[Federal Register Volume 78, Number 146 (Tuesday, July 30, 2013)]
[Notices]
[Pages 45993-45996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18282]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70036; File No. SR-NASDAQ-2013-097]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Offer a New Dedicated OUCH Port Infrastructure Connectivity Option and
Adopt Related Fees
July 25, 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 July 23, 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 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 the
Substance of the Proposed Rule Change
NASDAQ is proposing to offer a new Dedicated OUCH Port
Infrastructure connectivity option and adopt related fees under Rule
7015(g). The Exchange will implement the new service in October 2013,
and will provide public notice thereof at least five days prior to the
implementation date. NASDAQ will accept subscriptions to the service
immediately; however, it will not assess the monthly subscription fee
until the service is offered in October 2013. NASDAQ will begin
assessing the installation fee immediately, but waive the fee for all
subscriptions received by August 15, 2013.\3\
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\3\ The Exchange notes that the planned implementation timeframe
is designed to provide it with adequate time to purchase and install
new hardware, and to program and test the system.
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The text of the proposed rule change is below. Proposed new
language is italicized; proposed 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
[[Page 45994]]
Options Market LLC. For related options fees for Access Services refer
to Chapter XV, Section 3 of the Options Rules.
(a)-(f) No change.
(g) Other Port Fees
Remote Multi-cast ITCH Wave Ports
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Recurring
Description Installation monthly
fee fee
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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
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The following port fees shall apply in connection with the use of
other trading telecommunication protocols:
$500 per month for each port pair, other than Multicast
ITCH[supreg] data feed pairs, for which the fee is $1000 per month for
software-based TotalView-ITCH or $2,500 per month for combined
software- and hardware-based TotalView-ITCH.
An additional $200 per month for each port used for
entering orders or quotes over the Internet.
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 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.
* * * * *
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 offer a new connectivity option, and adopt
related installation and subscription fees, which will provide member
firms with remote access to dedicated server hardware for OUCH port
connectivity \4\ to the NASDAQ System. Currently, NASDAQ distributes a
member firm's OUCH ports among shared servers in order to facilitate
all member firms' connectivity to NASDAQ. These servers act as
switches, channeling the message traffic member firms send through
their ports to the System. NASDAQ is proposing to provide individual
member firms with access to a dedicated OUCH port server from NASDAQ.
This service is optional and is available to all NASDAQ member firms.
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\4\ An ``OUCH port'' is a connectivity port designated to accept
only OUCH protocol messaging. See http://www.nasdaqtrader.com/Trader.aspx?id=OUCH for a description of the OUCH protocol. Ports
are available to member firms for the purpose of transacting on the
Exchange system. Unlike other protocols, the OUCH protocol only
provides a method for subscribers to send orders and receive status
updates on those orders (see, e.g. http://www.nasdaqtrader.com/Trader.aspx?id=RASH).
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NASDAQ is proposing to offer the service for a one-time
installation fee of $5,000 per subscription and a monthly subscription
fee of $5,000. The monthly subscription fee is in addition to the
standard per port fee assessed a member firm for the OUCH ports
assigned to the Dedicated OUCH subscription \5\ and any other
connectivity costs currently assessed member firms.\6\ The proposed
fees are associated with the additional capital expenditures (hardware)
and operating expenditures (personnel) associated with offering,
supporting and maintaining this service. NASDAQ notes that the
dedicated server assigned to a member firm for each subscription is
limited to a maximum of 30 OUCH ports. As a consequence, a member firm
with an excess of 30 OUCH ports that it would like assigned to
dedicated infrastructure must have more than one Dedicated OUCH
subscription.\7\ NASDAQ is proposing to assess the monthly subscription
fee beginning with the rollout of the service in October 2013. NASDAQ
is proposing to assess the installation fee effective immediately, but
waive the fee for subscriptions received by August 15, 2013.
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\5\ The OUCH ports assigned to the service may be currently
subscribed ports, newly-subscribed, or a combination thereof.
\6\ All the fees a member firm is currently assessed will
continue, unaffected by a subscription to the Dedicated OUCH
service.
