Via email to firstname.lastname@example.org
May 1, 2003
Mr. Jonathan G. Katz
Re: NYSE Petition Relating to Participant Fee Exemptions
Dear Mr. Katz:
The Commission recently published a concept release requesting comment on a petition by which the Exchange requests the Commission to amend the CTA Plan and the CQ Plan (the "Plans") to delete the provisions 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 (the "NYSE Petition"). As a result of the deletion, all Participants would pay for their receipt of market data under the Plans, regardless of where the Participant receives the data or how the Participant uses it. The Commission seeks comment on whether it should act on the NYSE Petition and on the effects that eliminating the participant fee exemption would have on participants in the national market system.
As the petition reflects, NYSE is of the view that the fee exemption has long out-lived its usefulness. NYSE further believes that the elimination of the participant fee exemption would have a de minimis effect on the Participants and would level the playing field for other participants in the national market system. Indeed, eight of the nine Participants began paying device fees as of July 1, 2001. Each has individually determined to absorb the charges, to pass them through to end-users or to do a combination of both. The Chicago Board Options Exchange ("CBOE") alone has not been paying the device fees. It has also appealed the administrative determination pursuant to which the other eight Participants make their payments. The appeal is currently the subject of separate Commission review.
Since NYSE filed the NYSE Petition more than two years ago, subsequent events have strengthened the arguments that the petition marshals for deleting the device-fee exemptions:
In summary, the anticompetitive, distorting effects of the exemption have only gotten worse since we filed our petition, and further negative effects loom on the horizon.
For the reasons stated in the petition, as well as these additional exacerbating effects that this letter notes, we urge the Commission to delete the exemption from the Plans.
We thank you for this opportunity to comment and would be pleased to respond to any questions that you may have.
cc: Chairman William H. Donaldson