Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 12167 

6See FINRA Rule 9523(b)(1) (to be renumbered as 

FINRA Rule 9523(a)(1)). 

7 In approving this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition and capital formation. See 

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

8 15 U.S.C. 78o–3(b)(6). 

9 15 U.S.C. 78s(b)(2). 

10 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 54959 

(December 18, 2006), 71 FR 77842 (‘‘Notice’’). 

4Amendment No. 2 replaced Amendment No. 1, 

which was withdrawn. In Amendment No. 2, 

Nasdaq proposed to re-number the new rule from 

Rule 7038 to Rule 7047, as rule number 7038 has 

since been used for a subsequent rule. Nasdaq also 

clarified that the Service will only be available with 

respect to data feeds that contain non-core market 

data. Nasdaq also listed the current data feeds 

which can be customized through the Service. 

Because Amendment No. 2 is technical in nature, 

it is not subject to notice and comment. 

5See letter from Melissa MacGregor, Assistant 

Vice President and Assistant General Counsel, 

SIFMA, to Nancy M. Morris, Secretary, 

Commission, dated January 17, 2007. 

6 Id. at 1. 

7 Id. 

8 Id. at 2. 

9 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

10 15 U.S.C. 78f(b)(4). 

Act should be approved, but with 

specific supervisory requirements that 

have the consent of the disqualified 

member, sponsoring member and/or 

disqualified person, then proposed 

FINRA Rule 9523(b) would authorize 

Member Regulation to approve a 

supervisory plan, without submitting a 

recommendation to the Chairman of the 

Statutory Disqualification Committee, 

acting on behalf of the NAC. Consistent 

with the current rule regarding the 

submission of supervisory plans,6

proposed FINRA Rule 9523(b)(1) would 

provide that, by submitting an executed 

letter consenting to a supervisory plan, 

a disqualified member, sponsoring 

member and/or disqualified person 

waive the following (in summary): 

(a) The right to a hearing and any 

right of appeal to challenge the validity 

of the supervisory plan; 

(b) The right to claim bias or 

prejudgment by Member Regulation or 

the General Counsel regarding the 

supervisory plan; and 

(c) The right to claim a violation of 

the ex parte prohibitions or the 

separation of functions provisions of 

FINRA Rules 9143 and 9144, 

respectively, in connection with 

participation in the supervisory plan. 

If the supervisory plan is rejected, the 

disqualified member, sponsoring 

member and/or disqualified person 

would have the right to proceed under 

FINRA Rule 9524. 

The proposed rule change also would 

make several technical amendments. 

For example, the proposed rule change 

would amend FINRA Rule 9522(c) to 

allow a member that has filed a 

statutory disqualification application to 

withdraw that application after the start 

of a hearing but prior to the issuance of 

a decision by the NAC by filing a 

written notice with FINRA’s Department 

of Registration and Disclosure and 

FINRA’s Office of General Counsel. In 

addition, for purposes of clarity and 

consistency, the proposed rule change 

would amend FINRA Rule 9522(e) to 

replace references that Member 

Regulation ‘‘may grant’’ or ‘‘may 

approve’’ certain matters with ‘‘is 

authorized to approve’’ such matters. 

III. Discussion and Findings 

After careful review of the proposed 

rule change, the Commission finds that 

the proposed rule change is consistent 

with the requirements of the Act, and 

the rules and regulations thereunder 

that are applicable to a national 

securities association.7 In particular, the 

Commission believes the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,8 which 

requires, among other things, that 

FINRA rules must be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, and, in 

general, to protect investors and the 

public interest. The Commission 

believes that the proposed rule change 

is consistent with the provisions of the 

Act noted above because it should allow 

FINRA to integrate filings mandated by 

the revised definition of disqualification 

into established programs that monitor 

subject persons and allow FINRA and 

the Commission to focus resources on 

filings that raise important investor 

protection concerns. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 

proposed rule change (SR–FINRA– 

2008–045), as modified by Amendment 

No. 1, be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6208 Filed 3–20–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59579; File No. SR– 

NASDAQ–2006–056] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change as 

Modified by Amendment No. 2 Thereto 

To Establish Nasdaq Custom Data 

Feeds 

March 13, 2009. 

