[Federal Register Volume 80, Number 123 (Friday, June 26, 2015)]
[Notices]
[Pages 36862-36865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15690]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75257; File No. SR-NASDAQ-2015-055]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change Regarding NASDAQ Last Sale Plus
June 22, 2015.
I. Introduction
On May 11, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to establish a market data
product called NASDAQ Last Sale Plus (``NLS Plus''). The proposed rule
change was published for comment in the Federal Register on May 21,
2015.\3\ No comments on the proposed rule change have been received.
The Commission is publishing this Order to approve the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 74972 (May 15,
2015), 80 FR 29370 (``Notice'').
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II. Description of the Proposal
The Exchange proposes to amend Rule 7039 (NASDAQ Last Sale Data
Feed) to include the NLS Plus data feed,
[[Page 36863]]
which is offered by NASDAQ OMX Information LLC.\4\ Currently, Rule 7039
contains the NASDAQ Last Sale data feed (``NLS''). NLS consists of
``NLS for NASDAQ,'' which is a real-time data channel that provides
real-time last sale information including execution price, volume, and
time for executions occurring within the NASDAQ system as well as those
reported to the FINRA/NASDAQ Trade Reporting Facility (``FINRA/NASDAQ
TRF''). NLS also consists of ``NLS for NYSE/NYSE MKT,'' which provides
real-time last sale information over a second data channel including
execution price, volume, and time for NYSE- and NYSE MKT-securities
executions occurring within the NASDAQ system as well as those reported
to the FINRA/NASDAQ TRF.\5\
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\4\ NASDAQ OMX Information LLC is a subsidiary of The NASDAQ OMX
Group, Inc. (``NASDAQ OMX'').
\5\ These products are available via two separate data channels.
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Content of NLS Plus
NLS Plus contains the three last sale products offered by each of
NASDAQ OMX's three U.S. equity markets.\6\ Thus, NLS Plus includes all
transactions from all of NASDAQ OMX's equity markets, as well as the
FINRA/NASDAQ TRF data that is included in the current NLS product.
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\6\ The NASDAQ OMX U.S. equity markets include The NASDAQ Stock
Market (``NASDAQ''),\,\ NASDAQ OMX BX (``BX''), and NASDAQ OMX PSX
(``PSX'') (together known as the ``NASDAQ OMX equity markets''). The
Exchange represents that PSX and BX will shortly file companion
proposals regarding NLS Plus. NLS includes last sale information
from the FINRA/NASDAQ TRF, which is jointly operated by NASDAQ and
FINRA. Accordingly, NASDAQ expects that FINRA will submit a proposed
change to FINRA Rule 7640A with respect to NLS Plus.
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NLS Plus also contains cumulative consolidated volume
(``consolidated volume'') of real-time trading activity across all U.S.
exchanges for Tape C securities \7\ and 15-minute delayed information
for Tape A and Tape B securities.\8\ NLS Plus features total cross-
market volume information at the issue level, thereby providing
redistribution of consolidated volume information from the securities
information processors (``SIPs'') for Tape A, B, and C securities.
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\7\ Tape C securities are disseminated pursuant to the NASDAQ
Unlisted Trading Privileges (``UTP'') Plan.
\8\ Tape A and Tape B securities are disseminated pursuant to
the Security Industry Automation Corporation's (``SIAC'')
Consolidated Tape Association Plan/Consolidated Quotation System, or
CTA/CQS (``CTA'').
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Similar to NLS, NLS Plus offers data for all U.S. equities via two
separate data channels: The first data channel reflects NASDAQ, BX, and
PSX trades with real-time consolidated volume for NASDAQ-listed
securities; and the second data channel reflects NASDAQ, BX, and PSX
trades with delayed consolidated volume for NYSE, NYSE MKT, NYSE Arca
and BATS-listed securities.\9\
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\9\ These NLS Plus channels are each made up of a series of
sequenced messages so that each message is variable in length based
on the message type and is typically delivered using a higher level
protocol. NLS Plus Channel 1 contains NASDAQ trades with real time
consolidated volume for NASDAQ listed (Tape C) securities. NLS Plus
Channel 2 contains NASDAQ trades with delayed (15 minutes)
consolidated volume for NYSE, NYSE Market, NYSE Arca, and BATS
listed (Tape A and Tape B) securities.
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In addition to last sale information, NLS Plus also disseminates
the following data elements: Trade Price, Trade Size, Sale Condition
Modifiers, Cumulative Consolidated Market Volume, End of Day Trade
Summary, Adjusted Closing Price, IPO Information, and Bloomberg ID
(together the ``data elements''). NLS Plus also features and
disseminates the following messages: Market Wide Circuit Breaker, Reg
SHO Short Sale Price Test Restricted Indicator, Trading Action, Symbol
Directory, Adjusted Closing Price, and End of Day Trade Summary
(together the ``messages'').\10\ NASDAQ states that these data elements
and messages are the same as in and are sourced from NLS, BX Last Sale,
and PSX Last Sale, except consolidated volume and Bloomberg ID, which
are sourced from other publicly accessible or obtainable resources.
