Document ID: SEC-2017-1897-0001
Agency: sec
Document Type: Notice
Title: Joint Industry Plans: Fortieth Amendment to Joint Self-Regulatory Organization Plan Governing Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on Unlisted Trading Privileges Basis
Posted Date: 2017-11-20T05:00Z

[Federal Register Volume 82, Number 222 (Monday, November 20, 2017)]
[Notices]
[Pages 55137-55139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25028]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82072; File No. S7-24-89]

Joint Industry Plan; Notice of Filing and Immediate Effectiveness 
of the Fortieth Amendment to the Joint Self-Regulatory Organization 
Plan Governing the Collection, Consolidation and Dissemination of 
Quotation and Transaction Information for Nasdaq-Listed Securities 
Traded on Exchanges on an Unlisted Trading Privileges Basis

November 14, 2017.
    Pursuant to Section 11A of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that 
on October 19, 2017, the Participants \3\ in the Joint Self-Regulatory 
Organization Plan Governing the Collection, Consolidation and 
Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privileges 
Basis (``NASDAQ/UTP Plan'' or ``Plan'') filed with the Securities and 
Exchange Commission (``Commission'') a proposal to amend the NASDAQ/UTP 
Plan.\4\ The amendment is the 40th Amendment to the NASDAQ/UTP Plan 
(``Amendment'').\5\ The Amendment proposes to modify the text of the 
fee schedule of the Plan to conform the text of the Plan to what was 
described in both the transmittal letter for the Thirty-Third Amendment 
to the Plan and the Commission's public notice of the filing of the 
Thirty-Third Amendment to the Plan.\6\
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ The Participants are: Bats BYX Exchange, Inc.; Bats BZX 
Exchange, Inc.; Bats EDGA Exchange, Inc.; Bats EDGX Exchange, Inc.; 
Chicago Board Options Exchange, Incorporated; Chicago Stock 
Exchange, Inc.; Financial Industry Regulatory Authority, Inc.; 
Investors Exchange LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq 
PHLX LLC; The Nasdaq Stock Market LLC; New York Stock Exchange LLC; 
NYSE Arca, Inc.; NYSE American LLC; and NYSE National, Inc. 
(collectively, the ``Participants'').
    \4\ The Plan governs the collection, processing, and 
dissemination on a consolidated basis of quotation information and 
transaction reports in Eligible Securities for each of its 
Participants. This consolidated information informs investors of the 
current quotation and recent trade prices of Nasdaq securities. It 
enables investors to ascertain from one data source the current 
prices in all the markets trading Nasdaq securities. The Plan serves 
as the required transaction reporting plan for its Participants, 
which is a prerequisite for their trading Eligible Securities. See 
Securities Exchange Act Release No. 55647 (April 19, 2007), 72 FR 
20891 (April 26, 2007).
    \5\ See Letter from Emily Kasparov to Brent J. Fields, dated 
October 18, 2017 (``Transmittal Letter'').
    \6\ See, e.g., Transmittal Letter at 1, 3; Securities Exchange 
Act Release No. 73279 (October 1, 2014), 79 FR 60522, (October 7, 
2014) (``October 2014 Non-Display Filing'').
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    The original filing and notice included the following language 
designed to direct Participants to look to the regular fee schedule: 
``but the data may be fee liable under the regular fee schedule.'' \7\ 
Due to what the Participants state was an inadvertent omission, the 
language described in the transmittal letter and included in the public 
notice of the filing was omitted from the text of the Plan.\8\ The 
Participants propose to amend the Plan language to state that the Non-
Display fees do not apply when data is used to create derived data and 
the derived data is used for the purposes of solely displaying the 
derived data, and also to conform the Plan language to the original 
filing and notice directing subscribers to separate provisions of the 
Plan that still apply.\9\ Thus, the following conforming language would 
be added: ``but the data may be fee liable under the regular fee 
schedule.'' \10\ No comments were received on this topic when the 
Thirty-Third Amendment was noticed.
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    \7\ See October 2014 Non-Display Filing, 79 FR at 60525.
    \8\ See Transmittal Letter at 1, 3.
    \9\ See Transmittal Letter at 3.
    \10\ See Addendum 1 to the Thirty-Third Amendment to the Plan. 
The Addendum is marked to show the changes to the text of the Plan 
that the Participants proposed in the Thirty-Third Amendment.
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    Pursuant to Rule 608(b)(3)(i) under Regulation NMS,\11\ the 
Participants designate the Amendment as establishing or changing a fee 
or other charge collected on behalf of the Participants in connection 
with access to, or use of, any facility contemplated by the Nasdaq/UTP 
Plan and are submitting the amendment for immediate effectiveness.
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    \11\ 17 CFR 242.608(b)(3)(i).
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    The Commission is publishing this notice to solicit comments from 
interested persons on the Amendment. Set forth in Sections I and II is 
the statement of the purpose and summary of the Amendments, along with 
the information required by Rules 608(a) and 601(a) under the Act, 
prepared and submitted by the Participants to the Commission.