On December 12, 2006, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’) 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 establish a data filtration 

service called Nasdaq Custom Data 

Feeds (‘‘Service’’). The Service would 

permit entities to request and receive 

customized data feeds containing data 

elements from Nasdaq’s current data 

feeds. The proposed rule change was 

published in the Federal Register on 

December 27, 2006.3 On March 9, 2009, 

Nasdaq filed Amendment No. 1 to the 

proposed rule change. On March 10, 

2009, Nasdaq filed Amendment No. 2 to 

the proposed rule change.4

The Commission received one 

comment on the proposal from the 

Securities Industry and Financial 

Markets Association (‘‘SIFMA’’).5

SIFMA believes that the proposed rule 

change does not meet the requirements 

of the Act because ‘‘there is no costbased analysis or justification for the 

service in the release.’’ 6 SIFMA also 

asserts that the proposed rule change 

‘‘raises problems regarding how the 

proposed fee was calculated.’’ 7 Finally, 

SIFMA questions if competitors will be 

disadvantaged by the proposal as 

Nasdaq will have processed the raw 

data into a customized data feed when 

the data is released, and if a commercial 

service should be provided by Nasdaq 

or if it should instead ‘‘be offered by an 

affiliate on the condition that the terms 

under which that affiliate receives the 

underlying market data are offered to 

other vendors so as to assure 

competition and prevent commercial 

conflicts of interest.’’ 8

The Commission has reviewed 

carefully the proposed rule change and 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange 9 and, in particular, 

Section 6(b)(4) of the Act,10 which 

requires, among other things, that 

Nasdaq’s rules provide for the equitable 

allocation of reasonable dues, fees and 

other charges among members and 


dwashington3 on PROD1PC60 with NOTICES
12168 Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 

11 15 U.S.C. 78f(b)(5). 12See Notice at 77843. 13See Securities Exchange Act Release No. 59039 

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

2008) (SR–NYSEArca–2006–21). 14See Securities Exchange Act Release No. 55011 

(December 27, 2006) (order granting petition for 

review of SR–NYSEArca–2006–21). 15The Commission’s order distinguishes between 

core market data, which is defined as ‘‘the bestpriced quotations and last sale information of all 

markets in U.S.-listed equities that Commission 

rules require to be consolidated and distributed to 

the public by a single central processor,’’ and noncore market data. See 73 FR at 74771. Because the 

Service, which provides customized data feeds 

using data that is available through Nasdaq’s 

current proprietary data feeds, does not involve 

core market data, this proposed rule change is 

properly categorized as a non-core market data 

proposal. 

16 Id. at 74781. 

17 Id. at 74781–82. 

18 Id. at 74781. In approving NYSEArca–2006–21, 

the Commission found that the proposed rule 

change was consistent with Section 6(b)(4) of the 

Act, 15 U.S.C. 78f(b)(4). See 73 FR at 74779. The 

Commission also found that the proposal was 

consistent with Section 6(b)(5) of the Act, 15 U.S.C. 

78f(b)(5), Section 6(b)(8) of the Act, 15 U.S.C. 

78f(b)(8), and Rule 603(a) of Regulation NMS, 17 

CFR 242.603(a). See 73 FR at 74779. The 

Commission noted that the presence of competitive 

forces guided its analysis under both Section 6 of 

the Act and Rule 603 of Regulation NMS. Id. 

19 15 U.S.C. 78f(b)(4). 

20 15 U.S.C. 78f(b)(5). 

21 17 CFR 242.603(a)(1). 

22 17 CFR 242.603(a)(2). See 73 FR at 74782. 

23See 73 FR at 74779. 

24See Notice at 77844. 

25 15 U.S.C. 78f(b)(4). 

26 15 U.S.C. 78f(b)(5). 

27 17 CFR 242.603(a). 

28See 73 FR at 74787. 

29 Id. 

30See FR at 74775 (summarizing comments 

received on the proposed rule change from, among 

others, SIFMA). 

