Document ID: SEC-2014-0014-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2014-01-06T05:00Z

[Federal Register Volume 79, Number 3 (Monday, January 6, 2014)]
[Notices]
[Pages 679-681]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-31514]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71197; File No. SR-BX-2013-063]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Modify 
the Extranet Access Fee

December 30, 2013.
    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 December 19, 2013, 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 [sic] to modify the extranet access fee (``Extranet 
Access Fee'') set forth in BX Rule 7025, as well as to clarify its 
applicability. BX will implement the proposed revised fee on January 2, 
2014.
    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 be assessed 
a monthly access fee of $1,000 [750] per client organization Customer 
Premises Equipment (``CPE'') Configuration. If an extranet provider 
uses multiple CPE Configurations to provide market data feeds to any 
client organization, the monthly fee shall apply to each such 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

[[Page 680]]

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 a change to modify the Extranet Access 
Fee as set forth in BX Rule 7025, as well as to clarify its 
applicability. BX Rule 7025 currently provides that for extranet 
providers that establish a connection with the Exchange to offer direct 
access connectivity to market data feeds they [sic] will be assessed a 
monthly access fee of $750 per recipient Customer Premises Equipment 
(``CPE'') Configuration.\4\
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    \4\ 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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    Specifically, the Exchange proposes to increase this Extranet 
Access Fee from $750 per month to $1,000 per month. This increase 
represents the first price change since its introduction in 2009.\5\ 
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 this fee there have been numerous network 
infrastructure improvements and administrative controls enacted. The 
Exchange has additionally implemented compressed TCP/IP options, which 
allows [sic] customers reduced bandwidth and 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.
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    \5\ See Securities Exchange Act Release No. 59615 (March 20, 
2009), 74 FR 14604 (March 31, 2009) (SR-BX-2009-005).
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    As the number of extranets has increased, the 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 increased 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.
    Additionally, BX Rule 7025 will be clarified by stating that no 
extranet access fee will be charged for connectivity to market data 
feeds containing only consolidated data.\6\ This clarification should 
serve to reduce any confusion as to the applicability of this fee.
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    \6\ For purposes of BX Rule 7025, ``consolidated data'' is 
defined to include data disseminated by the UTP SIP.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and with Section 6(b)(4) 
of the Act,\8\ 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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    \7\ 15 U.S.C. 78f.
    \8\ 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. The increased fee will help the Exchange 
offset some of the rising overhead and technology infrastructure, 
administrative, maintenance and operational costs it incurs in support 
of the service. If such costs are covered, the service may provide the 
Exchange with a profit. As such, the Exchange believes that the 
proposed fee increase is reasonable and notes that this increase 
represents the first price change since its introduction in 2009. The 
extranet costs are separate and different from the colocation facility 
that is able to recoup these fees by charging for servers within the 
associated data centers.
    Additionally, BX Rule 7025 will be clarified by stating that no 
extranet access fee will be charged for connectivity to market data 
feeds containing only consolidated data. This clarification should 
serve to reduce any confusion as to the applicability of this fee.

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 fees are applied uniformly among extranet providers, which are 
not compelled to establish a connection 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.\9\ 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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    \9\ 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

[[Page 681]]

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-2013-063 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-BX-2013-063. 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, 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-BX-
2013-063, and should be submitted on or before January 27, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-31514 Filed 1-3-14; 8:45 am]
BILLING CODE 8011-01-P