Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81237 

74See Securities Exchange Act Release No. 89759 

(September 3, 2020). 85 FR 55877 (September 10, 

2020) (SR–BX–2020–023). 

75 15 U.S.C. 78s(b)(3)(A)(iii). 

76 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

77 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

apply during an opening does not 

impose an undue burden on 

competition as it would provide more 

specificity on how this functionality 

currently operates. A similar change 

was recently made to BX’s Rules.74 The 

Exchange notes that the same 

procedures used during an opening are 

used to reopen an option series after a 

trading halt, and therefore proposes to 

specify that Anti-Internalization will not 

apply during the opening (i.e., the 

opening and halt reopening processes). 

During the opening, Market Makers are 

able to observe the primary market and 

then determine how they would like to 

quote. They are not required to quote in 

the opening on NOM. Therefore, AntiInternalization is unnecessary during an 

opening due to the high level of control 

that Market Makers exercise over their 

quotes during this process. 

Options 3, Section 23 

The Exchange’s proposal to amend 

Options 3, Section 23, Data Feeds and 

Trade Information, to update its 

descriptions of the ITTO data feed does 

not impose an undue burden on 

competition because the updated 

descriptions will bring greater 

transparency to the Exchange’s rules 

and more closely align with current 

System operation. 

The Exchange’s proposal will make 

clear that order imbalance information 

is provided for both an opening and reopening process. Today, a re-opening 

process initiates after a trading halt has 

occurred intra-day. Also, the Exchange’s 

proposal notes the specific information 

that would be provided, namely the size 

of matched contracts and size of the 

imbalance. The Exchange believes that 

this additional context to imbalance 

messages will provide market 

participants with more complete 

information about what is contained in 

the data feed. The Exchange notes that 

this information is available today and 

the rule text is being amended to make 

clear what information is currently 

provided. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 75 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.76

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2020–083 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2020–083. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2020–083, and 

should be submitted on or before 

January 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.77

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27483 Filed 12–14–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90616; File No. SR– 

NASDAQ–2020–086] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Lower the 

Enterprise License Fee for BrokerDealers Distributing Nasdaq Basic to 

Internal Professional Subscribers as 

Set Forth in the Equity 7 Pricing 

Schedule, Section 147, and the 

Enterprise License Fee for BrokerDealers Distributing Nasdaq Last Sale 

to Professional Subscribers at Equity 

7, Section 139 

December 9, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

7, 2020, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

81238 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

3A ‘‘Professional Subscriber’’ is any Subscriber 

other than a Non-Professional Subscriber. A ‘‘NonProfessional Subscriber’’ is ‘‘a natural person who 

is not (i) registered or qualified in any capacity with 

the Commission, the Commodity Futures Trading 

Commission, any state securities agency, any 

securities exchange or association, or (ii) any 

commodities or futures contract market or 

association; engaged as an ‘investment adviser’ as 

that term is defined in Section 201(11) of the 

Investment Advisers Act of 1940 (whether or not 

registered or qualified under that Act); or (iii) 

employed by a bank or other organization exempt 

from registration under federal or state securities 

laws to perform functions that would require 

registration or qualification if such functions were 

performed for an organization not so exempt.’’ See 

Equity 7 Pricing Schedule, Section 147(d)(4). 

4 ‘‘Top-of-book’’ market data products provide 

last sale information, or both last sale and best bid 

and offer information to the user, without 

additional ‘‘depth of book’’ data. Both Nasdaq Last 

Sale and Nasdaq Basic are examples of top-of-book 

products. 

5See Securities Exchange Act Release No. 57965 

(June 16, 2008), 73 FR 35178 (June 20, 2008) (SR– 

NASDAQ–2006–060) (proposing NLS); see also 

Securities Exchange Act Release No. 57965 (June 

16, 2008), 73 FR 35178 (June 20, 2008) (SR– 

NASDAQ–2006–060) (approving SR–NASDAQ– 

2006–060, as amended by Amendment Nos. 1 and 

2, to implement NLS on a pilot basis). 

6See Securities Exchange Act Release No. 57965 

(June 16, 2008), 73 FR 35178 (June 20, 2008) (SR– 

NASDAQ–2006–060). 

7See Securities Exchange Act Release No. 34– 

82723 (February 15, 2018), 83 FR 7812 (February 

22, 2018) (SR–NASDAQ–2018–010). 

8 ‘‘Derived Data’’ is ‘‘pricing data or other 

information that is created in whole or in part from 

Nasdaq information; it cannot be reverse engineered 

to recreate Nasdaq information, or be used to create 

other data that is recognizable as a reasonable 

substitute for Nasdaq information.’’ See Equity 7, 

Section 147(d)(6). 