31 Id. at 74787. 

32 In its filing, Nasdaq represented that it would 

make the data delivered by the Service available at 

the same time that the data is made available 

through Nasdaq’s current data feeds. In addition, 

Nasdaq stated that, due to factors such as 

bandwidth and equipment capacity, a subscriber to 

the Service may receive the current data feed before 

receiving its customized data feed. See Notice at 

77843. 

issuers and other persons using any 

facility or system which Nasdaq 

operates or controls. The Commission 

also finds that the proposed rule change 

is consistent with the requirements of 

Section 6(b)(5) of the Act,11 which 

requires, among other things, that 

Nasdaq’s rules not unfairly discriminate 

between customers, issuers, brokers or 

dealers. 

The Commission finds that the 

proposed rule change is consistent with 

these statutory standards. Use of the 

Service is optional, and the fees 

associated with the Service will be 

imposed on all subscribers equally, 

based on the level of service that is 

selected. The fees for the Service are 

intended to approximate the average 

costs of establishing and maintaining a 

customized feed.12

In addition, the proposal meets the 

criteria, formulated by the 

Commission 13 in connection with the 

petition filed by NetCoalition,14 for 

approval of proposed rule changes 

concerning the distribution of non-core 

market data.15 In its order issued in 

connection with the NetCoalition 

petition, the Commission stated that 

‘‘reliance on competitive forces is the 

most appropriate and effective means to 

assess whether terms for the distribution 

of non-core data are equitable, fair and 

reasonable, and not unreasonably 

discriminatory.’’ 16 As such, 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.’’ 17 If an exchange ‘‘was 

subject to significant competitive forces 

in setting the terms of a proposal,’’ the 

proposal will be approved unless the 

Commission determines that ‘‘there is a 

substantial countervailing basis to find 

that the terms nevertheless fail to meet 

an applicable requirement of the 

Exchange Act or the rules 

thereunder.’’ 18

In its order approving NYSEArca– 

2006–21, the Commission also stated 

that the terms of a proposed rule change 

to distribute market data for which the 

exchange is the exclusive processor 

must provide for an equitable allocation 

of fees under Section 6(b)(4) of the 

Act,19 not be designed to permit unfair 

discrimination under Section 6(b)(5) of 

the Act,20 be fair and reasonable under 

Rule 603(a)(1),21 and not be 

unreasonably discriminatory under Rule 

603(a)(2).22 If the proposal involves 

non-core market data, an analysis of 

competitive forces may be used, and 

that analysis will apply to findings 

under Section 6 of the Act, and to 

findings under Rule 603.23

The Service customizes the 

information that is available through 

Nasdaq’s current proprietary data feeds. 

These current data feeds serve as an 

alternative to the Service, and potential 

subscribers to the Service can determine 

if the Service provides a benefit over the 

current data feeds that justifies its added 

cost. In addition, Nasdaq has 

represented that there is significant 

competition in the distribution of 

market data to broker-dealers and to 

other consumers, and that it fully 

expects its competitors to quickly 

replicate the Service.24 In that scenario, 

potential subscribers to the Service 

would have the added option of 

selecting a customized product offered 

by a competitor. 

Nasdaq was subject to significant 

competitive forces in formulating the 

terms of the Service—specifically, the 

availability to market participants of 

alternatives to purchasing the Service. 

Because the proposed Service involves 

the distribution of non-core market data, 

and significant competitive forces are 

present, the Service is thus consistent 

with Section 6(b)(4) 25 and Section 

6(b)(5) of the Act,26 and with Rule 

603(a).27 There is not a substantial 

countervailing basis that would render 

the proposal inconsistent with the Act 

or the rules thereunder. 

As described above, SIFMA submitted 

a comment letter in which it asserted 

that Nasdaq did not include a cost-based 

analysis or justification for the Service 

in its proposed rule change. SIFMA also 

questioned whether competitors would 

be disadvantaged by the proposal, and 

queried whether the Service should be 

offered through an affiliate of Nasdaq, 

with Nasdaq offering the underlying 

data to its affiliate and to other vendors 

on equal terms. 

