Document ID: SEC-2014-0016-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market, LLC
Posted Date: 2014-01-06T05:00Z

[Federal Register Volume 79, Number 3 (Monday, January 6, 2014)]
[Notices]
[Pages 692-695]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-31515]

[[Page 692]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71198; File No. SR-NASDAQ-2013-161]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Fees Assessed for Connectivity to the Exchange Under Rule 7015, 
and To Eliminate Fees Assessed Under Rules 7033 and 7059

December 30, 2013.
    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 20, 2013, 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 proposes to amend fees assessed for connectivity to the 
Exchange under Rule 7015, and to eliminate fees assessed under Rules 
7033 and 7059. NASDAQ is also making two minor technical changes to 
Rule 7015(g). NASDAQ will implement the fee change effective January 2, 
2014.
    The text of the proposed rule change is below. Proposed new 
language is italicized; 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 Chapter XV, Section 3 
of the Options Rules.
    (a) No change.
    (b) Financial Information Exchange (FIX)

------------------------------------------------------------------------
                   Ports                                Price
------------------------------------------------------------------------
FIX Trading Port..........................  $550 [500]/port/month.
FIX Port for Services Other than Trading..  $500/port/month.
------------------------------------------------------------------------

    (c) No change.
    (d) New Nasdaq Workstation

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Nasdaq Workstation Trader..............  $575 [475] per user per month
                                          (including: data entitlement
                                          package; the Trade Reporting
                                          File Upload service, which
                                          allows subscribing members to
                                          upload multiple trade reports
                                          in batches to Automated
                                          Confirmation Transaction
                                          Service (``ACT''); and the ACT
                                          Reject Scan service, which
                                          provides a list of all of a
                                          member's rejected ACT trade
                                          entries and a copy of each
                                          rejected trade report form
                                          submitted to ACT).
Nasdaq Workstation Post Trade..........  See Rule 7015(e).
------------------------------------------------------------------------

    (e) Specialized Services Related to FINRA/NASDAQ Trade Reporting 
Facility

------------------------------------------------------------------------
 
------------------------------------------------------------------------
CTCI fee...............................  $575/month
WebLink ACT or Nasdaq Workstation......  $525 [425.00]/month (full
                                          functionality) or
Post Trade.............................  $275 [225.00]/month (up to an
                                          average of twenty transactions
                                          per day each month) (For the
                                          purposes of this service only,
                                          a transaction is defined as an
                                          original trade entry, either
                                          on trade date or as-of
                                          transactions per month.)
                                         A subscription includes: the
                                          Trade Reporting File Upload
                                          service, which allows
                                          subscribing members to upload
                                          multiple trade reports in
                                          batches to ACT; and the ACT
                                          Reject Scan service, which
                                          provides a list of all of a
                                          member's rejected ACT trade
                                          entries and a copy of each
                                          rejected trade report form
                                          submitted to ACT.
ACT Workstation........................  $525/logon/month.
------------------------------------------------------------------------

    (f) No change.
    (g) Other Port Fees

                    Remote Multi-Cast ITCH Wave Ports
------------------------------------------------------------------------
                                           Installation      Recurring
               Description                      fee         monthly fee
------------------------------------------------------------------------
MITCH Wave Port at Secaucus, NJ.........          $2,500          $7,500
MITCH Wave Port at Weehawken, NJ........           2,500           7,500
MITCH Wave Port at Newark, NJ...........           2,500           7,500
------------------------------------------------------------------------

    The following port fees shall apply in connection with the use of 
other trading telecommunication protocols:
     $550[500] per month for each port pair, other than 
Multicast ITCH[supreg] data feed pairs, for which the fee is $1,000 per 
month for software-based TotalView-ITCH or $2,500 per month for 
combined software- and hardware-based TotalView-ITCH, and TCP ITCH data 
feed pairs, for which the fee is $750 per month.
     An additional $200 per month for each port used for 
entering orders or quotes over the Internet.

