Document ID: SEC-2020-2118-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2020-12-30T05:00Z

[Federal Register Volume 85, Number 250 (Wednesday, December 30, 2020)]
[Notices]
[Pages 86632-86635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28802]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90772; File No. SR-NASDAQ-2020-088]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Withdraw the Exchange's QView Product From Sale

December 22, 2020.
    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 14, 2020, 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 and 
II 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 86633]]

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

    The Exchange proposes to withdraw the Exchange's QView product from 
sale.
    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 withdraw QView from 
sale due to low customer demand.
QView
    QView is a web-based user interface that displays execution and 
open order information in a user-friendly format.\3\ It is a type of 
dashboard that displays information regarding the number of executions 
and their dollar value, executions by symbol, total volume, whether an 
order has been added or removed, whether the order is for a buy or a 
sell, whether an order is open, and information related to routing 
strategies. Information can be tracked in real-time and through 
historical order and execution summaries, and is available on a daily 
or a monthly basis.
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    \3\ See Securities Exchange Act Release No. 65851 (November 30, 
2011), 76 FR 75924 (December 5, 2011) (SR-Nasdaq-2011-157) 
(introducing the QView product); see also Securities Exchange Act 
Release No. 66636 (March 21, 2012), 77 FR 18280 (March 27, 2012) 
(SR-NASDAQ-2012-035) (introducing QView fees). For additional 
technical details on QView as well as screen shots, see QView Order 
and Execution Management & Latency Optics, available at http://www.nasdaqtrader.com/Trader.aspx?id=QView.
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    As a dashboard, QView presents information in a convenient and 
easy-to-read format, and provides analytic tools to help the user 
understand that information. It is not, however, the only source for 
the underlying data, which is provided by TradeInfo.\4\ TradeInfo is 
also a web-based tool, and presents the member with detailed data on 
the status of orders, executions, cancels and breaks, generates reports 
for download, and allows the member to cancel or correct open orders. 
QView and TradeInfo are designed to work together. QView provides 
summary information, and TradeInfo provides the underlying data that 
supports that summary information. TradeInfo is complementary as part 
of the Nasdaq workstation, or may be purchased separately for a fee of 
$95 per user per month.
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    \4\ See Equity 7, Section 115(f).
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    QView is offered with the Latency Optics add-on service, which 
compares three types of latency to Nasdaq averages: (i) The roundtrip 
time between order entry and receipt of acknowledgement; (ii) roundtrip 
time between order entry and the time that the order appears on the 
TotalView ITCH multicast feed; and (iii) the roundtrip time between the 
entry of an order cancellation request and the time that the message in 
reply is received by the client device.\5\ Data is displayed 
graphically and in table format, and may be segregated by MPID or 
ports.
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    \5\ The user of TradeInfo will be able to calculate these 
latencies for itself, as the underlying transaction information is 
timestamped.
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Proposed Withdrawal
    Nasdaq proposes to withdraw QView because of low customer demand. 
QView was introduced in December 2011,\6\ and, owing to the age of the 
product, the seventeen servers required to support QView will reach the 
end of their useful life at the end of this year. In light of low 
