Daily Rules, Proposed Rules, and Notices of the Federal Government


[Release No. 34-59552; File No. SR-CTA/CQ-2008-05]

Consolidated Tape Association; Order Approving the Thirteenth Substantive Amendment to the Second Restatement of the Consolidated Tape Association Plan and the Ninth Substantive Amendment to the Restated Consolidated Quotation Plan

On December 15, 2008, the Consolidated Tape Association ("CTA") Plan and Consolidated Quotation ("CQ") Plan participants ("Participants")1 filed with the Securities and Exchange Commission ("Commission") pursuant to Rule 6082 under the Securities Exchange Act of 1934 ("Act")3 a proposal to amend the CTA and CQ Plans (collectively, the "Plans")4 to provide that the Participants will pay the Network A Administrator a fixed annual fee ("Annual Fixed Payment") in exchange for its performance of Network A administrator functions under the Plans. The proposed Amendments were published for comment in theFederal Registeron January 21, 2008.5 No comment letters were received in response to the Notice. This order approves the Amendments.
II. Description of the Proposal

Section XII ("Financial Matters") of the CTA Plan and Section IX ("Financial Matters") of the CQ Plan each provide that a network's Operating Expenses are to be deducted from the network's Gross Income before determining the amounts that the network's administrator will distribute to the Participants. Both Section XII(c)(i) ("Determination of Operating Expenses") of the CTA Plan and Section IX(c)(i) ("Determination of Operating Expenses") of the CQ Plan currently provide that a network's Operating Expenses include all costs and expenses that the network's administrator incurs in "collecting, processing and making available Network A market data." The Network A Administrator stated that accounting for operating costs, especially the allocation of organization overhead costs to the Network A Administrator function, is administratively burdensome. And as a result, the Network A Participants have proposed to replace their payment to the Network A Administrator of Operating Expenses with an Annual Fixed Payment. In the case of NYSE as the CTA and CQ Network A Administrator, the Participants proposed that "Operating Expenses" for any calendar year equal: (1) The Annual Fixed Payment for that year; plus (2) "Extraordinary Expenses." Extraordinary Expenses would include that portion of legal and audit expenses and marketing and consulting fees that are outside of the ordinary and customary functions that a network administrator performs.6

For calendar year 2008, the Network A Participants voted to set the Annual Fixed Payment at $6,000,000 to compensate the Network A Administrator for its Network A administrative services during 2008 under both the CTA and CQ Plans. For each subsequent calendar year the Annual Fixed Payment shall increase (but not decrease) by the percentage increase (if any) in the annual cost-of-living adjustment ("COLA") that the U.S. Social Security Administration applies to the Supplemental Security Income for the calendar year preceding that subsequent year, subject to a maximum annual increase of five percent.7


After careful review, the Commission finds that the Amendments to the Plans are consistent with the requirements of the Act and the rules and regulations thereunder,8 and, in particular, Section 11A(a)(1) of the Act9 and Rule 608 thereunder10 in that they are necessary or appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system. The Commission believes that permitting the Network A Administrator to assess a flat fee should increase the efficiency of the administration of the Plans.11 Additionally, the Commission notes that every two years the Network A Administrator is required to provide a report detailing any significant changes to the administrative expenses during the preceding two years to enable the Participants to review and determine by majority vote whether to continue the Annual Fixed Payment at its then current level.

IV. Conclusion

It is therefore ordered,pursuant to Section 11A of the Act,12 and Rule 608 thereunder,13 that the proposed amendments to the CTA and CQ Plans (SR-CTA/CQ-2008-05) are approved.

For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14

1417 CFR 200.30-3(a)(27).

Florence E. Harmon, Deputy Secretary.
ACTION: 1317 CFR 240.608.