Subject: File No. SR-NYSE-2004-43
From: Richard A. Korhammer, Chief Executive Officer
Affiliation: Lava Trading Inc.
September 23, 2004
VIA E-MAIL: firstname.lastname@example.org
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609
Attention: Mr. Jonathan G. Katz, Secretary
Re: File No. SR-NYSE-2004-43
Ladies and Gentlemen:
Lava Trading Inc. is submitting this letter in response to the OpenBook Proposal that was published for comment in Securities Exchange Act Release No. 50275 (August 26, 2004) (the “Release”). That proposal would make the OpenBook service available in real-time.
Upon the Commission’s initial approval of OpenBook fees three years ago, the product was only available on a delayed basis. The Commission raised serious concerns regarding the prohibition on the commingling of data and other access issues raised by the OpenBook contract at that time:
The Commission notes that this order only approves the filing submitted by the NYSE, for the fees for the NYSE OpenBook service. Therefore, the Commission is not approving or disapproving the terms of the NYSE’s vendor or subscriber agreements. The NYSE’s proposed restrictions on vendor redissemination of OpenBook data, including the prohibition on providing the full data feed and providing enhanced, integrated, or consolidated data found in these agreements are on their face discriminatory, and may raise fair access issues under the Act. (Securities Exchange Act Release No. 45138, December 7, 2001).
The real-time OpenBook present several material issues including transparency.
There needs to be considered the integration of real-time OpenBook data into the same montage that displays the real-time full depth books of other market centers. Such would be consistent with the intent of Regulation NMS, and would give OpenBook the same trade-through protection and visibility that other full depth books at electronic exchanges and Electronic Communication Networks realize today in systems that offer consolidated order books. We believe this would also be consistent with the intent of the original ECN rules and Regulation ATS which, recognizing the fact that there were separate markets, one displayed and one hidden, corrected this problem by requiring more transparency.
Additionally, having to view multiple screens and mentally integrate two real-time montages in order to determine the market liquidity and depth presents additional challenges to traders and burdens them and technology vendors.
We believe the commission needs to give traders and vendors sufficient time to fully assess and comment on the NYSE's proposal, and should incorporate a reevaluation of the NYSE OpenBook contract and its affect on vendors and the trading community. Thus, we urge the Commission to require a full 90-day public comment, with contracts included, so the public can systematically assess the impact of this proposal on transparency and ultimately on investors.
Thank you for your consideration.
Richard A. Korhammer
Chief Executive Officer