9See Equity 7 Pricing Schedule, Section 

147(b)(1). The $26 monthly per-Subscriber fee 

consists of monthly charges of $13 for Nasdaq Basic 

for Nasdaq, $6.50 for Nasdaq Basic for NYSE, and 

$6.50 for Nasdaq Basic for NYSE MKT. 

10 ‘‘Distributor’’ refers to ‘‘any entity that receives 

Nasdaq Basic data directly from Nasdaq or 

indirectly through another entity and then 

distributes it to one or more Subscribers. (A) 

‘‘Internal Distributors’’ are Distributors that receive 

Nasdaq Basic data and then distribute that data to 

one or more Subscribers within the Distributor’s 

own entity. (B) ‘‘External Distributors’’ are 

Distributors that receive Nasdaq Basic data and then 

distribute that data to one or more Subscribers 

outside the Distributor’s own entity. See Equity 7, 

Section 147(d)(1). 

11The additional $2 fee was introduced to defray 

additional costs incurred by Nasdaq when 

distributing Nasdaq Basic through an External 

and III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to lower the 

enterprise license fee for broker-dealers 

distributing Nasdaq Basic to internal 

Professional Subscribers as set forth in 

the Equity 7 Pricing Schedule, Section 

147, and the enterprise license fee for 

broker-dealers distributing Nasdaq Last 

Sale (‘‘NLS’’) to Professional Subscribers 

at Equity 7, Section 139. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Nasdaq proposes to lower the 

enterprise license fee for broker-dealers 

distributing Nasdaq Basic to internal 

Professional Subscribers 3 from a twotiered fee of $365,000, plus $2 for any 

Professional Subscribers over 16,000, to 

a flat fee of $155,000. The license would 

otherwise remain unchanged. The 

enterprise license fee for broker-dealers 

distributing NLS to internal Professional 

Subscribers would be changed in a 

similar fashion: The two-tiered fee of 

$365,000, plus $2 for any Professional 

Subscribers over 16,000, would be 

replaced with a flat fee of $155,000. 

Both fee reductions are designed to help 

Nasdaq compete against other 

exchanges selling top-of-book 4 market 

data products. 

The Exchange initially filed the 

proposed pricing changes on September 

30, 2020 (SR–NASDAQ–2020–065). On 

November 23, 2020, the Exchange 

withdrew that filing and replaced it 

with SR–NASDAQ–2020–080. On 

December 3, 2020, the Exchange 

withdrew SR–NASDAQ–2020–080 and 

replaced it with SR–NASDAQ–2020– 

085. On December 7, 2020, the 

Exchange replaced SR–NASDAQ–2020– 

085 with this filing. 

Nasdaq Basic and Nasdaq Last Sale 

Nasdaq Basic is a real-time market 

data product that offers best bid and 

offer and last sale information for all 

U.S. exchange-listed securities based on 

liquidity within the Nasdaq market 

center and trades reported to the 

FINRA/Nasdaq Trade Reporting Facility 

(‘‘TRF’’). It is a subset of the ‘‘core’’ 

quotation and last sale data provided by 

securities information processors 

(‘‘SIPs’’) distributing consolidated data 

pursuant to the CTA/CQ Plan and the 

UTP Plan. Nasdaq Basic is separated 

into three components, which may be 

purchased individually or in 

combination: (i) Nasdaq Basic for 

Nasdaq, which contains the best bid and 

offer on the Nasdaq market center and 

last sale transaction reports for Nasdaq 

and the FINRA/Nasdaq TRF for Nasdaqlisted stocks; (ii) Nasdaq Basic for 

NYSE, which covers NYSE-listed stocks, 

and (iii) Nasdaq Basic for NYSE 

American, which provides data on 

stocks listed on NYSE American and 

other listing venues that disseminate 

quotes and trade reports on Tape B. The 

specific data elements available through 

Nasdaq Basic are: (i) Nasdaq Basic 

Quotes (‘‘QBBO’’), the best bid and offer 

and associated size available in the 

Nasdaq Market Center, as well as last 

sale transaction reports; (ii) Nasdaq 

opening and closing prices, as well as 

IPO and trading halt cross prices; and 

(iii) general exchange information, 

including systems status reports, trading 

halt information, and a stock directory. 