[[Page 55138]]

I. Rule 608(a)

A. Purpose of the Amendment

1. Background
    Derived data consists of pricing data or other information that is 
created in whole or part from consolidated quotation or last sale 
information and:
     Cannot be reverse-engineered to recreate the information, 
or
     Cannot be used to create other data that is recognized by 
NASDAQ to be a reasonable facsimile for the consolidated quotation or 
last sale information.
    Historically, derived data that contains price data and is based 
upon a single security symbol is fee liable at the underlying product 
rates. If derived real-time volume data for a single security does not 
also include price data, however, it is not fee liable. Additionally, 
derived data that contains price and/or volume data based upon multiple 
security symbols is not fee liable. This approach as to when derived 
data may be considered fee liable is due to the similarity between 
single security derived data containing price data and the consolidated 
quotation or last sale information.
    The application of the above-described derived data policy has been 
in place since at least 2007.\12\ The derived data policy for UTP 
market data paralleled the derived data policy adopted by Nasdaq for 
its proprietary data.\13\
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    \12\ See NASDAQ and UTP Market Data Policies V. 2007-02 
(September 13, 2007). The Plan's derived data policy differs from 
the treatment of derived data by the CTA and CQ Plan. Under the CTA 
and CQ Plan, derived data is never fee liable, even at the 
underlying product rates, regardless of how the derived data is 
used.
    \13\ As part of the Non-Display amendment in October 2014, the 
Participants stated that the fee changes proposed therein would 
``move in the direction of continuing to harmonize fee structures 
under the Plan with fee structures under the CTA Plan, CQ Plan, and 
the OPRA Plan.'' See October 2014 Non-Display Filing, 79 FR at 
60523. This language in the October 2014 Non-Display Filing was 
intended for the Professional Subscriber device fees, the Non-
Display fees, and the per-query fees and did harmonize these aspects 
of the various market data plans' fee structure. It was not intended 
to remove all differences that existed at the time the 2014 Non-
Display Filing was submitted to the Commission and that continue 
today. For instance, the CTA and CQ Plans have a tiered fee 
structure for Professional Subscribers based on the number of 
devices while the Plan has a single tier for Professional Subscriber 
fees. Conversely, the UTP Plan has a tiered fee structure for its 
Cable Television Ticker fee while the CTA and CQ Plan have a single 
tier with a set maximum for the same fee. These differences, along 
with a difference in the various market data plans'approaches to the 
fee liability of derived data, is due to the longstanding historical 
differences between the administration of each market data plan.
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2. Correcting Oversight in 2014 Non-Display Amendments
    In October 2014, the Participants amended the Plan's fee schedule 
to establish fees for Non-Display Uses and to reduce the Subscriber 
fees assessed on Professional Subscribers.\14\ As part of the 
amendment, the Participants made clear in their submission that, 
although Non-Display fees were not applicable when using the data in 
Non-Display to create derived data and the derived data was used for 
the purposes of solely displaying the derived data, the data still 
could be fee liable under the regular fee schedule.\15\ The 
Participants included this language to resolve a potential ambiguity 
between the existing derived data policy and the Non-Display fees. This 
language was designed to make clear that simply creating derived data 
would not result in Non-Display fees because the creation of derived 
data could conceivably fall within the definition of a Non-Display Use. 
Instead, like the derived data policy since at least 2007, derived data 
is meant to be fee liable at the underlying product rates.
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    \14\ See generally October 2014 Non-Display Filing.
    \15\ Id. at 60525.
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    Although this language was a part of the transmittal letter and 
notice for the October 2014 amendments, the language was inadvertently 
left out of the text of the Plan in that amendment. Currently, Exhibit 
2 of the Plan states that ``Non-Display Use does not apply to the 
creation and use of derived data.'' The Participants are proposing to 
correct this inadvertent clerical omission to include in the Plan 
language the detail contained in the October 2014 submission. 
Therefore, the Participants are proposing to amend the text of the 
Plan's fee schedule to insert the Plan's historical derived data policy 
that derived data will be subject to the underlying products fee 
schedule. As such, the use of data will be excepted from the Non-
Display fees when such data is used to create derived data and such 
derived data is used for the purpose of solely displaying the derived 
data.
    The Participants believe that this proposed change will align the 
October 2014 submission and text of the Plan and maintain the 
historical approach of the fee liability of derived data. As such, 
instances where a data recipient is using the data in Non-Display to 
create derived data, such as Indications of Interest or Volume-Weighted 
Average Prices, for the purpose of solely displaying such data, then 
the Non-Display fee schedule does not apply. Such use may be fee liable 
for the Subscriber fees, and other fees such as Access and/or 
Redistributor fees, if applicable.