[[Page 693]]

     An additional $600 per month for each port used for market 
data delivery over the Internet.
Dedicated OUCH Port Infrastructure
    The Dedicated OUCH Port Infrastructure subscription will not be 
implemented until the first quarter of 2014. The Exchange will provide 
public notice thereof at least five days prior to the implementation 
date.
    The Dedicated OUCH Port Infrastructure subscription allows a member 
firm to assign up to 30 of its OUCH ports to a dedicated server 
infrastructure for its exclusive use. A Dedicated OUCH Port 
Infrastructure subscription is available to a member firm for a fee of 
$5,000 per month, which is in addition to the standard fees assessed 
for each OUCH port. A one-time installation fee of $5,000 is assessed 
subscribers for each Dedicated OUCH Port Server subscription.
    [NASDAQ is waiving the $5,000 installation fee for all 
subscriptions received through August 15, 2013.]
    (h) No change.
* * * * *

7033. Reserved[Trade Reporting File Upload

    The Trade Reporting File Upload service allows subscribing members 
to upload multiple trade reports in batches to the Automated 
Confirmation Transaction (ACT) service via the Nasdaq Workstation or 
WeblinkACT 2.0.
    The Trade Reporting File Upload service is available to members for 
a fee of $25 per user, per month.]
* * * * *

7059. Reserved[ACT Reject Scan

    ACT Reject Scan service provides a subscribing member with a list 
of all of its rejected Automated Confirmation Transaction Service (ACT) 
trade entries and a copy of each rejected trade report form submitted 
to ACT.
    ACT Reject Scan service is available to members at no cost 
beginning October 1, 2012 and for a fee of $75 per user, per month 
beginning November 1, 2012.]
* * * * *

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
    The purpose of the proposed rule change is to amend certain fees 
under Rule 7015 relating to Access Services and eliminate stand-alone 
fees assessed for services provided under Rules 7033 and 7059, which 
have been offered as add-on services to a Nasdaq Workstation 
(``Workstation'') or Weblink ACT (``Weblink'') subscription but now 
will be included in all Workstation and Weblink subscriptions.
    The Exchange is proposing to amend Rules 7015(d) and (e) to 
increase fees assessed for subscription to the Workstation and Weblink 
to reflect the addition of the Trade Reporting File Upload and ACT 
Reject Scan services, which are currently offered as add-on services to 
a Workstation or Weblink subscription and will now be offered with 
every such subscription. The Trade Reporting File Upload service allows 
a member to upload multiple trade reports in batches to the Automated 
Confirmation Transaction (``ACT'') service via a Workstation or 
Weblink. The ACT Reject Scan service provides a subscriber with a list 
of all of its rejected ACT trade entries and a copy of each rejected 
trade report form submitted to ACT.
    Currently, the Exchange assesses a fee of $25 per user, per month 
for subscription to the Trade Reporting File Upload service under Rule 
7033, and a fee of $75 per user, per month for subscription to the ACT 
Reject Scan service under Rule 7059. NASDAQ is proposing to increase 
the fee for subscription to the Workstation under Rule 7015(d) from 
$475 to $575 per user, per month, and increase the fee for subscription 
to Weblink from $425 to $525 per user, per month for full functionality 
and from $225 to $275 per user, per month for a transaction-limited 
subscription. As a consequence of including Trade Reporting File Upload 
and ACT Reject Scan services with every Workstation and Weblink 
subscription, NASDAQ is eliminating the separate rule text describing 
these services found under Rule 7033 and 7059, respectively, and 
including the descriptive text from those rules under Rules 7015(d) and 
(e). The Exchange notes that it last increased fees for subscription to 
the Workstation in August 2006,\3\ raising the fee from $435 to $475 
per user, per month, and last increased fees for subscription to 
Weblink ACT in January 2012,\4\ raising the fee from $375 to $425 per 
user, per month for full functionality and $200 to $225 per user, per 
month for a transaction-limited subscription.
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    \3\ See Securities Exchange Act Release No. 54500 (September 25, 
2006), 71 FR 58026 (October 2, 2006) (SR-NASDAQ-2006-025).
    \4\ See Securities Exchange Act Release No. 66288 (February 1, 
2012), 77 FR 6164 (February 7, 2012) (SR-NASDAQ-2012-017).
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    NASDAQ is also amending fees under Rules 7015(b) and (g), which 
relate to trading port connectivity. Specifically, NASDAQ is proposing 
to increase the fee assessed under Rule 7015(b) for Financial 
Information Exchange (``FIX'') trading ports. FIX trading ports allow 
member firms to enter, modify and cancel orders in the NASDAQ System 
and receive Drop reports of executions. NASDAQ is proposing to increase 
the fee assessed for a FIX trading port from $500 to $550 per port, per 
month. NASDAQ is also proposing to increase the fee assessed for 
trading port pairs under Rule 7015(g), other than Multicast ITCH, 
TotalView-ITCH, and TCP ITCH port pairs.\5\ Currently, the Exchange 
assesses a fee of $500 per month, per port pair and NASDAQ is proposing 
to increase the fee to $550 per month, per port pair. NASDAQ notes that 
it last increased both of the trading port fees under Rules 7015(b) and 
(g) in August 2009, raising the fees from $400 to $500 per port (or 
port pair), per month.\6\
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    \5\ The $500 port pair fee under Rule 7015(g) provides 
subscription to an OUCH, RASH, or Drop port pair.
    \6\ See Securities Exchange Act Release No. 60546 (August 20, 
2009), 74 FR 43184 (August 26, 2009) (SR-NASDAQ-2009-058).
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    The Exchange is also proposing to make a technical correction to 
the trading port rule text under Rule 7015(g) and to delete text from 
Rule 7015(g), which relates to a time-limited waiver of the Dedicated 
OUCH Port Infrastructure installation fees that has since expired.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\7\ in general, and Section 
6(b)(4) of the Act,\8\ 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

