Federal Register / Vol. 77, No. 54 / Tuesday, March 20, 2012 / Notices 16309 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3All co-location services are provided by 

NASDAQ Technology Services LLC and pursuant to 

agreements with the owner/operator of its data 

center. 

4See Exchange Rule 7034(b), Connectivity to 

Nasdaq. All co-location services are provided by 

NASDAQ Technology Services LLC. 

5The 100MB option that is being eliminated— 

which is used to connect co-located servers to the 

Exchange—should be contrasted with a recently 

introduced option for customers to establish 100MB 

connections between their co-located servers and 

select external locations. These external 

connections are generally combined with other 

bandwidth options and are not utilized to transmit 

the same volume of data as the 100MB connection 

between co-located servers and the Exchange. For 

this reason, the Exchange believes that the same 

latency and data loss considerations that are 

prompting it to eliminate the 100MB connection to 

the Exchange do not apply to the 100MB 

connection to external locations. 

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 rulecomments@sec.gov. Please include File 

Number SR–Phlx–2012–30 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx-2012–30. 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 Web site (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 Web site 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 

a.m. and 3 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; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–Phlx2012–30 and should be submitted on or 

before April 10, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6618 Filed 3–19–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66591; File No. SR– 

NASDAQ–2012–036] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Eliminate 

the 100MB Connectivity Option and 

Fee 

March 14, 2012. 

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 March 6, 

2012, The NASDAQ Stock Market LLC 

(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II 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 eliminate 

100MB connectivity between the 

Exchange and co-located servers, as well 

as associated fees, as set forth in 

NASDAQ Rule 7034(b). The Exchange 

will implement the proposed change on 

April 1, 2012. The text of the proposed 

rule change is available at http:// 

nasdaq.cchwallstreet.com/, at the 

Exchange’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 

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 

The Exchange proposes to modify 

Rule 7034(b) to eliminate 100MB 

connectivity between the Exchange and 

co-located servers, as well as associated 

fees.3 NASDAQ currently offers each colocated customer one 100MB 

connection to the Exchange at no 

charge; additional connections are 

available for a $50 one-time installation 

fee and a monthly fee of $100.4 Due to 

the continuous growth of the size of 

consolidated and proprietary market 

data feeds, use of 100MB connectivity to 

the Exchange may result in high data 

transmission latencies, a loss of data 

packets, and a reduction in client 

service satisfaction. As a result, the 

Exchange proposes to eliminate the 

100MB connection option to the 

Exchange. The proposal to eliminate the 

100MB connection option will eliminate 

potential latencies and loss of data that 

could occur with lower bandwidths, 

issues that are potentially damaging to 

investors.5

Currently, there are seven co-located 

customers that utilize 100MB 

connectivity to the Exchange. All seven 

clients also have larger bandwidth 

connections to the Exchange. While 

these customers will need to assess the 

adequacy of their bandwidth and may 

need to make adjustments, NASDAQ 

strongly believes that these changes will 

be beneficial to these customers because 

they will decrease the risk of latency 

and data loss. In addition, as the 

number of customers making use of 

100MB connectivity to the Exchange 

dwindles, maintaining the option would 

require NASDAQ to impose associated 


srobinson on DSK4SPTVN1PROD with NOTICES
16310 Federal Register / Vol. 77, No. 54 / Tuesday, March 20, 2012 / Notices 

6See Securities Exchange Act Release No. 66428 

(February 21, 2012)(SR–NASDAQ–2012–028). The 

Exchange is not proposing to waive fees for 

migrating to 1GB connectivity, since the Exchange 

is concerned that this bandwidth level will prove 

inadequate for most members in the near future. 

Accordingly, rather than creating a scenario in 

which customers face repeated concerns about the 

adequacy of their bandwidth, NASDAQ believes 

that it is reasonable to use the fee waiver to 

encourage customers to move to connectivity 

options that are likely to be adequate for a more 

extended period. 

7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(5). 

9See, supra note 6. 

