[Federal Register Volume 79, Number 5 (Wednesday, January 8, 2014)]
[Notices]
[Pages 1399-1401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00072]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71228; File No. SR-Phlx-2013-128]
Self-Regulatory Organizations; The NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Further
Describe the Application of Fees Assessed for Connectivity to the
Carteret Test Environment under Chapter VIII of the Exchange's Pricing
Schedule
January 2, 2014.
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 December 23, 2013, NASDAQ OMX PHLX LLC (``Phlx'' 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
The Exchange proposes a rule change to further describe the
application of fees assessed pursuant to subparagraph (d) of ``Testing
Facilities'' under Chapter VIII of the Exchange's Pricing Schedule. The
Exchange is also eliminating outdated text relating to the
applicability of the fees assessed for use and connectivity to the
Testing Facilities.
The text of the proposed rule change is below. Proposed new
language is italicized. Proposed deletions are in brackets.
* * * * *
NASDAQ OMX PHLX LLC \1\ PRICING SCHEDULE
ALL BILLING DISPUTES MUST BE SUBMITTED TO THE EXCHANGE IN WRITING
AND MUST BE ACCOMPANIED BY SUPPORTING DOCUMENTATION. ALL DISPUTES MUST
BE SUBMITTED NO LATER THAN SIXTY (60) DAYS AFTER RECEIPT OF A BILLING
INVOICE, EXCEPT FOR DISPUTES CONCERNING NASDAQ OMX PSX FEES,
PROPRIETARY DATA FEED FEES AND CO-LOCATION SERVICES FEES. AS OF JANUARY
3, 2011, THE EXCHANGE
[[Page 1400]]
WILL CALCULATE FEES ON A TRADE DATE BASIS.
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\1\ PHLX[supreg] is a registered trademark of The NASDAQ OMX Group,
Inc.
* * * * *
VIII. NASDAQ OMX PSX FEES
* * * * *
Testing Facilities[[dagger]]
The Exchange operates two test environments. One is located in
Ashburn, Virginia and the other in Carteret, New Jersey. Unless
otherwise noted, reference to the ``Testing Facility'' applies to both
environments.
(a)-(c) No change.
(d) Subscribers to the Testing Facility located in Carteret, New
Jersey shall pay a fee of $1,000 per hand-off, per month for connection
to the Testing Facility. The hand-off fee includes either a 1Gb or 10Gb
switch port and a cross connect to the Testing Facility. Subscribers
shall also pay a one-time installation fee of $1,000 per hand-off,
which is waived for all installations ordered prior to March 31, 2014.
The connectivity provided under this rule also provides connectivity to
the other test environments of NASDAQ OMX BX, Inc. and The NASDAQ Stock
Market LLC.
[[dagger] Testing Facility fees will be waived for the period ending on
the sixth full calendar month following the launch of NASDAQ OMX PSX.]
* * * * *
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 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
The Exchange is proposing to amend the Phlx Pricing Schedule to
more fully describe the application of the newly-adopted fee \3\
assessed for direct connectivity to the Testing Facility \4\ test
environment located in Carteret, New Jersey (``Carteret''). The Testing
Facility provides subscribers with a virtual Exchange System test
environment that closely approximates the production environment and on
which they may test their automated systems that integrate with the
Exchange. The Exchange recently developed a test environment located in
Carteret that provides NASDAQ OMX PSX (``PSX'') \5\ equity trade
testing functionality. The new test environment was developed together
with equity test environments of the Phlx's sister exchanges, NASDAQ
OMX BX, Inc. and The NASDAQ Stock Market LLC, also located at Carteret,
New Jersey (collectively with PSX, the ``Equity Markets'').
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\3\ See Securities Exchange Act Release No. 71036 (December 11,
2013), 78 FR 76350 (December 17, 2013) (SR-Phlx-2013-116).
\4\ See http://www.nasdaqtrader.com/Trader.aspx?id=TestingFacility for a description of the Testing
Facility.
\5\ PSX is the Phlx equity market.
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The Exchange is proposing to add language to subparagraph (d) of
``Testing Facilities'' under Chapter VIII of the Exchange's Pricing
Schedule that was erroneously omitted when the fee was originally
adopted.\6\ The new rule text explains that a firm that is a member of
more than one of the Equity Markets may access the test environments of
each of the Equity Markets of which it is a member through a single
connectivity subscription under the rule. The Exchange notes that each
of the Equity Markets has identical installation and hand-off fees for
Carteret connectivity and these fees relate to the physical connection
to the hardware infrastructure that houses all three test environments
of the Equity Markets. Members of the Equity Markets must separately
pay port fees to connect to the individual test environments of the
Equity Markets of which it is a member within the hardware
infrastructure housing them.\7\ Therefore, a firm that is a member of
multiple Equity Markets is not charged the Carteret connectivity fees
for a hand-off under each of the identical rules of such markets, but
rather is assessed a single market's Carteret connectivity fees.