customer demand--only 10 firms currently purchase QView, of which only 
two purchase the Latency Optics add-on service, and further sales do 
not appear to be forthcoming \7\--the additional investment required to 
replace these servers is not economically viable.
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    \6\ See Securities Exchange Act Release No. 65851 (November 30, 
2011), 76 FR 75924 (December 5, 2011) (SR-Nasdaq-2011-157) 
(introducing the QView product); see also Securities Exchange Act 
Release No. 66636 (March 21, 2012), 77 FR 18280 (March 27, 2012) 
(SR-NASDAQ-2012-035) (introducing QView fees); Securities Exchange 
Act Release No. 68617 (January 10, 2013), 78 FR 3480 (January 16, 
2013) (SR-Nasdaq-2013-005) (introducing the Latency Optics add-on).
    \7\ Staff Guidance on SRO Filings Related to Fees states that 
the Purpose section should include ``the projected number of 
purchasers (including members, as well as non-members) of any new or 
modified product or service and the expected number of purchasers 
likely to be subject to a new fee or pricing tier, including members 
and non-members. . . .'' See Division of Trading and Markets, U.S. 
Securities and Exchange Commission, ``Staff Guidance on SRO Filings 
Related to Fees'' (May 21, 2019) (``Staff Guidance''), available at 
https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees. It also 
states that ``[w]hen a Fee Filing changes an existing fee, the 
purpose section also should compare the projected number of 
purchasers likely to be subject to the proposed fee following the 
proposed fee change and the expected cost of the proposed fee for 
different types of firms. . . .'' As indicated, there are 10 firms 
that currently purchase QView, of which two firms purchase the 
Latency Optics add-on service, and no new firms are projected to 
purchase this product, even if it were not withdrawn.
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    Nasdaq does not expect the withdrawal of QView to significantly 
impact any of its current customers. As noted, QView (including Latency 
Optics) is a dashboard that summarizes information in a convenient, 
user-friendly format, but the underlying data supporting the QView 
display will remain available on TradeInfo. Nasdaq has discussed its 
proposed withdrawal with each of the 10 current purchasers, and none 
indicated that it was essential for their business. Indeed, all 10 
purchasers indicated that their actual usage was low, and did not 
expect to continue using the product. Nasdaq publicly announced its 
intent to withdraw QView as of December 31, 2020, in a Data News 
publication issued on October 14, 2020,\8\ and received no feedback 
concerning additional demand for the product. There will be no 
interruption in the ability of current customers to see the status of 
orders, executions, cancels and breaks, generate reports for download, 
or cancel or correct open orders, as all of the data presented in QView 
will remain available through TradeInfo. The ``dashboard'' functions of 
QView that provide a user-friendly interface and summary statistics can 
be replaced by the member with any number of similar, commercially 
available dashboards or other products that summarize data.
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    \8\ See Nasdaq Data News No. 2020-9 (October 14, 2020), 
available at https://www.nasdaqtrader.com/TraderNews.aspx?id=dn2020-9.
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    QView was designed to provide summary statistics on trade 
executions to broker-dealers in a convenient, user-friendly format. All 
of the data needed to generate that summary information, including the 
Latency Optics add-on service,\9\ will remain available to Nasdaq 
customers via TradeInfo, which allows users to generate reports and 
download the data using Microsoft Excel. Once the user has the data on 
Excel, the user would be able to use commercially available programs or 
proprietary software to generate the charts, graphs and summary 
statistics previously generated by QView. All of

