70600 Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 

18 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 

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 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– 

NYSEArca–2014–125, and should be 

submitted on or before December 17, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27976 Filed 11–25–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73662; File No. SR– 

NASDAQ–2014–106] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Short Interest Reports 

November 20, 2014. 

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 

12, 2014, 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, 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 the Substance 

of the Proposed Rule Change 

The Exchange proposes to change the 

model of pricing for Short Interest 

Reports under the category of Historical 

Research and Administrative Reports 

under NASDAQ Rule 7022. Specifically, 

NASDAQ proposes to replace the 

current subscriber-based model with a 

fee based on internal or external 

distribution of the reports. Although the 

proposed rule is effective upon filing, 

NASDAQ plans to implement the fee on 

January 1, 2015. 

The text of the proposed rule change 

is below; proposed new language is 

italicized; proposed deletions are in 

brackets. 

* * * * * 

7022. Historical Research and 

Administrative Reports 

(a) No Change. 

(b) The charge to be paid by the 

purchaser of an Historical Research 

Report regarding a Nasdaq security that 

wishes to obtain a license to redistribute 

the information contained in the report 

to subscribers shall be determined in 

accordance with the following schedule: 

NUMBER OF SUBSCRIBERS

1–500 501–999 1,000–4,999 5,000–9,999 10,000+ 

A. Market Summary Statistics: 

More often than once a month ..................................... $250 $350 $450 $550 $750 

Once a month, quarter, or year .................................... 125 175 225 275 375 

B. Reserved. 

C. Nasdaq Issues Summary Statistics: 

More often than once a month ..................................... [500 600 700 800 1,000] 

Internal Distribution ................................................ 1,000 1,000 1,000 1,000 1,000 

External Distribution .............................................. 2,500 2,500 2,500 2,500 2,500 

Once a month, quarter, or year .................................... 250 300 350 400 500 

Aggregation of data on an annual basis ...................... 3,000 3,000 3,000 3,000 3,000 

D. Intra-Day Quote and Intra-Day Time and Sales Data: 

For a security and/or a market participant for a day .... 200 300 400 500 700 

For all market participants for a day or for all securities for a day ............................................................. 1,000 1,500 2,500 3,500 5,000 

(c) No change. 

(d) No change. 

* * * * * 

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 modify the 

pricing model for historical research 

and administrative reports categorized 

as Nasdaq Issues Summary Statistics 

under subsection C of NASDAQ Rule 

7022(b). The current pricing schedule 

for Nasdaq Issues Summary Statistics 

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Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 70601 

3 In 2013, NASDAQ moved the Daily List and 

Fundamental Data formerly covered by this rule 

into new NASDAQ Rule 7022(d). See Exchange Act 

Release No. 68636 (Jan. 11, 2013). In the future, this 

category may include other information that 

properly falls within the category of Nasdaq Issues 

Summary Statistics. 

4 15 U.S.C. 78f. 

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

6Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496 (June 29, 2005). 

reports currently includes only short 

interest information.3 The fee schedule 

is currently divided into two tranches 

depending upon whether the report is 

distributed once per month or less, or 

more than once monthly. Within each 

tranche, the fee depends upon how 

many subscribers receive the report 

from a given Distributor. This proposal 

affects only the tranches of reports that 

are distributed more than once per 

month, meaning it will apply only to 

Short Interest Reports. 

For this category only, NASDAQ has 

determined to replace the subscriberbased tiers with a fee based on internal 

versus external distribution, a model 

already utilized by NASDAQ for 

multiple products. Internal distribution 

is defined as distribution of NASDAQ 

data by a given firm or other entity that 

receives data from NASDAQ only to 

recipients within that firm or entity. 

Conversely, external distribution is 

defined as distribution of NASDAQ data 

by a given firm or other entity that 

receives data from NASDAQ to 

recipients either outside of the entity or 

both within and outside of that firm or 

entity. Replacing the per-subscriber fee 

with a Distributor fee will reduce the 

administrative burden on firms by 

eliminating the requirement to control 

and/or count the number of recipients of 

the report. In addition, external 

distributors will continue to be 

permitted to use the Information 

internally without additional charges. 

