[15935]
April 23, 2003
TO: EQUITY MARKETS ADVISORY COMMITTEE No. 7-03
RE: NYSE RESPONSE TO SEC CONDITIONAL APPROVAL OF LIQUIDITY QUOTE
PROPOSAL
As we previously informed you,1 the Securities and Exchange Commission issued an
order conditionally approving a proposed rule change filed by the New York Stock Exchange
relating to the dissemination of “Liquidity Quotes.” In particular, the approval was
conditioned on the NYSE removing from its vendor contracts a prohibition on the ability of data
feed recipients to integrate Liquidity Quote data with the display of other markets’ data. If by
the close of business on April 9, 2003, the NYSE did not demonstrate its acceptance of this
condition to the SEC, the SEC stated that it would issue an order beginning proceedings to
disapprove the proposed rule change. (The SEC did state, however, that the NYSE could
require that data feed recipients who choose to provide a Liquidity Quote data package: (i) give
the NYSE attribution next to any integrated quote that includes NYSE data; and (ii) make
available to customers NYSE’s Liquidity Quote product as a separate branded package).
The NYSE has accepted the SEC’s integration condition.2 The NYSE also determined to
incorporate the two requirements discussed above permitted by the SEC into the vendor
agreements. At the same time, however, the NYSE also incorporated several changes to the
integration prohibition into the vendor agreements relating to differentiating the Liquidity
Quote from other markets’ data including, among other things: (1) requiring the use of
highlighting or other techniques to visually differentiate the Liquidity Quote from other
markets’ data; and (2) in the case of an integrated quote, requiring the quotes’ display to
indicate the number of shares attributable to the Liquidity Quote. The SEC has not yet formally
stated whether these changes are in accordance with its original condition.
Ari Burstein
Associate Counsel
1 Memorandum to Equity Markets Advisory Committee No. 5-03, dated April 11, 2003.
2 The NYSE’s response can be found at http://www.sec.gov/rules/sro/nyse200255/nyse040903.txt.