Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices 22591 

6 15 U.S.C. 78s(b)(3)(A)(ii). 

7 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Securities Exchange Act Release No. 74432 

(March 4, 2015), 80 FR 12652 (March 10, 2015) (SR– 

OCC–2015–03). 

vendors’ pricing discipline is the same: 

They can simply refuse to purchase any 

proprietary data product that fails to 

provide sufficient value. NASDAQ and 

other producers of proprietary data 

products must understand and respond 

to these varying business models and 

pricing disciplines in order to market 

proprietary data products successfully. 

In addition to the competition and 

price discipline described above, the 

market for proprietary data products is 

also highly contestable because market 

entry is rapid, inexpensive, and 

profitable. The history of electronic 

trading is replete with examples of 

entrants that swiftly grew into some of 

the largest electronic trading platforms 

and proprietary data producers: 

Archipelago, Bloomberg Tradebook, 

Island, RediBook, Attain, TracECN and 

BATS Trading. A proliferation of dark 

pools and other ATSs operate profitably 

with fragmentary shares of consolidated 

market volume. 

Regulation NMS, by deregulating the 

market for proprietary data, has 

increased the contestability of that 

market. While broker-dealers have 

previously published their proprietary 

data individually, Regulation NMS 

encourages market data vendors and 

broker-dealers to produce proprietary 

products cooperatively in a manner 

never before possible. Multiple market 

data vendors already have the capability 

to aggregate data and disseminate it on 

a profitable scale, including Bloomberg, 

and Thomson Reuters. 

The vigor of competition for 

information is significant. NASDAQ has 

made a determination to adjust the fees 

associated with these products in order 

to reflect more accurately the value of 

its products and the investments made 

to enhance them, as well as to keep pace 

with changes in the industry and 

evolving customer needs. These 

products are entirely optional and are 

geared towards attracting new 

customers, as well as retaining existing 

customers. 

In all cases, firms make decisions on 

how much and what types of data to 

consume on the basis of the total cost of 

interacting with NASDAQ or other 

exchanges. Of course, the explicit data 

fees are but one factor in a total platform 

analysis. Some competitors have lower 

transactions fees and higher data fees, 

and others are vice versa. For example, 

NOM offers one distributor fee which 

allows firms to access both the BONO 

and ITTO data feeds. The market for this 

information is highly competitive and 

continually evolves as products develop 

and change. 

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 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.6 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, as amended, 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–2015–035 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Brent J. Fields, Secretary, Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2015–035. 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 

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

filing will also 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–2015–035 and 

should be submitted on or before May 

13, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–09264 Filed 4–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74747; File No. SR–OCC– 

2015–03] 

Self-Regulatory Organizations; The 

Options Clearing Corporation; Order 

Approving Proposed Rule Change 

Concerning the Execution of an 

Agreement for Clearing and Settlement 

Services Between OCC and NASDAQ 

Futures, Inc. 

April 16, 2015. 

On February 20, 2015, The Options 

Clearing Corporation (‘‘OCC’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change OCC–2015–03 

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

Securities Exchange Act of 1934 

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

The proposed rule change was 

published for comment in the Federal 

Register on March 10, 2015.3 The 

Commission received no comments on 

the proposed rule change. This order 

approves the proposed rule change. 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
22592 Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices 

4See http://www.cftc.gov/ucm/groups/public/@

otherif/documents/ifdocs/

nasdaqorderofreinstatement.pdf. 

5See Securities Exchange Act Release No. 66340 

(February 7, 2012), 77 FR 7621 (February 13, 2012) 

(SR–OCC–2012–02). 

6See 17 CFR 40.1. 

7More specifically, the Previous Agreement, in 

relevant part, stated that it would terminate if NFX 

terminates trading of all Cleared Contracts. See 

Section 19(b) of the Previous Agreement. See also 

note 5 supra. 

8See note 4 supra. 

9See Sections 3(a) and 9 of the Clearing 

Agreement in which language has been added 

allowing such flexibility. 

10See Article I, Section 1(C)(28) of OCC’s ByLaws. See also Sections 3(g), 6(a), 7, 19, and 

Schedule A, Section 1 of the Clearing Agreement. 

