Document ID: SEC-2022-1159-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2022-08-31T04:00Z

[Federal Register Volume 87, Number 168 (Wednesday, August 31, 2022)]
[Notices]
[Pages 53531-53533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18767]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95604; File No. SR-NASDAQ-2022-049]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Port-Related Fees, at Equity 7, Section 115, and Options 7, 
Section 3

August 25, 2022.
    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 August 12, 2022, 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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[[Page 53532]]

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

    The Exchange proposes to amend the Exchange's port-related fees, at 
Equity 7, Section 115, and Options 7, Section 3, as described further 
below.
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on September 1, 
2022.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend Equity 7, 
Section 115, and Options 7, Section 3, to prorate port fees for the 
first month of service. The Exchange also proposes to add language to 
Equity 7, Section 115, and Options 7, Section 3, to clarify that port 
fees for cancelled services will continue to be charged for the 
remainder of month.
    Currently, the Exchange does not prorate port connectivity fees 
under either its equity or options rules. Thus, equity members and 
options participants are assessed a full month's fee if they direct the 
Exchange to make the subscribed connectivity live on any day of the 
month, including the last day thereof. Equity members and options 
participants are also assessed a full month's port fee if they cancel 
service during the month.
    The Exchange proposes to provide prorated port fees for the first 
month of service for new requests. By prorating the first month's fees, 
the Exchange would charge equity members and options participants port 
fees only for the days in which the equity members and options 
participants are connected to the Exchange during the first month of 
service. The Exchange proposes to continue the current practice of 
charging port fees for the remainder of the month upon cancellation, 
with the exception of the specialized service fees in Equity 7, Section 
115(e).\3\ If an equity member or options participant starts and 
cancels service in the same month, the member or participant would not 
be billed for those days prior to the service start date but would be 
billed for the remainder of the month, including after the service is 
cancelled.\4\
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    \3\ The Exchange prorates the cost of the first and last month 
of a user's subscription to the WebLink, Workstation, and WorkX 
products. See Securities Exchange Act Release No. 94226 (February 
11, 2022), 87 FR 9096 (February 17, 2022) (NASDAQ-2021-012) [sic].
    \4\ For example, if a member orders a port on September 4, 2022 
and cancels the port on September 16, 2022, the member would be 
charged the prorated port fee for September 5, 2022 through 
September 30, 2022.
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    The Exchange believes it is important for equity members and 
options participants to have the option to establish new connections to 
the Exchange at any time during the month without being hampered by a 
full month charge irrespective of when during the month service begins. 
Moreover, other exchanges also charge new ports on a prorated basis for 
the first month of service.\5\
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    \5\ See, e.g., Cboe BZX U.S. Equities Exchange Fee Schedule, 
available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; New York Stock Exchange Price List 2022, 
available at https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ 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, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposed changes to its port fee schedule are 
reasonable in several respects. As a threshold matter, the Exchange is 
subject to significant competitive forces in the market for options and 
equity securities transaction services that constrain its pricing 
determinations in that market. The Commission and the courts have 
repeatedly expressed their preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. In Regulation NMS, while adopting a series of steps 
to improve the current market model, the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \8\
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    \8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    The Exchange believes that it is reasonable to prorate port fees 
for the first month of connectivity. As discussed above, the Exchange 
believes it is important for equity members and options participants to 
have the flexibility to establish new connections to the Exchange at 
any time during the month without being hampered by a full month 
charge. For example, the Exchange believes it is reasonable to charge a 
user who begins a subscription on the last day of the month to be 
charged only for use of a port for that day. As noted above, other 
exchanges already charge their customers for new ports on a prorated 
basis for the first month of service.\9\ The proposed language 
describing the Exchange's practice to bill for the remainder of the 
month upon cancellation is intended only to clarify the existing 
practice and limit any confusion.
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    \9\ Supra note 4.
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    The Exchange believes that the proposal is also equitable and not 
unfairly discriminatory because the proposed change to prorate port 
fees for the first month of service and continue to charge for the 
remainder of the month upon cancellation will apply uniformly to all 
similarly situated equity members and options participants. Removing 
the requirement to pay a full month's port fee if a user joins any day 
other than the first of the month is user-friendly and provides users 
incentive to subscribe at their convenience. The Exchange believes that 
prorating the fees for the first month of a user's subscription will 
ensure that the fees are more equitable to a user's utilization of the 
products. All users will benefit from the proration of the first month 
of their subscription.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

[[Page 53533]]

Intramarket Competition
    The Exchange does not believe that its proposal will place any 
category of Exchange participants at a competitive disadvantage. The 
proposed change to prorate port fees for the first month of service 
will apply uniformly to all similarly situated equity members and 
options participants. All users will receive the benefit of a proration 
for the first month of port connectivity, which will enable users to 
save money that they otherwise would incur under the Exchange's current 
rules that do not provide for proration. The proposed language 
describing the Exchange's practice to bill for the remainder of the 
month upon cancellation merely codifies and clarifies an existing 
practice of the Exchange.
Intermarket Competition
    The Exchange believes that the proposed change to its port fee 
schedule to provide proration for the first month of port connectivity 
will not impose a burden on competition because the Exchange's 
execution services are completely voluntary and subject to extensive 
competition both from the other live exchanges and from off-exchange 
venues, which include alternative trading systems that trade national 
market system stock. Moreover, as noted above, other exchanges 
currently charge new ports on a prorated basis for the first month of 
service.\10\ The proposed changes will help ensure that the Exchange's 
billing practices are commensurate with competitors.
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    \10\ Supra note 4.
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    The proposed change to the Exchange's port fee schedule is 
reflective of this competition because, as a threshold issue, the 
Exchange is a relatively small market so its ability to burden 
intermarket competition is limited. In this regard, even the largest 
U.S. equities exchange by volume only has 17-18% market share, which in 
most markets could hardly be categorized as having enough market power 
to burden competition. Accordingly, the Exchange does not believe that 
the proposed change will impair the ability of members, participants, 
or competing order execution venues to maintain their competitive 
standing in the financial markets.

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) of the Act \11\ and paragraph (f) of Rule 19b-4 \12\ 
thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f).
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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: (i) 
necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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 [email protected]. Please include 
File Number SR-NASDAQ-2022-049 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-2022-049. 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-2022-049 and should be submitted 
on or before September 21, 2022.

    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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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-18767 Filed 8-30-22; 8:45 am]
BILLING CODE 8011-01-P