[[Page 86634]]

the 10 current QView customers already have access to TradeInfo.\10\
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    \9\ See supra note 5.
    \10\ One of the two current purchasers of the Latency Optics 
add-on service indicated that it intends to obtain similar 
information through Trading Insights. Nasdaq Trading Insights is an 
optional market data service that employs advanced analytics and 
machine learning to analyze order activity. It is comprised of three 
active market data components: (a) Missed Opportunity--Liquidity; 
(b) Missed Opportunity--Latency; and (c) Peer Benchmarking. The 
Missed Opportunity--Liquidity component identifies when an order 
from a market participant could have been increased in size, 
resulting in the execution of additional shares. This component is 
designed to provide information to a market participant interested 
in gaining insight into hidden pockets of liquidity. The Missed 
Opportunity--Latency component identifies the amount of time by 
which an otherwise marketable order missed execution. This component 
is designed to provide information to market participants interested 
in optimizing their models and trading patterns. The Peer 
Benchmarking component ranks the quality of a market participant's 
trading performance against its peers, allowing market participants 
to view their relative trading performance by port, with each port 
ranked independently by each metric against the ports of peer firms 
trading on the Exchange. See Equity 7, Section 146; Securities 
Exchange Act Release No. 80856 (June 5, 2017), 82 FR 26820 (June 9, 
2017) (SR-NASDAQ-2017-051). Trading Insights can be used by the 
customer to place the latency information that it calculates using 
TradeInfo in context by comparing its performance against others.
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    Withdrawal of QView will not have a different impact on different 
types of market participants.\11\ All of the basic data needed for 
current customers to replicate the product and manage trading activity 
and monitor latency is available through TradeInfo and Trading 
Insights. Current customers were unconcerned with withdrawal, and 
indicated that they did not intend to continue using the product. 
Broker-dealers that do not currently purchase QView will not be 
affected by its absence. No other market participants will be affected, 
as the product was designed exclusively for broker-dealers that manage 
order flow.
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    \11\ Staff Guidance also states that the Purpose section should 
identify ``how the fee may apply differently (e.g., additional cost 
vs. additional discount) to different types of market participants 
(e.g., market makers, institutional brokers, retail brokers, 
vendors, etc.) and different sizes of market participants (e.g., 
large, medium or small entity. . . .''
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    Thus, Nasdaq proposes to withdraw QView based on lack of demand, 
and does not expect the withdrawal to negatively impact current 
customers, based on their feedback.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    QView was designed to facilitate the work of broker-dealers 
executing orders on the Exchange, and its usefulness depended on its 
effectiveness in helping the broker-dealer manage order flow. Nasdaq 
proposes to withdraw QView because low customer demand has rendered the 
product no longer economically viable. Withdrawing a product that has 
been determined to not be economically viable in a competitive 
marketplace promotes just and equitable principles of trade, removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system, and, in general, protects investors and the 
public interest.
    The Proposal is not designed to permit unfair discrimination 
between customers, issuers, brokers, or dealers. Broker-dealers that 
currently utilize the product did not express concern that the 
withdrawal will negatively impact their business, and did not expect to 
continue using the product. These customers will still have access to 
the underlying information, and will remain able to summarize that 
information through their own dashboards or other similar products. 
Broker-dealers that do not currently utilize the product will not be 
affected. The Proposal therefore does not permit unfair discrimination.

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.
Intermarket Competition
    The withdrawal of QView will have no impact on intermarket 
competition (the competition among SROs). Indeed, the Proposal may 
generate competitive responses from other exchanges by, for example, 
introducing their own versions of QView, although, as is evident from 
Nasdaq's experience, this type of product does not appear to be subject 
to high customer demand.
Intramarket Competition
    The Proposal will not cause any unnecessary or inappropriate burden 
on intramarket competition (competition among exchange customers). As 
explained in our discussion of unfair discrimination above, broker-
dealers that currently utilize the product did not indicate that they 
would be adversely impacted in any way. Such broker-dealers would still 
have access to the underlying information, and would remain able to 
summarize that information through their own dashboards or other 
similar products. Broker-dealers that do not currently utilize the 
product would not be affected in any way. The Proposal therefore will 
not cause any unnecessary or inappropriate burden on intramarket 
competition.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \16\ normally 
does not become operative for 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay. According to the 
Exchange, current QView customers and other market participants have 
already been notified of the end-of-year withdrawal; each customer that 
currently purchases QView has been individually notified, and other 
market participants have been notified through a Nasdaq Data News item 
published on October 14, 2020. Because QView and Latency Optics are

[[Page 86635]]

both charged as monthly fees, waiver of the operative delay would allow 
the Exchange to withdraw these products at the end of the calendar 
month on December 31, 2020, which would provide for a more orderly 
withdrawal for both the Exchange and current customers. For these 
reasons, the Commission believes that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Accordingly, the Commission waives the 30-day operative delay 
and designates the proposal operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(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 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 change 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-2020-088 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-2020-088. 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-2020-088 and should be submitted 
on or before January 20, 2021.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2020-28802 Filed 12-29-20; 8:45 am]
BILLING CODE 8011-01-P