NLS provides real-time last sale 

information for executions occurring 

within the Nasdaq market center and 

trades reported to the jointly-operated 

FINRA/Nasdaq TRF.5 The NLS data 

feed, which provides price, volume and 

time of execution data for last sale 

transactions, includes transaction 

information for Nasdaq-listed stocks 

(‘‘NLS for Nasdaq’’) and for stocks listed 

on NYSE, NYSE American, and other 

Tape B listing venues (‘‘NLS for NYSE/ 

NYSE American’’).6 This is also a noncore product that provides a subset of 

the core last sale data distributed by the 

SIPs under the CTA/CQ Plan and the 

UTP Plan.7

Current Top-of-Book Enterprise 

Licenses for Internal Professional 

Subscribers 

Broker-dealers may purchase Nasdaq 

Basic, or Derived Data 8 therefrom, for 

internal professional use for a monthly 

per-Subscriber fee of $26,9 or, in lieu of 

a per-Subscriber fee, purchase an 

enterprise license for the internal 

distribution of Nasdaq Basic to 

Professional Subscribers for $365,000, 

plus $2 for any Professional Subscribers 

over 16,000 if an external Distributor 10

controls the display of the product.11

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81239 

Distributor that controls display of the product. See 

Securities Exchange Act Release No. 71507 

(February 7, 2014), 79 FR 8763 (February 13, 2014) 

(SR–NASDAQ–2014–011). 

12See Equity 7 Pricing Schedule, Section 

147(c)(1). 

13See Securities Exchange Act Release No. 82723 

(February 15, 2018), 83 FR 7812 (February 22, 2018) 

(SR–Nasdaq–2018–010) (explaining that ‘‘NLS was 

designed to enable market-data ‘distributors to 

provide free access to the data contained in NLS to 

millions of individual investors via the internet and 

television’ and was expected to ‘increase the 

availability of Nasdaq proprietary market data to 

individual investors.’ ’’). 

14See Equity 7 Pricing Schedule, Section 

147(b)(5). 

15See Equity 7 Pricing Schedule, Section 

139(b)(4). 

16The top-of-book products distributed under this 

license are Nasdaq Basic, NLS and NLS Plus. 

17The depth-of-book products distributed under 

this license are TotalView and Level 2. 

18See Equity 7 Pricing Schedule, Section 132. 

19See Securities Exchange Act Release No. 79456 

(December 2, 2016), 81 FR 88716 (December 8, 

2016) (SR–NASDAQ–2016–162). 

20See Securities Exchange Act Release No. 77578 

(April 11, 2016), 81 FR 22344 (April 15, 2016) (SR– 

NASDAQ–2016–048). 

21See Securities Exchange Act Release No. 83751 

(July 31, 2018), 83 FR 38428 (August 6, 2018) (SR– 

Nasdaq–2018–058). 

22See Securities Exchange Act Release No. 71507 

(February 7, 2014), 79 FR 8763 (February 13, 2014) 

(SR–NASDAQ–2014–011). 

23The broker-dealer would save the difference 

between $365,000 and $155,000 ($210,000), plus an 

additional $2,000 for the 1,000 Professional 

Subscribers over 16,000. 

24The hypothetical current average perSubscriber monthly charge is estimated as the 

current fee of $365,000 plus $2,000 for the 1,000 

Professional Subscribers over 16,000 divided by 

17,000 internal Professional Subscribers. 

25The hypothetical per-Subscriber monthly 

charge for the Proposal is estimated as the flat fee 

of $155,000 divided by 17,000 internal Professional 

Subscribers. 

26See Securities Exchange Act Release No. 71507 

(February 7, 2014), 79 FR 8763 (February 13, 2014) 

(SR–NASDAQ–2014–011) (explaining that the 

$365,000 monthly fee for all internal subscribers, 

divided by $26 monthly fee for each internal 

Subscriber, is equal to 14,038). 

27This estimated cutoff point is calculated as the 

Proposed license fee of $155,000 divided by the 

per-Subscriber rate of $26 per month. 

The license also allows the brokerdealer to display NLS data for its own 

stock price and that of up to ten of its 

competitors or peers on its internal 

website. Separate licenses must be 

purchased if more than one external 

Distributor controls display of the 

product. The license excludes 

Distributor fees, which are $1,500 per 

month for internal distribution.12

Although NLS was initially designed 

for general distribution to individual 

investors,13 a broker-dealer may elect to 

distribute this data to its registered 

representatives through an employerprovided workstation or software 

application. To allow for such usage, 

Nasdaq adopted a fee schedule for 

‘‘specialized usage’’ of NLS not 

associated with distribution of data to 

the general investing public. In general, 

broker-dealers paying for specialized 

usage track either the number of 

Subscribers receiving data or the 

number of queries for the data, and pay 

the corresponding fee. 

