Opinion ID: 6105520
Heading Depth: 3
Heading Rank: 2

Heading: Departure from agency precedent without

Text: adequate explanation ICE also argues that in concluding the Wireless Bandwidth Connection and the Wireless Data Connection are subject to its jurisdiction, the SEC departed from two agency precedents without providing a reasoned explanation. The first precedent to which ICE points is a 2007 order that dealt with a “neutral communications service that allow[ed] Nasdaq members and non-members to route orders to one another.” Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving a Proposed Rule Change, as Modified by Amendments No. 1 and 2, to Remove Provisions Governing the Operation of the ACES System, 72 Fed. Reg. 46118 (Aug. 2007). The SEC held the system was not a “facility” within the meaning of the Exchange Act: “the . . . system is not linked 26 with the Exchange’s core systems” and “[i]t is not possible for an order to be routed to the Nasdaq Market Center via the . . . system.” Id. at 46119. The same points, ICE argues, describe the Wireless Bandwidth Connection and the Wireless Data Connection. Therefore, the argument goes, the SEC was obligated to acknowledge the 2007 Order and either follow it or explain its reason for departing from it. This argument fails because, as the SEC points out, the 2007 Order, which the petitioners never cited in their filings with the Commission, did not purport to set forth a rule that a “facility” must be linked directly to an exchange. The lack of a direct connection was significant in that case because the system under review merely routed orders between broker-dealers, making it easier for them to fulfill their best-execution obligations. Neither of the Wireless Connections involves the mere routing of orders between broker-dealers, so the 2007 Order is simply irrelevant. ICE’s second example of a purported departure from precedent involves a 2008 Order regarding an index dissemination service through which the Nasdaq calculated and disseminated index information based upon publicly available data. Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change as Modified by Amendment Nos. 1 and 2 Thereto to Remove from Rule 7019 the Fees for Receiving Index Values, 73 Fed. Reg. 66952 (Nov. 2008). Although that service is unlike either of the Wireless Services, ICE points to the following wording in the 2008 Order: “If, however, Nasdaq were to propose to tie pricing for the index dissemination service to exchange services . . . Nasdaq would have to file a proposed rule change with the Commission.” Id. at 66953. Based upon this snippet, ICE argues the Final Order here under review departed from agency precedent by holding the Wireless Connections are 27 “facilities” even though their pricing is not in any way tied to “exchange services.” There is nothing to this argument either. In the 2008 Order, having concluded that the index dissemination service was not a “facility,” the SEC unremarkably pointed out that the service might be one if the Nasdaq were later to tie its pricing to a service that is a “facility.” That has nothing to do with our case, in which the SEC determined the Wireless Connections independently come within the definition of “facility” and are themselves properly characterized as “exchange services.”