Document ID: SEC-2015-0140-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2015-01-23T05:00Z

[Federal Register Volume 80, Number 15 (Friday, January 23, 2015)]
[Notices]
[Pages 3683-3685]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01067]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74077; File No. SR-NASDAQ-2015-002]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Regarding the Extranet Access Fee

January 16, 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 January 5, 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 NASDAQ. 
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 Substance 
of the Proposed Rule Change

    NASDAQ proposes to add language to Rule 7025 (``Extranet Access 
Fee''), which includes a new section about the applicability of the 
Extranet Access Fee. This will conform the Exchange's Extranet Access 
Fee rule to that of other markets.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.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. 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 purpose of the proposal is to add language to Rule 7025 
(``Extranet Access Fee''), which includes a new section about the 
applicability of the Extranet Access Fee. This will conform the 
Exchange's Extranet Access Fee rule to that of other markets.\3\
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    \3\ The Exchange, NASDAQ OMX PHLX LLC (``Phlx''), and NASDAQ OMX 
BX, Inc. (``BX'') are self-regulatory organizations (``SROs'') that 
are wholly owned subsidiaries of The NASDAQ OMX Group, Inc. 
(``NASDAQ OMX''). The Exchange, NOM (a facility of the Exchange), 
BX, BX Options (a facility of BX), Phlx, and PSX (a facility of 
Phlx) (together with the Exchange known as the ``NASDAQ Markets''), 
are independently filing proposals to conform their respective 
Extranet Access Fee rules to NASDAQ Rule 7025.
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    Specifically, the Exchange proposes language in Rule 7025 to 
indicate that an Extranet Access connection with NASDAQ pursuant to 
Rule 7025 on the equity side as well as a connection pursuant to 
Chapter XV, Section 12 on the options side shall be assessed a total 
monthly access fee of $1,000 per recipient CPE Configuration [sic] This 
proposal conforms the Extranet Access Fee in Rule 7025 (equities) and 
the Extranet Access Fee in NASDAQ Options Market (``NOM'') Chapter XV, 
Section 12 (options), as well as the other NASDAQ Markets.
    The Extranet Access Fee was introduced a decade ago on NASDAQ Rule 
7025 as an equity fee.\4\ The Extranet Access Fee was also introduced 
on NOM.\5\ By this proposal, the Exchange normalizes the application of 
the Extranet Access Fee on NASDAQ and on NOM.\6\
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    \4\ See Securities Exchange Act Release Nos. 50483 (October 1, 
2004), 69 FR 60448 (October 8, 2004) (SR-NASD-2004-118) 
(establishing the Extranet Access Fee on NASDAQ); and 71199 
(December 30, 2013), 79 FR 686 (January 6, 2014) (SR-NASD [sic]-
2013-159) (notice of filing and immediate effectiveness increasing 
the Extranet Access Fee to $1,000).
    \5\ See SR-SR- [sic] NASDAQ-2015-001 [sic] (immediately 
effective filing on January 2 [sic], 2015, establishing the Extranet 
Access Fee on NOM pursuant to Chapter XV, Section 12).
    \6\ As noted, the NASDAQ Markets are independently filing 
proposals to conform their respective Extranet Access Fee.
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    As proposed, Rule 7025 will read as follows: ``Extranet providers 
that establish a connection with Nasdaq to offer direct access 
connectivity to market data feeds shall be assessed a monthly access 
fee of $1,000 per recipient Customer Premises Equipment (``CPE'') 
Configuration. If an extranet provider uses multiple CPE Configurations 
to provide market data feeds to any recipient, 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 Nasdaq 
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. Extranet providers that 
establish a connection with Nasdaq pursuant to this Rule 7025 as well 
as a connection pursuant to Chapter XV, Section 12 shall be assessed a 
total monthly access fee of $1,000 per recipient CPE Configuration.'' 
The proposal conforms NASDAQ Rule 7025 to NOM Chapter XV, Section 12 
and makes them substantively identical.\7\ The proposal also makes it 
clear that if an extranet provider establishes a connection on NASDSAQ 
[sic] (equities) as well as on NOM (options), the extranet provider 
will not need to pay a double $1,000 monthly access fee per CPE, but 
rather only one total monthly access fee of $1,000 per CPE.
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    \7\ The Exchange notes that while NOM Chapter XV, Section 12 and 
NASDAQ Rule 7025 each contain some language particular to the 
relevant exchange, with this proposal the language of the two rules 
is substantively identical. For example, language in Rule 7025 that 
refers to consolidated data disseminated by the UTP SIP is not 
reflected in NOM Chapter XV, Section 12, as it deals with options.
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    The proposed [sic] Extranet Access Fee will continue to be used to 
help recoup 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 Extranet 
Access

[[Page 3684]]

there have been numerous network infrastructure improvements and 
administrative controls enacted. 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 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 proposed [sic] 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.\8\ 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.
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    \8\ The Exchange will inform extranet providers of their 
reporting responsibilities via its public Web site. This will 
include, as an example, reporting CPE usage.
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    Thus, subsequent to the proposal extranet providers that establish 
a connection with the Exchange to offer direct access connectivity to 
market data feeds shall continue to be assessed a monthly access fee of 
$1,000 per CPE Configuration. If, as discussed, an extranet provider 
has a connection on the NASDAQ side (equity) and NOM side (options), 
the provider will not be charged double. The proposal would make the 
Exchange's Extranet Access Fee in Rule 7025 work the same as the 
equivalent fee in NOM Chapter XV, Section 12 NASDAQ [sic], and complete 
the effort to conform the two rules, as well as the equivalent rules of 
the NASDAQ Markets.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and with Section 6(b)(4) 
of the Act,\10\ 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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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that its proposal to add language in Rule 
7025 regarding the applicability of the Extranet Access Fee if an 
extranet provider has a connection on both the equity side through 
NASDAQ and the options side through NOM conforms the rules of the 
entities and is consistent with the Act.
    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.\11\ The fee will help the Exchange to 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 
proposal is reasonable and notes that this proposal conforms similarly-
situated Extranet Access Fee rules on NOM options and NASDAQ equities. 
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, the Exchange believes 
that the proposed change is equitable and not unreasonably 
discriminatory. The monthly fee is assessed uniformly to all extranet 
providers that establish a connection with the Exchange to offer direct 
access connectivity to market data feeds, and is the same for all at 
$1,000 per recipient CPE Configuration. Thus, any burden arising from 
the fees is necessary in the interest of promoting the equitable 
allocation of a reasonable fee. Moreover, 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 markets and, of course, the 
Extranet Access Fee is but one factor in a total platform analysis.
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    \11\ For example, NASDAQ Technology Services, a subsidiary of 
the Exchange, pays the applicable fee(s) to the Exchange for 
services covered under the Extranet Access Fee.
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    The proposal provides for uniform application of 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 is thereby consistent with the Act.

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 proposed [sic] 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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\12\ the Exchange 
has designated this proposal as establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization on any person, 
whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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.

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-2015-002 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange

[[Page 3685]]

Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2015-002. 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-
002, and should be submitted on or before February 13, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-01067 Filed 1-22-15; 8:45 am]
BILLING CODE 8011-01-P