32670 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 

13 15 U.S.C. 78o–3(b)(6). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

approving outside activities, FINRA 

believes the Interpretations are 

unnecessary or inconsistent with 

proposed FINRA Rule 3270. In 

particular, the provisions in NYSE Rule 

Interpretation 346/02 requiring a firm to 

assume responsibility for all activities 

effected on its behalf and under its 

name are addressed by other FINRA 

rules, including supervision rules. In 

addition, FINRA has chosen not to 

impose a requirement for firms to 

approve all advertisements of an outside 

business, although a firm may impose 

such restrictions as part of its 

obligations under supplementary 

material .01. FINRA requires firms to 

approve all advertisements for member 

firm business, even if an advertisement 

relates to the firm’s non-securities 

business; however, FINRA does not 

believe that approval should be required 

for outside business activities permitted 

under the proposed rule change. 

For the reasons noted above, FINRA 

proposes to transfer NASD Rule 3030 

into the Consolidated FINRA Rulebook 

with the changes described herein. In 

addition, FINRA proposes to delete 

NYSE Rule 346 and its interpretations 

from the Transitional Rulebook also as 

described herein. 

FINRA will announce the 

implementation date of the proposed 

rule change in a Regulatory Notice to be 

published no later than 90 days 

following Commission approval. 

2. Statutory Basis 

FINRA believes that the proposed rule 

change is consistent with the provisions 

of Section 15A(b)(6) of the Act,13 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 proposed rule 

change will clarify and streamline 

NASD Rule 3030 for adoption as a 

FINRA rule in the new Consolidated 

FINRA Rulebook, while also 

implementing additional protections 

such as the need for registered persons 

to provide prior written notice to its 

member firms of proposed outside 

business activities and for firms to 

determine whether the proposed 

activities raise investor protection 

concerns. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FINRA 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. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–FINRA–2009–042 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–FINRA–2009–042. This file 

number should be included on the 

subject line if e-mail 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 inspection and copying 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 such filing also will be 

available for inspection and copying at 

the principal office of FINRA. 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–FINRA–2009–042 and 

should be submitted on or before July 

29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–15996 Filed 7–7–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60201; File No. SR– 

NASDAQ–2009–062] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Order Granting Accelerated 

Approval of Proposed Rule Change To 

Extend the Pilot Program for NASDAQ 

Last Sale Data Feeds 

June 30, 2009. 

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 June 26, 

2009, 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, and is 

approving the proposal on an 

accelerated basis. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 32671 

3Nasdaq will file a proposed rule change within 

thirty days seeking permanent approval oft [sic] the 

Nasdaq Last Sale pilot. 

4Changes are marked to the rule text that appears 

in the electronic NASDAQ Manual found at 

http://nasdaqomx.cchwallstreet.com. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASDAQ is proposing to extend for 

three months the pilot that created the 

NASDAQ Last Sale (‘‘NLS’’) market data 

products. NLS allows data distributors 

to have access to real-time market data 

for a capped fee, enabling those 

distributors to provide free access to the 

data to millions of individual investors 

via the internet and television. 

Specifically, NASDAQ offers the 

‘‘NASDAQ Last Sale for NASDAQ’’ and 

‘‘NASDAQ Last Sale for NYSE/Amex’’ 

data feeds containing last sale activity in 

U.S. equities within the NASDAQ 

Market Center and reported to the 

jointly operated FINRA/NASDAQ Trade 

Reporting Facility (‘‘FINRA/NASDAQ 

TRF’’). The purpose of this proposal is 

to extend the existing pilot program for 

three months.3

This pilot program supports the 

aspiration of Regulation NMS to 

increase the availability of proprietary 

data by allowing market forces to 

determine the amount of proprietary 

market data information that is made 

available to the public and at what 

price. During the current pilot period, 

the program has vastly increased the 

availability of NASDAQ proprietary 

market data to individual investors. 