As an alternative to per-Subscriber or 

per-query fees, however, a broker-dealer 

may purchase an enterprise license for 

internal Subscribers to receive NLS, or 

Derived Data therefrom, through an 

external Distributor that controls 

display of the product. The fee is 

$365,000 per month for up to 16,000 

internal Subscribers, plus $2 for each 

additional internal Subscriber over 

16,000, the same fee structure as the 

enterprise license for the internal 

distribution of Nasdaq Basic to 

Professionals. A separate enterprise 

license must be purchased for each 

external Distributor that controls the 

display of the product. The enterprise 

license does not include distributor fees. 

Proposed Fee Reduction for Nasdaq 

Basic and NLS Enterprise Licenses 

Nasdaq proposes to reduce its 

enterprise license fees for Nasdaq Basic 

and NLS to bolster its ability to compete 

effectively against other exchanges 

selling top-of-book market data 

products, which are substitutes for 

Nasdaq Basic and NLS. Nasdaq faces 

vigorous competition for the sale of this 

data, including from the ‘‘Best Quote 

and Trade’’ (‘‘BQT’’) product sold by the 

NYSE-affiliated exchanges and the Cboe 

One Summary Feed. 

Nasdaq received customer feedback 

requesting that it lower the price of the 

professional licenses for its top-of-book 

products. This feedback prompted a 

reexamination of Nasdaq’s four 

enterprise licenses for top-of-book data: 

(i) The license for internal Professional 

distribution of Nasdaq Basic to 

Professionals for $365,000 per month 

(the subject of this proposal); (ii) the 

license for external distribution of 

Nasdaq Basic to Professionals and NonProfessionals in the context of the 

brokerage relationship for $100,000 per 

month; 14 (iii) the license for external 

distribution of NLS data to the General 

Investing Public for Display Usage for 

$41,500; 15 and (iv) the license for 

internal and external distribution of topof-book 16 and depth-of-book 17 products 

for $500,000 with a twelve-month 

commitment, or a month-to-month fee 

of $600,000.18

Fees for three of these four licenses 

have been reduced in the last several 

years. In 2016, Nasdaq lowered the fee 

for external distribution of Nasdaq Basic 

in the context of the brokerage 

relationship from $350,000 to 

$100,000.19 Also in 2016, the Exchange 

reduced the monthly fee for the external 

distribution of NLS data from $50,000 to 

$41,500.20 In 2018, Nasdaq introduced 

an enterprise license that substantially 

lowered the cost of purchasing top-ofbook and depth-of-book data together by 

replacing three separate enterprise 

licenses—$365,000 for internal 

distribution of Nasdaq Basic, $100,000 

for external distribution in a brokerage 

relationship, and $500,000 for 

distribution of depth-of-book products— 

with a single license for a monthly fee 

of $500,000, with a twelve-month 

service commitment.21

In light of customer feedback and 

Nasdaq’s history of lowering fees for 

top-of-book products, Nasdaq 

determined that the proposed fee will 

better position it to operate in the 

current competitive environment. Fees 

for Nasdaq’s other three enterprise 

licenses have been lowered over the 

course of the last four years, while the 

license fee for internal professionals has 

not changed since the enterprise license 

was introduced in 2014.22 Nasdaq 

believes that this fourth fee reduction 

will allow it to continue to compete in 

the market for top-of-book products. 

The new enterprise license fee will 

substantially lower total and perSubscriber costs for broker-dealers with 

approximately 5,962 or more internal 

Professional Subscribers. All current 

enterprise license purchasers will save 

the difference between the current base 

fee of $365,000 and the proposed fee of 

$155,000 (which is $210,000 per 

month), plus $2 times the number of 

internal Professional Subscribers over 

16,000. A broker-dealer with 17,000 

internal Professional Subscribers, for 

example, would save a total of $212,000 

per month as compared to the current 

license,23 reducing average perSubscriber monthly charges from 

$21.60 24 to $9.12.25

In addition, a number of the mid-size 

broker-dealers that currently have too 

few professional subscribers to benefit 

from the license would be able to 

achieve substantial savings at the new, 

lower rate. The ‘‘break even’’ point—i.e., 

the point at which the average perSubscriber rate of a licensee falls below 

the per-Subscriber rate of $26—is 

currently 14,038 internal Professional 

Subscribers.26 Under the new fee 

schedule, broker-dealers with as few as 

5,962 internal Professional Subscribers 

would be able to save money.27 A 

hypothetical broker-dealer with 10,000 

internal Professional Subscribers would 

81240 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

28Savings are calculated as follows: 10,000 

internal Professional Subscribers multiplied by $26 

per-Subscriber equals $260,000. The difference 

between $260,000 and $155,000 is $105,000. 

