05.04.2016

NYSE Seeks to Change User Fees

05.04.2016

The U.S.’s oldest stock market has filed a proposed rule change with the Securities and Exchange Commission seeking to establish new fees relating to end users of multicast and unicast services.

The reason for the NYSE change is rooted in the board move by all the stock exchanges to diversify their earnings stream away from trading commissions and charge their member money for data services.

Under the proposal, filed on April 4 and now published by the SEC, the NYSE seeks to charge a new monthly fee of $1,700 for a “Multicast End User” (newly defined in the proposal as a customer of a rebroadcasting party) for up to two connections to the re-broadcaster and further add a new monthly fee of $850 per each such additional connection thereafter.

Currently, information flows over existing network connections in two formats: first, multicast format, which is a format in which information is sent one-way from the exchange to multiple recipients at once, like a radio broadcast; and second, unicast format, which is a format that allows one-to-one communication, similar to a phone line, in which information is sent to and from the exchange.

Messages, such as those to send an order or related to clearing a trade, are transmitted in unicast format.

Also, the exchange wants to levy a new monthly fee of $1,500 for “Unicast End Users” (newly defined in the proposal as a customer of a party that enables its customers, or the customers of its customers, to transmit messages to and from NYSE using the unicast format) for up to two connections to the transmitting party.

Lastly, NYSE wants add a new monthly fee of $750 per each such additional connection thereafter.

In its SEC filing, the NYSE said it believes that the proposal is not designed to permit unfair discrimination between customers, issuers, brokers or dealers. Also, the proposed end user fees would fairly and equitably allocate the costs associated with maintaining its data center facility, hardware and equipment and related to personnel required for installation and ongoing monitoring, support and maintenance of such services.

The exchange also wants to change the definition of an “affiliate.” The new definition would clarify that an affiliate relationship exists whenever two entities are under common control and irrespective of which entity controls the other.

The proposal is open for comment until May 13. The NYSE proposes that the changes be effective the first of the month following SEC approval – which could be as early as July 1.

Featured image by Abhisit Vejjajiva/Flickr

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