Document ID: SEC-2015-1297-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market LLC
Posted Date: 2015-08-05T04:00Z

[Federal Register Volume 80, Number 150 (Wednesday, August 5, 2015)]
[Notices]
[Pages 46640-46641]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19127]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75557; File No. SR-NASDAQ-2015-086]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NASDAQ Rule 7015(b) and (g) To Modify Port Fees

July 30, 2015.
    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 July 20, 2015, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend NASDAQ Rule 7015(b) and (g) to 
modify the port fees charged to members and non-members for ports used 
to enter orders into Nasdaq systems, in connection with the use of the 
FIX and OUCH trading telecommunication protocols. The Exchange will 
implement the proposed new fees on August 3, 2015.
    The text of the proposed rule change is below; proposed new 
language is italicized; proposed deletions are in brackets.
* * * * *
7015. Access Services
    (a) No change.
    (b) Financial Information Exchange (FIX).

------------------------------------------------------------------------
                   Ports                                Price
------------------------------------------------------------------------
FIX Trading Port..........................  $575[50]/port/month.
FIX Port for Services Other than Trading..  $500/port/month.
------------------------------------------------------------------------

    (c)-(f) No change.
    (g) Other Port Fees.

                    Remote Multi-Cast ITCH Wave Ports
------------------------------------------------------------------------
                                               Installation   Recurring
                 Description                        fee      monthly fee
------------------------------------------------------------------------
MITCH Wave Port at Secaucus, NJ..............        $2,500       $7,500
MITCH Wave Port at Weehawken, NJ.............         2,500        7,500
MITCH Wave Port at Mahwah, NJ................         5,000       12,500
------------------------------------------------------------------------

    The following port fees shall apply in connection with the use of 
other trading telecommunication protocols:
     $575[50] per month for each port pair, other than 
Multicast ITCH[supreg] data feed pairs, for which the fee is $1,000 per 
month for software-based TotalView-ITCH or $2,500 per month for 
combined software- and hardware-based TotalView-ITCH, and TCP ITCH data 
feed pairs, for which the fee is $750 per month.
     An additional $200 per month for each port used for 
entering orders or quotes over the Internet.
     An additional $600 per month for each port used for market 
data delivery over the Internet.
Dedicated OUCH Port Infrastructure
    The Dedicated OUCH Port Infrastructure subscription allows a member 
firm to assign up to 30 of its OUCH ports to a dedicated server 
infrastructure for its exclusive use. A Dedicated OUCH Port 
Infrastructure subscription is available to a member firm for a fee of 
$5,000 per month, which is in addition to the standard fees assessed 
for each OUCH port. A one-time installation fee of $5,000 is assessed 
subscribers for each Dedicated OUCH Port Server subscription.
    (h)-(i) 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 is proposing to amend NASDAQ Rules 7015 (b) and (g) to 
modify the monthly fee it charges for ports used to enter orders in the 
NASDAQ Market Center for the trading of equities, in connection with 
the use of FIX and OUCH trading telecommunication protocols.\3\
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    \3\ In April 2015, the Exchange increased the charges assessed 
under Rules 7015(b) and (g) to the levels proposed herein in light 
of the FPGA hardware upgrade. See Securities Exchange Act Release 
No. 74829 (April 29, 2015), 80 FR 25745 (May 5, 2015) (SR-NASDAQ-
2015-042). The upgrade to FPGA hardware was delayed, however, and 
the Exchange reverted the fees to their original levels with 
retroactive application. See Securities Exchange Act Release No. 
75366 (July 6, 2015), 80 FR 39827 (July 10, 2015) (SR-NASDAQ-2015-
067). The Exchange is now confident that the FPGA hardware will be 
installed by the August 3, 2015 implementation date proposed by this 
filing.
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    The enhanced ports will use field-programmable gate array 
(``FPGA'') technology, which is a hardware-delivery mechanism and an 
upgrade to the existing software and software-and-hardware based 
mechanisms. By taking advantage of hardware parallelism, FPGA 
technology is capable of processing more data packets during peak 
market conditions without the introduction of variable queuing latency. 
In other words, the upgrade to FPGA will improve the predictability of 
the telecommunications ports and thereby add value to the user 
experience.
    The Exchange is offering new technology and pricing in order to 
keep pace with changes in the industry and

[[Page 46641]]

evolving customer needs as new technologies emerge and products 
continue to develop and change. The costs associated with the hardware-
based delivery system cover creating, shipping, installing and 
maintaining the new equipment and codebase. From a messaging 
perspective, the data content and sequencing on the new hardware 
version of the OUCH ports will be the same as on the legacy software-
based versions of NASDAQ's ports that are being replaced.
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)(5) of the Act \5\ in particular, in that the proposal 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. The Exchange continuously 
strives to offer members state of the art technology to enhance their 
trading experience and thereby enhance the national market system. 
Incremental enhancements such as the advent of FPGA technology has 
helped make the U.S. markets the deepest, most liquid markets in the 
world.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act \6\ 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 it does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed fees are reasonable in that 
they are based on the costs associated with purchasing hardware 
(capital expenditures) and supporting and maintaining the 
infrastructure (operating expenditures) for the FPGA enhancement for 
member firms. In addition, the FPGA enhancements will provide value to 
members far exceeding the incremental costs imposed. The Exchange also 
believes that the proposed fees are equitable and not unfairly 
discriminatory because the fees apply equally to all users of the FPGA-
enhanced ports. Moreover, the fees apply in direct proportion to the 
number of ports used by each member.

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, 
NASDAQ believes that the proposed rule change is pro-competitive in 
that the enhancements improve the competitiveness of the NASDAQ Market 
Center and the overall quality of the national market system. If, as 
NASDAQ believes, the FPGA enhancement provides NASDAQ a competitive 
advantage, other exchanges will quickly respond by enhancing their own 
markets in the same way. Such innovation and imitation is the very 
essence of the competition the Exchange Act is designed to promote.\7\
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    \7\ The Chicago Mercantile Exchange is already using FPGA 
technology in order entry ports for the trading of futures. See 
https://www.cmegroup.com/globex/files/NewiLinkArchitecture2014.pdf.
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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 change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \8\. At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2015-086 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-2015-086. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing 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-2015-
086, and should be submitted on or before August 26, 2015.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19127 Filed 8-4-15; 8:45 am]
 BILLING CODE 8011-01-P