Consequently, a member organization of PSX using the Carteret test
environment may be assessed the connectivity fee under another Equity
Markets' rules of which it is a member, yet pay the PSX port fee to
connect to the PSX test environment. Similarly, a member organization
may subscribe to Carteret connectivity under the Phlx Pricing Schedule
and not have an obligation to pay the same fee under the rules of the
other Equity Markets of which it is a member, but have an obligation to
pay those markets' port fees. The Exchange notes that, in adopting the
identical fee for Carteret connectivity, NASDAQ OMX BX, Inc. included
rule text consistent with the rule text proposed herein.\8\
Accordingly, the Exchange is adding rule text to Carteret connectivity
fee rule to reflect that the connectivity provided by the rule also
provides access to the test environments of NASDAQ OMX BX, Inc. and The
NASDAQ Stock Market LLC.
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\6\ Supra note 3.
\7\ Phlx Pricing Schedule, Chapter VIII Testing Facilities
subparagraph (a), NASDAQ Rule 7030(d)(1)(B), and BX Rule 7030(d)(1).
\8\ See Securities Exchange Act Release No. 71035 (December 11,
2013), 78 FR 76344 (December 17, 2013) (SR-BX-2013-058).
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The Exchange is also eliminating text from the Testing Facilities
rule that relates to a general waiver of fees under the rule, which was
effective with the launch of PSX and ended six months thereafter. PSX
launched in October 2010,\9\ and consequently the fee waiver period has
expired. Accordingly, the Exchange is removing the text relating to
this fee waiver period.
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\9\ See http://www.nasdaqtrader.com/Tradernews.aspx?id=eta2010-56.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \10\ in general, and with Section 6(b)(5) of the
Act,\11\ in particular. The Exchange believes the proposal furthers the
objectives of Section 6(b)(5) of the Act \12\ in that it is designed to
promote just and equitable principles of trade, 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 and is not designed to permit unfair discrimination between
customer, issuers, brokers and dealers. The Exchange is proposing to
add clarifying language to the rule, which was erroneously omitted when
the rule was adopted and further describes the application of the rule.
Moreover, the proposed new rule text is consistent with the identical
rule of NASDAQ OMX BX, Inc. and how fees are assessed under that rule.
Last, the Exchange is proposing to eliminate outdated rule text from
the rule, which serves no purpose. Accordingly, the Exchange believes
that it is consistent with the protection of investors and the public
[[Page 1401]]
interest to avoid potential market participant confusion that may be
caused by the omission of the proposed rule text and the inclusion of
outdated rule text.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
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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 rule change clarifies how fees will be assessed to a firm that
is a member of more than one of the Equity Markets and makes clear that
a member organization may gain access to the test environments of the
other Equity Markets through a subscription under the rule. Members of
multiple Equity Markets are assessed the same fee for Carteret
connectivity and must pay the port fees of each of the Equity Markets
to gain access to such markets' test environments. In addition, the
proposed change eliminates rule text that relates to a fee waiver that
has since expired. As a consequence, the Exchange does not believe that
the proposed rule change is impactful to competition in any respect.
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 has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) \14\ thereunder.
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 \15\ and subparagraph (f)(6) of Rule
19b-4 thereunder.\16\
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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 the Exchange to give the Commission written notice of the
Exchange's 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.
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\17\ Id.
\18\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the 30-day operative
delay. The Exchange notes that such waiver will allow the Exchange to
immediately add language to its rule text that was incorrectly omitted
from a previous rule change, thereby clarifying its rules and avoiding
potential market participant confusion.\19\ The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest as the proposal is
designed to avoid potential investor confusion regarding the Exchange's
rules and provide clarification to the public. For these reasons, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\20\
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\19\ See SR-Phlx-2013-128, Item 7.
\20\ 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 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-Phlx-2013-128 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-Phlx-2013-128. 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-Phlx-2013-128,
and should be submitted on or before January 29, 2014.
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\21\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00072 Filed 1-7-14; 8:45 am]
BILLING CODE 8011-01-P