NASDAQ has determined to assess a 

monthly per Distributor fee of $1,000 for 

internal distribution and $2,500 for 

external distribution. NASDAQ 

determined to assess higher fees for 

external Distributors based on historical 

experience that external distributors 

offer wider distribution than internal 

Distributors, and they therefore derive 

higher value than internal Distributors 

while typically maintaining a lower fee 

per unit. 

2. Statutory Basis 

NASDAQ believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,4 in 

general, and with Section 6(b)(4) and 

6(b)(5) of the Act,5 in particular, in that 

it provides an equitable allocation of 

reasonable fees among Subscribers and 

recipients of NASDAQ data and is not 

designed to permit unfair 

discrimination between them. In 

adopting Regulation NMS, the 

Commission granted self-regulatory 

organizations and broker-dealers 

increased authority and flexibility to 

offer new and unique market data to the 

public. 

The Commission concluded that 

Regulation NMS—by deregulating the 

market in proprietary data—would itself 

further the Act’s goals of facilitating 

efficiency and competition: 

[E]fficiency is promoted when broker-dealers 

who do not need the data beyond the prices, 

sizes, market center identifications of the 

NBBO and consolidated last sale information 

are not required to receive (and pay for) such 

data. The Commission also believes that 

efficiency is promoted when broker-dealers 

may choose to receive (and pay for) 

additional market data based on their own 

internal analysis of the need for such data.6

By removing ‘‘unnecessary regulatory 

restrictions’’ on the ability of exchanges 

to sell their own data, Regulation NMS 

advanced the goals of the Act and the 

principles reflected in its legislative 

history. If the free market should 

determine whether proprietary data is 

sold to broker-dealers at all, it follows 

that the price at which such data is sold 

should be set by the market as well. 

On July 21, 2010, President Barack 

Obama signed into law H.R. 4173, the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 

(‘‘Dodd-Frank Act’’), which amended 

Section 19 of the Act. Among other 

things, Section 916 of the Dodd-Frank 

Act amended paragraph (A) of Section 

19(b)(3) of the Act by inserting the 

phrase ‘‘on any person, whether or not 

the person is a member of the selfregulatory organization’’ after ‘‘due, fee 

or other charge imposed by the selfregulatory organization.’’ As a result, all 

self-regulatory organization (‘‘SRO’’) 

rule proposals establishing or changing 

dues, fees, or other charges are 

immediately effective upon filing 

regardless of whether such dues, fees, or 

other charges are imposed on members 

of the SRO, non-members, or both. 

Section 916 further amended paragraph 

(C) of Section 19(b)(3) of the Act to read, 

in pertinent part, ‘‘At any time within 

the 60-day period beginning on the date 

of filing of such a proposed rule change 

in accordance with the provisions of 

paragraph (1) [of Section 19(b)], the 

Commission summarily may 

temporarily suspend the change in the 

rules of the self-regulatory organization 

made thereby, 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 this title. If the Commission 

takes such action, the Commission shall 

institute proceedings under paragraph 

(2)(B) [of Section 19(b)] to determine 

whether the proposed rule should be 

approved or disapproved.’’ 

The decision of the United States 

Court of Appeals for the District of 

Columbia Circuit in NetCoalition v. 

SEC, No. 09–1042 (D.C. Cir. 2010), 

although reviewing a Commission 

decision made prior to the effective date 

of the Dodd-Frank Act, 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, at 15 (quoting 

H.R. Rep. No. 94–229, at 92 (1975), as 

reprinted in 1975 U.S.C.C.A.N. 321, 

323). 

For the reasons stated above, 

NASDAQ believes that the allocation of 

the proposed fee is fair and equitable in 

accordance with Section 6(b)(4) of the 

Act, and not unreasonably 

discriminatory in accordance with 

Section 6(b)(5) of the Act. As described 

above, the proposed fee is based on 

pricing conventions and distinctions 

that exist in NASDAQ’s current fee 

schedule. These distinctions are each 

based on principles of fairness and 

equity that have helped for many years 

to maintain fair, equitable, and not 

unreasonably discriminatory fees, and 

that apply with equal or greater force to 

the current proposal. 

NASDAQ believes that the $1,000 and 

$2,500 Distributor fees for the short 

interest report are fair and equitable and 

not unreasonably discriminatory. The 

Internal Distributor Fee represents an 

increase of no more than $500 per 

month, with many Distributors paying a 

smaller increase or no increase at all. 

