[Federal Register Volume 79, Number 242 (Wednesday, December 17, 2014)]
[Notices]
[Pages 75223-75225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29511]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73815; File No. SR-NASDAQ-2014-121]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify NASDAQ Rule 7021 Fees
December 11, 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 5, 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 7021
for the NasdaqTrader.com Trading and Compliance Data Package (``Data
Package''). 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 7021 to increase the fee assessed
for subscription to the Data Package and eliminate a little-used
report.\3\ The Data Package allows member firms to obtain information
regarding their own historical quoting and trading activity on NASDAQ.
The Data Package also provides member firms with information concerning
their compliance with NASDAQ and FINRA rules. When NASDAQ last
increased the fees for the Data Package in February 2012,\4\ the
service provided subscribers the following reports: Monthly Compliance
Report Cards, which outline a firm's own compliance with various FINRA
rules; Monthly Summaries, which provide monthly trading volume
statistics for the top 50 market participants broken down by industry
sector, security or type of trading; and Historical Research Reports,
which provide a variety of historical trading data such as a market
maker's quote updates, order activity, and detailed trade reporting
information. Additionally, NASDAQ offered subscribers the ability to
receive the detailed trade report (Equity Trade Journal) via a secure
FTP dissemination as an option. These reports, which continue to be
offered as part of Data Package, are based on the subscribing member
firm's historical trade
[[Page 75224]]
information taken from NASDAQ and the FINRA/NASDAQ Trade Reporting
Facility.
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\3\ The Data Package is also commonly referred to as the Report
Center.
\4\ See Securities Exchange Act Release No. 66078 (January 3,
2012), 77 FR 1125 (January 9, 2012) (SR-NASDAQ-2011-173).
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NASDAQ has continued to enhance what is offered in the Data Package
to make it a more useful tool to member firms.\5\ In this regard,
NASDAQ now provides the following new historical reports, which do not
count toward the 25 and 100 monthly report limits under the rule when
accessed: Execution Invoice Detail, which provides a member firm with
enhanced detail of its executions; Month to Date Invoice Summary, which
provides a member firm with a summary of its trading at any point in
the month; Excessive Messaging Invoice Detail, which informs a member
firm of whether its order activity at any point in a month will qualify
for the Excess Order Fee under Rule 7018(m); Investor Support Program
Invoice Detail, which informs a member firm of whether its order
activity at any point in the month will qualify for the Investor
Support Program under Rule 7014; and Qualified Market Maker Invoice
Detail, which informs a member firm of whether its order activity at
any point in the month will qualify for the Qualified Market Maker
Program under Rule 7014. In addition, NASDAQ has enhanced the service
with the following new reports, which do count toward the 25 and 100
monthly report limits under the rule when accessed: NASDAQ Order
Execution and Routing, which provides a detailed daily summary of a
member firm's executions on NASDAQ and those routed to other markets;
Market Recap, which provides a daily snapshot in a timeline format of
all market events occurring during the day, such as trading halts and
limit up/limit down pauses; QView \6\ Historical Reports, which provide
both daily and monthly summaries of trading based on volume, routing
strategy, and order type; and Real-Time Registered Market Maker Report,
which provides a market maker with a real-time assessment of whether it
is meeting its market making obligations in the securities for which it
is a market maker. NASDAQ is also proposing to eliminate the Monthly
Compliance Report Card report from the service. NASDAQ notes that the
report is not used significantly by subscribers to the service. In
addition to having very little demand, the Monthly Compliance Report
Card is similar to reports offered by FINRA at no cost.\7\ NASDAQ
currently offers two monthly Data Package subscriptions: a basic
subscription of $175 providing up to 25 reports per month; and a
premium subscription of $225 providing up to 100 reports per month. As
noted above, NASDAQ last increased the fee for Data Package in February
2012,\8\ and since then has enhanced the service with several new
reports noted above. NASDAQ is proposing to increase the monthly fee
assessed for up to 100 reports from $225 to $250 to cover the costs
associated with enhancing and offering the service, and to ensure that
the service continues to provide NASDAQ with a profit. In addition to
increasing the fee assessed for the 100 report subscription, NASDAQ is
proposing to eliminate the basic level subscription. As described
above, NASDAQ has substantially increased the number of reports
available to subscribers, including those that count against the
monthly report limits of the two fee tiers. As a consequence, NASDAQ
has observed that the lower tier provides an inadequate number of
reports to be useful to most subscribers. Accordingly, NASDAQ is
proposing to eliminate the lower tier.