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of the Amendments

    Because the Participants have designated the Amendment as one 
establishing or changing fee or other charge collected on behalf of the 
Participants in connection with access to, or use of, any facility 
contemplated by the Nasdaq/UTP Plan,\16\ the Amendment became effective 
upon filing with the Commission.
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    \16\ See 17 CFR 242.608(b)(3)(i)
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D. Development and Implementation Phases

    See Item I.C. above.

E. Analysis of Impact on Competition

    The Participants assert that the Amendment does not impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Securities Exchange Act of 1934 (the 
``Act''). Additionally, the Participants do not believe that the 
proposed amendment introduces terms that are unreasonably 
discriminatory for the purposes of Section 11A(c)(1)(D) of the Act. The 
Participants have submitted this amendment to simply correct an 
inadvertent omission in the Plan language to correspond to language 
previously contained in a submission to the Commission. This amendment 
simply aligns the text of the Plan with the language contained in the 
October 2014 submission and the longstanding practice of the Plan's 
application of fees to derived data.
    Furthermore, the Participants believe that this longstanding 
derived data policy is reasonable in order to protect the Plan's 
proprietary rights over consolidated quotation and last sale 
information. As previously stated, derived data that contains price 
data and is based upon a single security symbol is fee liable at the 
underlying product rates. Derived data that contains volume data but no 
price data and derived data that is based upon multiple security 
symbols is not currently fee liable. Such an approach is logical given 
the similarity between derived data that contains price data and is 
based upon a single security symbol to the consolidated quotation and 
last sale information disseminated by the Plan.

[[Page 55139]]

F. Written Understanding or Agreements Relating to Interpretation of, 
or Participation in, Plan

    Not applicable.

G. Approval by Sponsors in Accordance With Plan

    See Item I.C. above.

H. Description of Operation of Facility Contemplated by the Proposed 
Amendments

    Not applicable.

I. Terms and Conditions of Access

    Not applicable.

J. Method of Determination and Imposition, and Amount of, Fees and 
Charges

    The Participants believe that the amendment proposed herein is fair 
and reasonable since it corrects an inadvertent omission in order to 
ensure the continued implementation of the derived data policy that has 
been in place for at least ten years.
    The longstanding derived data policy is reasonable in order to 
protect the Plan's proprietary rights over consolidated quotation and 
last sale information. As previously stated, derived data that contains 
price data and is based upon a single security symbol is fee liable at 
the underlying product rates. Derived data that contains volume data 
but no price data and derived data that is based upon multiple security 
symbols is not currently fee liable. Such an approach is logical given 
the similarity between derived data that contains price data and is 
based upon a single security symbol to the consolidated quotation and 
last sale information disseminated by the Plans.

K. Method and Frequency of Processor Evaluation

    Not applicable.

L. Dispute Resolution

    Not applicable.

II. Rule 601(a)

A. Equity Securities for Which Transaction Reports Shall Be Required by 
the Plan

    Not applicable.

B. Reporting Requirements

    Not applicable.

C. Manner of Collecting, Processing, Sequencing, Making Available and 
Disseminating Last Sale Information

    Not applicable.

D. Manner of Consolidation

    Not applicable.

E. Standards and Methods Ensuring Promptness, Accuracy and Completeness 
of Transaction Reports

    Not applicable

F. Rules and Procedures Addressed to Fraudulent or Manipulative 
Dissemination

    Not applicable.

G. Terms of Access to Transaction Reports

    Not applicable.

H. Identification of Marketplace of Execution

    Not applicable.

III. Solicitation of Comments

    The Commission seeks comments on the Amendment. Interested persons 
are invited to submit written data, views, and arguments concerning the 
foregoing, including whether the proposed Amendment 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 S7-24-89 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number File No. S7-24-89. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies 
of the submission, all written statements with respect to the proposed 
Amendment that are filed with the Commission, and all written 
communications relating to the proposed Amendment 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 10:00 
a.m. and 3:00 p.m. Copies of the Amendment also will be available for 
Web site viewing and printing at the principal office of the Plan. 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 S7-24-89 and should be 
submitted on or before December 11, 2017.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2017-25028 Filed 11-17-17; 8:45 am]
 BILLING CODE 8011-01-P