Document ID: SEC-2014-2103-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2014-12-15T05:00Z

[Federal Register Volume 79, Number 240 (Monday, December 15, 2014)]
[Notices]
[Pages 74150-74152]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29240]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73789; File No. SR-NASDAQ-2014-120]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify NASDAQ Rule 7049 Fees

December 8, 2014.
    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 3, 2014, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a 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 fees assessed under NASDAQ Rule 7049 
for the NASDAQ InterACT surveillance tool. While the changes proposed 
herein are effective upon filing, the Exchange has designated that the 
amendments be operative on January 2, 2015.
    The text of the proposed rule change is available at 
nasdaq.cchwallstreet.com at NASDAQ's principal office, 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, NASDAQ 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 those 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 parts 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 7049 to increase the fee and 
related fee cap for subscription to the NASDAQ InterACT service. 
InterACT is a real-time compliance tool accessed through an existing 
Nasdaq Workstation or Weblink ACT 3.0 user account, which assists a 
member firm with supervision of its trade activity reported to the 
FINRA/NASDAQ Trade Reporting Facility, and with its supervision of 
trade throughs to help in complying with Rule 611 of Regulation NMS.\3\ 
The Exchange currently assesses a fee of $300 per month, per user, for 
the first three users, and $100 per month, per user, for each 
additional user, with a maximum fee of $1,500 per month, per member 
firm. The Exchange began offering the service in 2009 \4\ and has not 
increased fees since its adoption, notwithstanding that the Exchange's 
costs in offering and supporting the service have increased. 
Accordingly, NASDAQ is proposing to increase the fee assessed for the 
service to $400 per month, per user, with an increased fee cap of 
$2,400 per month, per member firm. The Exchange is also proposing to 
eliminate the reduced fee rate of $100 per user, per month assessed for 
the fourth through ninth subscriptions.\5\ The Exchange notes that 
offering the discounted fee for the fourth through ninth user 
subscriptions was designed to encourage member firms to purchase more 
subscriptions, thus ensuring broad use of the service and, ultimately, 
NASDAQ's ability to offer the service long-term. NASDAQ believes that 
the reduced fee has had the desired effect and, accordingly, is 
assessing the same fee for all subscriptions through the sixth, at 
which point member firms will have reached the new fee cap. Lastly, 
upon launch of InterACT in May 2009, NASDAQ offered the service at no 
cost for sixty days. Accordingly, NASDAQ is

[[Page 74151]]

proposing to delete text from the rule that concerns the expired free 
period.
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    \3\ 17 CFR 242.611.
    \4\ Securities Exchange Act Release No. 59786 (April 17, 2009), 
74 FR 18769 (April 24, 2009) (SR-NASDAQ-2009-033).
    \5\ Subscriptions beyond the ninth are provided at no cost 
because the subscribing member firm has met the $1,500 monthly fee 
cap.
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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 with 
Sections 6(b)(4) and 6(b)(5) of the Act,\7\ 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, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. This proposal is reasonable, equitable and not 
unfairly discriminatory for the reasons noted below.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    NASDAQ believes that the proposed increases to the fee and fee cap 
are reasonable because they will allow NASDAQ to realign the fee 
assessed for the service with the costs it incurs in offering it, while 
also ensuring that the service continues to provide NASDAQ with a 
profit. Eliminating the reduced fee for the fourth through ninth 
subscriptions is reasonable because NASDAQ believes that it has served 
its purpose by attracting an adequate number of subscribers to the 
service to ensure its viability. As a consequence, NASDAQ believes that 
such incentive pricing is no longer needed.
    NASDAQ believes that the increased fees and elimination of 
incentive pricing is an equitable allocation because NASDAQ is 
assessing the fee increase uniformly among subscribers up to the fee 
cap, which is also increased. NASDAQ notes that it incurs the same 
costs in offering a subscription, regardless of the number of member 
subscriptions. As such, increasing the fee and applying it uniformly to 
all subscriptions without any distinction based on the number of 
subscriptions a member firm has, up to the increased fee cap, better 
aligns the fees paid with the costs incurred by NASDAQ in offering the 
service.
    The Exchange believes that the proposed changes are not unfairly 
discriminatory because they now apply a uniform fee per subscription, 
thus eliminating a distinction made in the fee assessed based on the 
number of subscriptions held. The Exchange notes that some member firms 
may incur a disproportionate increase in fees as compared to others 
under the proposed change as a result of the elimination of the 
incentive pricing provided for the fourth through ninth subscriptions 
and increase in the fee cap. Under the proposed change, a member firm 
that has four to six subscriptions will experience a greater per 
subscription fee increase than a member firm with three or fewer 
subscriptions, whereas subscriptions in excess of six under the 
proposed change exceed the new fee cap and are therefore offered at no 
cost. The Exchange does not believe that the changes are unfairly 
discriminatory because they eliminate a distinction in the fee assessed 
based on NASDAQ's desire to ensure wide acceptance of the service, and 
better align the fee assessed for a subscription with the costs that 
NASDAQ incurs in providing it. NASDAQ notes that it is retaining the 
fee cap, albeit at a higher level, which will ensure that no member 
firm pays more than $2,400 per month.
    Lastly, the proposed elimination of the rule text concerning the 
expired free period is designed to clarify the rule text and avoid any 
potential confusion among market participants that may arise if the 
language were to remain.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ does not believe that the proposed rule changes will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.\8\ NASDAQ notes 
that it 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 carefully balance the fees it assesses with the costs incurred to 
remain competitive with other exchanges. To the extent NASDAQ's fees 
are too high or another exchange's products and services provide 
greater value, NASDAQ will likely lose subscriber revenue. As such, 
NASDAQ believes that the degree to which fee changes in this market may 
impose any burden on competition is extremely limited. In this 
instance, NASDAQ is proposing to increase the fees for a service for 
the first time since it was offered in 2009 to realign the fee assessed 
for the subscription to the service with the costs it incurs in 
offering it, and to ensure that the service provides NASDAQ with a 
profit. Moreover, the Exchange does not believe that the fee increase 
imposes an unnecessary burden on competition because the service is 
optional and member firms may develop their own alternatives to the 
service or purchase similar functionality from third parties. 
Accordingly, NASDAQ does not believe that the proposed changes will 
impose any unnecessary burden on competition.
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    \8\ 15 U.S.C. 78f(b)(8).
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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 change has become effective pursuant to Section 
19(b)(3)(A) of the Act,\9\ and paragraph (f) \10\ of Rule 19b-4, 
thereunder. 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f).
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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-2014-120 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 SR-NASDAQ-2014-120. 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

[[Page 74152]]

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 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-2014-
120, and should be submitted on or before January 5, 2015.

    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. 2014-29240 Filed 12-12-14; 8:45 am]
BILLING CODE 8011-01-P