Based upon data from NLS distributors, 

Nasdaq believes that since its launch in 

July 2008, the NLS data has been 

viewed by over 50,000,000 investors on 

Web sites operated by Google, 

Interactive Data, and Dow Jones, among 

others. 

The text of the proposed rule change 

is below. Proposed new language is 

italicized; proposed deletions are in 

brackets.4

* * * * * 

7039. NASDAQ Last Sale Data Feeds 

(a) For a three-month pilot period 

commencing on [April] July 1, 2009, 

NASDAQ shall offer two proprietary 

data feeds containing real-time last sale 

information for trades executed on 

NASDAQ or reported to the NASDAQ/ 

FINRA Trade Reporting Facility. 

(1) ‘‘NASDAQ Last Sale for 

NASDAQ’’ shall contain all transaction 

reports for NASDAQ-listed stocks; and 

(2) ‘‘NASDAQ Last Sale for NYSE/ 

Amex’’ shall contain all such 

transaction reports for NYSE- and 

Amex-listed stocks. 

(b) Each distributor of the NASDAQ 

Last Sale Data Feeds may elect between 

two alternate fee schedules, depending 

upon the choice of distributors to report 

usage based on either a username/ 

password entitlement system or a quote 

counting mechanism or both. All fees 

for the NASDAQ Last Sale Data 

Products are ‘‘stair-stepped’’ in that the 

fees are reduced for distributors with 

more users but the lower rates apply 

only to users in excess of the specified 

thresholds rather than applying to all 

users once a threshold is met. In 

addition, there shall be a maximum fee 

of $50,000 per month for NASDAQ Last 

Sale for NASDAQ and NASDAQ Last 

Sale for NYSE/Amex. 

(1) Firms that choose to report usage 

for either a username/password 

entitlement system or quote counting 

mechanism or both shall elect between 

paying a fee for each user or a fee for 

each query. A firm that elects to pay for 

each query may cap its payment at the 

monthly rate per user. Firms shall pay 

the following fees: 

(A) NASDAQ Last Sale for NASDAQ 

Users/mo Price Query Price 

1–9,999 ......................................... $0.60/usermonth ........................... 0–10M ........................................... $0.003/query. 

10,000–49,999 .............................. $0.48/usermonth ........................... 10M–20M ...................................... $0.0024/query. 

50,000–99,999 .............................. $0.36/usermonth ........................... 20M–30M ...................................... $0.0018/query. 

100,000+ ....................................... $0.30/usermonth ........................... 30M+ ............................................. $0.0015/query. 

(B) NASDAQ Last Sale for NYSE/Amex 

Users/mo Price Query Price 

1–9,999 ......................................... $0.30/usermonth ........................... 0–10M ........................................... $0.0015/query. 

10,000–49,999 .............................. $0.24/usermonth ........................... 10M–20M ...................................... $0.0012/query. 

50,000–99,999 .............................. $0.18/usermonth ........................... 20M–30M ...................................... $0.0009/query. 

100,000+ ....................................... $0.15/usermonth ........................... 30M+ ............................................. $0.000725/query. 

(2) Firms that choose not to report 

usage based on either a username/ 

password entitlement system or quote 

counting mechanism or both may 

distribute NASDAQ Last Sale Data 

Products under alternate fee schedules 

depending upon whether they distribute 

data via the Internet or via Television: 

(A) The fee for distribution of 

NASDAQ Last Sale Data Products via 

the Internet shall be based upon the 

number of Unique Visitors to a website 

receiving such data. The number of 

Unique Visitors shall be validated by a 

vendor approved by NASDAQ in 

NASDAQ’s sole discretion. 

(i) NASDAQ Last Sale for NASDAQ 

Unique visitors Monthly fee 

1–100,000 ................. $0.036/Unique Visitor. 

100,000–1M .............. $0.03/Unique Visitor. 

1M+ ........................... $0.024/Unique Visitor. 

