Document ID: SEC-2013-1224-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market, LLC
Posted Date: 2013-07-05T04:00Z

[Federal Register Volume 78, Number 129 (Friday, July 5, 2013)]
[Notices]
[Pages 40527-40529]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16087]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69887; File No. SR-NASDAQ-2013-088]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Reduce the Fees Assessed Under NASDAQ Rule 7034 for Certain Co-
Location Services

June 28, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on June 21, 2013, 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 and II below, which Items have been prepared by the 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 the 
Substance of the Proposed Rule Change

    NASDAQ is proposing changes to reduce the fees assessed under 
NASDAQ Rule 7034 for certain co-location services.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://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 Exchange proposes to repeat a temporary fee reduction program 
to attract new customers to its co-location facility in Carteret, New 
Jersey.\3\ Specifically, the Exchange proposes to amend Rule 7034 to 
reduce the monthly recurring cabinet (``MRC'') fees assessed for 
installation of certain new co-location cabinets. The reduced MRC fees 
will apply to new cabinets ordered by users using the Co-Lo Console \4\ 
on or after July 1, 2013 through August 31, 2013. The reduced fee shall 
apply to any cabinet that increases the number of dedicated cabinets 
beyond the total number dedicated to the user as of May 31, 2013 
(``Baseline Number''), for so long as the total number of dedicated 
cabinets exceeds that user's Baseline Number. The reduced MRC fees will 
apply for a period of 24 months from the date the new cabinet becomes 
fully operational under NASDAQ rules, provided that the user's total 
number of cabinets continues to exceed the Baseline Number.
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    \3\ See Exchange Act Release No. 68624 (Jan. 1, 2013), 78 FR 
3945 (Jan. 17, 2013) (notice of publication of SR-NASDAQ-2013-002, a 
two-month reduction in co-location cabinet fees).
    \4\ The ``Co-Lo Console'' is NASDAQ's web-based ordering tool, 
and it is the exclusive means for ordering colocation services.
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    The Exchange proposes to reduce the applicable fees as follows:

------------------------------------------------------------------------
                                                 Current       Reduced
                Cabinet type                     ongoing       ongoing
                                               monthly fee   monthly fee
------------------------------------------------------------------------
Low Density.................................        $4,000        $2,000
Medium Density..............................         5,000         2,500
Medium-High Density.........................         6,000         3,500
High Density................................         7,000         4,500
Super High Density..........................        13,000         8,000
------------------------------------------------------------------------

New cabinets shall be assessed standard installation fees.
    NASDAQ proposes to reduce co-location cabinet fees by different 
amounts to maintain a sliding scale of lower fees for higher density 
cabinets on a per kilowatt basis. The chart below reflects this scale:

----------------------------------------------------------------------------------------------------------------
                                                                                          Discount
                        Cabinet type                             Max KW       New fee    (percent)    Fee per KW
----------------------------------------------------------------------------------------------------------------
Super High Density..........................................           17       $8,000        38.46      $470.59
High Density................................................           10        4,500        35.71       450.00

[[Page 40528]]

 
Medium High.................................................            7        3,500        41.67       500.00
Medium Density..............................................            5        2,500        50.00       500.00
Low Density.................................................         2.88        2,000        50.00       694.44
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\5\ in general, and with 
Section 6(b)(4) of the Act,\6\ 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. The proposed reduced 
fee will be assessed equally on all customers that place an order for a 
new cabinet after the designated period. The proposed amendments will 
provide an incentive for customers to avail themselves of the 
designated co-location services.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4).
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    NASDAQ's proposal to reduce fees by differing amounts is fair and 
equitable because it reflects the economic efficiency of higher density 
co-location cabinets. First, the underlying costs for co-location 
cabinets consists [sic] of certain fixed costs for the data center 
facility (space, amortization, etc.) and certain variable costs 
(electrical power utilized and cooling required). The variable costs 
are in total higher for the higher power density cabinets, as reflected 
in their higher current prices. Second, the higher density cabinets 
were introduced later than the lower density cabinets (the High Density 
cabinet was introduced in 2009 and the Super High Density cabinet was 
introduced in 2011). Due to the competitive pressures that existed in 
2011, Super High Density cabinets were introduced at lower fees per 
kilowatt. As a result of these already-reduced rates on higher density 
cabinets, NASDAQ has greater flexibility to discount fees for lower 
density cabinets, on a per kilowatt basis.
    NASDAQ operates in a highly competitive market in which market 
participants can readily favor competing venues if they deem fee levels 
at a particular venue to be excessive. In such an environment, NASDAQ 
must continually adjust its fees to remain competitive with other 
exchanges and with alternative trading systems that have been exempted 
from compliance with the statutory standards applicable to exchanges. 
NASDAQ believes that the proposed rule change reflects this competitive 
environment because it is designed to ensure that the charges for use 
of the NASDAQ co-location facility remain competitive.

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. To 
the contrary, the Exchange's voluntary fee reduction is a response to 
increased competition for co-location services by other exchanges and 
trading venues. As more venues offer co-location services, competition 
drives costs lower. The Exchange, in order to retain existing orders 
and to attract new orders, is forced to offer a lower effective rate 
for aggregate cabinet demand. This competition benefits users, members 
and investors by lowering the average aggregate cost of trading on the 
Exchange.

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,\7\ NASDAQ 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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    \7\ 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-2013-088 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-2013-088. 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 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 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; the Commission does not edit 
personal identifying information from submissions. You should submit 
only

[[Page 40529]]

information that you wish to make available publicly.
    All submissions should refer to File Number SR-NASDAQ-2013-088, and 
should be submitted on or before July 26, 2013.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-16087 Filed 7-3-13; 8:45 am]
BILLING CODE 8011-01-P