Document ID: SEC-2015-0114-0001
Agency: sec
Document Type: Notice
Title: Self-RegulatoryOrganizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2015-01-20T05:00Z

[Federal Register Volume 80, Number 12 (Tuesday, January 20, 2015)]
[Notices]
[Pages 2766-2768]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00703]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74045; File No. SR-BX-2015-003]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Regarding 
the Extranet Access Fee

January 13, 2015.
    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 5, 2015, NASDAQ OMX BX, Inc. (``BX'' 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 amend BX Rule 7025 (Extranet Access Fee) 
of the Exchange's Pricing Schedule entitled ``Extranet Access Fee'' 
(``Pricing Schedule''), as well as to clarify the applicability of the 
Extranet Access Fee and thereby conform it to the equivalent fee of 
other markets.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxbx.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
    The purpose of the proposal is to amend BX Rule 7025 of the 
Exchange's Pricing Schedule, as well as to clarify the applicability of 
the Extranet Access Fee and thereby conform it to the equivalent fee of 
other markets.\3\
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    \3\ The Exchange, NASDAQ OMX PHLX LLC (``Phlx''), and The NASDAQ 
Stock Market LLC (``NASDAQ'') are self-regulatory organizations 
(``SROs'') that are wholly owned subsidiaries of The NASDAQ OMX 
Group, Inc. (``NASDAQ OMX''). NOM (a facility of NASDAQ), BX, BX 
Options (a facility of BX), Phlx, and PSX (a facility of Phlx) 
(together with the Exchange known as the ``NASDAQ Markets''), are 
independently filing proposals to conform their respective Extranet 
Access Fee rules to NASDAQ Rule 7025.
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    Specifically, the Exchange proposes to modify BX Rule 7025 to 
indicate that certain non-Exchange Customer Premises Equipment 
(``CPE'') Products shall be assessed a monthly access fee of $1,000 per 
CPE. The Exchange also proposes to conform the Extranet Access Fee to 
that of another market, specifically NASDAQ Rule 7025, by substituting 
``recipient'' for ``client organization'' and also indicating that if

[[Page 2767]]