(ii) NASDAQ Last Sale for NYSE/Amex 

Unique visitors Monthly fee 

1–100,000 ................. $0.018/Unique Visitor. 

100,000–1M .............. $0.015/Unique Visitor. 

1M+ ........................... $0.012/Unique Visitor. 

(B) Distribution of NASDAQ Last Sale 

Data Products via Television shall be 

based upon the number of Households 

receiving such data. The number of 

Households to which such data is 

available shall be validated by a vendor 

approved by NASDAQ in NASDAQ’s 

sole discretion. 

(i) NASDAQ Last Sale for NASDAQ 

Households Monthly fee 

1–1M ......................... $0.0096/Household. 

1M–5M ...................... $0.0084/Household. 

5M–10M .................... $0.0072/Household. 

mstockstill on DSKH9S0YB1PROD with NOTICES

32672 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 

5 15 U.S.C. 78f. 

6 15 U.S.C. 78f–3(b)(4). 

7Securities Exchange Act Release No. 51808 

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

Households Monthly fee 

10M+ ......................... $0.006/Household. 

(ii) NASDAQ Last Sale for NYSE/Amex 

Households Monthly fee 

1–1M ......................... $0.0048/Household. 

1M–5M ...................... $0.0042/Household. 

5M–10M .................... $0.0036/Household. 

10M+ ......................... $0.003/Household. 

(C) A Distributor that distributes 

NASDAQ Last Sale Data Products via 

multiple distribution mechanisms shall 

pay all fees applicable to each 

distribution mechanism, provided that 

there shall be a discount from the 

applicable Television rate as follows: 

(i) 10 percent reduction in applicable 

Television fees when a Distributor 

reaches the second tier of Users, 

Queries, or Unique Visitors for its nonTelevision users; 

(ii) 15 percent reduction in applicable 

Television fees when a Distributor 

reaches the third tier of Users, Queries, 

or Unique Visitors for its non-Television 

users; and 

(iii) 20 percent reduction in 

applicable Television fees when a 

Distributor reaches the fourth tier of 

Users, Queries, or Unique Visitors for its 

non-Television users. 

(c) All Distributors of a NASDAQ Last 

Sale Data Feed shall also pay a monthly 

fee of $1,500. 

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 those statements may be examined at 

the places specified in Item III below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Prior to the launch of NLS, public 

investors that wished to view market 

data to monitor their portfolios 

generally had two choices: (1) Pay for 

real-time market data or (2) use free data 

that is 15 to 20 minutes delayed. To 

increase consumer choice, NASDAQ 

proposed a pilot to offer access to realtime market data to data distributors for 

a capped fee, enabling those distributors 

to disseminate the data via the Internet 

and television at no cost to millions of 

Internet users and television viewers. 

NASDAQ now proposes a three-month 

extension of that pilot program on the 

same terms as applicable today. 

The NLS pilot created two separate 

‘‘Level 1’’ products containing last sale 

activity within the NASDAQ market and 

reported to the jointly-operated FINRA/ 

NASDAQ TRF. First, the ‘‘NASDAQ 

Last Sale for NASDAQ Data Product,’’ a 

real-time data feed that provides realtime last sale information including 

execution price, volume, and time for 

executions occurring within the 

NASDAQ system as well as those 

reported to the FINRA/NASDAQ TRF. 

Second, the NASDAQ Last Sale for 

NYSE/Amex data product that provides 

real-time last sale information including 

execution price, volume, and time for 

NYSE- and Amex-securities executions 

occurring within the NASDAQ system 

as well as those reported to the FINRA/ 

NASDAQ TRF. 