I. Description 

OCC proposes to execute an 

Agreement for Clearing and Settlement 

Services (‘‘Clearing Agreement’’) 

between OCC and NASDAQ Futures, 

Inc. (‘‘NFX’’) in connection with NFX’s 

operation as a designated contract 

market (‘‘DCM’’) 4 regulated by the 

Commodity Futures Trading 

Commission (‘‘CFTC’’). OCC will 

provide clearance and settlement 

services to NFX pursuant to the terms 

set forth in the Clearing Agreement. The 

rule change, as proposed, permits OCC 

to begin providing clearing and 

settlement services for NFX in the 

second quarter of 2015. 

NFX previously operated as a DCM 

and cleared its futures contracts through 

OCC. As such, OCC and NFX had 

previously entered into a Second 

Amended and Restated Agreement for 

Clearing and Settlement Services 

(‘‘Previous Agreement’’) dated January 

13, 2012.5 As of January 31, 2014, NFX 

ceased operations as a contract market 

and became a dormant contract market 

under CFTC Regulations.6 As a result, 

the Previous Agreement was terminated 

pursuant to its terms 7 and the clearing 

relationship between OCC and NFX 

terminated. 

On November 21, 2014, NFX was 

approved by the CFTC as a DCM.8 In 

connection with that approval, OCC 

proposes to provide the clearance and 

settlement services as described in the 

Clearing Agreement, which is 

substantially similar to the Previous 

Agreement with several differences 

discussed in more detail below. The 

Clearing Agreement has been amended 

to allow OCC more flexibility in 

determining which products it will clear 

based upon its conclusion that it is able 

to appropriately risk manage such 

products using commercially reasonable 

standards.9 More specifically, the 

following changes have been made: 

• Section 3(a) of the Clearing 

Agreement, ‘‘General Criteria for 

Underlying Interests,’’ has been 

amended to permit NFX to select the 

underlying interests that are the subject 

of currency futures, commodity futures, 

and/or futures options to be traded on 

NFX only if OCC is satisfied that it is 

able to appropriately risk manage the 

contract with the proposed underlying 

interest using commercially reasonable 

efforts. 

• Section 9 of the Clearing 

Agreement, ‘‘Limitations of Authority 

and Responsibility,’’ has been amended 

to specify that OCC shall have no 

responsibility to enforce standards 

relating to the conduct of trading on 

NFX unless OCC finds it reasonably 

necessary in order to appropriately risk 

manage the products that are being 

traded on NFX. 

In addition, the Clearing Agreement 

will also make several changes to the 

Previous Agreement, which include: 

• Section 3(c), ‘‘Procedures for 

Selection of Underlying Interests,’’ has 

been amended to state that NFX must 

submit a certificate for a new class of 

contracts not already listed or traded on 

NFX as soon as practicable (rather than 

ten days prior to the commencement of 

trading). It has also been amended to 

state that OCC will be obligated to use 

commercially reasonable efforts to 

authorize the clearance and settlement 

of such contracts as soon as practicable. 

In addition, the Clearing Agreement 

expressly obligates NFX to provide OCC 

with any additional information as 

requested by OCC from time to time that 

will assist OCC in identifying a new 

product proposed for clearing by NFX. 

OCC believes that these amendments to 

Section 3(c), related to the procedures 

for the selection of underlying interests, 

will ensure that OCC not only has the 

correct information needed to evaluate a 

proposed new product but that the 

information will be produced to OCC in 

a timely manner which will provide 

OCC sufficient time to evaluate the 

proposed new product. 

• Section 3(d), ‘‘Notice of Additional 

Maturity or Expiration Dates,’’ has been 

amended to state that, for a class of 

products previously certified, NFX may 

introduce a new maturity or expiration 

date that is in the cycle set forth in the 

certificate by providing notice to OCC 

through electronic means specified by 

OCC. The Previous Agreement required 

such notice to be sent to OCC only by 

email or facsimile. 