\7\ In such a case, a member firm may assign its OUCH ports to
its multiple dedicated servers in any ratio it wishes, so long as no
one server has more than 30 OUCH ports assigned to it.
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NASDAQ notes that member firms will not have physical access to
their dedicated server within the NASDAQ data center and thus cannot
make any modifications to the server. All port servers (including
servers used for this service) are owned and operated by NASDAQ. NASDAQ
will assign the same type of server to Dedicated OUCH subscribers as is
provided to existing OUCH port users on shared servers.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\8\ in general, and with Section
6(b)(5) of the Act \9\ in particular, in that the proposal is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest. The Exchange notes that the
servers under the proposed new service are owned and operated by the
Exchange. A subscribing member firm will not have the ability to modify
the infrastructure in any way. In addition, the proposed dedicated
infrastructure will not change the process by which order message
traffic reaches the System. Rather, it merely provides certainty to a
subscribing member firm that its OUCH ports are not on shared
infrastructure.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange also believes the proposed rule change is consistent
with Section 6(b)(4) of the Act \10\ 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, and it does not unfairly
[[Page 45995]]
discriminate between customers, issuers, brokers or dealers.
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\10\ 15 U.S.C. 78f(b)(4).
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The Exchange determined that the proposed fees are reasonable based
on market demand as well as the costs associated with purchasing
hardware (capital expenditures) and supporting and maintaining the
infrastructure (operating expenditures) for this Dedicated OUCH
connectivity option for member firms. To the extent such costs are
covered, the proposed fees may provide NASDAQ with a profit. Member
firms are not obligated to subscribe to this service and may continue
to access the NASDAQ System through shared servers at no additional
cost. As such, the Exchange believes that if a member firm determines
that the installation and subscription fees are not cost-efficient for
its needs or does [sic] not provide sufficient value to the firm, it
may elect not to subscribe to the service and continue to access the
System, unchanged. NASDAQ notes that member firms may subscribe to OUCH
ports at any time, in addition to or in replacement of, existing means
of accessing NASDAQ. NASDAQ also believes that waiver of the
installation fee is reasonable as it promotes member firms'
subscription to the connectivity option, thus providing NASDAQ with a
successful launch of the new service option while also promoting a
wider use of the connectivity among member firms that might not be
initially realized without the waiver.
The Exchange believes that the proposed fees are equitable and not
unfairly discriminatory because member firms that voluntarily elect to
subscribe to this service will be charged the same fees. Furthermore,
this service is optional and is available to all NASDAQ member firms.
With Dedicated OUCH, member firms can develop a tailored trading
solution by controlling their message traffic in order to optimize
their trading strategies. In this regard, some member firms may find
little benefit in having [sic] dedicated server, and may continue their
use of the shared servers, unchanged. The Exchange has no plans to
eliminate shared servers and require subscription to the dedicated
infrastructure. NASDAQ also believes that the waiver of the
installation fee is equitable and not unfairly discriminatory because
it is offered to all member firms and it is applied equally to all
member firms that subscribe by a date certain.
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. NASDAQ notes that
the connectivity option is wholly optional and therefore member firms
are not compelled to subscribe. Moreover, NASDAQ believes that the
proposed rule change is pro-competitive as it adds an additional
connectivity option available to NASDAQ members.
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
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 \11\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing.
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\13\ 17 CFR 240.19b-4(f)(6).
\14\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The Exchange proposes to offer a waiver of the installation fee for
those who subscribe to this new connectivity option by August 15, 2013.
NASDAQ's waiver of the installation fee will benefit those who purchase
this new connectivity option by August 15, 2013, and will allow NASDAQ
to begin without delay the process of purchasing hardware and
installation so that subscribers may use the service beginning with its
commencement in October 2013. The proposed rule change presents no
novel issues, and waiver of the operative delay provides benefits to
NASDAQ and member firms subscribing to the service. Therefore, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\15\
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\15\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 15 U.S.C. 78s(b)(2)(B).
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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 [email protected]. Please include
File Number SR-NASDAQ-2013-097 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-2013-097. 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
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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 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-2013-097, and should be submitted on or before
August 20, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18282 Filed 7-29-13; 8:45 am]
BILLING CODE 8011-01-P