NASDAQ established two different 

pricing models, one for clients that are 

able to maintain username/password 

entitlement systems and/or quote 

counting mechanisms to account for 

usage, and a second for those that are 

not. Firms with the ability to maintain 

username/password entitlement systems 

and/or quote counting mechanisms will 

be eligible for a specified fee schedule 

for the NASDAQ Last Sale for NASDAQ 

Product and a separate fee schedule for 

the NASDAQ Last Sale for NYSE/Amex 

Product: Firms that were unable to 

maintain username/password 

entitlement systems and/or quote 

counting mechanisms will also have 

multiple options for purchasing the 

NASDAQ Last Sale data. These firms 

chose between a ‘‘Unique Visitor’’ 

model for Internet delivery or a 

‘‘Household’’ model for television 

delivery. Unique Visitor and Household 

populations must be reported monthly 

and must be validated by a third-party 

vendor or ratings agency approved by 

NASDAQ at NASDAQ’s sole discretion. 

In addition, to reflect the growing 

confluence between these media outlets, 

NASDAQ offered a reduction in fees 

when a single distributor distributes 

NASDAQ Last Sale Data Products via 

multiple distribution mechanisms. 

Second, NASDAQ established a cap 

on the monthly fee, currently set of 

$50,000 per month for all NASDAQ Last 

Sale products. The fee cap enables 

NASDAQ to compete effectively against 

other exchanges that also offer last sale 

data for purchase or at no charge. 

Finally, as with the distribution of 

other NASDAQ proprietary products, all 

distributors of the NASDAQ Last Sale 

for NASDAQ and/or NASDAQ Last Sale 

for NYSE/Amex products would pay a 

single $1,500/month NASDAQ Last Sale 

Distributor Fee in addition to any 

applicable usage fees. The $1,500 

monthly fee will apply to all 

distributors and will not vary based on 

whether the distributor distributes the 

data internally or externally or 

distributes the data via both the Internet 

and television. 

2. Statutory Basis 

NASDAQ believes that the proposed 

rule change is consistent with the 

provisions of Section 6 of the Act,5 in 

general and with Section 6(b)(4) of the 

Act,6 as stated above, in that it provides 

an equitable allocation of reasonable 

fees among users and recipients of 

NASDAQ data. In adopting Regulation 

NMS, the Commission granted selfregulatory organizations and brokerdealers increased authority and 

flexibility to offer new and unique 

market data to the public. It was 

believed that this authority would 

expand the amount of data available to 

consumers, and also spur innovation 

and competition for the provision of 

market data. 

The NASDAQ Last Sale market data 

products proposed here appear to be 

precisely the sort of market data product 

that the Commission envisioned when it 

adopted Regulation NMS. 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 brokerdealers 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.7

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. 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 32673 

NASDAQ’s ability to price its Last 

Sale Data Products is constrained by (1) 

competition between exchanges and 

other trading platforms that compete 

with each other in a variety of 

dimensions; (2) the existence of 

inexpensive real-time consolidated data 

and free delayed consolidated data; and 

(3) the inherent contestability of the 

market for proprietary last sale data. 

The market for proprietary last sale 

data products is currently 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 

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 eleven selfregulatory organization (‘‘SRO’’) 

markets, as well as broker-dealers 

(‘‘BDs’’) and aggregators such as the 

DirectEdge electronic communications 

network (‘‘ECN’’). Each SRO market 

competes to produce transaction reports 

via trade executions, and an everincreasing number of FINRA-regulated 

Trade Reporting Facilities (‘‘TRFs’’) 

compete to attract internalized 

transaction reports. It is common for 

BDs to further and exploit this 

competition by sending their order flow 

and transaction reports to multiple 

markets, rather than providing them all 

to a single market. 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, and 

ECNs that currently produce proprietary 

data or are currently capable of 

producing it provides further pricing 

discipline for proprietary data products. 

Each SRO, TRF, ECN and BD is 

currently permitted to produce 

proprietary data products, and many 

currently do or have announced plans to 

do so, including NASDAQ, NYSE, 

Amex, NYSEArca, and BATS. 

Any ECN or BD can combine with any 

other ECN, broker-dealer, or multiple 

ECNs or BDs to produce jointly 

proprietary data products. Additionally, 

non-broker-dealers such as order routers 

like LAVA, as well as 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 

ECNs, 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 proprietary 

book 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 writ large. 