With respect to the basis for the 

proposed fees for the Service, Nasdaq 

has represented that those fees are 

intended to approximate the average 

costs of establishing and maintaining a 

customized feed. Moreover, the 

Commission has stated that proposed 

fees need not be subject to a cost-based 

review in order to conclude that such 

fees are fair and reasonable.28 Rather, 

the criteria for review should be 

‘‘appropriate to the circumstances,’’ and 

the existence of competitive forces is 

‘‘particularly appropriate’’ when 

assessing a proposed fee.29 As noted 

above, Nasdaq was subject to significant 

competitive forces in formulating the 

terms of the Service. A cost-based 

review is therefore not necessary here. 

With respect to SIFMA’s proposal that 

the Service be offered through an 

affiliate of Nasdaq, and that Nasdaq 

offer the underlying data on equal terms 

to its affiliate and competitors alike, a 

similar proposal was made in the 

context of SR–NYSEArca–2006–21.30 In 

its order approving that rule change, the 

Commission found that such a proposal 

was not necessary or appropriate, as 

NYSE Arca, Inc. was subject to 

significant competitive forces in setting 

the terms of its data product.31 Given 

the presence of significant competitive 

forces here, SIFMA’s proposal that 

Nasdaq offer the Service through an 

affiliate, and provide Nasdaq and other 

vendors access to the underlying data 

on equal terms, is also unnecessary.32


dwashington3 on PROD1PC60 with NOTICES
Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 12169 

33 15 U.S.C. 78s(b)(2). 

34 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Nasdaq also proposed to include internalized 

prints from the FINRA/Nasdaq Trade Reporting 

Facility (‘‘TRF’’) in the Service. However, as part of 

Amendment No. 1, Nasdaq has represented that it 

will not include any TRF data in the Service until 

FINRA has submitted a separate filing to include 

TRF data in the Service, and the Commission has 

acted favorably upon that filing. See note 5 infra. 

4See Securities Exchange Act Release No. 55444 

(March 12, 2007), 72 FR 12648 (‘‘Notice’’). 

5 In Amendment No. 1, Nasdaq clarified certain 

aspects of the Service. For example, Nasdaq noted 

that it will not include any data in the Service that 

is received from the FINRA/Nasdaq TRF until 

FINRA has submitted a separate filing to include 

TRF data in the Service, and the Commission has 

acted favorably upon that filing. Nasdaq also noted 

that it is eliminating the individual access fee for 

web subscribers from the Service, and deleted the 

corresponding portion of the proposed rule text. 

Because the Amendment is technical in nature, it 

is not subject to notice and comment. 

6 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

7 15 U.S.C. 78f(b)(4). 

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

9See Notice at 12649. 

10See Securities Exchange Act Release No. 59039 

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

2008) (SR–NYSEArca–2006–21). 

11See Securities Exchange Act Release No. 55011 

(December 27, 2006) (order granting petition for 

review of SR–NYSEArca–2006–21). 

12The Commission’s order distinguishes between 

core market data, which is defined as ‘‘the bestpriced quotations and last sale information of all 

markets in U.S.-listed equities that Commission 

rules require to be consolidated and distributed to 

the public by a single central processor,’’ and noncore market data. See 73 FR at 74771. Because the 

Service, which provides daily traded share volume 

for trades executed by, or reported to, Nasdaq 

systems, does not involve core market data, this 

proposed rule change is properly categorized as a 

non-core market data proposal. 

13 Id. at 74781. 

14 Id. at 74781–82. 

15 Id. at 74781. In approving NYSEArca–2006–21, 

the Commission found that the proposed rule 

change was consistent with Section 6(b)(4) of the 

Act, 15 U.S.C. 78f(b)(4). See 73 FR at 74779. The 

Commission also found that the proposal was 

consistent with Section 6(b)(5) of the Act, 15 U.S.C. 

78f(b)(5), Section 6(b)(8) of the Act, 15 U.S.C. 

78f(b)(8), and Rule 603(a) of Regulation NMS, 17 

CFR 242.603(a). See 73 FR at 74779. The 

Commission noted that the presence of competitive 

forces guided its analysis under both Section 6 of 

the Act and Rule 603 of Regulation NMS. Id. 

