[Federal Register Volume 79, Number 66 (Monday, April 7, 2014)]
[Notices]
[Pages 19129-19131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07638]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71841; File No. SR-BX-2014-015]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Impose an
Extranet Access Fee
April 1, 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 March 28, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``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 to modify the extranet access fee (``Extranet
Access Fee'') set forth in BX Rule 7025. BX will implement the proposed
revised fee on April 1, 2014.
[[Page 19130]]
The text of the proposed rule change is below. Proposed new
language is italicized; proposed deletions are bracketed.\3\
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\3\ Changes are marked to the rules of NASDAQ OMX BX, Inc. found
at http://nasdaqomxbx.cchwallstreet.com
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* * * * *
7025. Extranet Access Fee
Extranet providers that establish a connection with the Exchange
to offer direct access connectivity to market data feeds shall [not]
be assessed a monthly access fee of $750 per client organization
Customer Premises Equipment (``CPE'') Configuration. For purposes of
this Rule 7025, the term ``Customer Premises Equipment
Configuration'' shall mean any line, circuit, router package, or
other technical configuration used by an extranet provider to
provide a direct access connection to the Exchange market data feeds
to a recipient's site. No extranet access fee will be charged for
connectivity to market data feeds containing only consolidated data.
For purposes of this rule, consolidated data includes data
disseminated by the UTP SIP.
* * * * *
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 Exchange is proposing to impose an Extranet Access Fee as set
forth in BX Rule 7025. BX Rule 7025 currently does not include a
monthly access fee per recipient Customer Premises Equipment (``CPE'')
Configuration.\4\ Specifically, the Exchange proposes to charge a $750
per recipient CPE Configuration per month.
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\4\ See Securities Exchange Act Release No. 71506 (February 7,
2014), 79 FR 8769 (February 13, 2014) (SR-BX-2014-008). As defined
in BX Rule 7025, a ``Customer Premises Equipment Configuration''
means any line, circuit, router package, or other technical
configuration used by an extranet provider to provide a direct
access connection to the Exchange market data feeds to a recipient's
site.
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As discussed in a recent filing,\5\ initially an Extranet Access
Fee of $750 per recipient CPE Configuration per month was put in place
in 2009,\6\ but the service was provided for free during the first year
of operation of the Exchange's venue for trading cash equities. At the
end of the one-year period, the initial fee of $750 per recipient CPE
Configuration per month remained in place, but it inadvertently was
never billed.
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\5\ See Securities Exchange Act Release No. 71506 (February 7,
2014), 79 FR 8769 (February 13, 2014) (SR-BX-2014-008). See also
Securities Exchange Act Release No. 59615 (March 20, 2009), 74 FR
14604 (March 31, 2009) (SR-BX-2009-005).
\6\ See Securities Exchange Act Release No. 59615 (March 20,
2009), 74 FR 14604 (March 31, 2009) (SR-BX-2009-005).
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Subsequently, the Exchange filed to increase the fee of $750 per
recipient CPE Configuration per month to $1,000.\7\ Shortly after
increasing the fee, the Exchange discovered that the Extranet Access
Fee had never been billed so the Exchange determined to file and to
eliminate the fee [sic]. The Exchange believed that since recipients
had yet to actually pay an Extranet Access Fee, it would be burdensome
for recipients to start-off paying $1,000 per recipient CPE
Configuration per month. However, the Exchange has now had the
necessary time to assess the need for the Extranet Access Fee and
determined that it cannot completely absorb its costs associated with
maintaining multiple extranet connections with multiple providers.
Accordingly, the Exchange now seeks to charge recipients the fee
originally proposed in 2009 of $750 per recipient CPE Configuration per
month.
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\7\ See supra note 3.
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As stated above, this fee increase will be used to help support the
Exchange's costs associated with maintaining multiple extranet
connections with multiple providers. These costs include those
associated with overhead and technology infrastructure, administrative,
maintenance and operational costs. Since the inception of accessing
data through extranets, there had been numerous network infrastructure
improvements and administrative controls enacted. The Exchange has
additionally implemented compressed TCP/IP options, which allows
customers to use reduced bandwidth and [sic] lower carrying costs.
Additionally, the Exchange has implemented automated retransmission
facilities for most of its data clients that benefit extranet clients
by reducing operational costs associated with retransmissions.
As the number of extranets has increased, the Exchange's management
of the downstream customers has expanded and the Exchange has had to
ensure appropriate reporting and review processes, which has resulted
in a greater cost burden on the Exchange over time. The fee will also
help to ensure that the Exchange is better able to closely review
reports and uncover reporting errors via audits thus minimizing
reporting issues. The network infrastructure has increased in order to
keep pace with the increased number of products, which, in turn, has
caused an increased administrative burden and higher operational costs
associated with delivery via extranets.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and with Section 6(b)(4)
of the Act,\9\ in particular, 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.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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All similarly situated extranet providers, including the Exchange
operating its own extranet, that establish an extranet connection with
the Exchange to access market data feeds from the Exchange are subject
to the same fee structure. As noted above, this fee is the same as the
originally proposed Extranet Access Fee in 2009 of $750 per recipient
CPE Configuration per month. The fee will help the Exchange offset some
of the overhead and technology infrastructure, administrative,
maintenance and operational costs it incurs in support of the service.
As such, the Exchange believes that the proposed fee is reasonable
and notes it is the same as originally proposed in 2009. The extranet
costs are separate and different from the colocation facility that is
able to recoup these fees by charging for servers, rack space,
electricity, etc. within the associated data centers.
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 fee will be applied uniformly among extranet providers, which
are not compelled to establish a connection
[[Page 19131]]
with the Exchange to offer access connectivity to market data feeds.
For these reasons, any burden arising from the fees is necessary in the
interest of promoting the equitable allocation of a reasonable fee.
Additionally, firms make decisions on how much and what types of data
to consume on the basis of the total cost of interacting with the
Exchange or other exchanges and, of course, the extranet access fee is
but one factor in a total platform analysis.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\10\ 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 should be approved or disapproved.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-BX-2014-015 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-BX-2014-015. 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 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; 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-BX-2014-015 and
should be submitted on or before April 28, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-07638 Filed 4-4-14; 8:45 am]
BILLING CODE 8011-01-P