Consolidated data provides two 

additional measures of pricing 

discipline for proprietary data products 

that are a subset of the consolidated data 

stream. First, the consolidated data is 

widely available in real time at $1 per 

month for non-professional users. 

Second, consolidated data is also 

available at no cost with a 15- or 20- 

minute delay. Because consolidated 

data contains marketwide information, 

it effectively places a cap on the fees 

assessed for proprietary data (such as 

last sale data) that is simply a subset of 

the consolidated data. The mere 

availability of low-cost or free 

consolidated data provides a powerful 

form of pricing discipline for 

proprietary data products that contain 

data elements that are a subset of the 

consolidated data, by highlighting the 

optional nature of proprietary products. 

Market data vendors provide another 

form of price discipline for proprietary 

data products because they control the 

primary means of access to end users. 

Vendors impose price restraints based 

upon their business models. For 

example, vendors such as Bloomberg 

and Reuters that assess a surcharge on 

data they sell may refuse to offer 

proprietary products that end users will 

not purchase in sufficient numbers. 

Internet portals, such as Google, impose 

a discipline by providing only that data 

which will enable them to attract 

‘‘eyeballs’’ that contribute to their 

advertising revenue. Retail brokerdealers, 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 successfully 

market proprietary data products. 

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. Today, BATS publishes 

its data at no charge on its website in 

order to attract order flow, and it uses 

market data revenue rebates from the 

resulting executions to maintain low 

execution charges for its users. 

Several ECNs have existed profitably 

for many years with a minimal share of 

trading, including Bloomberg Tradebook 

and NexTrade. 

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, 

Reuters and Thomson. New entrants are 

already on the horizon, including 

‘‘Project BOAT,’’ a consortium of 

financial institutions that is assembling 

a cooperative trade collection facility in 

Europe. These institutions are active in 

the United States and could rapidly and 

profitably export the Project BOAT 

technology to exploit the opportunities 

offered by Regulation NMS. 

In establishing the price for the 

NASDAQ Last Sale Products, NASDAQ 

considered the competitiveness of the 

market for last sale data and all of the 

implications of that competition. 

NASDAQ believes that it has considered 

all relevant factors and has not 

considered irrelevant factors in order to 

establish a fair, reasonable, and not 

unreasonably discriminatory fee and an 

equitable allocation of fees among all 

users. 

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. 

To the contrary, the NASDAQ Last Sale 

mstockstill on DSKH9S0YB1PROD with NOTICES

32674 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 

8 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). 

9 15 U.S.C. 78f(b)(4). 

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78f(b)(8). 12 17 CFR 242.603(a). 13NASDAQ is an exclusive processor of its last 

sale data under Section 3(a)(22)(B) of the Act, 15 

U.S.C. 78c(a)(22)(B), which defines an exclusive 

processor as, among other things, an exchange that 

distributes data on an exclusive basis on its own 

behalf. 

14See Securities Exchange Act Release Nos. 

57965 (June 16, 2008), 73 FR 35178 (June 20, 2008) 

(SR–NASDAQ–2006–060); 58894 (October 31, 

2008), 73 FR 66953 (November 12, 2008) (SR– 

NASDAQ–2008–086); 59186 (December 30, 2008), 

74 FR 743 (January 7, 2009) (SR–NASDAQ–2008– 

103); and 59652 (March 31, 2009) 74 FR 15533 

(April 6, 2009) (SR–NASDAQ–2009–027). 

15 Id. 

16See Securities Exchange Act Release No. 59039 

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

2008) (Order Setting Aside Action by Delegated 

Authority and Approving Proposed Rule Change 

Relating to NYSE Arca Data). 

17See supra note 14. 

Products respond to and enhance 

competition that already exists in the 

market. 