an extranet provider uses multiple CPE Configurations \4\ to provide 
market data feeds to any recipient the monthly fee shall apply to each 
such CPE Configuration. This proposal conforms the Extranet Access Fee 
in BX Rule 7025 to the equivalent fee in NASDAQ Rule 7025.
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    \4\ As defined in BX Rule 7025, a ``Customer Premises Equipment 
Configuration'' means any line, circuit, router package, or other 
technical configuration used by an extranet provider to provide a 
direct access connection to the Exchange market data feeds to a 
recipient's site.
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    The Extranet Access Fee was introduced a decade ago on NASDAQ Rule 
7025.\5\ The Extranet Access Fee was introduced about five years ago on 
BX Rule 7025, and is currently set at $750 per month.\6\ By this 
proposal, the Exchange normalizes the cost and structure of its 
Extranet Access Fee to that of the equivalent decade-old NASDAQ fee.
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    \5\ See Securities Exchange Act Release Nos. 50483 (October 1, 
2004), 69 FR 60448 (October 8, 2004) (SR-NASD-2004-118) 
(establishing the Extranet Access Fee on NASDAQ); and 71199 
(December 30, 2013), 79 FR 686 (January 6, 2014) (SR-NASDAQ-2013-
159) (notice of filing and immediate effectiveness increasing the 
Extranet Access Fee to $1,000).
    \6\ See Securities Exchange Act Release Nos. 59615 (March 20, 
2009), 74 FR 14604 (March 31, 2009) (SR-BX-2009-005) (establishing 
the Extranet Access Fee on BX); and 71841 (April 1, 2014), 79 FR 
19129 (April 7, 2014) (SR-BX-2014-015) (notice of filing and 
immediate effectiveness reinstating the Extranet Access Fee to 
$750). The Extranet Access Fee was also established on PSX. See 
Securities Exchange Act Release No. 71236 (January 6, 2014), 79 FR 
1906 (January 10, 2014) (SR-Phlx-2014-01) (notice of filing and 
immediate effectiveness establishing the Extranet Access Fee on PSX, 
and clarifying that no fee is charged at the time of the filing).
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    BX Rule 7025 currently indicates that extranet providers that 
establish a connection with the Exchange to offer direct access 
connectivity to market data feeds shall be assessed a monthly access 
fee of $750 per recipient client organization Customer Premises 
Equipment (CPE) Configuration. As noted, this proposal indicates the 
same fee as NASDAQ Rule 7025, namely $1,000 per CPE Configuration, and 
adds to BX Rule 7025 verbatim clarifying language from NASDAQ Rule 
7025. As proposed, BX Rule 7025 will read as follows: ``Extranet 
providers that establish a connection with the Exchange to offer direct 
access connectivity to market data feeds shall be assessed a monthly 
access fee of $1,000 per recipient Customer Premises Equipment 
(``CPE'') Configuration. If an extranet provider uses multiple CPE 
Configurations to provide market data feeds to any recipient, the 
monthly fee shall apply to each such CPE Configuration. For purposes of 
this Rule 7025, the term ``Customer Premises Equipment Configuration'' 
shall mean any line, circuit, router package, or other technical 
configuration used by an extranet provider to provide a direct access 
connection to the Exchange market data feeds to a recipient's site. No 
extranet access fee will be charged for connectivity to market data 
feeds containing only consolidated data. For purposes of this rule, 
consolidated data includes data disseminated by the UTP SIP. Extranet 
providers that establish a connection with the Exchange pursuant to 
this Rule 7025 as well as a connection pursuant to BX Options Chapter 
XV, Section 3 shall be assessed a total monthly access fee of $1,000 
per recipient CPE Configuration.'' The proposal thus conforms BX Rule 
7025 to NASDAQ Rule 7025, and makes them substantively identical.\7\ 
The proposal also makes it clear that if an extranet provider 
establishes a connection on BX (equities) as well as on BX Options, the 
extranet provider will not need to pay a double $1,000 monthly access 
fee per CPE, but rather only one total monthly access fee of $1,000 per 
CPE.
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    \7\ The Exchange notes that while BX Rule 7025 and NASDAQ Rule 
7025 each contain some language particular to the relevant exchange, 
with this proposal the language of the two rules is substantively 
identical.
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    The modified proposed Extranet Access Fee will, as on NASDAQ, be 
used to help support the Exchange's costs associated with maintaining 
multiple extranet connections with multiple providers. These costs 
include those associated with overhead and technology infrastructure, 
administrative, maintenance and operational costs. Since the inception 
of Extranet Access there have been numerous network infrastructure 
improvements and administrative controls enacted. Additionally, the 
Exchange has implemented automated retransmission facilities for most 
of its data clients that benefit extranet clients by reducing 
operational costs associated with retransmissions.
    As the number of extranets has increased, the management of the 
downstream customers has expanded and the Exchange has had to ensure 
appropriate reporting and review processes, which has resulted in a 
greater cost burden on the Exchange over time. The proposed fee will 
also help to ensure that the Exchange is better able to closely review 
reports and uncover reporting errors via audits thus minimizing 
reporting issues.\8\ The network infrastructure has increased in order 
to keep pace with the increased number of products, which, in turn, has 
caused an increased administrative burden and higher operational costs 
associated with delivery via extranets.
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    \8\ The Exchange will inform extranet providers of their 
reporting responsibilities via its public Web site.
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    Thus, subsequent to the proposal extranet providers that establish 
a connection with the Exchange to offer direct access connectivity to 
market data feeds shall be assessed a monthly access fee of $1,000 per 
CPE Configuration. If, as discussed below, an extranet provider uses 
multiple CPE Configurations to provide market data feeds to any 
recipient, the monthly fee shall apply to each such CPE Configuration.
    The Exchange proposes two clarifications to conform the language of 
BX Rule 7025 to that of NASDAQ Rule 7025. Specifically, the Exchange 
proposes to indicate that if an extranet provider uses multiple CPE 
Configurations to provide market data feeds to any recipient, the 
monthly fee shall apply to each such CPE Configuration; and to 
substitute ``recipient'' for ``client organization.'' For purposes of 
this rule, consolidated data includes data disseminated by the UTP SIP. 
These proposed clarifications should serve to reduce any confusion as 
to the applicability of the Extranet Access Fee. Moreover, the 
clarifications would make the Exchange's Extranet Access Fee in BX Rule 
7025 work the same as the equivalent fee in NASDAQ Rule 7025, and 
complete the effort to conform the two rules.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and with Section 6(b)(4) 
of the Act,\10\ 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 the 
Exchange operates or controls.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that its proposal to amend BX Rule 7025, and 
to clarify the applicability of the Extranet Access Fee if an extranet 
provider has a connection on both the equity side through BX and the 
options side through BX options conforms the fee on the BX markets and 
the equivalent fee on Phlx and NASDAQ and is consistent with the Act.
    All similarly situated extranet providers, including the Exchange 
operating its own extranet, that establish an extranet connection with 
the Exchange to access market data feeds from the Exchange are subject 
to the same fee structure. The fee will help the