29See Equity 7 Pricing Schedule, Section 

147(b)(1). 

30This figure is calculated as the proposed flat fee 

of $155,000 divided by 10,000 internal Professional 

Subscribers. 

31See Division of Trading and Markets, U.S. 

Securities and Exchange Commission, ‘‘Staff 

Guidance on SRO Filings Related to Fees (May 21, 

2019), available at https://www.sec.gov/tm/staffguidance-sro-rule-filings-fees. 

32No customers purchased the comparable 

license for NLS, discussed above. 

33This estimate is based on customer 

conversations and the experience and judgment of 

Nasdaq staff. 

34See 15 U.S.C. 78f(b). 

35See 15 U.S.C. 78f(b)(4) and (5). 

36See, e.g., Securities Exchange Act Release No. 

81697 (September 25, 2017), 82 FR 45639 

(September 29, 2017) (SR–NASDAQ–2017–095); 

Securities Exchange Act Release No. 72620 (July 16, 

2014), 79 FR 42572 (July 22, 2014) (SR–NASDAQ– 

2014–070); Securities Exchange Act Release No. 

72153 (May 12, 2014), 79 FR 28575 (May 16, 2014) 

(SR–NASDAQ–2014–045); Securities Exchange Act 

Release No. 71507 (February 7, 2014), 79 FR 8763 

(February 13, 2014) (SR–NASDAQ–2014–011); see 

Securities Exchange Act Release No. 82723 

(February 15, 2018), 83 FR 7812 (February 22, 2018) 

(SR–Nasdaq–2018–010). 

37The statutory bases for both the Nasdaq Basic 

and NLS enterprise licenses are identical. Both are 

top-of-book products sold to broker-dealers for 

internal distribution to Professionals. The fee 

structure and use requirements are currently the 

same for both, and will continue to be the same 

under the Proposal. The discussion contained 

herein therefore applies to both licenses. 

38The decision of the United States Court of 

Appeals for the District of Columbia Circuit in 

NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010) 

upheld the Commission’s reliance upon 

competitive markets to set reasonable and equitably 

allocated fees for market data. ‘‘In fact, the 

legislative history indicates that the Congress 

intended that the market system evolve through the 

interplay of competitive forces as unnecessary 

regulatory restrictions are removed and that the SEC 

wield its regulatory power in those situations where 

competition may not be sufficient, such as in the 

creation of a consolidated transactional reporting 

system.’’ NetCoalition I, at 535 (quoting H.R. Rep. 

No. 94–229, at 92 (1975), as reprinted in 1975 

U.S.C.C.A.N. 321, 323) (internal quotation marks 

omitted). The court agreed with the Commission’s 

conclusion that ‘‘Congress intended that 

competitive forces should dictate the services and 

practices that constitute the U.S. national market 

system for trading equity securities.’’ Id. (quoting 

Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770, 74,771 (December 

9, 2008) (SR–NYSEArca–2006–21)). 

39See Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770 (December 9, 

2008) (SR–NYSEArca–2006–21). 

40 Id. 

41See https://www.nyse.com/market-data/realtime/nyse-bqt. 

42See https://markets.cboe.com/us/equities/ 

market_data_services/#:∼:

text=Cboe%20Top%20is%20a

%20real,time%20on%20a%20Cboe%20book.

&text=It%20is%20a%20real%2Dtime,

time%20on%20a%20Cboe%20book We note that 

Cboe recently proposed a fee reduction for top-ofbook data as well. See Securities Exchange Act 

Release No. 86670 (August 14, 2019), 84 FR 43207 

(August 20, 2019) (SR–CboeBYX–2019–012). 

be able to save $105,000 per month,28

reducing per-Subscriber fees from $26 29

to $15.50.30

In addition to lowering Nasdaq’s fees, 

the proposed rule change will allow 

users to lower internal administrative 

costs by eliminating the need to report 

monthly usage. Nasdaq does not have 

sufficient information about brokerdealer operations and costs to accurately 

estimate these savings, but believes that 

monthly savings in administrative 

expenditures—as well as the improved 

ability to project future expenditures 

achieved by eliminating audit liability 

for errors in reporting usage—to be 

substantial. 