On May 28, 2008, the Internet portal 

Yahoo! announced that it would offer its 

Web site viewers real-time last sale data 

provided by BATS Trading. NASDAQ’s 

last sale data products would compete 

directly with the BATS product 

disseminated via Yahoo!. Since that 

time, BATS has attracted additional 

purchasers of its last sale product that 

is free of charge or, at least, has not been 

the subject of a proposed rule change 

* * * [sic] 

In addition, as set forth above, the 

market for last sale data is already 

competitive, with both real-time and 

delayed consolidated data as well as the 

ability for innumerable entities to begin 

rapidly and inexpensively to offer 

competitive last sale data products. 

Moreover, the New York Stock 

Exchange distributes competing last sale 

data products and has reduced the price 

of its product. Under the deregulatory 

regime of Regulation NMS, there is no 

limit to the number of competing 

products that can be developed quickly 

and at low cost. The Commission 

should not stand in the way of 

enhanced competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Three comment letters were filed 

regarding the proposed rule change as 

originally published for comment. 

NASDAQ responded to these comments 

in a letter dated December 13, 2007. 

Both the comment letters and 

NASDAQ’s response are available on 

the SEC Web site at http://www.sec.gov/ 

comments/sr-nasdaq-2006-060/ 

nasdaq2006060.shtml. 

III. 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2009–062 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–2009–062. This 

file number should be included on the 

subject line if e-mail 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 inspection and copying in 

the Commission’s Public Reference 

Room, 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–2009–062 and should be 

submitted on or before July 29, 2009. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of a 

Proposed Rule Change 

The Commission finds that the 

proposed rule change, to extend the 

pilot program for three months, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.8 In particular, it is 

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

Act,9 which requires that the rules of a 

national securities exchange provide for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other parties 

using its facilities, and Section 6(b)(5) of 

the Act,10 which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

promote just and equitable principles of 

trade, 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 

not be designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The Commission also finds that the 

proposed rule change is consistent with 

the provisions of Section 6(b)(8) of the 

Act,11 which requires that the rules of 

an exchange not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Act. Finally, the 

Commission finds that the proposed 

rule change is consistent with Rule 

603(a) of Regulation NMS,12 adopted 

under Section 11A(c)(1) of the Act, 

which requires an exclusive processor 

that distributes information with respect 

to quotations for or transactions in an 

NMS stock to do so on terms that are 

fair and reasonable and that are not 

unreasonably discriminatory.13

The Commission approved the fee for 

the NASDAQ Last Sale Data Feeds for 

a pilot period which runs until June 30, 

2009.14 The Commission notes that the 

Exchange proposes to extend the pilot 

program for three months. The 

Commission did not receive any 

comments on the previous extensions of 

the pilot program.15

On December 2, 2008, the 

Commission issued an approval order 

(‘‘Order’’) that sets forth a market-based 

approach for analyzing proposals by 

self-regulatory organizations to impose 

fees for ‘‘non-core’’ market data 

products, such as the NASDAQ Last 

Sale Data Feeds.16 The Commission 

believes that Nasdaq’s proposal to 

temporarily extend the pilot program is 

consistent with the Act for the reasons 

noted in the Order.17 The Commission 

believes that approving NASDAQ’s 

proposal to temporarily extend the pilot 

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 32675 

18The Exchange has represented that it will file 

a proposed rule change within thirty days of filing 

of this proposal seeking permanent approval of the 

NASDAQ Last Sale Data Feeds pilot program. See 

supra note 3. 

19 15 U.S.C. 78s(b)(2). 

20 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. 59995 

(May 28, 2009), 74 FR 26750 (June 3, 2009) (SR– 

Phlx–2009–32). 