• A universal conforming change has 

been made to various sections in the 

Clearing Agreement to replace the term 

‘‘matched’’ trades with ‘‘confirmed’’ 

trades to better describe trades that are 

processed for clearance and 

settlement.10

• Section 5(a), ‘‘Confirmed Trade 

Reports,’’ has been amended to remove 

language discussing the possibility that 

NFX will provide OCC with a confirmed 

trade report on a real time basis as this 

capability is already captured in the 

language ‘‘as the Corporation may 

reasonably prescribe.’’ 

• Section 5(c)(i) has been amended to 

include language that will allow OCC to 

determine the final settlement price for 

a futures contract in which the 

underlying interest is a cash-settled 

foreign currency if the organized market 

in which that foreign currency future is 

traded on, or the foreign currency itself, 

did not open or remain open for trading 

at or before the time in which the 

settlement price for such futures 

contract would ordinarily be 

determined. In addition, Section 5(c)(i) 

has been amended to include a 

reference to ‘‘variance’’ when listing 

factors that will allow OCC to determine 

a final reasonable settlement price, if 

not reported at the ordinary time of final 

settlement. OCC believes that these 

additions to the Clearing Agreement 

clarify the potential underlying interests 

in which NFX may introduce futures 

contracts and make the Clearing 

Agreement more precise. 

• Section 7, ‘‘Acceptance and 

Rejection of Transactions in Cleared 

Contracts,’’ has been amended to 

include a provision that will allow OCC, 

in accordance with its By-Laws, to reject 

transactions due to validation errors 

which will allow OCC to better manage 

its clearance and settlement obligations 

by expressly allowing it to reject 

transactions that do not contain 

complete terms. These validation errors 

include, for example, an incorrect 

Clearing Member, account, product or 

format. 

• Section 8, ‘‘Non-Discrimination,’’ 

has been amended to delete a provision 

restricting OCC from changing its ByLaws or Rules in any manner that may 

limit its obligations to clear and settle 

for NFX. In addition, a provision has 

been deleted requiring OCC to amend 

the Clearing Agreement in the event that 

OCC has made changes to its standard 

form agreement for clearing and 

settlement services. Section 8 has also 

been amended to delete a provision 

stating OCC is required to consult with 

NFX and modify OCC’s By-Laws or 

Rules to incorporate product design 

features specified by NFX for new 

products. OCC believes that these 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Notices 22593 

11 15 U.S.C. 78s(b)(2)(C). 

12 15 U.S.C. 78q–1(b)(3)(F). 

13 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

14 15 U.S.C. 78s(b)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

provisions are no longer necessary as 

they limit OCC’s ability to modify its 

By-Laws, Rules and agreements which 

may be necessary for OCC to fulfill its 

obligations as a clearing organization. 

OCC will, however, continue to be 

obligated to fulfill both the provisions of 

the Clearing Agreement and OCC’s 

regulatory responsibilities. Section 8 has 

additionally been amended to delete an 

obligation for each party to provide the 

other with proposed rule changes. The 

elimination of this contractual 

obligation reflects the parties’ 

determination that their respective 

obligations to post filed regulatory 

submissions on their public Web sites 

provides sufficient notice of such 

changes. 

• Section 11, ‘‘Financial 

Requirements for Clearing Members,’’ 

has been amended to delete a provision 

stating the specific financial 

responsibility standards OCC has with 

respect to its Clearing Members. This 

change was made to further streamline 

the Clearing Agreement given OCC’s 

general obligation to remain consistent 

with OCC By-Laws and Rules. 

• Section 14, ‘‘Programs and 

Projects,’’ has been amended to 

eliminate a provision expressly 

requiring OCC to offer futures contract 

clearing terms to NFX that are no less 

favorable to the terms offered to other 

exchanges. 

• Sections 15 and 24 in the Previous 

Agreement, ‘‘Information Sharing’’ and 

‘‘Quality Standards’’ respectively, have 

been deleted in their entirety in an 

attempt to simplify the Clearing 

Agreement as the sections create 

unnecessary obligations on the parties 

and are duplicative of general regulatory 

responsibilities of both parties. 

