submission of amended and restated CTA and CQ Plans in December 1995, the Participants submitted a revised version of the Consolidated Vendor Form to the Commission. That revised version made non-substantive changes to conform the form's language to the language in the Plans and to provide greater clarity and standardization in the definitions. The Commission approved the restated Plans, including the revised version of the Consolidated Vendor Form, in May 1996. The amendments propose the first changes to the Consolidated Vendor Form since then.
See Securities Exchange Act Release No. 27498 (December 4, 1989), 54 FR 50828 (December 11, 1989).
See Securities Exchange Act Release No. 28407 (September 6, 1990), 55 FR 37276 (September 10, 1990).
See Securities Exchange Act Release No. 37191 (May 9, 1996), 61 FR 24842 (May 16, 1996).
Under the proposal, the Amex would assume Network B contract-administration functions within 90 days from the Commission's approval of these proposed amendments. The network administrators would commence to use the Network A consolidated Vendor Form and the Network B Consolidated Vendor Form at that time. The Participants state that they intend to notify vendors and other interested parties, both in writing and through verbal contact, of the two new forms.
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.
In approving the proposed plan amendments, the Commission has considered the proposed amendments' impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
15 U.S.C. 78k-1(a)(1).
17 CFR 240.11Aa3-2.
The Commission believes that separating the Network A and Network B functions of administering the contracts into which vendors and others enter for the purpose of receiving and using market data should help to facilitate the proper administration of the Plans. More specifically, the Commission believes that the proposed amendments should ease the administrative burden on the NYSE, which currently administers the Consolidated Vendor Form on behalf of both Network A and Network B Participants, by transferring the Network B Contract functions to the Amex, the Network B administrator. The Commission notes that the new Network A Consolidated Vendor Form and the new Network B Consolidated Vendor Form are substantially similar to, and offer the same terms and conditions as, the current Consolidated Vendor Form. The Commission further notes that the separation of the Network A and Network B contract-administration functions and the use of the new forms will be implemented 90 days from the date of this approval order, and that the Participants will notify vendors and other interested parties of the new forms. The Commission therefore finds that the proposed amendments to divide the contract-administration function between the Network A administrator and the Network B administrator 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 6th Amendment to the CTA Plan and the proposed 4th Amendment to the CQ Plan are approved, as amended.
15 U.S.C. 78k-1.
17 CFR 240.11Aa3-2(c)(2).
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.16
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-2907 Filed 2-10-04; 8:45 am]
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