4The Exchange notes that the proposed definition 

of ‘‘distributor’’ and references to internal and 

external distribution are identical to those set forth 

in NASDAQ Rule 7019(c). 

program that imposes a fee for the 

NASDAQ Last Sale Data Feeds for an 

additional three months will be 

beneficial to investors and in the public 

interest, in that it is intended to allow 

continued broad public dissemination 

of increased real-time pricing 

information. In addition, extending the 

pilot program for an additional three 

months will allow NASDAQ, consistent 

with its representation, to file within 30 

days, the public to comment on, and the 

Commission to analyze consistent with 

the Order and in light of Section 19(b) 

of the Act, a proposal to permanently 

approve the fee for NASDAQ Last Sale 

Data Feeds.18

The Commission finds good cause for 

approving the proposed rule change 

before the thirtieth day after the date of 

publication of notice of filing thereof in 

the Federal Register. Accelerating 

approval of this proposal is expected to 

benefit investors by continuing to 

facilitate their access to widespread, 

free, real-time pricing information 

contained in the NASDAQ Last Sale 

Data Feeds. Therefore, the Commission 

finds good cause, consistent with 

Section 19(b)(2) of the Act,19 to approve 

the proposed rule change on an 

accelerated basis to extend the operation 

of the pilot until September 30, 2009. 

V. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–NASDAQ– 

2009–062) is hereby approved on an 

accelerated basis until September 30, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Elizabeth M. Murphy. 

Secretary. 

[FR Doc. E9–16002 Filed 7–7–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60202; File No. SR–Phlx– 

2009–54)] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NASDAQ OMX PHLX, Inc. Relating to 

Fees for the Top of PHLX Options 

(‘‘TOPO’’) Data Feed 

June 30, 2009. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on June 30, 

2009, NASDAQ OMX PHLX, Inc. 

(‘‘Phlx’’ 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

fee schedule by establishing subscriber 

fees for a direct data product related to 

the trading of standardized options on 

the Exchange’s enhanced electronic 

trading platform for options, Phlx XL 

II.3 Specifically, the Exchange is 

proposing to adopt fees for the Top of 

Phlx Options (‘‘TOPO’’), a direct data 

feed product that features the 

Exchange’s best bid and offer position, 

with aggregate size and last sale 

information on the Phlx XL II system. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http:// 

nasdaqomxphlx.cchwallstreet.com/ 

NASDAQOMXPHLX/Filings/, 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 

On June 5, 2009, the Exchange 

launched the Phlx XL II system, which 

is subject to a symbol-by-symbol rollout 

schedule expected to last up to 12 

weeks. In conjunction with the launch 

and rollout of the Phlx XL II system, the 

Exchange is developing TOPO. TOPO 

will provide to subscribers a direct data 

feed that includes the Exchange’s best 

bid and offer position, with aggregate 

size, based on displayable order and 

quoting interest on the Phlx XL II 

system. The data contained in the TOPO 

data feed is identical to the data sent to 

the processor for the Options Price 

Regulatory Authority (‘‘OPRA’’), and the 

TOPO and OPRA data leave the Phlx XL 

II System at the same time. 

Currently, the Exchange does not 

make market data products such as 

TOPO available. Accordingly, there are 

no current fees for distribution or use of 

these products on the Exchange’s fee 

schedule. In coordination with the 

projected completion of the rollout of 

the Phlx XL II system, the Exchange 

proposes to charge monthly fees to 

distributors, beginning August 1, 2009, 

for use of TOPO. The monthly 

‘‘Distributor Fee’’ charged will depend 

on whether the distributor is an 

‘‘Internal Distributor’’ or an ‘‘External 

Distributor,’’ as defined below. 

Under the proposal, the Exchange’s 

fee schedule will reflect that a 

‘‘distributor’’ of NASDAQ OMX PHLX 

data is any entity that receives a feed or 

data file of data directly from NASDAQ 

OMX PHLX or indirectly through 

another entity and then distributes it 

either internally (within that entity) or 

externally (outside that entity), and that 

all distributors would be required to 

execute a NASDAQ OMX PHLX 

distributor agreement.4

Internal Distributor 

An Internal Distributor is an 

organization that subscribes to the 

Exchange for the use of TOPO, and is 

permitted by agreement with the 

Exchange to provide TOPO data to 

internal users (i.e., users within their 

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