[Federal Register Volume 79, Number 240 (Monday, December 15, 2014)]
[Notices]
[Pages 74150-74152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29240]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73789; File No. SR-NASDAQ-2014-120]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify NASDAQ Rule 7049 Fees
December 8, 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 3, 2014, 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, 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
NASDAQ is proposing to modify fees assessed under NASDAQ Rule 7049
for the NASDAQ InterACT surveillance tool. While the changes proposed
herein are effective upon filing, the Exchange has designated that the
amendments be operative on January 2, 2015.
The text of the proposed rule change is available at
nasdaq.cchwallstreet.com at NASDAQ's principal office, 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, 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 amend Rule 7049 to increase the fee and
related fee cap for subscription to the NASDAQ InterACT service.
InterACT is a real-time compliance tool accessed through an existing
Nasdaq Workstation or Weblink ACT 3.0 user account, which assists a
member firm with supervision of its trade activity reported to the
FINRA/NASDAQ Trade Reporting Facility, and with its supervision of
trade throughs to help in complying with Rule 611 of Regulation NMS.\3\
The Exchange currently assesses a fee of $300 per month, per user, for
the first three users, and $100 per month, per user, for each
additional user, with a maximum fee of $1,500 per month, per member
firm. The Exchange began offering the service in 2009 \4\ and has not
increased fees since its adoption, notwithstanding that the Exchange's
costs in offering and supporting the service have increased.
Accordingly, NASDAQ is proposing to increase the fee assessed for the
service to $400 per month, per user, with an increased fee cap of
$2,400 per month, per member firm. The Exchange is also proposing to
eliminate the reduced fee rate of $100 per user, per month assessed for
the fourth through ninth subscriptions.\5\ The Exchange notes that
offering the discounted fee for the fourth through ninth user
subscriptions was designed to encourage member firms to purchase more
subscriptions, thus ensuring broad use of the service and, ultimately,
NASDAQ's ability to offer the service long-term. NASDAQ believes that
the reduced fee has had the desired effect and, accordingly, is
assessing the same fee for all subscriptions through the sixth, at
which point member firms will have reached the new fee cap. Lastly,
upon launch of InterACT in May 2009, NASDAQ offered the service at no
cost for sixty days. Accordingly, NASDAQ is
[[Page 74151]]
proposing to delete text from the rule that concerns the expired free
period.
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\3\ 17 CFR 242.611.
\4\ Securities Exchange Act Release No. 59786 (April 17, 2009),
74 FR 18769 (April 24, 2009) (SR-NASDAQ-2009-033).
\5\ Subscriptions beyond the ninth are provided at no cost
because the subscribing member firm has met the $1,500 monthly fee
cap.
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2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\6\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\7\ 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 NASDAQ operates or controls, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. This proposal is reasonable, equitable and not
unfairly discriminatory for the reasons noted below.
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\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(4) and (5).
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NASDAQ believes that the proposed increases to the fee and fee cap
are reasonable because they will allow NASDAQ to realign the fee
assessed for the service with the costs it incurs in offering it, while
also ensuring that the service continues to provide NASDAQ with a
profit. Eliminating the reduced fee for the fourth through ninth
subscriptions is reasonable because NASDAQ believes that it has served
its purpose by attracting an adequate number of subscribers to the
service to ensure its viability. As a consequence, NASDAQ believes that
such incentive pricing is no longer needed.
NASDAQ believes that the increased fees and elimination of
incentive pricing is an equitable allocation because NASDAQ is
assessing the fee increase uniformly among subscribers up to the fee
cap, which is also increased. NASDAQ notes that it incurs the same
costs in offering a subscription, regardless of the number of member
subscriptions. As such, increasing the fee and applying it uniformly to
all subscriptions without any distinction based on the number of
subscriptions a member firm has, up to the increased fee cap, better
aligns the fees paid with the costs incurred by NASDAQ in offering the
service.
The Exchange believes that the proposed changes are not unfairly
discriminatory because they now apply a uniform fee per subscription,
thus eliminating a distinction made in the fee assessed based on the
number of subscriptions held. The Exchange notes that some member firms
may incur a disproportionate increase in fees as compared to others
under the proposed change as a result of the elimination of the
incentive pricing provided for the fourth through ninth subscriptions
and increase in the fee cap. Under the proposed change, a member firm
that has four to six subscriptions will experience a greater per
subscription fee increase than a member firm with three or fewer
subscriptions, whereas subscriptions in excess of six under the
proposed change exceed the new fee cap and are therefore offered at no
cost. The Exchange does not believe that the changes are unfairly
discriminatory because they eliminate a distinction in the fee assessed
based on NASDAQ's desire to ensure wide acceptance of the service, and
better align the fee assessed for a subscription with the costs that
NASDAQ incurs in providing it. NASDAQ notes that it is retaining the
fee cap, albeit at a higher level, which will ensure that no member
firm pays more than $2,400 per month.
Lastly, the proposed elimination of the rule text concerning the
expired free period is designed to clarify the rule text and avoid any
potential confusion among market participants that may arise if the
language were to remain.
B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule changes will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.\8\ NASDAQ notes
that it operates in a highly competitive market in which market
participants can readily favor competing venues if they deem fee levels
at a particular venue to be excessive. In such an environment, NASDAQ
must carefully balance the fees it assesses with the costs incurred to
remain competitive with other exchanges. To the extent NASDAQ's fees
are too high or another exchange's products and services provide
greater value, NASDAQ will likely lose subscriber revenue. As such,
NASDAQ believes that the degree to which fee changes in this market may
impose any burden on competition is extremely limited. In this
instance, NASDAQ is proposing to increase the fees for a service for
the first time since it was offered in 2009 to realign the fee assessed
for the subscription to the service with the costs it incurs in
offering it, and to ensure that the service provides NASDAQ with a
profit. Moreover, the Exchange does not believe that the fee increase
imposes an unnecessary burden on competition because the service is
optional and member firms may develop their own alternatives to the
service or purchase similar functionality from third parties.
Accordingly, NASDAQ does not believe that the proposed changes will
impose any unnecessary burden on competition.
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\8\ 15 U.S.C. 78f(b)(8).
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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 foregoing change has become effective pursuant to Section
19(b)(3)(A) of the Act,\9\ and paragraph (f) \10\ of Rule 19b-4,
thereunder. 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.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f).
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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-2014-120 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2014-120. 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
[[Page 74152]]
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-NASDAQ-2014-
120, and should be submitted on or before January 5, 2015.
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. 2014-29240 Filed 12-12-14; 8:45 am]
BILLING CODE 8011-01-P