The higher External Distributor Fee is 

fair and equitable because External 

Distributors derive higher value from 

the report and, therefore, should bear a 

higher burden than internal 

Distributors. In addition, all Distributors 

benefit from the reduced administrative 

burden of counting subscribers. 

NASDAQ further believes that the 

distinction between internal and 

external distribution is fair and 

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70602 Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 

equitable and not unreasonably 

discriminatory because external 

distributors have the potential to, and 

generally do, distribute to a larger 

number of subscribers. As noted earlier, 

NASDAQ and other exchanges have 

utilize this pricing model for many 

years. 

As described in greater detail below, 

if NASDAQ has calculated improperly 

and the market deems the proposed fees 

to be unfair, inequitable, or 

unreasonably discriminatory, firms can 

discontinue the use of their data 

because the proposed product is entirely 

optional to all parties. Firms are not 

required to purchase data and NASDAQ 

is not required to make data available or 

to offer specific pricing alternatives for 

potential purchases. NASDAQ can 

discontinue offering a pricing 

alternative (as it has in the past) and 

firms can discontinue their use at any 

time and for any reason (as they often 

do), including due to their assessment of 

the reasonableness of fees charged. 

NASDAQ continues to establish and 

revise pricing policies aimed at 

increasing fairness and equitable 

allocation of fees among Subscribers. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

NASDAQ 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. 

Notwithstanding its determination that 

the Commission may rely upon 

competition to establish fair and 

equitably allocated fees for market data, 

the NetCoalition court found that the 

Commission had not, in that case, 

compiled a record that adequately 

supported its conclusion that the market 

for the data at issue in the case was 

competitive. NASDAQ believes that a 

record may readily be established to 

demonstrate the competitive nature of 

the market in question. 

There is intense competition between 

trading platforms that provide 

transaction execution and routing 

services and proprietary data products. 

Transaction execution and proprietary 

data products are complementary in that 

market data is both an input and a 

byproduct of the execution service. In 

fact, market data and trade execution are 

a paradigmatic example of joint 

products with joint costs. Data products 

are valuable to many end Subscribers 

only insofar as they provide information 

that end Subscribers expect will assist 

them or their customers in making 

trading decisions. 

The costs of producing market data 

include not only the costs of the data 

distribution infrastructure, but also the 

costs of designing, maintaining, and 

operating the exchange’s transaction 

execution platform and the cost of 

regulating the exchange to ensure its fair 

operation and maintain investor 

confidence. The total return that a 

trading platform earns reflects the 

revenues it receives from both products 

and the joint costs it incurs. Moreover, 

an exchange’s customers view the costs 

of transaction executions and of data as 

a unified cost of doing business with the 

exchange. A broker-dealer will direct 

orders to a particular exchange only if 

the expected revenues from executing 

trades on the exchange exceed net 

transaction execution costs and the cost 

of data that the broker-dealer chooses to 

buy to support its trading decisions (or 

those of its customers). The choice of 

data products is, in turn, a product of 

the value of the products in making 

profitable trading decisions. If the cost 

of the product exceeds its expected 

value, the broker-dealer will choose not 

to buy it. Moreover, as a broker-dealer 

chooses to direct fewer orders to a 

particular exchange, the value of the 

product to that broker-dealer decreases, 

for two reasons. First, the product will 

contain less information, because 

executions of the broker-dealer’s orders 

will not be reflected in it. Second, and 

perhaps more important, the product 

will be less valuable to that brokerdealer because it does not provide 

information about the venue to which it 

is directing its orders. Data from the 

competing venue to which the brokerdealer is directing orders will become 

correspondingly more valuable. 

Thus, an increase in the fees charged 

for either transactions or data has the 

potential to impair revenues from both 

products. ‘‘No one disputes that 

competition for order flow is ‘fierce’.’’ 

NetCoalition at 24. However, the 

existence of fierce competition for order 

flow implies a high degree of price 

sensitivity on the part of broker-dealers 

with order flow, since they may readily 

reduce costs by directing orders toward 

the lowest-cost trading venues. A 

broker-dealer that shifted its order flow 

from one platform to another in 

response to order execution price 

differentials would both reduce the 

value of that platform’s market data and 

reduce its own need to consume data 

from the disfavored platform. Similarly, 

if a platform increases its market data 

fees, the change will affect the overall 

cost of doing business with the 

platform, and affected broker-dealers 

will assess whether they can lower their 

trading costs by directing orders 

elsewhere and thereby lessening the 

need for the more expensive data. 

