Document ID: SEC-2017-2086-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2017-12-18T05:00Z

[Federal Register Volume 82, Number 241 (Monday, December 18, 2017)]
[Notices]
[Pages 60085-60087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27149]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82302; File No. SR-NASDAQ-2017-126]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Exchange Fees at Rules 7023, 7044, 7045 and 7048 To Withdraw 
Four Rarely-Purchased Products From Sale

December 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 November 30, 2017, 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's fees at Rules 7023, 
7044, 7045 and 7048 to withdraw four rarely-purchased products from 
sale: Historical ModelView Information, Nasdaq Custom Data Feeds, the 
Nasdaq Market Pathfinders Service, and the PORTAL Reference Database.
    The text of the proposed rule change is available on the Exchange's 
website 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to withdraw four rarely-
purchased products from sale--Historical ModelView Information, Nasdaq 
Custom Data Feeds, the Nasdaq Market Pathfinders Service, and the 
PORTAL Reference Database--as the Exchange performs an ongoing review 
of its product offerings.
ModelView
    Historical ModelView Information (``ModelView''), set forth in Rule 
7023(f), provides historical information regarding aggregate displayed 
and hidden liquidity at each price level in the Nasdaq Market Center on 
a T+10 basis. The information is aggregated at each price level and is 
designed to be used by developers of automated trading and order-
routing models to improve Nasdaq trading efficiency and help firms 
understand how to minimize price impact with large orders. Information 
is useful for historical analysis, and does not reveal information 
about reserve size posted by any specific market participant.
Nasdaq Custom Data Feeds
    Nasdaq Custom Data Feeds, described at Rule 7048, is a data feed 
service that allows Nasdaq to accommodate individual subscribers' 
requests for market data feeds containing a specified combination of 
data elements that would otherwise be delivered on multiple data feeds. 
These customized data feeds provide each customer with the ability to 
receive a unique combination of functionality and content.
Pathfinders
    As set forth in Rule 7044, the Nasdaq Market Pathfinders Service 
(``Pathfinders'') is ``a real time data product that tracks the 
aggregated market activity of certain market participants who are 
aggressively buying and/or selling.'' The product identifies bullish or 
bearish positions taken by three or more market participants over an 
extended period of time and captures the aggregate sentiment of this 
well-informed group by indicating the number of Pathfinders bullish 
versus bearish in a particular stock, as well as the ratio of shares 
bought versus sold.
PORTAL Reference Database
    PORTAL securities are restricted securities.\3\ The PORTAL 
Reference Database, set forth in Rule 7045, is an electronic reference 
database of information culled from PORTAL offering documents and 
applications submitted to Nasdaq since 1990. The

[[Page 60086]]

database is fully electronic and allows users to determine the PORTAL 
issue's name and offering description, CUSIP, country of incorporation, 
security class, maturity class and date, currency denomination, 
applicable interest and credit rating, convertibility and call 
provisions, total number of shares offered, and date of PORTAL 
designation, as well as other information. The database is open to all 
market participants.\4\
---------------------------------------------------------------------------

    \3\ PORTAL securities are defined in the text of Rule 7045 as 
``restricted securities, as defined in SEC Rule 144(a)(3) under the 
Securities Act; or securities that, pursuant to contract or through 
terms of the security, upon issuance and continually thereafter only 
can be sold pursuant to Regulation S under the Securities Act, SEC 
Rule 144A, or SEC Rule 144 under the Securities Act, or in a 
transaction exempt from the registration requirements of the 
Securities Act pursuant to Section 4 thereof and not involving any 
public offering that were designated for inclusion in the PORTAL 
Market by Nasdaq. PORTAL equity securities are PORTAL securities 
that represent an ownership interest in a legal entity, including 
but not limited to any common, capital, ordinary, preferred stock, 
or warrant for any of the foregoing, shares of beneficial interest, 
or the equivalent thereof (regardless of whether voting or non-
voting, convertible or non-convertible, exchangeable or non-
exchangeable, exercisable or nonexercisable, callable or non-
callable, redeemable or non-redeemable). PORTAL debt securities are 
PORTAL securities that are United States dollar denominated debt 
securities issued by United States and/or foreign private 
corporations.''
    \4\ Nasdaq no longer designates securities as PORTAL securities. 
This is an historical database only, and the information contained 
within that database is, and will continue to be, widely available 
after this product is withdrawn.
---------------------------------------------------------------------------