[[Page 2768]]

Exchange to offset some of the rising overhead and technology 
infrastructure, administrative, maintenance and operational costs it 
incurs in support of the service.
    If such costs are covered, the service may provide the Exchange 
with a profit. As such, the Exchange believes that the proposed fee is 
reasonable and notes that this proposal conforms to similarly-situated 
Extranet Access Fee rules on Phlx and NASDAQ. The extranet costs are 
separate and different from the colocation facility that is able to 
recoup these fees by charging for servers within the associated data 
centers. Additionally, the Exchange believes that the proposed change 
is equitable and not unreasonably discriminatory. The monthly fee is 
assessed uniformly to all extranet providers that establish a 
connection with the Exchange to offer direct access connectivity to 
market data feeds, and is the same for all at $1,000 per recipient CPE 
Configuration. Thus, any burden arising from the fees is necessary in 
the interest of promoting the equitable allocation of a reasonable fee. 
Moreover, firms make decisions on how much and what types of data to 
consume on the basis of the total cost of interacting with the Exchange 
or other markets and, of course, the Extranet Access Fee is but one 
factor in a total platform analysis.
    Additionally, BX Rule 7025 will be clarified by stating that if an 
extranet provider uses multiple CPE Configurations to provide market 
data feeds to any recipient, the monthly fee shall apply to each such 
CPE Configuration, and by replacing non-conforming language. This 
clarification should serve to reduce any confusion as to the 
applicability of this fee.
    The proposal 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 the Exchange operates or 
controls, and is consistent with the Act.

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 necessary or 
appropriate in furtherance of the purposes of the Act, as amended.
    The proposed fees are applied uniformly among extranet providers, 
which are not compelled to establish a connection with the Exchange to 
offer access connectivity to market data feeds. For these reasons, any 
burden arising from the fees is necessary in the interest of promoting 
the equitable allocation of a reasonable fee. Additionally, firms make 
decisions on how much and what types of data to consume on the basis of 
the total cost of interacting with the Exchange or other exchanges and, 
of course, the Extranet Access Fee is but one factor in a total 
platform analysis.

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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\11\ the Exchange 
has designated this proposal as establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization on any person, 
whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

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-BX-2015-003 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BX-2015-003. 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; 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-BX-2015-003, 
and should be submitted on or before February 10, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-00703 Filed 1-16-15; 8:45 am]
BILLING CODE 8011-01-P