Document ID: SEC-2014-0556-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2014-04-07T04:00Z

[Federal Register Volume 79, Number 66 (Monday, April 7, 2014)]
[Notices]
[Pages 19129-19131]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-07638]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71841; File No. SR-BX-2014-015]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Impose an 
Extranet Access Fee

April 1, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 28, 2014, NASDAQ OMX BX, Inc. (``BX'' 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 modify the extranet access fee (``Extranet 
Access Fee'') set forth in BX Rule 7025. BX will implement the proposed 
revised fee on April 1, 2014.

[[Page 19130]]

    The text of the proposed rule change is below. Proposed new 
language is italicized; proposed deletions are bracketed.\3\
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    \3\ Changes are marked to the rules of NASDAQ OMX BX, Inc. found 
at http://nasdaqomxbx.cchwallstreet.com
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* * * * *

7025. Extranet Access Fee

    Extranet providers that establish a connection with the Exchange 
to offer direct access connectivity to market data feeds shall [not] 
be assessed a monthly access fee of $750 per client organization 
Customer Premises Equipment (``CPE'') Configuration. For purposes of 
this Rule 7025, the term ``Customer Premises Equipment 
Configuration'' shall mean any line, circuit, router package, or 
other technical configuration used by an extranet provider to 
provide a direct access connection to the Exchange market data feeds 
to a recipient's site. No extranet access fee will be charged for 
connectivity to market data feeds containing only consolidated data. 
For purposes of this rule, consolidated data includes data 
disseminated by the UTP SIP.
* * * * *

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 is proposing to impose an Extranet Access Fee as set 
forth in BX Rule 7025. BX Rule 7025 currently does not include a 
monthly access fee per recipient Customer Premises Equipment (``CPE'') 
Configuration.\4\ Specifically, the Exchange proposes to charge a $750 
per recipient CPE Configuration per month.
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    \4\ See Securities Exchange Act Release No. 71506 (February 7, 
2014), 79 FR 8769 (February 13, 2014) (SR-BX-2014-008). As defined 
in BX Rule 7025, a ``Customer Premises Equipment Configuration'' 
means any line, circuit, router package, or other technical 
configuration used by an extranet provider to provide a direct 
access connection to the Exchange market data feeds to a recipient's 
site.
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    As discussed in a recent filing,\5\ initially an Extranet Access 
Fee of $750 per recipient CPE Configuration per month was put in place 
in 2009,\6\ but the service was provided for free during the first year 
of operation of the Exchange's venue for trading cash equities. At the 
end of the one-year period, the initial fee of $750 per recipient CPE 
Configuration per month remained in place, but it inadvertently was 
never billed.
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    \5\ See Securities Exchange Act Release No. 71506 (February 7, 
2014), 79 FR 8769 (February 13, 2014) (SR-BX-2014-008). See also 
Securities Exchange Act Release No. 59615 (March 20, 2009), 74 FR 
14604 (March 31, 2009) (SR-BX-2009-005).
    \6\ See Securities Exchange Act Release No. 59615 (March 20, 
2009), 74 FR 14604 (March 31, 2009) (SR-BX-2009-005).
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    Subsequently, the Exchange filed to increase the fee of $750 per 
recipient CPE Configuration per month to $1,000.\7\ Shortly after 
increasing the fee, the Exchange discovered that the Extranet Access 
Fee had never been billed so the Exchange determined to file and to 
eliminate the fee [sic]. The Exchange believed that since recipients 
had yet to actually pay an Extranet Access Fee, it would be burdensome 
for recipients to start-off paying $1,000 per recipient CPE 
Configuration per month. However, the Exchange has now had the 
necessary time to assess the need for the Extranet Access Fee and 
determined that it cannot completely absorb its costs associated with 
maintaining multiple extranet connections with multiple providers. 
Accordingly, the Exchange now seeks to charge recipients the fee 
originally proposed in 2009 of $750 per recipient CPE Configuration per 
month.
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    \7\ See supra note 3.
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    As stated above, this fee increase will be used to help support the 
Exchange's costs associated with maintaining multiple extranet 
connections with multiple providers. These costs include those 
associated with overhead and technology infrastructure, administrative, 
maintenance and operational costs. Since the inception of accessing 
data through extranets, there had been numerous network infrastructure 
improvements and administrative controls enacted. The Exchange has 
additionally implemented compressed TCP/IP options, which allows 
customers to use reduced bandwidth and [sic] lower carrying costs. 
Additionally, the Exchange has implemented automated retransmission 
facilities for most of its data clients that benefit extranet clients 
by reducing operational costs associated with retransmissions.
    As the number of extranets has increased, the Exchange's management 
of the downstream customers has expanded and the Exchange has had to 
ensure appropriate reporting and review processes, which has resulted 
in a greater cost burden on the Exchange over time. The fee will also 
help to ensure that the Exchange is better able to closely review 
reports and uncover reporting errors via audits thus minimizing 
reporting issues. The network infrastructure has increased in order to 
keep pace with the increased number of products, which, in turn, has 
caused an increased administrative burden and higher operational costs 
associated with delivery via extranets.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and with Section 6(b)(4) 
of the Act,\9\ in particular, in that it provides for the equitable 
allocation of reasonable dues, fees and other charges among members and 
issuers and other persons using any facility or system which the 
Exchange operates or controls.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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    All similarly situated extranet providers, including the Exchange 
operating its own extranet, that establish an extranet connection with 
the Exchange to access market data feeds from the Exchange are subject 
to the same fee structure. As noted above, this fee is the same as the 
originally proposed Extranet Access Fee in 2009 of $750 per recipient 
CPE Configuration per month. The fee will help the Exchange offset some 
of the overhead and technology infrastructure, administrative, 
maintenance and operational costs it incurs in support of the service.
    As such, the Exchange believes that the proposed fee is reasonable 
and notes it is the same as originally proposed in 2009. The extranet 
costs are separate and different from the colocation facility that is 
able to recoup these fees by charging for servers, rack space, 
electricity, etc. within the associated data centers.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.
    The fee will be applied uniformly among extranet providers, which 
are not compelled to establish a connection

[[Page 19131]]

with the Exchange to offer access connectivity to market data feeds. 
For these reasons, any burden arising from the fees is necessary in the 
interest of promoting the equitable allocation of a reasonable fee. 
Additionally, firms make decisions on how much and what types of data 
to consume on the basis of the total cost of interacting with the 
Exchange or other exchanges and, of course, the extranet access fee is 
but one factor in a total platform analysis.

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.\10\ 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 should be approved or disapproved.
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    \10\ 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-BX-2014-015 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-BX-2014-015. 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 available publicly.
    All submissions should refer to File Number SR-BX-2014-015 and 
should be submitted on or before April 28, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07638 Filed 4-4-14; 8:45 am]
BILLING CODE 8011-01-P