Staff of the Commission’s Division of 

Trading and Markets have indicated that 

self-regulatory organizations (‘‘SROs’’) 

proposing fee changes should provide 

‘‘the projected number of purchasers 

(including members, as well as nonmembers) of any new or modified 

product or service . . . .’’ 31 Prior to the 

proposed change, two customers had 

purchased the Nasdaq Basic 

Professional Subscriber enterprise 

license for $365,000, plus $2 for any 

Professional Subscriber over 16,000 if 

an external Distributor controls the 

display of the product.32 Of these two 

customers, one informed Nasdaq that it 

would abandon the Nasdaq license in 

favor of a license offered by one of its 

two major competitors, Cboe and NYSE. 

After the proposed license fee was 

instituted on October 1, 2020, the 

complaining customer decided to retain 

the license. Nasdaq is also in 

discussions with additional customers 

to purchase the license, including both 

customers that do not currently 

purchase Nasdaq Basic, and customers 

that do purchase Nasdaq Basic, but not 

through an enterprise license. To date, 

however, no new firms have purchased 

the enterprise license. 

While any broker-dealer with 

approximately 5,962 or more internal 

Subscribers will be able to benefit from 

the proposed license, Nasdaq does not 

know, and is unable to ascertain with 

precision, the number of internal 

Professional Subscribers utilized by 

various broker-dealers, nor can it 

anticipate the actions of its competitors 

in response to the lower enterprise 

license fee, and therefore cannot project 

precisely the number of expected 

purchasers. Nevertheless, judging from 

expressions of interest and Nasdaq’s 

experience in the financial services 

industry, Nasdaq estimates that between 

fifteen and twenty broker-dealers 

worldwide may elect to purchase the 

license.33

2. Statutory Basis 

The Exchange believes that its 

Proposal is consistent with Section 6(b) 

of the Act,34 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,35 in particular, in that it 

provides for the equitable allocation of 

reasonable dues, fees and other charges 

among members and issuers and other 

persons using any facility, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

As a preliminary manner, the 

statutory basis for the current Nasdaq 

Basic and NLS enterprise licenses have 

already been explained in prior 

filings.36 The Proposal lowers fees for 

enterprise licenses that have already 

been shown to be consistent with 

Section 6(b) of the Act, and this analysis 

therefore focuses on the new, lower 

fees.37

The Proposal Is an Equitable Allocation 

of Reasonable Dues, Fees and Other 

Charges 

As the Commission and courts 38 have 

recognized, ‘‘[i]f competitive forces are 

operative, the self-interest of the 

exchanges themselves will work 

powerfully to constrain unreasonable or 

unfair behavior.’’ 39 Accordingly, ‘‘the 

existence of significant competition 

provides a substantial basis for finding 

that the terms of an exchange’s fee 

proposal are equitable, fair, reasonable, 

and not unreasonably or unfairly 

discriminatory.’’ 40 Nasdaq believes that 

competitive forces constrain the price of 

top-of-book products based on 

competition among exchanges for topof-book data. The proposed fee change 

is a direct response to this competition. 

Nasdaq Basic and NLS provide 

choices to broker-dealers and other data 

consumers by providing less than the 

quantum of data provided through the 

consolidated tape feeds, but at a lower 

price. The same is true for the top-ofbook proprietary products offered by 

other exchanges. All of these top-ofbook products are substitutes for each 

other. Nasdaq Basic provides data 

derived from liquidity within the 

Nasdaq market center and trades 

reported to the FINRA/Nasdaq TRF. The 

NYSE BQT feed disseminates top-ofbook information from the NYSE, NYSE 

American, NYSE Arca and NYSE 

National exchanges.41 The Cboe One 

Summary Feed provides data from the 

four Cboe equities exchanges: BZX 

Exchange, BYX Exchange, EDGX 

Exchange and EDGA Exchange.42 These 

exchanges compete on price and quality 

Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 81241 

43See https://www.nyse.com/market-data/realtime/nyse-bqt. 

44See https://markets.cboe.com/us/equities/ 

market_data_services/cboe_one/. 

45See https://markets.cboe.com/us/equities/ 

market_data_services/#:∼:text=Cboe%20Top%20is

%20a%20real,time%20on%20a%20Cboe%20

book.&text=It%20is%20a%20real%2Dtime,

time%20on%20a%20Cboe%20book (‘‘The Cboe 

One Feed is 60% less expensive per professional 

user and more than 85% less expensive for an 

enterprise license for professional users and nonprofessional users when compared to a similar 

competitor exchange product.’’). 

46See Securities Exchange Act Release No. 88221 

(February 14, 2020), 85 FR 9904 (February 20, 2020) 

(SR–CboeBYX–2020–007) (stating that ‘‘the 

Exchange’s top of book market data products are 

among the most competitively priced in the 

industry due to modest subscriber fees, and a lower 

Enterprise cap . . . .’’). The filing included a table 

comparing its pricing to Nasdaq Basic. 