• Section 18(b), ‘‘Other Grounds for 

Termination,’’ has been amended to 

include a provision that OCC may 

terminate the Clearing Agreement at any 

time so long as NFX is given 120 days 

prior written notice. The addition of this 

provision better balances the rights of 

both parties to terminate the Clearing 

Agreement at their discretion provided 

that proper notice is given as required 

by the Clearing Agreement. 

• Various administrative changes 

have been made throughout the 

document including, but not limited to, 

an amended legal name and description 

of NFX, updated references to sections 

within the document, and clean-up 

changes of duplicative terms. 

Finally, pursuant to the rule change, 

as approved, Schedule A of the Clearing 

Agreement, ‘‘Description of Clearing 

and Settlement Services’’ and Schedule 

B of the Clearing Agreement, 

‘‘Information Sharing,’’ are being 

amended as follows: 

• Section (1) of Schedule A of the 

Clearing Agreement, ‘‘Trade 

Acceptance,’’ has been updated to 

reflect current OCC operational 

requirements with respect to submission 

of confirmed trades. 

• Section (4) of Schedule A, 

‘‘Information for Clearing Members,’’ 

has been amended to delete specific 

information sharing obligations of OCC 

to its Clearing Members and to state that 

the information provided to Clearing 

Members will be in accordance with 

OCC’s By-Laws and Rules. 

• Section (I)(A) of Schedule B has 

been amended to delete specific 

references to information that OCC will 

provide to Clearing Members on a daily 

basis and instead adds a provision that 

OCC will provide NFX with its ‘‘Data 

Distribution Service’’ information for 

regulatory and financial purposes. 

• Section (I)(B) of Schedule B has 

been amended to delete certain 

information sharing provisions and to 

state that the information sharing 

obligations OCC continues to have may 

be satisfied by posting the required 

information on OCC’s public Web site 

which streamlines the information 

sharing process. 

II. Discussion and Commission 

Findings 

Section 19(b)(2)(C) of the Act 11

directs the Commission to approve a 

proposed rule change of a selfregulatory organization if it finds that 

the proposed rule change is consistent 

with the requirements of the Act and the 

rules and regulations thereunder 

applicable to such organization. The 

Commission finds that the proposed 

rule change is consistent with Section 

17A(b)(3)(F) of the Act,12 which 

requires, among other things, that the 

rules of a clearing agency be designed to 

promote the prompt and accurate 

clearance and settlement of securities 

transactions and, to the extent 

applicable, derivative agreements, 

contracts, and transactions, to assure the 

safeguarding of securities and funds 

which are in its custody or control or for 

which it is responsible, and, in general, 

to protect investors and the public 

interest. As approved, the Clearing 

Agreement will allow derivative 

contract trades executed on NFX to be 

cleared and settled at OCC, thereby 

ensuring that these trades will be 

subject to the comprehensive 

operational and risk management 

framework at OCC. In so doing, the 

Clearing Agreement, should reduce the 

costs and risks associated with clearing 

and settling NFX trades, which should 

in turn promote the prompt and 

accurate clearance and settlement of the 

NFX derivative contract transactions, 

better assure the safeguarding of related 

securities and funds in the custody and 

control of OCC, and better protect 

investors and the public interest. 

III. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposal is 

consistent with the requirements of the 

Act and in particular with the 

requirements of Section 17A of the 

Act 13 and the rules and regulations 

thereunder. 

IT IS THEREFORE ORDERED, 

pursuant to Section 19(b)(2) of the 

Act,14 that the proposed rule change 

(SR–OCC–2015–03) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–09266 Filed 4–21–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74741; File No. SR–ICEEU– 

2015–005] 

Self-Regulatory Organizations; ICE 

Clear Europe Limited; Notice of 

Designation of Longer Period for 

Commission Action on Proposed Rule 

Change Relating to CDS Procedures 

for CDX North America Index CDS 

Contracts 

April 16, 2015. 

On February 12, 2015, ICE Clear 

Europe Limited (‘‘ICEEU’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to revise ICEEU’s CDS 

Procedures, CDS Risk Model 

Description and CDS End-of-Day Price 

Discovery Policy to provide the basis for 

ICEEU to clear CDX North America 

Index CDS Contracts (‘‘CDX.NA 

Contracts’’). The proposed rule change 


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