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\5\ See http://www.nasdaqtrader.com/trader.aspx?id=reportcenter.
\6\ QView provides a member firm with the ability to track its
order flow on NASDAQ, and view both real-time data and download
reports of such order flow. See Rule 7058. Data Package offers QView
historical data, but not real-time reports of order flow.
\7\ FINRA offers Equity Report Cards, which allow firms to track
their compliance with equity trading rules related to OATS, best
execution, market order timeliness, trade reporting, Reg NMS Trade
Throughs, and the NASDAQ Market Center. See http://www.finra.org/Industry/Compliance/ReportCenter/P015063.
\8\ Supra note 4.
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Lastly, NASDAQ is proposing to rename the service as the NASDAQ
Report Center. NASDAQ notes that the service is commonly referred to as
the Report Center, and changing the name to reflect the commonly-used
name will avoid any market participant confusion caused by the two
names. Moreover, NASDAQ believes that the proposed new name is more
reflective of the nature of the service.
2. Statutory Basis
NASDAQ believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\9\ in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,\10\ 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, and 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; and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4) and (5).
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NASDAQ believes that the proposed increase to the fee assessed
under the rule is reasonable because it will allow NASDAQ to realign
the fees assessed for the service with the costs it incurs in offering
and enhancing it, while also ensuring that NASDAQ continues to realize
a profit. The Exchange notes that it has substantially enhanced the
service since the last time the fee was increased. Moreover,
eliminating the lower tier is reasonable because NASDAQ has observed
that the 25 report limit is too low for most member firms given the
expansion of reports available to them through the service. As a
consequence, the lower tier has limited applicability, yet represents a
cost to NASDAQ in monitoring and administering the fee in relation to a
subscriber's usage.
NASDAQ believes that the increased fee and elimination of the lower
fee tier is an equitable allocation because the increased fee will
apply to all subscribers uniformly. NASDAQ notes that under the
proposed changes member firms currently subscribing to the lower tier
will experience a greater fee increase than those currently subscribing
to the higher tier. NASDAQ believes elimination of the lower tier is
equitable because the limited number of member firms that subscribe to
the lower tier will receive the benefit of a substantially increased
monthly report limit.
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 reports available per month. 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 lower tier subscription. The Exchange does not believe that this
change is unfairly discriminatory because it eliminates a distinction
in the fee assessed based on the number of reports, which is of
declining applicability and use, and provides all member firms with the
same level of service at the same cost.
[[Page 75225]]
As noted, NASDAQ incurs costs in monitoring a subscribing member firm's
report limit and in administering the fee. Consequently, reducing the
number of fee tiers will reduce NASDAQ's costs, thereby allowing NASDAQ
to keep the fee lower than it would otherwise be. In addition, NASDAQ
does not believe that elimination of the Monthly Compliance Report Card
reports from the service is unfairly discriminatory. As noted, the
report is used very little by subscribing member firms and any member
firm that seeks similar information may obtain similar reports from
FINRA at no cost.
Lastly, NASDAQ believes that the proposed name change will avoid
any market participant confusion due to the name of the service used in
the rule and the commonly-used name. NASDAQ notes that the proposed
change does not affect what is offered by the service in any way.
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.\11\ 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 last increased the Data Package fees in February 2012
and NASDAQ is now realigning the fee assessed for the subscription to
the service with the costs it incurs in offering it. Such costs include
adding enhancements to the service to make it more useful to
subscribers. Moreover, increasing the fees also allows NASDAQ to
continue to derive a profit from the service, which will allow NASDAQ
to continue to offer the service in the long term. Moreover, NASDAQ
believes that the fee increase does not impose a burden on competition
because the service is optional and member firms may develop their own
alternatives to the service or acquire similar functionality through
third parties. For these reasons, NASDAQ does not believe that the
proposed changes will impose any unnecessary burden on competition.
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\11\ 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,\12\ and paragraph (f) \13\ 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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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 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-2014-121 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-2014-121. 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-NASDAQ-2014-
121, and should be submitted on or before January 7, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-29511 Filed 12-16-14; 8:45 am]
BILLING CODE 8011-01-P