47See Securities Exchange Act Release No. 79456 

(December 2, 2016), 81 FR 88716 (December 8, 

2016) (SR–NASDAQ–2016–162). 

48See Securities Exchange Act Release No. 77578 

(April 11, 2016), 81 FR 22344 (April 15, 2016) (SR– 

NASDAQ–2016–048). 

49See Securities Exchange Act Release No. 83751 

(July 31, 2018), 83 FR 38428 (August 6, 2018) (SR– 

Nasdaq–2018–058). 

50See Securities Exchange Act Release No. 86670 

(August 14, 2019), 84 FR 43207 (August 20, 2019) 

(SR–CboeBYX–2019–012). 

51See Securities Exchange Act Release No. 71507 

(February 7, 2014), 79 FR 8763 (February 13, 2014) 

(SR–NASDAQ–2014–011) (initially adopting the 

current enterprise license). 

52See, e.g., Sections 123(c) and 147 (b); Securities 

Exchange Act Release No. 82182 (November 30, 

2017), 82 FR 57627 (December 6, 2017) (SR–NYSE– 

2017–60) (changing an enterprise fee for NYSE BBO 

and NYSE Trades). 

53See Securities Exchange Act Release No. 71507 

(February 7, 2014), 79 FR 8763 (February 13, 2014) 

(SR–NASDAQ–2014–011) (explaining that the 

$365,000 monthly fee for all internal subscribers, 

divided by $26 monthly fee for each internal 

Subscriber, is equal to 14,038). 

for their top-of-book feeds. NYSE 43 and 

Cboe,44 like Nasdaq, offer enterprise 

licenses. Cboe touts its price in 

promotional literature,45 and reduced 

its fee for certain top-of-book customers 

just this year.46

Top-of-book data can be used for 

many purposes—from a retail investor 

casually surveying the market to 

sophisticated market participants using 

it for a variety of applications, such as 

investment analysis, risk management, 

or portfolio valuation. The value of that 

data depends on its quality and how 

well it approximates the NBBO, which 

is determined by the amount of order 

flow attracted by the exchange—the 

more order flow, the more quotes and 

trades, and the better the exchange data 

will be able to match the NBBO. 

Nasdaq’s own experience with sales 

of top-of-book feeds underscores their 

substitutability, as the customer whose 

feedback motivated this price change 

informed Nasdaq that it would drop 

Nasdaq Basic in favor of a competing 

product unless a change is made. 

The constraint imposed by direct 

competition on the price of top-of-book 

data is further illustrated by proposals 

to reduce fees for three of the four topof-book enterprise licenses in the past 

several years: (i) The enterprise license 

for external distribution of Nasdaq 

Basic; 47 (ii) the enterprise license for 

the external distribution of NLS; 48 and 

(iii) the combined enterprise license for 

distribution of top-of-book and depth-ofbook data.49 Nasdaq is not alone in 

lowering fees to compete against the 

other exchanges. Just this year, Cboe 

proposed a fee reduction for its top-ofbook data.50

As shown, Nasdaq competes against 

other exchanges in the sale of top-ofbook products. That competition 

constrains the price of top-of-book 

market data, and provides a substantial 

basis for finding that the terms of an 

exchange’s fee proposal are equitable, 

fair, reasonable, and not unreasonably 

or unfairly discriminatory. 

The Proposal Does Not Permit Unfair 

Discrimination 

The Proposal is not unfairly 

discriminatory. As previously noted, the 

Nasdaq Basic enterprise license subject 

to this Proposal was shown to be nondiscriminatory and otherwise consistent 

with the Act over six years ago.51 The 

only difference between that initial 

proposal and the change under 

consideration today is that the new 

license costs less and more brokerdealers will be able to benefit from the 

lower prices. Enterprise licenses in 

general have been widely recognized as 

an effective and not unfairly 

discriminatory method of distributing 

market data. This applies to Nasdaq’s 

enterprise licenses as well as those 

offered by the NYSE and Cboe 

exchanges.52

The Act does not prohibit all 

distinctions among customers; only 

discrimination that is unfair. It is not 

unfair discrimination to charge those 

Distributors that are able to reach the 

largest audiences of retail investors a 

lower fee for incremental investors in 

order to encourage the widespread 

distribution of market data. 

