48554 Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices 

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

2 17 CFR 240.19b–4. 

3See https://www.nasdaqtrader.com/ 

Trader.aspx?id=TestingFacility for a description of 

the NTF. 

4See Rule 7030(d)(1)(A). 

5See id. 

6Rule 7030(d)(2)(A). 

7Rule 7030(d)(2)(B). 

8Rule 7030(d)(2)(C). The length of the Period of 

Inactivity is such period of time between 10 

minutes and 60 minutes in length as Nasdaq may 

specify from time to time by giving notice to users 

of the NTF. See id. 

9The existing Rule refers alternatively to those 

that utilize the NTF as ‘‘subscribers’’ or ‘‘users.’’ For 

purposes of clarity, the Exchange proposes to 

modify the Rule to use the term ‘‘user’’ exclusively. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81870; File No. SR– 

NASDAQ–2017–105] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Transaction Fees at Rule 

7030 That Apply to Use of the Nasdaq 

Testing Facility 

October 12, 2017. 

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 October 

2, 2017, 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 Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s transaction fees at Rule 7030 

that apply to use of the Nasdaq Testing 

Facility (‘‘NTF’’). 

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 Exchange proposes to amend the 

fees that it assesses for use of the NTF.3

The NTF provides users with a virtual 

Nasdaq system test environment that 

closely approximates the production 

environment and on which they may 

test their automated systems that 

integrate with the Exchange. For 

example, users may test upcoming 

Exchange releases and product 

enhancements, as well as test software 

prior to implementation. 

The Exchange assesses certain fees 

under Rule 7030 for use of the NTF. In 

pertinent part, Rule 7030(d)(1) states 

that the Exchange assesses a fee of $285 

per hour for ‘‘Active Connection’’ 

testing using current Exchange access 

protocols during the normal operating 

hours and $333 per hour for such testing 

after hours.4 The Exchange does not 

currently assess a fee for ‘‘Idle 

Connections.’’ 5

For purposes of the foregoing fees, an 

‘‘Active Connection’’ is one that 

‘‘commences when the user begins to 

send and/or receive a transaction to and 

from the NTF and continues until the 

earlier of the disconnection or the 

commencement of an Idle 

Connection.’’ 6 An ‘‘Idle Connection’’ is 

a connection that ‘‘commences after a 

Period of Inactivity and continues until 

the earlier of disconnection or the 

commencement of an Active 

Connection.’’ 7 A ‘‘Period of Inactivity’’ 

is an ‘‘uninterrupted period of time of 

specified length when the connection is 

open but the NTF is not receiving from 

or sending to subscriber any 

transactions.’’ 8

The Exchange proposes to modify 

Rule 7030 in several respects. First, the 

Exchange proposes to decrease and 

simplify the fees it charges to users 9 for 

their active use of the NTF. Specifically, 

the Exchange proposes to eliminate the 

$333 hourly rate that it presently 

charges users for Active Connection 

testing outside of normal operating 

hours of the NTF such that the 

Exchange will charge users $285 per 

hour for Active Connection testing in all 

instances. 

Second, the Exchange proposes to 

clarify the definition of a Period of 

Inactivity as well as establish a new fee 

for users to the extent that they 

experience one or more Periods of 

Inactivity while they are connected to 

the NTF in a given day. Specifically, the 

Exchange proposes to define a Period of 

Inactivity as any uninterrupted period 

of time that occurs while a user is 

connected to the NTF and when the 

NTF is neither receiving from nor 

sending to the user any transactions. 

The proposal states that each Period of 

Inactivity will be billable at the Active 

Connection rate after the first 10 

minutes thereof and up to a cumulative 

amount of 60 minutes per user, per day. 

This means that: (i) The first 10 minutes 

of each Period of Inactivity will be free; 

(ii) each Period of Inactivity in excess of 

10 minutes will be billable at the rate of 

$285 per hour; (iii) a user that 

experiences either a single Period of 

Inactivity of less than 60 billable 

minutes in a day or multiple Periods of 

Inactivity of less than 60 billable 

minutes in a day, cumulatively, will 

incur a fee for such Inactivity on a pro 

rata basis; and (iv) a user that 

experiences either a single Period of 

Inactivity in excess of 60 billable 

minutes in a day or multiple Periods of 

Inactivity in excess of 60 billable 

minutes in a day, cumulatively, will 

only incur a fee for the first 60 billable 

minutes of Inactivity. 