Analyzing the cost of market data 

distribution in isolation from the cost of 

all of the inputs supporting the creation 

of market data will inevitably 

underestimate the cost of the data. Thus, 

because it is impossible to create data 

without a fast, technologically robust, 

and well-regulated execution system, 

system costs and regulatory costs affect 

the price of market data. It would be 

equally misleading, however, to 

attribute all of the exchange’s costs to 

the market data portion of an exchange’s 

joint product. Rather, all of the 

exchange’s costs are incurred for the 

unified purposes of attracting order 

flow, executing and/or routing orders, 

and generating and selling data about 

market activity. The total return that an 

exchange earns reflects the revenues it 

receives from the joint products and the 

total costs of the joint products. 

Competition among trading platforms 

can be expected to constrain the 

aggregate return each platform earns 

from the sale of its joint products, but 

different platforms may choose from a 

range of possible, and equally 

reasonable, pricing strategies as the 

means of recovering total costs. For 

example, some platforms may choose to 

pay rebates to attract orders, charge 

relatively low prices for market 

information (or provide information free 

of charge) and charge relatively high 

prices for accessing posted liquidity. 

Other platforms may choose a strategy 

of paying lower rebates (or no rebates) 

to attract orders, setting relatively high 

prices for market information, and 

setting relatively low prices for 

accessing posted liquidity. In this 

environment, there is no economic basis 

for regulating maximum prices for one 

of the joint products in an industry in 

which suppliers face competitive 

constraints with regard to the joint 

offering. This would be akin to strictly 

regulating the price that an automobile 

manufacturer can charge for car sound 

systems despite the existence of a highly 

competitive market for cars and the 

availability of after-market alternatives 

to the manufacturer-supplied system. 

The market for market data products 

is competitive and inherently 

contestable because there is fierce 

competition for the inputs necessary to 

the creation of proprietary data and 

strict pricing discipline for the 

proprietary products themselves. 

Numerous exchanges compete with 

each other for listings, trades, and 

market data itself, providing virtually 

limitless opportunities for entrepreneurs 

who wish to produce and distribute 

their own market data. This proprietary 

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Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 70603 

7 15 U.S.C. 78s(b)(3)(A)(ii). 

data is produced by each individual 

exchange, as well as other entities, in a 

vigorously competitive market. 

Broker-dealers currently have 

numerous alternative venues for their 

order flow, including thirteen SRO 

markets, as well as internalizing brokerdealers (‘‘BDs’’) and various forms of 

alternative trading systems (‘‘ATSs’’), 

including dark pools and electronic 

communication networks (‘‘ECNs’’). 

Each SRO market competes to produce 

transaction reports via trade executions, 

and two FINRA-regulated Trade 

Reporting Facilities (‘‘TRFs’’) compete 

to attract internalized transaction 

reports. Competitive markets for order 

flow, executions, and transaction 

reports provide pricing discipline for 

the inputs of proprietary data products. 

The large number of SROs, TRFs, BDs, 

and ATSs that currently produce 

proprietary data or are currently capable 

of producing it provides further pricing 

discipline for proprietary data products. 

Each SRO, TRF, ATS, and BD is 

currently permitted to produce 

proprietary data products, and many 

currently do or have announced plans to 

do so, including NASDAQ, New York 

Stock Exchange LLC (‘‘NYSE’’), NYSE 

MKT LLC, NYSE Arca LLC, and BATS 

Exchange, Inc. (‘‘BATS’’). 

Any ATS or BD can combine with any 

other ATS, BD, or multiple ATSs or BDs 

to produce joint proprietary data 

products. Additionally, order routers 

and market data vendors can facilitate 

single or multiple broker-dealers’ 

production of proprietary data products. 

The potential sources of proprietary 

products are virtually limitless. 

The fact that proprietary data from 

ATSs, BDs, and vendors can by-pass 

SROs is significant in two respects. 

