Document ID: SEC-2012-0206-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2012-02-06T05:00Z

[Federal Register Volume 77, Number 24 (Monday, February 6, 2012)]
[Notices]
[Pages 5862-5864]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-2588]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66282; File No. SR-NASDAQ-2012-016]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Fees Assessed Under Rule 7015(c) for Subscription to Computer to 
Computer Interface Stations

January 31, 2012.
    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 23, 2012, 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 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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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    NASDAQ is proposing to modify the fees assessed under Rule 7015(c) 
for subscription to Computer to Computer Interface Stations 
(``Stations''). NASDAQ will implement the proposed change on February 
1, 2012.
    The text of the proposed rule change is below. Proposed new 
language is underscored; proposed deletions are in brackets.

7015. Access Services

    The following charges are assessed by Nasdaq for connectivity to 
systems operated by NASDAQ, including the Nasdaq Market Center, the 
FINRA/NASDAQ Trade Reporting Facility, and FINRA's OTCBB Service. The 
following fees are not applicable to the NASDAQ Options Market LLC. For 
related options fees for Access Services refer to Rule 7053.
    (a)-(b) No change.
    (c) Computer to Computer Interface (CTCI) Stations

------------------------------------------------------------------------
        Fee component                             Fee
------------------------------------------------------------------------
[1st] Per Station Fee........  [$200]$600/Station/month.
[
Each Additional Station......  $600/Station/month].
------------------------------------------------------------------------

    The bandwidth-based fees in the table below apply to CTCI 
subscribers that have not transitioned off of Nasdaq-supported 
circuits.

Bandwidth

------------------------------------------------------------------------
        Fee component                             Fee
------------------------------------------------------------------------
Single 56kb line with single   $900/month.
 hub and router (for remote
 disaster recovery sites
 only).
Option 1:
    Dual 56kb lines (one for   $1,000/month.
     redundancy) and single
     hub and router.
Option 2:
    Dual 56kb lines (one for   $1,200/month.
     redundancy), dual hubs
     (one for redundancy),
     and dual router (one for
     redundancy).
Option 3:
    Dual Tl lines (one for     $2,500/month.
     redundancy), dual hubs
     (one for redundancy),
     and dual routers (one
     for redundancy).
     Includes base bandwidth
     of 128kb.

[[Page 5863]]

 
Bandwidth Enhancement Fee
 (for Tl subscribers only):
    Per 64kb increase above    $200/month.
     128kb Tl base.
Option 1, 2, or 3 with         Fee for Option 1, 2, or 3 (including any
 Message Queue software         Bandwidth Enhancement Fee) plus 20%.
 enhancement.
Installation Fee.............  $2,000 per site for dual hubs and
                                routers.
                               $1,000 per site for single hub and
                                router.
Relocation Fee (for the        $1,700 per relocation.
 movement of TCF/IP-capable
 lines within a single
 location).
------------------------------------------------------------------------

    (d)-(h) No change.
* * * * *

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
    NASDAQ is proposing to eliminate from Rule 7015(c) the $200 per 
station/per month fee assessed for the first Station subscribed and 
assess a uniform fee for all Stations of $600 per Station, per month, 
which is the current fee assessed for each Station subscribed in excess 
of one. Stations are logical channels used to manage the flow of data 
to and from a member firm user. A Station allows a subscribing member 
firm to send orders to NASDAQ or to report trades, using the member 
firm's computer system and not a NASDAQ Workstation. Stations are 
synonymous with the logical access ports used for FIX and QIX as they 
have the same characteristics, including a one-to-one relationship 
between the member firm and Station and throughput limits.\3\ Unlike 
FIX and QIX ports, which are limited to a single service, Stations 
allow member firms to access multiple services. For example, if a 
member firm wished to access ACT, ACES and TRACE using FIX it would 
have to order three separate ports, totaling $1,500 per month, whereas 
the member firm may connect to all three facilities through a single 
Station for a proposed fee of $600 per month.
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    \3\ Rules 7015(a) and (b).
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    Use of this service is voluntary and member firms have the option 
of subscribing to other protocols that offer similar connectivity. 
NASDAQ notes that the Station fees have not increased since March 2006, 
when the current fee structure was adopted.\4\ NASDAQ developed and 
implemented enhancements to CTCI since March 2006, such as updating 
protocol formatting based on changing industry requirements and adding 
new servers to support the updated product. NASDAQ also added the 
ability to receive DROP copies over CTCI, which allows subscribing 
member firms to send in order information and receive back their DROP 
copies over a single connection.\5\ As a consequence of adding 
enhancements, the value of the service has incrementally increased over 
time and NASDAQ believes that it is appropriate to now raise the fee 
assessed for CTCI to better align it with the increased value of the 
service and rising costs associated with technology and connectivity. 
Accordingly, NASDAQ proposes to eliminate the discounted fee assessed 
for the first Station subscribed and assess a uniform fee of $600 for 
each Station subscribed. NASDAQ anticipates that the proposed fees may 
provide NASDAQ with a profit, in addition to covering costs discussed 
above.
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    \4\ Securities Exchange Act Release No. 53536 (March 21, 2006), 
71 FR 15784 (March 29, 2006) (SR-NASD-2006-026).
    \5\ Prior to this enhancement, member firms would have to order 
a separate port dedicated to the receipt of their DROP copies.
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2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\6\ in general, and Section 
6(b)(4) of the Act,\7\ in particular, because 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 that 
NASDAQ operates or controls, and it does not unfairly discriminate 
between customers, issuers, brokers or dealers. NASDAQ believes that 
the proposal constitutes an equitable allocation of fees because all 
similarly-situated member firms would be charged the same amount. In 
addition, access to NASDAQ will continue to be offered on fair and non-
discriminatory terms.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4).
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    NASDAQ believes that the proposal is reasonable because the fee 
increase will realign the cost of administering and enhancing the 
service with the revenue generated by the fee. As noted above, NASDAQ 
has developed and implemented enhancements to CTCI since last 
increasing fees in March 2006. As a consequence of adding enhancements, 
the value of the service has incrementally increased over time and 
NASDAQ believes that it is appropriate to now raise the fee assessed 
for the initial Station to better align the fee with the increased 
value of the service. NASDAQ anticipates that the proposed fee will 
cover the costs associated with responding to customer requests, 
configuring NASDAQ's systems, programming to user specifications, and 
administering the service, among other things, and may provide NASDAQ 
with a profit. As discussed, the proposed fee increase applies to only 
the first Station subscribed, aligning that fee with the fee 
historically applied to all Stations subscribed in excess of one. 
NASDAQ notes that the proposed single Station fee is structured 
similarly to the FIX port fee that, although offered at $100 per port, 
per month less than the proposed Station fee, does not provide the 
flexibility in connectivity that Stations provide.\8\
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    \8\ Rule 7015(b).
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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

[[Page 5864]]

necessary or appropriate in furtherance of the purposes of the Act, as 
amended.

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\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\10\ 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). [sic]
    \10\ 17 CFR 240.19b-4(f)(2).
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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-2012-016 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-2012-016. 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 on 
official business days between the hours of 10 a.m. and 3 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-2012-016, and should be submitted on or before 
February 27, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-2588 Filed 2-3-12; 8:45 am]
BILLING CODE 8011-01-P