Third, the Exchange proposes to 

eliminate the term ‘‘Idle Connection’’ 

insofar as no clear distinction exists 

between that term and a ‘‘Period of 

Inactivity.’’ That is, the Exchange 

believes it would be difficult for users 

to discern when an Idle Connection 

exists, which is free under the existing 

Rule, and when a Period of Activity 

commences, which would be billable. 

The Exchange proposes to simplify the 

fee schedule by collapsing these 

concepts into the single term ‘‘Period of 

Inactivity’’ and billing for Periods of 

Activity as described above. 

Finally, the Exchange proposes to 

modify Rule 7030 to clarify that the 

connectivity provided under the Rule 

also applies, not only to NASDAQ OMX 

BX, Inc. (now, Nasdaq BX, Inc.) and 

NASDAQ OMX PHLX LLC (now, 

Nasdaq PHLX, LLC), but also to Nasdaq 

ISE LLC, Nasdaq MRX LLC, and Nasdaq 

GEMX LLC. This purpose of this 

proposal is to clarify that a client can 

use the connectivity to the NTF it 


ethrower on DSK3G9T082PROD with NOTICES
Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices 48555 

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

11 15 U.S.C. 78f(b)(4) and (5). 12 15 U.S.C. 78s(b)(3)(A)(ii). 

establishes under the Rule to perform 

tests with respect to all of the Nasdaq, 

Inc. exchanges, and in doing so, it will 

be billed only once. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,10 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,11 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, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The Exchange’s proposal to eliminate 

its $330 hourly ‘‘after-hours’’ Active 

Connection rate is equitable and is not 

unfairly discriminatory in that it will 

apply to all NTF users equally. This 

proposal is also reasonable because the 

Exchange no longer incurs additional 

costs or requires additional resources, as 

it once did, to permit its users to utilize 

the NTF outside of normal operating 

hours. Moreover, the act of simplifying 

the NTF fee schedule so that it involves 

only a single hourly rate will render the 

schedule easier for the Exchange to 

administer and easier for users to 

understand. 

The Exchange’s proposal to assess a 

new fee for inactive use of the NTF is 

equitable and is not unfairly 

discriminatory in that it will apply to all 

NTF users and will vary only depending 

upon the nature and extent of their 

activity while connected to the NTF. 

The proposal is reasonable, moreover, as 

a means of reducing the extent to which 

inactive users consume the limited 

bandwidth of the NTF at any given time. 

The Exchange intends for the fee to 

provide a disincentive for users to 

remain connected while inactive. That 

said, the Exchange proposes to refrain 

from charging users a fee for their first 

10 minutes of inactivity because it 

believes that it would be an unnecessary 

and excessive act to penalize users that 

become momentarily inactive between 

periods of activity on the NTF or that 

fail to disconnect from the NTF the 

instant that they cease any activity. 

Likewise, the Exchange proposes to cap 

the fees it charges for Periods of 

Inactivity because it does not wish to 

penalize excessively those users that 

wish or need to maintain their 

connections to the NTF, even when they 

are inactive, so that they can resume 

active testing quickly. The Exchange 

believes that its proposal to cap this fee 

at 60 minutes of billable inactive time 

represents a reasonable balance between 

its desire to promote active use of the 

NTF and the practical needs of its users 

to maintain inactive connections to the 

NTF in certain circumstances. 

Lastly, the proposals to eliminate 

references to the term ‘‘Idle Connection’’ 

and to amend the term ‘‘Period of 

Inactivity’’ are reasonable and not 

unfairly discriminatory in that these 

changes will clarify and simplify the fee 

schedule that applies to all NTF users. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. Testing is a 

matter of regulatory hygiene, not of 

competition. 

In this instance, the Exchange does 

not believe that its proposal to eliminate 

the $330 hourly ‘‘after hours’’ fee for use 

of the NTF will impose any burden 

insofar as it is merely reducing the rates 

it charges its users for use of the NTF 

outside of normal operating hours. 

Likewise, the Exchange does not 

believe that its proposal to establish a 

fee for Periods of Inactive Use will 

impose any unnecessary or 

inappropriate burden on competition 

because it designed the proposal, not to 

raise revenue for the Exchange, but 

rather to act as a modest and targeted 

disincentive for users to remain inactive 

while they are connected to the NTF. 

The design of the fee permits users to 

avoid the fee by disconnecting from or 

resuming activity on the NTF within 10 

minutes of the commencement of a 

Period of Inactivity. It also caps the fee 

at 60 minutes of cumulative daily 

billable inactivity so that users that 

choose to or inadvertently do remain 

inactive for long periods of time will not 

incur unreasonable or excessive fees as 

a result of doing so. 

