Document ID: SEC-2021-1627-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2021-11-22T05:00Z

[Federal Register Volume 86, Number 222 (Monday, November 22, 2021)]
[Notices]
[Pages 66379-66381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25346]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93580; File No. SR-NASDAQ-2021-089]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Retire Certain Order Entry Protocols and Related Fees, at Equity 7, 
Section 115

November 16, 2021.
    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 November 4, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II 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 the Exchange's transaction [sic] 
credits and charges at Equity 7, Section 115, as described further 
below. The text of the proposed rule change is available on the 
Exchange's website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at the principal office of the Exchange, and at the Commission's 
Public Reference Room.

[[Page 66380]]

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 this proposal is for the Exchange to discontinue the 
following order entry protocols: (i) QIX OTCBB,\3\ effective as of 
November 8, 2021; (ii) CTCI \4\ (except for CTCI MFUND, which will 
remain active), effective as of November 22, 2021; and (iii) BRUT FIX 
and SUMO FIX, effective as of November 22, 2021. The Exchange also 
proposes to amend Equity 7, Section 115 of the Exchange's Rules to 
reflect the retirement of these protocols and their related fees.
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    \3\ The QIX Order entry protocol is a Nasdaq proprietary 
protocol that allows automated, real-time trading. See https://www.nasdaqtrader.com/Trader.aspx?id=qix. QIX OTCBB, in particular, 
is utilized to enter orders on FINRA's Over the Counter Bulletin 
Board (``OTCBB'') platform.
    \4\ The Computer-to-Computer Interface (``CTCI'') is a method by 
which Nasdaq subscribers can enter transactions, such as Nasdaq 
Market Center orders and trade reports, from their computer systems 
to Nasdaq's computer systems without using a Nasdaq Workstation. See 
https://www.nasdaqtrader.com/Trader.aspx?id=ctci. In this instance, 
the Exchange proposes to discontinue use of two varieties of CTCI--
CTCI/TCP and CTCI/MQ that are used for the FINRA/Nasdaq Trade 
Reporting Facility Carteret (``FINRA/Nasdaq TRF Carteret'') and 
ACES. As is discussed below, participants will use the FIX order 
entry protocol with the FINRA/Nasdaq TRF Carteret and ACES, on a 
going-forward basis.
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    In Equity 7, Section 115(a), the Exchange proposes to delete 
references to two QIX-related fees that relate to QIX OTCBB: (i) A 
$1,200/port/month fee for a FINRA trading port (plus optional 
proprietary quote information port); and (ii) a $1,000/port/month fee 
for a FINRA unsolicited message port.\5\ The Exchange proposes to 
delete these fees because QIX OTCBB is used for interacting with the 
FINRA OTCBB platform, which FINRA plans to decommission, effective 
November 5, 2021.\6\ Nasdaq has provided prior notice of the pending 
retirement of QIX OTCBB.\7\ As of the date of this filing, less than 20 
QIX OTCBB ports (FINRA trading ports, at $1,200 per port per month) 
remain active, such that the impact of the proposal to discontinue 
offering QIX OTCBB will have little practical effect. The availability 
of Nasdaq's proprietary QIX trading ports and disaster recovery ports 
will be unaffected by this proposal as QIX will continue to be 
available for use in sending orders and receiving messages from Nasdaq 
(at no charge).
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    \5\ An ``unsolicited message port'' is used to separate the 
message traffic for FINRA exceptions which are no longer applicable 
due to rule changes. There are no active users or configured ports 
under this category.
    \6\ See https://www.finra.org/filing-reporting/market-transparency-reporting/reminder-upcoming-retirement-otc-bulletin-board-otcbb; https://www.finra.org/filing-reporting/market-transparency-reporting/upcoming-retirement-otc-bulletin-board-otcbb. 
See also FINRA Regulatory Notice 21-28 (August 6, 2021), available 
at https://www.finra.org/sites/default/files/2021-08/Regulatory-Notice-21-28.pdf.
    \7\ See Nasdaq Equity Trader Alert 2020-28 Regulatory Notice 21-
28 (August 6, 2021), available at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2020-28 [sic].
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    The Exchange proposes to discontinue the CTCI/TCP and CTCI/MQ 
protocols for communicating trade information to the FINRA/Nasdaq TRF 
Carteret and trade and order information to ACES \8\ because it plans 
to replace these protocols with the FIX (FIX Port for services other 
than Trading and FIX Trading Port, respectively) order entry protocol, 
going forward. Again, Nasdaq \9\ has provided prior notice to market 
participants of the impending transition from CTCI/TCP and CTCI/MQ to 
FIX. As of the date of this filing, less than 15 CTCI/TCP and CTCI/MQ 
ports remain active, such that the impact of the proposal to 
discontinue offering CTCI/TCP & CTCI/MQ will have little practical 
effect. The Exchange has already transitioned most other subscribers to 
FIX. Going forward, the Exchange proposes to continue to offer CTCI for 
use by participants in the Nasdaq Fund Network \10\ (``CTCI MFUND''), 
due to the fact that FIX does not provide the capabilities that these 
participants require for use with the Nasdaq Fund Network. The Exchange 
proposes to amend Equity 7, Section 115(c), to specify that going 
forward, fees relating to CTCI will be limited to CTCI MFUND.
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    \8\ ACES is an order routing system that allows user to route 
orders between order-entry firms and market makers that have 
established relationships. See http://nasdaqtrader.com/Trader.aspx?id=ACES. The Exchange notes that when customers 
transition from CTCI to FIX for purposes of communicating with ACES 
or the FINRA/Nasdaq TRF Carteret, they will realize a cost savings 
of $25 per port per month and $75 [sic] per port per month, 
respectively.
    \9\ See Nasdaq Equity Trader Alert 2021-80 (October 14, 2021), 
available at http://www.nasdaqtrader.com/TraderNews.aspx?id=%20ETA2021-80; Nasdaq Equity Trader Alert 2021-59 
(August 9, 2021), available at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2021-59; Nasdaq Equity Trader Alert 2021-18 
(March 11, 2021), available at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2021-18; Nasdaq Equity Trader Alert 2020-28 
(May 21, 2020), available at http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2020-28.
    \10\ The Nasdaq Fund Network facilitates the collection and 
dissemination of performance NAV, valuation, and strategy-level 
reference data for over 35,000 investable products. See https://www.nasdaq.com/solutions/nasdaq-fund-network.
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    Finally, the Exchange proposes to discontinue offering BRUT FIX and 
SUMO FIX, as these are older varieties of the FIX order entry protocol 
that are legacies of prior application acquisitions and are now 
obsolete as their specifications have been integrated into the standard 
FIX protocol specification and the standard Nasdaq INET applications. 
Going forward, market participants that utilize BRUT FIX and SUMO FIX 
will be required to utilize FIX Trading Ports instead at the same price 
per port per month. Given that only a small number of market 
participants continue to use BRUT FIX and SUMO FIX ports, Nasdaq 
contacted these participants directly, as early as December 2020, to 
inform them of the impending transition. As of the date of this filing, 
only three ports remain, none which are in active use. Thus, the impact 
of the proposal to discontinue offering BRUT FIX and SUMO FIX will have 
little or no practical effect.
2. Statutory Basis
    The Exchange believes that its proposals are consistent with 
Section 6(b) of the Act,\11\ in general, and further the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that 
they provide for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility, and are not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The proposals are also 
consistent with Section 11A of the Act relating to the establishment of 
the national market system for securities.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that its proposals to discontinue offering 
the QIX OTCBB, CTCI/TCP, CTCI/MQ, BRUT FIX, and SUMO FIX order entry 
protocols and to delete related fees are reasonable. In the case of QIX 
OTCBB, the proposal is reasonable given that FINRA plans to 
decommission the OTCBB platform to which market