The instant Proposal, like other 

enterprise licenses, will cause top-ofbook data to become more widely 

available to investors. It will save 

current enterprise license purchasers 

the $210,000 per month difference 

between the current base fee of $365,000 

and $155,000, plus $2 times the number 

of internal Professional Subscribers over 

16,000. Broker-dealers that do not 

currently purchase the license will 

nevertheless benefit because the ‘‘break 

even’’ point—i.e., the point where the 

average per-Subscriber rate of a licensee 

falls below per-Subscriber rate of $26— 

will fall from 14,038 to 5,962 internal 

Professional Subscribers.53 All 

purchasers of the proposed license will 

also be able to save in administrative 

expenditures by eliminating monthly 

reporting requirements and periodic 

review of such reports by compliance 

staff. 

It is of particular importance now to 

expand the availability of top-of-book 

data. In recent months, retail investors 

have become increasingly interested in 

equities markets. Many of these retail 

investors will require advice and 

assistance from equity market 

professionals, and this license will 

enable broker-dealers that serve such 

clients to do so at a lower cost. 

In addition, the proposed enterprise 

license will be subject to significant 

competition, and that competition will 

ensure that there is no unfair 

discrimination. Each Distributor will be 

able to accept or reject the license 

depending on whether it will or will not 

lower costs for that particular 

Distributor, and, if the license is not 

sufficiently competitive, the Exchange 

may lose market share. 

For all of these reasons, the Proposal 

is not unreasonably discriminatory. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. With respect 

to inter-market competition—the 

competition among SROs—the 

Exchange’s ability to price market data 

products is constrained by competition 

among exchanges for top-of-book data. 

With respect to intra-market 

competition—the competition among 

consumers of exchange data—the 

Exchange expects the Proposal to 

promote competition through lower-cost 

data. 

Intermarket Competition 

As discussed in detail under Statutory 

Basis, Nasdaq competes with other 

exchanges in the sale of top-of-book 

products. In order to better compete for 

this segment of the market, the 

Exchange is proposing to reduce the 

cost of top-of-book data by lowering the 

enterprise license fee for internal 

Professional Subscribers. The proposed 

price reduction will not cause any 

unnecessary or inappropriate burden on 

intermarket competition, as other 

81242 Federal Register / Vol. 85, No. 241 / Tuesday, December 15, 2020 / Notices 

54 15 U.S.C. 78s(b)(3)(A)(ii). 

55 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

exchanges and data vendors are free to 

lower their prices to better compete 

with the Exchange’s offering. Nasdaq’s 

main competitors, in particular, offer 

directly competing enterprise licenses 

for their top-of-book products, and are 

readily able to lower enterprise license 

fees in response to Nasdaq. Indeed, the 

Exchange’s decision to lower its 

enterprise license fee was itself 

generated by the need to compete with 

other exchanges. The Proposal may in 

turn generate competitive responses 

from other exchanges, enhancing overall 

competition. 

Intramarket Competition 

The Proposal will not cause any 

unnecessary or inappropriate burden on 

intramarket competition. In fact, it will 

foster competition among broker-dealers 

by lowering costs for current licensees, 

while at the same time increasing the 

number of broker-dealers able to 

purchase that license. The current 

enterprise license, just like all of the 

enterprise licenses offered by Nasdaq’s 

competitors, does not itself impose an 

unnecessary or inappropriate burden on 

intramarket competition. Relatively 

smaller broker-dealers have fewer 

internal Professional Subscribers and 

therefore operate with lower fixed costs, 

helping them compete with the larger 

broker-dealers. Moreover, the 

underlying fee of $26 per Professional 

Subscriber fee has itself been shown not 

to place an undue burden on 

competition, and, if that fee proves to be 

excessive, broker-dealers would be able 

to purchase top-of-book data from one of 

the Exchange’s competitors offering a 

substitute product. For all of these 

reasons, the Proposal will not place any 

unnecessary or inappropriate burden on 

intramarket competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.54

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2020–086 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2020–086. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2020–086 and 

should be submitted on or before 

January 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.55

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2020–27484 Filed 12–14–20; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90612; File No. SR– 

EMERALD–2020–16] 

Self-Regulatory Organizations; MIAX 

Emerald, LLC; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Amend Its Fee 

Schedule To Establish Market Data 

Fees 

December 9, 2020. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on November 

25, 2020, MIAX Emerald, LLC (‘‘MIAX 

Emerald’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend the MIAX Emerald Fee Schedule 

(the ‘‘Fee Schedule’’) to establish market 

data fees. 

The text of the proposed rule change 

is available on the Exchange’s website at 

http://www.miaxoptions.com/rulefilings/emerald, at MIAX’s principal 

office, and at the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The