Document ID: SEC-2014-0009-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market, LLC
Posted Date: 2014-01-06T05:00Z

[Federal Register Volume 79, Number 3 (Monday, January 6, 2014)]
[Notices]
[Pages 686-688]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-31516]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71199; File No. SR-NASDAQ-2013-159]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
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 18, 2013, 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, 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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[[Page 687]]

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

    NASDAQ proposes to modify the extranet access fee (``Extranet 
Access Fee'') set forth in NASDAQ Rule 7025, as well as to clarify its 
applicability. NASDAQ 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 The NASDAQ Stock Market 
LLC found at http://NASDAQomx.cchwallstreet.com/.
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* * * * *

7025. Extranet Access Fee

    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[750] 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.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASDAQ 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. NASDAQ 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
    NASDAQ is proposing a change to modify the Extranet Access Fee as 
set forth in NASDAQ Rule 7025, as well as to clarify its applicability. 
NASDAQ Rule 7025 currently provides that for extranet providers that 
establish a connection with NASDAQ to offer direct access connectivity 
to market data feeds they 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 NASDAQ 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 NASDAQ market data feeds to a 
recipient's site.
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    Specifically, NASDAQ 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 2004.\5\ This fee increase 
will be used to help support NASDAQ'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. 50483 (October 1, 
2004), 69 FR 60448 (October 8, 2004) (SR-NASD-2004-118).
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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, 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 Rule 7025, ``consolidated data'' is defined 
to include data disseminated by the UTP SIP.
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2. Statutory Basis
    NASDAQ 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 
NASDAQ to access market data feeds from NASDAQ are subject to the same 
fee structure. The increased fee will help NASDAQ 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 NASDAQ 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 2004. 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, 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

    NASDAQ 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

[[Page 688]]

with NASDAQ 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 NASDAQ 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

    Written comments were neither solicited nor 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 
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-2013-159 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-NASDAQ-2013-159. 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-2013-
159, 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. 2013-31516 Filed 1-3-14; 8:45 am]
BILLING CODE 8011-01-P