[[Page 66381]]

participants use QIX OTCBB to connect, such that after this 
decommissioning, there will be no further basis for offering or 
charging fees for use of QIX OTCBB ports. The other proposals, to 
discontinue offering and charging fees for ports using the CTCI/TCP, 
CTCI/MQ, BRUT FIX, and SUMO FIX order entry protocols are reasonable 
because these order entry protocols are associated with legacy 
applications and have become obsolete and the Exchange wishes to 
transition market participants to the newer and more capable FIX order 
entry protocol. The Exchange proposes to continue offering and charging 
fees for the CTCI MFUND order entry protocol because customers that 
utilize it cannot currently attain their existing functionality through 
the use of FIX.
    The Exchange believes that it is an equitable allocation of its 
fees to cease charging customers for ports that connect to discontinued 
platforms or that use order entry protocols that have become obsolete 
and will be replaced with newer and more capable protocols.
    The proposals are not unfairly discriminatory to existing users of 
the order entry protocols that the Exchange will eliminate. The 
Exchange continually invests in new technologies to serve its 
customers' growing and evolving needs. At the same time it deploys new 
technologies, the Exchange must also periodically cease to support, or 
retire, technologies that have become obsolete and are no longer widely 
used. To mitigate the effect of transitions to new technologies in this 
instance, the Exchange has provided ample prior notice to market 
participants and has assisted them in the transition process. As of the 
date of this filing, Nasdaq has already transitioned most of its 
customers from CTCI/TCP, CTCI/MQ, BRUT FIX, and SUMO FIX to using the 
FIX order entry protocol, such that the proposals will little to no 
practical impact on them. Given that FINRA plans to decommission OTCBB, 
Nasdaq's proposal to eliminate QIX OTCBB should have no effect on them.

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

    The Exchange does not believe that its proposed rule changes will 
impose any burden on competition. Again, the proposals to eliminate the 
QIX OTCBB order entry protocol will merely help to effectuate FINRA's 
elimination of the OTCBB platform, while the proposed elimination of 
the CTCI/TCP, CTCI/MQ, BRUT FIX, and SUMO FIX order entry protocols 
will serve to transition market participants to a newer and more 
capable alternative to these protocols. Participants should suffer no 
adverse competitive impact from the elimination of these order entry 
protocols.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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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 change 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 [email protected]. Please include 
File Number SR-NASDAQ-2021-089 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-NASDAQ-2021-089. 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 website (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 website 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. 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 SR-NASDAQ-2021-089 and should be submitted 
on or before December 13, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25346 Filed 11-19-21; 8:45 am]
BILLING CODE 8011-01-P