Document ID: SEC-2010-1721-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-11-12T05:00Z

[Federal Register Volume 75, Number 218 (Friday, November 12, 2010)]
[Notices]
[Pages 69505-69507]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-28461]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63253; File No. SR-NASDAQ-2010-144]

Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by NASDAQ Stock Market, LLC 
Relating To Access Service Fees

November 5, 2010.
    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 October 28, 2010, 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, 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to modify Exchange Rule 7053, related to fees 
governing pricing for NASDAQ members using the NASDAQ Options Market 
(``NOM''), NASDAQ's facility for executing and routing standardized 
equity and index options. Specifically, the Exchange proposes to adopt 
a tiered fee structure for certain Access Services fees.
    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
November 1, 2010.
    The text of the proposed rule change is set forth below. Proposed 
new text is underlined and deleted text is in brackets.
* * * * *

7053. NASDAQ Options Market--Access Services

    The following charges are assessed by Nasdaq for connectivity to 
the NASDAQ Options Market.

(a) Financial Information Exchange (FIX)

------------------------------------------------------------------------
                [Ports]                              [Price]
------------------------------------------------------------------------
[FIX Trading Port]....................  [$500/port/month].
[FIX Port for Services Other than       [$500/port/month].
 Trading].
------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
                  Ports                              Quantity                             Price
----------------------------------------------------------------------------------------------------------------
FIX Trading Port.........................  First 25 ports.............  $500/port/month.
                                           Additional ports above 25..  $250/port/month.
FIX Port for Services Other than Trading.  First 25 ports.............  $500/port/month
                                           Additional ports above 25..  $250/port/month.
----------------------------------------------------------------------------------------------------------------

(b) TradeInfo

     Members not subscribing to the Nasdaq Workstation using 
TradeInfo will be charged a fee of $95 per user per month.

(c) Other Port Fees

    The following port fees shall apply in connection with the use 
of other trading telecommunication protocols:
    [ $500 per month for each port pair.]

------------------------------------------------------------------------
                 Quantity                               Price
------------------------------------------------------------------------
First 25 ports............................  $500 per month for each port
                                             pair.
Additional ports above 25.................  $250 per month for each port
                                             pair.
------------------------------------------------------------------------

* * * * *
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.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 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 amend Rule 7053, titled NASDAQ Options 
Market--Access Services, to create a tiered fee structure for its 
Financial Information Exchange (``FIX'') \3\ Fees and Other Port Fees 
\4\ pricing.
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    \3\ FIX is a protocol used by NOM market participants for order 
entry, modification and cancellation and message transmittal.
    \4\ Other Port Fees refer to non-Fix ports used by NOM market 
participants for order entry and quotes.
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    Currently Rule 7053 contains fees assessed by Nasdaq for 
connectivity to NOM. Access Services fees relate to ports used to: 
Enter orders into the NASDAQ trading systems; receive market data; and 
enter quotes.
    The Exchange proposes to amend the current FIX fees, which are 
currently $500 per month/per port for a Fix Trading Port or a FIX Port 
for Services Other than Trading. The Exchange proposes to assess the 
following tiered fees:

[[Page 69506]]

----------------------------------------------------------------------------------------------------------------
                  Ports                              Quantity                             Price
----------------------------------------------------------------------------------------------------------------
FIX Trading Port.........................  First 25 ports.............  $500/port/month.
                                           Additional ports above 25..  $250/port/month.
FIX Port for Services Other than Trading.  First 25 ports.............  $500/port/month.
                                           Additional ports above 25..  $250/port/month.
----------------------------------------------------------------------------------------------------------------

    These tiered fees would allow NOM members to incur a lower fee 
after the first 25 ports. The NOM member would continue to be assessed 
a $500 per month, per port fee for the first 25 ports.\5\
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    \5\ According to the Exchange, the tiered fee structure is being 
proposed in light of the nature of the NOM architecture, which makes 
it necessary for liquidity providers in options to utilize more 
ports in comparison to liquidity providers on the NASDAQ Stock 
Market. Liquidity providers on NOM may provide liquidity in up to 
140,000 different symbols versus approximately 8,500 symbols in 
equities. Moreover, several options symbols for a given underlying 
may be directly correlated and may require updates to a large number 
of symbols simultaneously. For example, a liquidity provider in SPY 
options may need to update all 2401 SPY options simultaneously due 
to a change in the price of SPY in the equity market.
    Further, a NASDAQ Stock Market member, who is both an equity and 
options member, is required to have a distinct port(s) for each 
market and would be billed according to whether the particular port 
was assigned to the equity or options infrastructure. See e-mail 
from Angela Dunn, Assistant General Counsel, Exchange, to Richard 
Holley, Assistant Director, and Terri Evans, Special Counsel, 
Division of Trading and Markets, Commission, on November 4, 2010.
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    The Exchange is also proposing to amend the Other Port Fee pricing. 
Currently, NOM members are assessed the $500 per month fee for each 
port pair. The Exchange proposes to assess the following tiered fees:

------------------------------------------------------------------------
                 Quantity                               Price
------------------------------------------------------------------------
First 25 ports............................   $500 per month for each
                                             port pair.
Additional ports above 25.................  $250 per month for each port
                                             pair.
------------------------------------------------------------------------

    These tiered fees would allow NOM members to incur a lower fee 
after the first 25 port pairs.\6\ The NOM member would continue to be 
assessed a $500 per month, per port [sic] fee for the first 25 port 
pairs. The Exchange does not intend to amend the TradeInfo fee.\7\
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    \6\ Id.
    \7\ Currently, NOM members not subscribing to the Nasdaq 
Workstation using TradeInfo are charged a fee of $95 per user per 
month.
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    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
November 1, 2010.
2. Statutory Basis
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(4) of the Act,\9\ 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 NASDAQ operates or controls.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed amendments to Rule 7053 to 
established tiered pricing for FIX and Other Port Fees pricing is 
reasonable to incentivize members by proving [sic] a discount for the 
quantity of ports or port pairs to which they subscribe. Also, the 
Exchange believes that the pricing proposal is equitable because all 
NOM members are assessed the same rates.
2. Statutory Basis [sic]
    NASDAQ believes that the proposed rule changes are consistent with 
the provisions of Section 6 of the Act,\10\ in general, and with 
Section 6(b)(4) of the Act,\11\ 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 NASDAQ operates or controls.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes the proposed amendments to Rule 7053 to 
establish tiered pricing for FIX and Other Port Fees pricing is 
reasonable to incentivize members by proving a discount for the 
quantity of ports or port pairs to which they subscribe. Also, the 
Exchange believes that the pricing proposal is equitable because all 
NOM members are assessed the same rates.

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.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\12\ 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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    \12\ 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 e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2010-144 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2010-144. This 
file number should be included on the subject line if e-mail 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

[[Page 69507]]

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 a.m. and 3 p.m. Copies of such 
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 information that 
you wish to make publicly available. All submissions should refer to 
File Number SR-NASDAQ-2010-144 and should be submitted on or before 
December 3, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-28461 Filed 11-10-10; 8:45 am]
BILLING CODE 8011-01-P