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.12

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–2017–105 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2017–105. This 

file number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

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


ethrower on DSK3G9T082PROD with NOTICES
48556 Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices 

13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78f(b). 

4 15 U.S.C. 78f(b)(4) and (5). 5See Nasdaq Rule 7018(a). 

available publicly. All submissions 

should refer to File Number SR– 

NASDAQ–2017–105, and should be 

submitted on or before November 8, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Brent J. Fields, 

Secretary. 

[FR Doc. 2017–22541 Filed 10–17–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81860; File No. SR–Phlx– 

2017–78] 

Self-Regulatory Organizations; 

NASDAQ PHLX LLC; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Decrease 

the Qualification Criteria of a Credit 

Tier and Make Related Changes 

October 12, 2017. 

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 October 

2, 2017, NASDAQ PHLX LLC (‘‘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 decrease 

the level of Consolidated Volume 

required to qualify for a $0.0031 per 

share executed credit and make related 

changes. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqphlx.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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

transaction fees at Section VIII 

(NASDAQ PSX Fees) of the NASDAQ 

PHLX LLC Pricing Schedule to decrease 

the level of Consolidated Volume 

required to qualify for a $0.0031 per 

share executed credit and make related 

changes. Currently, the Exchange 

provides credits ranging from $0.0023 to 

$0.0031 per share executed to member 

organizations for displayed quotes and 

orders that provide liquidity through the 

PSX System. The top two credit tiers are 

the following: (1) A credit of $0.0031 

per share executed for Quotes/Orders 

entered by a member organization that 

provides and accesses 0.3% or more of 

Consolidated Volume during the month; 

and (2) a credit of $0.0029 per share 

executed for Quotes/Orders entered by a 

member organization that provides and 

accesses 0.25% or more of Consolidated 

Volume during the month. The 

Exchange is proposing to decrease the 

level of monthly Consolidated Volume 

required of a member organization to 

qualify for the $0.0031 per share 

executed credit from 0.3% to 0.25%, 

which is the level required to currently 

qualify for the $0.0029 per share 

executed credit tier. As a consequence, 

the Exchange is also proposing to 

eliminate the $0.0029 per share 

executed credit tier. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,3 in general, and furthers the 

objectives of Sections 6(b)(4) and 6(b)(5) 

of the Act,4 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, and is not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. 

The Exchange believes that the 

$0.0031 per share executed credit 

provided to a member organization for 

displayed quotes and orders is 

reasonable because it will remain 

unchanged, and it is competitive with 

the fees of other exchanges. For 

example, The Nasdaq Stock Market 

provides its members with credits up to 

$0.00305 per share executed for 

displayed quotes and orders.5

Elimination of the $0.0029 per share 

executed credit provided to a member 

organization for displayed quotes and 

orders is reasonable because the criteria 

currently required to receive the 

$0.0029 per share executed credit will 

be the same as the criteria required to 

receive the $0.0031 per share executed 

credit. Thus, member organizations that 

currently qualify for $0.0029 per share 

executed credit will qualify for the 

higher credit under the proposed 

change. 

The Exchange believes that decreasing 

the level of Consolidated Volume during 

the month required to qualify for the 

$0.0031 per share executed credit is an 

equitable allocation and is not unfairly 

discriminatory because the Exchange is 

using the reduced Consolidated Volume 

requirement to provide incentive to 

member organizations to participate on 

the Exchange. The Exchange has 

observed that the current qualification 

criteria for the $0.0031 per share 

executed credit and the qualification 

requirement of the $0.0029 per share 

executed credit have not provided 

adequate incentive. The Exchange 

believes that creating a single credit tier 

that combines the higher credit with the 

lower Consolidated Volume 

requirement will be more effective at 

increasing participation on the 

Exchange. The proposed change will 

apply to all member organizations, any 

of which may provide the level of 

Consolidated Volume required to 

qualify for the credit. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. In terms of 

inter-market competition, the Exchange 

notes that it operates in a highly 

competitive market in which market 

participants can readily favor competing 

venues if they deem fee levels at a 

particular venue to be excessive, or 

rebate opportunities available at other 

venues to be more favorable. In such an 

environment, the Exchange must 

continually adjust its fees to remain 

competitive with other exchanges and 

with alternative trading systems that 


ethrower on DSK3G9T082PROD with NOTICES