16 15 U.S.C. 78f(b)(4). 

17 15 U.S.C. 78f(b)(5). 

18 17 CFR 242.603(a)(1). 

19 17 CFR 242.603(a)(2). See 73 FR at 74782. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,33 that the 

proposed rule change (SR–NASDAQ– 

2006–056), as modified by Amendment 

No. 2 be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6146 Filed 3–20–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59580; File No. SR– 

NASDAQ–2007–006] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change as 

Modified by Amendment No. 1 Thereto 

To Establish the Nasdaq Daily Share 

Volume Service and To Establish Fees 

for the Service 

March 13, 2009. 

On February 7, 2007, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’) 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 establish the Nasdaq Daily 

Share Volume Service (‘‘Service’’) and 

to establish fees for the Service. The 

Service will provide the volume of 

shares traded each day by issue for 

participating market participants on a 

T+1 basis. The volume data will consist 

of trades from the Nasdaq Execution 

System.3 Subscribers will have File 

Transfer Protocol (‘‘FTP’’) access to the 

full underlying data set to create custom 

reports. Subscribers will also be able to 

redistribute the data, although the 

subscriber will be required to enter into 

a distributor agreement. 

Nasdaq proposes to charge $2,500 per 

month for the Service. Participation by 

eligible market participants will be 

voluntary, and eligible market 

participants who choose to participate 

will be able to decide whether to 

advertise their trade volume by market 

participant ID code and issue. 

The proposed rule change was 

published in the Federal Register on 

March 16, 2007.4 The Commission 

received no comments on the proposal. 

On March 6, 2009, Nasdaq filed 

Amendment No. 1 to the proposed rule 

change.5

The Commission has reviewed 

carefully the proposed rule change and 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange 6 and, in particular, 

Section 6(b)(4) of the Act,7 which 

requires, among other things, that 

Nasdaq’s rules provide for the equitable 

allocation of reasonable dues, fees and 

other charges among members and 

issuers and other persons using any 

facility or system which Nasdaq 

operates or controls. The Commission 

also finds that the proposed rule change 

is consistent with Section 6(b)(5) of the 

Act,8 which requires, among other 

things, that Nasdaq’s rules are not 

designed to unfairly discriminate 

between customers, issuers, brokers or 

dealers. 

The Commission finds that the 

proposed rule change is consistent with 

these statutory standards. Use of the 

Service is optional, and the fee 

associated with the Service will be 

imposed on all subscribers equally. The 

fee for the Service is intended to cover 

the costs of establishing and 

maintaining the Service.9

In addition, the proposal meets the 

criteria, formulated by the 

Commission 10 in connection with the 

petition filed by NetCoalition,11 for 

approval of proposed rule changes 

concerning the distribution of non-core 

market data.12 In its order issued in 

connection with the NetCoalition 

petition, the Commission stated that 

‘‘reliance on competitive forces is the 

most appropriate and effective means to 

assess whether the terms for the 

distribution of non-core data are 

equitable, fair and reasonable, and not 

unreasonably discriminatory.’’ 13 As 

such, 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.’’ 14 If an 

exchange ‘‘was subject to significant 

competitive forces in setting the terms 

of a proposal,’’ the proposal will be 

approved unless the Commission 

determines that ‘‘there is a substantial 

countervailing basis to find that the 

terms nevertheless fail to meet an 

applicable requirement of the Exchange 

Act or the rules thereunder.’’ 15

In its order approving NYSEArca– 

2006–21, the Commission also stated 

that the terms of a proposed rule change 

to distribute market data for which the 

exchange is the exclusive processor 

must provide for an equitable allocation 

of fees under Section 6(b)(4) of the 

Act,16 not be designed to permit unfair 

discrimination under Section 6(b)(5) of 

the Act,17 be fair and reasonable under 

Rule 603(a)(1),18 and not be 

unreasonably discriminatory under Rule 

603(a)(2).19 If the proposal involves 

non-core market data, an analysis of 

competitive forces may be used, and 

that analysis will apply to findings 


dwashington3 on PROD1PC60 with NOTICES