10See http://www.nyse.com/pdfs/ 

NYSEArca_Equities_Fees.pdf, page 13, for NYSE 

Equities, Inc. Fee Schedule where the bandwidth 

starts at 1Gb. See also http://www.ise.com/assets/ 

documents/OptionsExchange/legal/fee/ 

fee_schedule.pdf, page 9, for the International 

Securities Exchange Fee Schedule where the 

bandwidth also starts at 1Gb. 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

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

the Commission written notice of its intent to file 

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. 

13 17 CFR 240.19b–4(f)(6)(iii). 

14For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 

fixed costs on a smaller customer base, 

or upon customers that are not 

themselves using this legacy 

connectivity option. NASDAQ believes 

that it is reasonable and equitable to 

avoid this result by eliminating the 

option and helping customers migrate to 

more suitable connections. 

To provide all affected customers 

sufficient time to migrate from their 

100MB connections to larger 

bandwidths, the Exchange has proposed 

(in a separate filing) to waive 

installation fees for 10Gb and 40Gb 

connectivity until May 31, 2012.6

The Exchange also proposes to 

eliminate the word ‘‘additional’’ from 

the fee schedule in several instances to 

reflect the elimination of the 100MB 

connection that was previously offered 

at no charge. 

2. Statutory Basis 

The Exchange believes the proposal is 

consistent with the provisions of 

Section 6 of the Act 7 in general, and 

with the objectives of Section 6(b)(5) of 

the Act 8 in particular, in that it is 

designed to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general, to protect 

investors and the public interest, and is 

not designed to permit unfair 

discrimination between customers, 

issuers, brokers, and dealers. 

Removes Impediments and Perfects 

Mechanism of a Free and Open Market 

The Exchange’s proposal is designed 

to eliminate data transmission latencies 

and loss of data risks that are associated 

with 100MB connectivity, and thereby 

provide a more efficient mechanism for 

trading. Since the migration to a higher 

bandwidth option will reduce the 

potential disruption and consequently 

provide greater efficiency of trading in 

the marketplace, the effects of this 

proposal will remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system, which in turn will protect 

investors and the public interest. 

Not Unfairly Discriminatory 

The proposal to eliminate the 100MB 

connectivity option applies to all 

Exchange members that have 

voluntarily elected this service option. 

Currently, there are seven co-located 

customers that utilize 100MB 

connectivity to the Exchange. All seven 

clients also have larger bandwidth 

connections to the Exchange. While 

these customers will need to assess the 

adequacy of their bandwidth and may 

need to make adjustments, NASDAQ 

strongly believes that these changes will 

be beneficial to these customers because 

they will decrease the risk of latency 

and data loss. In addition, as the 

number of customers making use of 

100MB connectivity to the Exchange 

dwindles, maintaining the option would 

require NASDAQ to impose associated 

fixed costs on a smaller customer base, 

or upon customers that are not 

themselves using this legacy 

connectivity option. 

To assist co-located customers with 

migration to larger bandwidths, the 

Exchange has proposed (in a separate 

filing) to waive installation fees for 

10Gb and 40Gb connectivity until May 

31, 2012.9 Given the ever-increasing size 

of market data, the Exchange decided to 

apply the waiver of installation fees 

only to the 10Gb and 40Gb connection 

instead of offering the waiver for the 

next available bandwidth, the 1Gb 

connection. This will provide the 

clients the opportunity to migrate to a 

bandwidth that will more efficiently 

sustain the client’s business needs over 

a longer period of time. The co-located 

customers that currently have the 

100MB connectivity to the Exchange 

have until March 31, 2012 to migrate 

from the 100MB connection to a larger 

bandwidth. Furthermore, eliminating 

the 100MB connectivity to NASDAQ is 

consistent with the connections offered 

by other exchanges,10 and NASDAQ 

does not believe that it would be 

unfairly discriminatory to eliminate a 

connectivity option that is not routinely 

offered by other exchanges. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act, as amended. 