Proposed Changes
    The Exchange proposes to withdraw ModelView, Nasdaq Custom Data 
Feeds, Pathfinders, and the PORTAL Reference Database from sale. As a 
result of an ongoing review of its product offerings, the Exchange has 
elected to withdraw these products due to the evolution of the market, 
including the competitive forces of operating an Exchange, market 
feedback, and the advancement of market structure since the products 
were introduced.
    The products are all between nine and twelve years old. ModelView 
was introduced in 2005,\5\ Nasdaq Custom Data Feeds in 2006,\6\ 
Pathfinders in 2008,\7\ and the PORTAL Reference Database in 2008,\8\ 
and yet a sustained lack of customer interest over that period has 
rendered continued investments in these products impractical and 
unwise. Indeed, ModelView and Pathfinders have fewer than ten customers 
combined, and Nasdaq Custom Data Feeds and the PORTAL Reference 
Database have no customers. Advancements in market structure over the 
last ten years, coupled with a lack of customer interest, caused the 
Exchange to conclude that the products should be discontinued. While 
the Exchange does not believe any concerns about the products would be 
warranted, in the case of ModelView and Pathfinders, some customers 
have recently posed questions regarding the types of information 
included in the product. The Exchange would not offer a data product 
that it believed to be detrimental to the market, but Pathfinders and 
ModelView simply did not earn enough revenue to justify the costly 
undertaking of upgrading them. Accordingly, the Exchange has elected to 
discontinue these low-revenue products.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 51851 (June 14, 
2005), 70 FR 35752 (June 21, 2005) (SR-NASD-2005-060); Securities 
Exchange Act Release No. 52112 (July 22, 2005), 70 FR 43917 (July 
29, 2005) (approval order).
    \6\ See Securities Exchange Act Release No. 54959 (December 18, 
2006), 71 FR 77842 (December 27, 2006) (SR-NASDAQ-2006-056); 
Securities Exchange Act Release No. 59579 (March 13, 2009), 74 FR 
12167 (March 23, 2009) (approval order).
    \7\ See Securities Exchange Act Release No. 58145 (July 11, 
2008), 73 FR 41143 (July 17, 2008) (SR-NASDAQ-2008-016); Securities 
Exchange Act Release No. 59266 (January 16, 2009), 74 FR 4799 
(January 27, 2009) (approval order).
    \8\ See Securities Exchange Act Release No. 58622 (September 23, 
2008), 73 FR 56876 (September 30, 2008) (SR-NASDAQ-2008-072); 
Securities Exchange Act Release 58891 (October 30, 2008), 73 FR 
66090 (November 6, 2008) (approval order).
---------------------------------------------------------------------------

    The Exchange proposes these changes so that it can remain 
competitive among exchanges and other competitors. Data products such 
as ModelView, Nasdaq Custom Data Feeds, Pathfinders, and the PORTAL 
Reference Database are a means by which exchanges compete to attract 
order flow. Customers base their order routing and purchasing decisions 
on total interactions with an exchange, and the market data products 
offered inform those decisions. In this competitive environment, the 
Exchange must continually review and adjust its product offerings and 
fees and, in this case, the Exchange has determined to jettison these 
four products to remain competitive.
    In light of the age of these products, the small amount of revenue 
generated, the cost of maintenance, and the fierce competitive 
environment, the Exchange proposes to withdraw ModelView, Nasdaq Custom 
Data Feeds, Pathfinders, and the PORTAL Reference Database from the 
market.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\10\ in particular, in that it is 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. In light of the age of ModelView, Nasdaq Custom Data Feeds, 
Pathfinders, and the PORTAL Reference Database, the small number of 
subscribers, and the fact that continuing to invest in unpopular 
products would be impractical, the Exchange believes that the proposal 
to remove these products from the market strikes the correct balance 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.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes 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, rebate opportunities available at other venues to be more 
favorable, or prefer the market data offerings of another exchange. In 
such an environment, the Exchange must continually adjust its product 
offerings to remain competitive with other exchanges. Because 
competitors are free to modify their product offerings in response, and 
because market participants may readily adjust their order routing 
practices, the Exchange believes that the degree to which changes in 
product offerings may impose any burden on competition is extremely 
limited. The Exchange does not expect the proposed withdrawal of 
ModelView, Nasdaq Custom Data Feeds, Pathfinders, and the PORTAL 
Reference Database to have a significant impact on competition. The 
products have few purchasers, and the Exchange has already discussed 
the proposal with current purchasers to ameliorate the impact of 
withdrawal. The products will not have any future impact on competition 
as the products will no longer be offered.
    The proposed withdrawals illustrate the impact of market forces on 
the Exchange. Customers have not purchased these products in sufficient 
numbers to economically justify continuing to offer these products, and 
the Exchange therefore decided to discontinue them. That is precisely 
how competitive markets operate.

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

    Because the proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on

[[Page 60087]]

which it was filed, or such shorter time as the Commission may 
designate, it has become effective pursuant to Section 19(b)(3)(A) of 
the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and the text of the proposed rule change, 
at least five business days prior to the date of filing of the 
proposed rule change, or such shorter time as designated by the 
Commission. The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Commission notes that, in light of the age of the products, the 
small number of subscribers (fewer than ten combined for ModelView and 
Pathfinders, and none for Nasdaq Custom Data Feeds and the PORTAL 
Reference Database), the impracticality of continuing to invest in 
these low-revenue products, and the competition among exchanges and 
other entities, the Exchange has determined to discontinue these 
products. Also, the Exchange stated that some customers have recently 
posed questions regarding the types of information included in 
ModelView and Pathfinders, and the Exchange wants to be responsive to 
customer feedback about products. Moreover, the Commission notes that 
the Exchange has already discussed the proposal with the affected 
customers to ameliorate any impact of the withdrawal. Accordingly, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\15\
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change 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 [email protected]. Please include 
File Number SR-NASDAQ-2017-126 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-2017-126. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2017-126 and should be submitted 
on or before January 8, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27149 Filed 12-15-17; 8:45 am]
 BILLING CODE 8011-01-P