[[Page 694]]

customers, issuers, brokers or dealers. The proposed increases to the 
Workstation and Weblink fees are reasonable because they reflect the 
added value that subscribing members receive from the inclusion of the 
Trade Reporting File Upload and ACT Reject Scan services in every 
subscription. NASDAQ notes that the combined value of the two services 
under the current rule is $100 per user, per month and NASDAQ is 
proposing to increase the fees for the Workstation and unlimited 
Weblink subscription by an equal amount. NASDAQ believes the lower 
increase in the transaction-limited Weblink fee of $50 per user, per 
month is reasonable and not unfairly discriminatory because those 
subscribers will likewise have limited use of the Trade Reporting File 
Upload and ACT Reject Scan services. NASDAQ notes that an existing 
subscriber to the Workstation or unrestricted Weblink that also 
subscribes to the Trade Reporting File Upload and ACT Reject Scan add 
on services will see no increase in the fees assessed for the services 
received, and subscribers to the transaction-limited Weblink service 
that also subscribe to the Trade Reporting File Upload and ACT Reject 
Scan services will see a decrease in the total fees assessed for the 
add-on services. In contrast, current subscribers to the Workstation or 
Weblink that subscribe to no add-on services or a single add-on service 
will experience a fee increase. NASDAQ believes that it is reasonable 
and not unfairly discriminatory to increase fees for such subscribers 
to the Workstation and Weblink because the subscribers are receiving 
additional services valued in the amount of the fee increase and, 
consequently will derive benefit from the addition of the enhancements. 
NASDAQ notes that Workstation and Weblink subscribers that determine 
that the enhancements do not provide benefit to support the additional 
cost of the subscriptions may alternatively subscribe to third party 
front end systems or develop front end applications of their own.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4).
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    NASDAQ believes that the proposal to increase fees for trading 
ports under Rules 7015(b) and (g) is reasonable [sic] not unfairly 
discriminatory because the fee increases will realign the cost of 
administering and enhancing the connectivity options offered by the 
services with the revenue generated by the fee, which have diverged 
since the fees were last increased in August 2009.\9\ In particular, 
NASDAQ believes that the proposed fees 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. Moreover, 
NASDAQ believes that the proposed changes to Rules 7015(b) and (g) 
constitute equitable allocations of fees because, under each individual 
rule, all member firms would be charged the same fee and receive the 
same number of access ports. As such, NASDAQ believes that the proposed 
increase in port fees under Rules 7015(b) and (g) are both equitably 
allocated and reasonable.
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    \9\ Supra note 6.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ 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. The increased 
Workstation and Weblink fees are reflective of the addition of the 
Trade Reporting File Upload and ACT Reject Scan services and the 
benefit member firms receive from these enhancements. As noted, the 
proposed increase in fees for subscription to trading ports will 
realign the cost of administering and enhancing the service with the 
revenue generated by the fees, which have diverged since the fees were 
last increased in August 2009.\10\ The Exchange must, from time to 
time, increase fees as general costs associated with offering services 
increase. The burden of covering these increased costs is most 
appropriately born by the users of the service. NASDAQ notes that, if 
the proposed port fees are set too high, given the competitive nature 
of the market for execution and routing services, market participants 
could simply opt to connect with market centers other than the Exchange 
to access liquidity available on NASDAQ by directing order flow to the 
other market centers that are required to route to NASDAQ if it has 
posted the best available price.
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    \10\ Id.
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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,\11\ and paragraph (f) \12\ of Rule 19b-4, 
thereunder.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f).
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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.

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-2013-161 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-2013-161. 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 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;

[[Page 695]]

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-2013-161, and should be submitted on or before January 27, 2014.

    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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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-31515 Filed 1-3-14; 8:45 am]
BILLING CODE 8011-01-P