Specifically, the Exchange believes that 

eliminating the 100MB connectivity 

service option will not burden 

competition since the 100MB 

connectivity option is not routinely 

offered by other exchanges. In fact, 

requiring NASDAQ to continue to offer 

this option would unfairly burden 

competition by requiring it to incur 

costs that are not typically incurred by 

any of its competitors. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor 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 after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 11 and Rule 19b– 

4(f)(6) 12 thereunder. 

The Exchange has asked that the 

Commission waive the 30-day preoperative waiting period contained in 

Rule 19b–4(f)(6)(iii).13 The Exchange 

represents that investors and the public 

interest are best served by waiving the 

pre-operative delay to minimize 

potential risks of market disruption 

associated with the use of lower 

bandwidth at a time of increasing data 

traffic. For these reasons, the 

Commission believes it is consistent 

with the protection of investors and the 

public interest to waive the 30-day 

operative delay, and hereby grants such 

waiver.14

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 


srobinson on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 54 / Tuesday, March 20, 2012 / Notices 16311 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Pursuant to ISE Rule 100(37A), a Priority 

Customer is a person or entity that is not a broker 

or dealer in securities, and does not place more 

than 390 orders in listed options per day on average 

during a calendar month for its own beneficial 

account. 

4Pursuant to ISE Rule 1900(f) of the Distributive 

Linkage rules, a customer is an individual or 

organization that is not a broker-dealer. 

5See Securities and Exchange Act Release No. 

60791 (October 5, 2009), 74 FR 52521 (October 13, 

2009) (SR–ISE–2009–74). 

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 rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2012–036 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2012–036. 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 Web site (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 Web site 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 

a.m. and 3 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; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2012–036 and should be 

submitted on or before April 10, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–6616 Filed 3–19–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66589; File No. SR–ISE– 

2012–13] 

Self-Regulatory Organizations; 

International Securities Exchange, 

LLC; Notice of Filing and Immediate 

Effectiveness of Proposed Rule 

Change To Adopt a Route-Out Fee for 

Priority Customer Orders 

March 14, 2012. 

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

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on February 29, 2012, the International 

Securities Exchange, LLC (the 

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

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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 ISE is proposing to adopt a fee 

related to the execution of Priority 

Customer orders subject to linkage 

handling. The text of the proposed rule 

change is available on the Exchange’s 

Web site (http://www.ise.com), 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 

self-regulatory organization 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 self-regulatory organization 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 

The purpose of this proposed rule 

change is to adopt a fee related to the 

execution of Priority Customer 3 orders 

subject to linkage handling. 

On August 31, 2009, the Exchange 

implemented the new Options Order 

Protection and Locked/Crossed Market 

Plan (‘‘Distributive Linkage’’) and the 

use of Intermarket Sweep Orders 

(‘‘ISOs’’). Consistent with Distributive 

Linkage and pursuant to ISE rules, the 

Exchange’s Primary Market Makers 

(‘‘PMMs’’) have an obligation to address 

customer 4 orders when there is a better 

market displayed on another exchange. 

ISE’s PMMs meet this obligation via the 

use of ISOs. In meeting their obligations, 

PMMs may incur fees when they send 

ISOs, especially when sending ISOs to 

exchanges that charge ‘‘taker’’ fees. To 

minimize the PMM’s financial burden 

and help offset such fees, the ISE 

amended its schedule of fees on October 

1, 2009 to adopt a rebate for the PMM 

of $0.20 per contract on all ISO orders 

sent to an away exchange (regardless of 

the fee charged by the exchange where 

the ISO order sent away was executed).5

With the costs associated with 

servicing Priority Customer orders that 

must be executed at another exchange 

coupled with the cost of funding the 

existing fee credit, the Exchange 

believes it is appropriate to charge a fee 

for these orders. Therefore, the 

Exchange now proposes to charge 

Priority Customer orders a fee of $0.25 

per contract for executions that result 

from the PMM routing ISOs to another 

exchange in a limited number of 

symbols. Specifically, the proposed fee 

will only be charged for Priority 

Customer orders that are routed to an 

away exchange in symbols that are 

subject to the Exchange’s modified 

maker/taker pricing model. These 

symbols, which currently number 101, 


srobinson on DSK4SPTVN1PROD with NOTICES