[Federal Register Volume 80, Number 10 (Thursday, January 15, 2015)]
[Notices]
[Pages 2145-2148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-00528]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74020; File No. SR-BX-2015-002]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Regarding
the Extranet Access Fee
January 9, 2015.
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 January 2, 2015, 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
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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 Substance
of the Proposed Rule Change
The Exchange proposes to add new BX Options \3\ Chapter XV, Section
3(c) (Options Market--Access Services) to the Exchange's Pricing
Schedule entitled ``Extranet Access Fee'' (``Pricing Schedule''), which
includes description about the applicability of the Extranet Access
Fee. This will conform the Exchange's Pricing Schedule to that of other
markets.
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\3\ BX Options is a facility of BX.
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The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxbx.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 the proposal is to add new BX Options Chapter XV,
Section 3(c) entitled ``Extranet Access Fee'' to the Pricing Schedule,
which includes description about the applicability of the Extranet
Access Fee. This will conform the Exchange's Pricing Schedule to that
of other markets.\4\
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\4\ The Exchange, NASDAQ OMX PHLX LLC (``Phlx''), and The NASDAQ
Stock Market LLC (``NASDAQ'') are self-regulatory organizations
(``SROs'') that are wholly owned subsidiaries of The NASDAQ OMX
Group, Inc. (``NASDAQ OMX''). The Exchange, NOM (a facility of the
Exchange [sic]), BX Options (a facility of BX), Phlx, and PSX (a
facility of Phlx) (together with the Exchange known as the ``NASDAQ
Markets''), are independently filing proposals to conform their
respective Extranet Access Fee rules to NASDAQ Rule 7025.
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Specifically, the Exchange proposes to establish the Extranet
Access Fee in proposed new BX Options Chapter XV, Section 3(c) to
indicate that certain non-Exchange Customer Premises Equipment
(``CPE'') Products shall be assessed a monthly access fee of $1,000 per
CPE. The Exchange also proposes to conform the Extranet Access Fee to
that of another market, specifically NASDAQ Rule 7025, by also
indicating that if an extranet provider uses multiple CPE
Configurations \5\ to provide market data feeds to any recipient the
monthly fee shall apply to each such CPE Configuration; and that no
Extranet Access Fee will be charged for connectivity to market data
feeds containing only consolidated data. This proposal conforms the
Extranet Access Fee in BX Options Chapter XV, Section 3(c) to the
equivalent fee in NASDAQ Rule 7025.
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\5\ As defined in proposed BX Options Chapter XV, Section 3(c),
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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The Extranet Access Fee was introduced a decade ago on NASDAQ Rule
7025 as an equity fee.\6\ The Extranet Access Fee was introduced about
five years ago in BX Rule 7025.\7\ By this proposal, the Exchange
normalizes the cost and structure of its Extranet Access Fee on BX
Options to that of the equivalent decade-old NASDAQ fee.\8\
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\6\ See Securities Exchange Act Release Nos. 50483 (October 1,
2004), 69 FR 60448 (October 8, 2004) (SR-NASD-2004-118)
(establishing the Extranet Access Fee on NASDAQ); and 71199
(December 30, 2013), 79 FR 686 (January 6, 2014) (SR-NASD [sic]-
2013-159) (notice of filing and immediate effectiveness increasing
the Extranet Access Fee to $1,000).
\7\ See Securities Exchange Act Release Nos. 59615 (March 20,
2009), 74 FR 14604 (March 31, 2009) (SR-BX-2009-005) (establishing
the Extranet Access Fee on BX); and 71841 (April 1, 2014), 79 FR
19129 (April 7, 2014) (SR-BX-2014-015) (notice of filing and
immediate effectiveness describing that the Extranet Access Fee is
$750). The Extranet Access Fee was also established on PSX. See
Securities Exchange Act Release No. 71236 (January 6, 2014), 79 FR
1906 (January 10, 2014) (SR-Phlx-2014-01) (notice of filing and
immediate effectiveness establishing the Extranet Access Fee on PSX,
and describing that no fee is charged at the time of the filing).
\8\ As noted, BX and other NASDAQ Markets are independently
filing proposals to conform their respective Extranet Access Fee.
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Proposed Section 3(c) of the Fee Schedule indicates the same fee as
NASDAQ Rule 7025, namely $1,000 per CPE Configuration, and adds
verbatim language from NASDAQ Rule 7025 that explains the application
of the fee.\9\ As proposed, BX Options Chapter XV, Section 3(c) will
read as follows: ``Extranet providers that establish a connection with
the Exchange to offer direct access connectivity to market data feeds
shall be assessed a monthly access fee of $1,000 per recipient Customer
Premises Equipment (``CPE'') Configuration. If an extranet provider
uses multiple CPE Configurations to provide market data feeds to any
recipient, the monthly fee shall apply to each such CPE Configuration.
For purposes of this Section 3, 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.
