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Commercial Disputes Among National Market System Participants Should Be Decided By The Courts

Boston Stock Exchange, et. al., Exchange Act Rel. 58191 (July 18, 2008)

Time since appeal filed - 1 year, 13 days
Time since last brief filed - 7 months, 22 days
Pages - 12
Footnotes - 39


Participants in the Consolidated Tape Association Plan sought review of the failure of the American Stock Exchange to comply with a majority vote by plan participants directing it to deduct legal expenses in connection with a settlement before allocating settlement proceeds among participants.

The Commission pursuant to Section 11 of the Exchange Act is charged with the duty of facilitate creation of a national securities market system.  Amex administers one of four systems to disseminate market information for a group of securities.  Participants in the network receive revenue proportional to their total transaction volume on the network after operating expenses are deducted.  In settling a dispute with a broker-dealer over fees owed the network participants disagreed as to whether legal fees in connection with the settlement were normal operating expense that should be deducted before payments were divided.  

The Commission has previously held that it is not required to rule on petitions to review disputes among national market system participants.  In that previous case the Commission determined that it would not intervene in disputes among competing participants unless the administrator clearly acted unfairly or engaged in conduct that would undermine the fundamental fairness of the national market system.  The Commission did not disturb that precedent here and ruled that commercial disputes such as those involved here should be handled in the courts.