U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

before the
Washington, D.C.

Rel. No. 47891 / May 20, 2003

Admin. Proc. File No. 3-11129

In the Matter of the Application of


For Review of Action Taken by the




Bloomberg L.P., a vendor of quotation information provided by the New York Stock Exchange, Inc. (the "NYSE" or "Exchange"), has appealed from action taken by the NYSE which Bloomberg contends constitutes a denial of access to services under Sections 19(d) and 19(f) of the Securities Exchange Act of 1934. Bloomberg also has requested a stay of Exchange action related to that appeal. As discussed below, we have determined to grant Bloomberg an interim stay.

On April 2, 2003, the Commission issued an order (the "Order") approving, subject to certain conditions, a change to the Exchange's rules to permit the Exchange to disseminate "liquidity bid" and "liquidity offer" quotations through its "Liquidity Quote Service." 1 These liquidity quotes wouldreflect aggregated Exchange trading interest at specific price intervals below the best bid (in the case of a liquidity bid) or at specific price intervals above the best offer (in the case of a liquidity offer) for selected securities. The Liquidity Quote Service would be part of the NYSE OpenBook data feed service. 2 The Order conditioned approval of the rule change on the Exchange's agreement to remove from its vendor agreements prohibitions on data feed recipients, including vendors, from integrating Liquidity Quote data with markets' data or with the display of other markets' data provided that the NYSE may require that vendors provide the NYSE attribution in any display that includes Liquidity Quote and also may require vendors that purchase the Liquidity quote product to make Liquidity Quote available to their customers as a separate branded package. 3

The Order further further required that the Exchange's "Liquidity Quote proposal not be implemented until the prohibition is removed from the NYSE's vendor agreements." 4

The NYSE represented that it agreed to the Commission's conditions, and subsequently revised its vendor agreements. According to Bloomberg, the revised vendor agreements, among other things, would: (i) require the use of highlighting or othertechniques to visually differentiate liquidity quote data from best bid and offer data; (ii) require, in the case of any display of an integrated quote that incorporates liquidity quote data with best bid and offer data, that the quote's display indicate the number of shares attributable to liquidity quote data; (iii) require montages to include a footnote that differentiates liquidity quote data from best bid and offer data; (iv) require the vendor to obtain the Exchange's prior approval for each manner in which the vendor will display liquidity quota data; and (v) require the vendor to obtain the Exchange's prior approval of all changes, "whether trivial or otherwise," to any such displays (collectively, the "Vendor Restrictions").

Bloomberg contends that, through the Vendor Restrictions, the Exchange is seeking to continue to impose the very kinds of restrictions the Commission expressly prohibited in the Order. Bloomberg further asserts that it has no effective alternative source for the data other than the NYSE and that the Exchange's restrictions will make the resulting display screens difficult to read and understand and will impede Bloomberg's creation of quotation montages and analytics integrating liquidity quote data with data from other markets. According to Bloomberg, the Vendor Restrictions will "severely disadvantage and indeed cripple the ability" of small to middle-market investment firms to compete, because such firms lack the computer resources of their largercompetitors and must rely on vendors such as Bloomberg to perform the kind of complex data manipulation involved in this case. Bloomberg asserts that it was that competitive burden, among other things, that led the Commission to make the Order conditional on the NYSE removing restrictions from its vendor agreements.

Based on this asserted harm and considerations of public interest, Bloomberg has requested that the Commission either stay the launch of the Liquidity Quote Service or, in the alternative, the implementation by the NYSE of the challenged restrictions. Bloomberg represents that the NYSE has stated that it intends to begin the Liquidity Quote Service and to impose the challenged restrictions on May 21, 2003. The NYSE has indicated that it will not file its opposition to Bloomberg's stay motion until May 21, 2003, after the start of the Liquidity Quote Service.

We generally have considered the following factors in determining whether to grant a stay: (i) likelihood that the moving party will eventually succeed on the merits of his appeal; (ii) likelihood that the moving party will suffer irreparable harm without a stay; (iii) likelihood that another party will suffer substantial harm as a result of a stay; and (iv) a stay's impact on the public interest. 5 A consideration of thosefactors here supports the granting of a stay on an interim basis. Bloomberg's appeal raises complicated and important public policy issues. The consequences for Bloomberg and its customers if a stay is not granted could be significant in light of Bloomberg's dependence on the NYSE for quotation data and the alleged intrusiveness of the Vendor Restrictions. Among other things, we are troubled by the potential anti-competitive impact of the NYSE's actions. Under the circumstances, a brief, interim stay -- which will permit us to consider and more fully evaluate these issues as well as to analyze the Exchange's response to Bloomberg's motion -- would serve the public interest. 6

Accordingly, it is ORDERED that implementation by the New York Stock Exchange, Inc. of the Liquidity Quote Service be and it hereby is, stayed until June 6, 2003.

By the Commission.

Jonathan G. Katz

1 Order Approving a Proposed Rule Change Regarding the Dissemination of Liquidity Quotations, Securities Exchange Act Rel. No. 47614 (Apr. 2, 2003), __SEC Docket ___.
2 For further information regarding the Exchange's OpenBook service, see Exchange Act Rel. No. 45138 (Dec. 7, 2001), 76 SEC Docket 1208.
3 __SEC Docket at ___.
4 __SEC Docket at ___.
5 See, e.g., Stratton Oakmont, Inc., Exchange Act Rel. No. 38026 (Dec. 6, 1996), 63 SEC Docket 1106, 1110.
6 Because the Exchange has not yet filed its response to Bloomberg's motions, we have not been able to consider its view of this matter. In this connection, we emphasize that our determination to grant this interim stay should not be interpreted as suggesting that we have decided any matter regarding Bloomberg's appeal, including whether the Exchange's action constitutes a denial of access to services.



Modified: 05/21/2003