Extranet providers that establish a connection with the Exchange
pursuant to this Section 3 as well as a connection pursuant to BX Rule
7025 shall be assessed a total monthly access fee of $1,000 per
recipient CPE Configuration.'' The proposal thus conforms BX Options
Chapter XV, Section 3(c) to NASDAQ Rule 7025, and makes them
substantively identical.\10\ The proposal also makes it clear that if
an extranet provider establishes an Extranet connection on BX as well
as on BX Options, the extranet provider will not need to pay a double
$1,000 monthly access fee per CPE, but rather only one total monthly
access fee of $1,000 per CPE. In addition, as discussed, there is an
equity market and an options market under the BX SRO license. This
proposal brings the Extranet Access Fee per BX Rule 7025 on the equity
side to the options side per BX Options Chapter XV, Section 3(c) in
conformity with NASDAQ Rule 7025.\11\
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\9\ However, the proposed Section 3(c) language does not,
because it deals with options, indicate that consolidated data
includes data disseminated by the UTP SIP (as noted in NASDAQ Rule
7025).
\10\ The Exchange notes that while BX Options Chapter XV,
Section 3(c) and NASDAQ Rule 7025 each contain some language
particular to the relevant exchange, with this proposal the language
of the two rules is substantively identical. The Exchange notes that
the statement that Extranet providers shall be assessed a total
monthly access fee of $1,000 per recipient CPE Configuration is not
in NASDAQ Rule 7025.
\11\ The Exchange is filing to raise the monthly access fee on
BX from $750 to $1,000.
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The proposed Extranet Access Fee will, as on NASDAQ, 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 Extranet
Access there have been numerous network
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infrastructure improvements and administrative controls enacted.
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 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 proposed 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.\12\ 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.
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\12\ The Exchange will inform extranet providers of their
reporting responsibilities via its public Web site. This will
include, as an example, reporting CPE usage.
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Thus, subsequent to the proposal extranet providers that establish
a connection with the Exchange to offer direct access connectivity to
market data feeds shall be assessed a monthly access fee of $1,000 per
CPE Configuration. If, as discussed below, an extranet provider uses
multiple CPE Configurations to provide market data feeds to any
recipient, the monthly fee shall apply to each such CPE Configuration.
The Exchange proposes two new descriptions to conform the language
of BX Options Chapter XV, Section 3(c) to that of NASDAQ Rule 7025.
Specifically, the Exchange proposes to indicate that if an extranet
provider uses multiple CPE Configurations to provide market data feeds
to any recipient, the monthly fee shall apply to each such CPE
Configuration; and that no extranet access fee will be charged for
connectivity to market data feeds containing only consolidated data.
These proposed descriptions should serve to reduce any confusion as to
the applicability of the Extranet Access Fee. Moreover, the
descriptions would make the Exchange's Extranet Access Fee in BX
Options Chapter XV, Section 3(c) work the same as the equivalent fee in
NASDAQ Rule 7025, and complete the effort to conform the two rules.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\13\ in general, and with Section 6(b)(4)
of the Act,\14\ 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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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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The Exchange believes that its proposal to add the Extranet Access
Fee in BX Options Chapter XV, Section 3(c), and to describe the
applicability of the Extranet Access Fee and thereby conform the fee
with the equivalent fee on NASDAQ, is consistent with the Act.
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.\15\ The fee will help the Exchange to offset
some of the rising overhead and technology infrastructure,
administrative, maintenance and operational costs it incurs in support
of the service.
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\15\ For example, NASDAQ Technology Services, a subsidiary of
the Exchange [sic], pays the applicable fee(s) to the Exchange for
services covered under the Extranet Access Fee.
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If such costs are covered, the service may provide the Exchange
with a profit. As such, the Exchange believes that the proposed fee is
reasonable and notes that this proposal conforms similarly-situated
Extranet Access Fee rules on BX options, BX equities, and NASDAQ. The
extranet costs are separate and different from the colocation facility
that is able to recoup these fees by charging for servers within the
associated data centers. Additionally, the Exchange believes that the
proposed change is equitable and not unreasonably discriminatory. The
monthly fee is assessed uniformly to all extranet providers that
establish a connection with the Exchange to offer direct access
connectivity to market data feeds, and is the same for all at $1,000
per recipient CPE Configuration. Thus, any burden arising from the fees
is necessary in the interest of promoting the equitable allocation of a
reasonable fee. Moreover, 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 markets and, of course, the Extranet Access
Fee is but one factor in a total platform analysis.
Additionally, proposed BX Options Chapter XV, Section 3(c) contains
description stating that if an extranet provider uses multiple CPE
Configurations to provide market data feeds to any recipient, the
monthly fee shall apply to each such CPE Configuration; and that no
Extranet Access Fee will be charged for connectivity to market data
feeds containing only consolidated data. This description should serve
to reduce any confusion as to the applicability of this fee.
The proposal 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 consistent with the Act.
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 fees are applied uniformly among extranet providers,
which are not compelled to establish a connection 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
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\16\ the Exchange
has designated this proposal as establishing or changing a due, fee, or
other charge imposed by the self-regulatory organization on any person,
whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing.
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\16\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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
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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 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-2015-002 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-2015-002. 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-BX-2015-002,
and should be submitted on or before February 5, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-00528 Filed 1-14-15; 8:45 am]
BILLING CODE 8011-01-P