First, non-SROs can compete directly 

with SROs for the production and sale 

of proprietary data products, as BATS 

and Arca did before registering as 

exchanges by publishing data on the 

Internet. Second, because a single order 

or transaction report can appear in an 

SRO proprietary product, a non-SRO 

proprietary product, or both, the data 

available in proprietary products is 

exponentially greater than the actual 

number of orders and transaction 

reports that exist in the marketplace. 

Market data vendors provide another 

form of price discipline for proprietary 

data products because they control the 

primary means of access to end 

Subscribers. Vendors impose price 

restraints based upon their business 

models. For example, vendors such as 

Bloomberg and Thomson Reuters that 

assess a surcharge on data they sell may 

refuse to offer proprietary products that 

end Subscribers will not purchase in 

sufficient numbers. Internet portals, 

such as Google, impose a discipline by 

providing only data that will enable 

them to attract ‘‘eyeballs’’ that 

contribute to their advertising revenue. 

Retail broker-dealers, such as Schwab 

and Fidelity, offer their customers 

proprietary data only if it promotes 

trading and generates sufficient 

commission revenue. Although the 

business models may differ, these 

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, 

BATS Trading and Direct Edge. 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 this product 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. This product 

is entirely optional and is geared 

towards attracting new customers, as 

well as retaining existing customers. 

The Exchange has witnessed 

competitors creating new products and 

innovative pricing in this space over the 

course of the past year. NASDAQ 

continues to see firms challenge its 

pricing on the basis of the Exchange’s 

explicit fees being higher than the zeropriced fees from other competitors such 

as BATS. 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. 

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.7

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–2014–106 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–2014–106. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

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70604 Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 

8 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Exchange also excludes from both total 

Consolidated Volume and the member’s trading 

activity, expressed as a percentage of or ratio to 

Consolidated Volume, the date of the annual 

reconstitution of the Russell Investments Indexes. 

4 15 U.S.C. 78f. 

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

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 also will be available for 

inspection and copying at the principal 

offices 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–2014–106, and should be 

submitted on or before December 17, 

2014. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Kevin M. O’ Neill, 

Deputy Secretary. 

[FR Doc. 2014–28026 Filed 11–25–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73661; File No. SR– 

NASDAQ–2014–107] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Clarify Rule 

7018(a) With Respect to Execution and 

Routing of Orders in Securities Priced 

at $1 or More Per Share 

November 20, 2014. 

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 

12, 2014, 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 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 make a 

minor clarifying change Rule 7018(a) 

with respect to execution and routing of 

orders in securities priced at $1 or more 

per share. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaq.cchwallstreet.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 

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 purpose of the proposed rule 

change is to make a minor clarifying 

change to the definition of the term 

‘‘Consolidated Volume’’ provided in 

Rule 7018(a). Consolidated Volume is 

currently defined as the total 

consolidated volume reported to all 

consolidated transaction reporting plans 

by all exchanges and trade reporting 

facilities during a month, excluding 

executed orders with a size of less than 

one round lot.3 Consolidated Volume is 

used as a measure in determining 

member firm liability for certain 

charges, and eligibility for certain 

credits, for participation in NASDAQ. 

The Exchange compares a member 

firm’s equity transactions in NASDAQ 

to Consolidated Volume to determine 

how impactful its particular order 

activity in NASDAQ is in relation to 

overall equity market volume. The 

Exchange notes that the definition of 

Consolidated Volume does not 

expressly state that it encompasses 

equity securities only. Accordingly, the 

Exchange is proposing to add language 

to the definition to clarify that the 

definition of Consolidated Volume 

under Rule 7018(a) applies only to 

equity securities. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6 of the Act,4 in general, and 

furthers the objectives of Sections 

6(b)(4) and 6(b)(5) of the Act,5 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 or system which the Exchange 

operates or controls, and is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating, clearing, 

settling, processing information with 

respect to, and facilitating transactions 

in securities, 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 

are not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. Specifically, 

the proposed change furthers these 

objectives because it clarifies the rule 

and helps avoid potential investor 

confusion on how the credits and 

charges that use the definition are 

applied. The Exchange notes that it is 

not changing how the rule is applied, 

and therefore the fees and credits 

continue to be reasonable and equitably 

allocated among member firms. 

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 change does not alter 

the meaning or application of the fees 

and credits provided under Rule 

7018(a), and therefore does not affect 

competition in any respect. 

mstockstill on DSK4VPTVN1PROD with NOTICES