[Federal Register Volume 78, Number 170 (Tuesday, September 3, 2013)]
[Notices]
[Pages 54336-54338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21297]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70269; File No. SR-NASDAQ-2013-106]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Amend Rule 7026
August 27, 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 August 16, 2013, 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, 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
The Exchange proposes a rule change to NASDAQ Rule 7026
(Distribution Models) regarding Managed Data Solutions (``MDS''), to
indicate that this option is available for non-display use only. This
would conform non-display MDS in Rule 7026(b) with non-display MDS on
PSX, the equity market of NASDAQ OMX PHLX LLC (``Phlx''), and on NASDAQ
OMX BX, Inc. (``BX'').
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.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 this proposal is to amend Rule 7026(b) to indicate
that NASDAQ MDS is available for non-display use only. This would
conform non-display MDS on NASDAQ with recent immediately effective
proposals establishing non-display MDS on PSX and on BX.\3\
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\3\ See Securities Exchange Release Nos. 69182 (March 19, 2013),
78 FR 18378 (March 26, 2013) (SR-Phlx-2013-28) (notice of filing and
immediate effectiveness implementing MDS on PSX) (the ``PSX MDS
filing''); and 69041 (March 5, 2013), 78 FR 15791 (March 12, 2013)
(SR-BX-2013-018) (notice of filing and immediate effectiveness
implementing MDS on BX) (the ``BX MDS filing'').
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No other changes to Rule 7026 are proposed or made by this filing.
MDS has been available on NASDAQ since 2010,\4\ and is, in all
material respects, similar to MDS on PSX and on BX, except that MDS is
currently available for display on NASDAQ. This proposal aligns and
conforms the non-display nature of MDS for all three Self-Regulatory
Organization (``SRO'') exchanges under the umbrella of the NASDAQ OMX
Group Inc., (``NASDAQ OMX Group''), namely NASDAQ, PSX, and BX.
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\4\ See Securities Exchange Release No. 63276 (November 8,
2010), 75 FR 69717 (November 15, 2010) (SR-NASDAQ-2010-138) (notice
of filing and immediate effectiveness implementing MDS on NASDAQ)
(the ``NASDAQ MDS filing''). Other markets have also implemented a
managed data solution. See, for example, Securities Exchange Release
No. 65678 (November 3, 2011), 76 FR 70178 (November 10, 2011) (SR-
ISE-2011-67) (notice of filing and immediate effectiveness
implementing a managed data solution on ISE).
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[[Page 54337]]
MDS is a pricing and administrative option available on NASDAQ to
firms seeking simplified market data administration for MDS products
containing TotalView, Level 2, and Open View (known as ``Depth
Data'').\5\ The MDS pricing and administrative option is reflected in
the established NASDAQ fee schedule in Rule 7026(b) for Distributors,
non-professional, and professional subscribers \6\ of NASDAQ Depth Data
that provide datafeed solutions such as an Application Programming
Interface (API) or similar automated delivery solutions to recipients
with limited entitlement controls (e.g., usernames and/or passwords)
(``Managed Data Recipients''). A Distributor must, however, first agree
to reformat, redisplay and/or alter the NASDAQ Depth Data prior to
retransmission, but not to affect the integrity of the NASDAQ Depth
Data and not to render it inaccurate, unfair, uninformative,
fictitious, misleading, or discriminatory. MDS is an optional
distribution model for any retransmission datafeed product containing
NASDAQ Depth Data offered by a Distributor where the Distributor
manages and monitors, but does not necessarily control, the
information. However, the Distributor does maintain contracts with the
Managed Data Recipients and is liable for any unauthorized use by the
Managed Data Recipients. The Managed Data Recipients may not distribute
the information outside of their organization and may only use the
information for internal, non-display use.
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\5\ MDS on PSX and on BX includes TotalView only, and as such,
MDS on NASDAQ is priced higher than on PSX and on BX. As noted in
this proposal, there is no change to the fee structure, or any other
aspect of MDS, on NASDAQ.
\6\ The term ``Distributor'' shall have the same meaning as set
forth in NASDAQ Rule 7019(c). The term ``non-professional'' shall
have the same meaning as set forth in NASDAQ Rule 7011(b). MDS fees
do not change, and remain the same: An administrative fee of $1,500/
month per Distributor; a professional subscriber fee of $300/month
per subscriber; and a non-professional fee of $60/month per
subscriber.
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The Exchange believes that this proposal is reasonable, proper, and
desirable. First, it aligns and conforms the equities exchanges market
data products on NASDAQ, PSX, and BX. Second, NASDAQ is not aware of
Managed Data Recipients using MDS in display; rather they use the
Enhanced Display Solution (``EDS'') for the ability to display data.
Separation of MDS and EDS makes it easier for users to understand and
control the use of these functionalities. Third, MDS continues to give
Managed Data Recipients a reduction in fees for a specific non-display
use scenario. And fourth, MDS provides Distributors and Subscribers a
new unit of count option; smaller firms receive a value added service
at a reduced cost to help lower even further the potential barriers to
entry.\7\
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\7\ Moreover, MDS may ease the administrative burden on
Subscribers by refocusing administrative costs from smaller
recipients to larger Distributors that are better able to absorb the
cost through economies of scale.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder, including the
requirements of Section 6(b) of the Act.\8\ In particular, the Exchange
believes the proposed rule change is consistent with the Section
6(b)(5) \9\ requirements that the rules of an exchange be designed to
promote just and equitable principles of trade, to prevent fraudulent
and manipulative acts, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and to perfect the mechanism for a free and open market
and a national market system, and, in general, to protect investors and
the public interest.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that, in addition to being consistent with
the Act, this proposal is beneficial for market participants. First,
the proposal aligns and conforms Market Data Recipients on NASDAQ with
recipients of similar data on PSX and BX, so that Recipients of MDS on
all three exchanges are treated similarly. Second, NASDAQ is not aware
of Managed Data Recipients using MDS in display; rather they use EDS
for the ability to display data. Separation of MDS and EDS makes it
easier for users to understand and control the use of these
functionalities. Third, MDS continues to give Managed Data Recipients a
reduction in fees for a specific non-display use scenario. And fourth,
MDS provides Distributors and Subscribers a new unit of count option;
smaller firms receive a value added service at a reduced cost to help
lower even further the potential barriers to entry.
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. To the contrary,
MDS has been available on NASDAQ for more than two years as a display
option, and has, as proposed herein, been available on PSX and BX as a
non-display option. Thus, combined with the very limited scope of this
proposal, the Exchange believes that there is no burden on inter- or
intra-exchange competition.
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 Exchange believes that the foregoing proposed rule change may
take effect upon filing with the Commission pursuant to Section
19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \11\
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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) 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, as amended, 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
[[Page 54338]]
Number SR-NASDAQ-2013-106 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-2013-106. 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 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-2013-106, and
should be submitted on or before September 24, 2013.
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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21297 Filed 8-30-13; 8:45 am]
BILLING CODE 8011-01-P