Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”)  and Rule 19b-4 thereunder, notice is hereby given that on May 20, 2011, NYSE Arca, Inc. (the “Exchange” Start Printed Page 31669or “NYSE Arca”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to establish a revenue sharing program with Correlix, Inc. (“Correlix”) and a free trial period for new users of the Correlix service. The text of the proposed rule change is available at the Exchange, the Commission's Public Reference Room and http://www.nyse.com.
II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change
The Exchange is filing a proposed rule change to establish a revenue sharing program with Correlix effective upon filing with the Commission. The Exchange has entered into an agreement with Correlix to provide to users  of the Exchange real-time analytical tools to measure the latency of orders to and from the Exchange's system as well as the latency of market data updates transmitted from the Exchange systems to the user. Under the agreement, the Exchange will receive 30 percent of the total monthly subscription fees received by Correlix from parties who have contracted directly with Correlix to use their RaceTeam latency measurement service for the Exchange. The Exchange will not bill or contract with any Correlix RaceTeam customer directly.
Pricing for the Correlix RaceTeam product for users of the Exchange will be based on the number of ports requested by the user for monitoring by Correlix; each “port” is a FIX or binary protocol connection to the Common Customer Gateway (“CCG”) of NYSE Euronext, which provides connectivity to the national securities exchanges operated by NYSE Euronext (i.e., NYSE Arca, New York Stock Exchange LLC (“NYSE”), and NYSE Amex LLC (“NYSE Amex”)). The fee for equities users of the Exchange will be an initial $2,500 monthly base fee for the first 25 ports requested by the user for latency monitoring, and an additional $1,000 per month for each additional 25 ports (or portion thereof) requested by the user for latency monitoring. The fee for options users of the Exchange will be an initial $1,500 monthly fee for the first 25 ports requested by the user for latency monitoring, and an additional $750 per month for each additional 25 ports (or portion thereof).
Correlix will charge for services based on the number of ports because of the CCG technology, which is unique to the NYSE Euronext exchanges. Specifically, the use of ports as the basis of charging will permit order-related messages transmitted through the CCG to the various NYSE Euronext markets (e.g., NYSE Arca equities vs. NYSE or NYSE Arca equities vs. NYSE Arca options) to be differentiated and kept separate. For these purposes, the combination of port and user ID provides the mechanism for users to receive latency data for their transactions on a particular NYSE Euronext market. The Correlix RaceTeam product will include controls such that users will not be able to obtain latency information about options orders through an equities port connection and vice versa.
Under the program, Correlix will see an individualized unique NYSE Arca generated identifier that will allow Correlix RaceTeam to determine round trip order time, from the time the order reaches the Exchange extranet, through the Exchange matching engine, and back out of the Exchange extranet. The RaceTeam product offering does not measure latency outside of the Exchange extranet. The unique identifier serves as a technological information barrier so that the RaceTeam data collector will only be able to view data for Correlix RaceTeam subscribing users related to latency. Correlix will not see subscriber's individual order detail such as security, price or size. Individual RaceTeam subscribers' logins will restrict access to only their own latency data. Correlix will see no specific information regarding the trading activity of non-subscribers. The Exchange believes that the above arrangement will provide users of the Exchange with greater transparency into the processing of their trading activity and allow them to make more efficient trading decisions.
In addition, the Exchange proposes to establish a flexible 60-day free trial so parties will be eligible for one free 60-day trial period of Correlix services whenever they initially elect to sign-up for the service, now or in the future. The Exchange is proposing the flexible trial to ensure that all Correlix users have an equal opportunity to take advantage of an initial free trial period.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section 6(b) of the Act, in general, and furthers the objectives of Section 6(b)(5) of the Act, in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. The Exchange believes the proposed rule will provide greater transparency into trade and information processing and thus allow market participants to make better-informed and more efficient trading decisions.
In addition, the Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, in general, and with Section 6(b)(4) of the Act, in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system that the Exchange operates or controls. In particular, NYSE Arca notes that it operates in a highly Start Printed Page 31670competitive market in which market participants can readily direct orders to competing venues and that use of the Correlix RaceTeam product is completely voluntary. Further, NYSE Arca makes the RaceTeam product uniformly available pursuant to a standard non-discriminatory pricing schedule offered by Correlix and will offer the free trial period on a uniform and non-discriminatory basis.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act  and Rule 19b-4(f)(6) thereunder. Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder.
The Exchange has requested that the Commission waive the 30-day operative delay. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that revenue sharing programs with Correlix for the provision of latency information have been approved previously by the Commission for other markets. Waiver of the 30-day operative delay will ensure that the free period is made available to all interested parties without delay. Accordingly, the Commission designates the proposed rule change operative upon filing with the Commission.
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
- Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
- Send an e-mail to firstname.lastname@example.org. Please include File Number SR-NYSEArca-2011-12 on the subject line.
- 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-NYSEArca-2011-12. 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 proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for 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 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. The text of the proposed rule change is available on the Commission's Web site at http://www.sec.gov. 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-NYSEArca-2011-12 and should be submitted on or before June 22, 2011.Start Signature
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Cathy H. Ahn,
1. 15 U.S.C.78s(b)(1).Back to Citation
3. For the purposes of this filing, the term “users” includes any ETP Holder or Sponsored Participant who is authorized to obtain access to the NYSE Arca Marketplace pursuant to NYSE Arca Equities Rule 7.29 (see NYSE Arca Equities Rule 1.1(yy)), or any OTP Holder, OTP Firm or Sponsored Participant that is authorized to obtain access to OX pursuant to NYSE Arca Options Rule 6.2A (see NYSE Arca Options Rule 6.1A(a)(19)).Back to Citation
4. NYSE and NYSE Amex have submitted similar rule filings. See SR-NYSE-2011-13 and SR-NYSEAmex-2011-20.Back to Citation
5. The product measures latency of orders whether the orders are rejected, executed, or partially executed.Back to Citation
12. See Exchange Act Release Nos. 62605 (July 30, 2010), 75 FR 47651 (August 6, 2010) (SR-NASDAQ-2010-068); 62928 (September 17, 2010), 75 FR 58002 (September 23, 2010) (SR-EDGA-2010-09); 62929 (September 17, 2010), 75 FR 58003 (September 23, 2010) (SR-EDGX-2010-09).Back to Citation
13. For the purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78(c)(f).Back to Citation
[FR Doc. 2011-13420 Filed 5-31-11; 8:45 am]
BILLING CODE 8011-01-P