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\10\ The Reg SHO Short Sale Price Test Restricted Indicator
message is disseminated intra-day when a security has a price drop
of 10% or more from the adjusted prior day's NASDAQ Official Closing
Price. Trading Action indicates the current trading status of a
security to the trading community, and indicates when a security is
halted, paused, released for quotation, and released for trading.
Symbol Directory is disseminated at the start of each trading day
for all active NASDAQ and non-NASDAQ-listed security symbols.
Adjusted Closing Price is disseminated at the start of each trading
day for all active symbols in the NASDAQ system, and reflects the
previous trading day's official closing price adjusted for any
applicable corporate actions; if there were no corporate actions,
however, the previous day's official closing price is used. End of
Day Trade Summary is disseminated at the close of each trading day,
as a summary for all active NASDAQ- and non-NASDAQ-listed
securities. IPO Information reflects IPO general administrative
messages from the UTP and CTA Level 1 feeds for Initial Public
Offerings for all NASDAQ- and non-NASDAQ-listed securities.
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Consolidated volume reflects the consolidated volume at the time
that the NLS Plus trade message is generated, and includes the volume
for the issue symbol as reported on the consolidated market data feed.
The consolidated volume is based on the real-time trades reported via
the UTP Trade Data Feed (``UTDF'') and delayed trades reported via CTA.
NASDAQ OMX calculates the real-time trading volume for its trading
venues, and then adds the real-time trading volume for the other (non-
NASDAQ OMX) trading venues as reported via the UTDF data feed. For non-
NASDAQ-listed issues, the consolidated volume is based on trades
reported via SIAC's Consolidated Tape System (``CTS'') for the issue
symbol. The Exchange calculates the real-time trading volume for its
trading venues, and then adds the 15-minute delayed trading volume for
the other (non-NASDAQ OMX) trading venues as reported via the CTS data
feed.
The second data point that is not sourced from NLS, BX Last Sale,
and PSX Last Sale is Bloomberg ID. NASDAQ states that this composite ID
is a component of Bloomberg's Open Symbology and acts as a global
security identifier that Bloomberg assigns to securities, and is
available free of charge.\11\
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\11\ See http://bsym.bloomberg.com/sym/pages/bbgid-fact-sheet.pdf. http://bsym.bloomberg.com/sym/pages/NASDAQ_Adopts_BSYM.pdf.
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NASDAQ states that NLS Plus may be received by itself or in
combination with NASDAQ Basic.\12\ If a subscriber choses to receive
NLS Plus in combination with NASDAQ Basic, the subscriber receives all
of the elements contained in NLS Plus as well as the best bid and best
offer information provided by NASDAQ Basic.
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\12\ NASDAQ Basic provides the information contained in NLS,
together with NASDAQ's best bid and best offer. See NASDAQ Rule
7047.
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The Exchange believes that market data distributors may use the NLS
Plus data feed to feed stock tickers, portfolio trackers, trade alert
programs, time and sale graphs, and other display systems. NASDAQ notes
that NLS Plus provides investors with options for receiving market data
that parallel products currently offered by BATS and BATS Y, EDGA, and
EDGX and NYSE equity exchanges.\13\
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\13\ See Securities Exchange Act Release No. 73918 (December 23,
2014), 79 FR 78920 (December 31, 2014) (SR-BATS-2014-055; SR-BYX-
2014-030; SR-EDGA-2014-25; SR-EDGX-2014-25) (approving BATS One Data
Feed). See also Securities Exchange Act Release No. 73553 (November
6, 2014), 79 FR 67491 (November 13, 2014) (SR-NYSE-2014-40)
(approving NYSE Best Quote & Trades Data Feed).
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Distribution of NLS Plus
The Exchange states that NASDAQ OMX Information LLC distributes no
data that is not equally available to all market data vendors. NASDAQ
further states that NASDAQ OMX Information LLC has no competitive
advantage over other market data vendors as it receives
[[Page 36864]]
data from the exchange that is equally available to other market data
vendors, with the same information distributed to NASDAQ OMX
Information LLC at the same time it is distributed to other vendors.
The Exchange represents that the path for distribution by the
Exchange of NLS Plus is not faster than the path for distribution that
would be used by a market data vendor to distribute an independently
created NLS Plus-like product. As such, NASDAQ states that the proposed
NLS Plus data feed is a data product that a competing market data
vendor could create and sell without being in a disadvantaged position
relative to the Exchange. In recognition that the Exchange is the
source of its own market data and with BX and PSX being equity markets
owned by NASDAQ OMX, the Exchange represents that the source of the
market data it would use to create proposed NLS Plus is available to
other vendors. The Exchange further represents that NASDAQ, BX, and PSX
will continue to make available these individual underlying data
elements, and thus, that the source of the market data that the
Exchange would use to create the proposed NLS Plus is the same as what
is available to other market data vendors.
The Exchange states that the system creating and supporting NLS
Plus receives the individual data feeds from each of the NASDAQ OMX
equity markets and, in turn, aggregates and summarizes that data to
create NLS Plus and then distribute it to end users. The Exchange notes
that this is the same process that a competing market data vendor would
undergo should it want to create a market data product similar to NLS
Plus to distribute to its end users. The Exchange believes that a
competing market data vendor could receive the individual data feeds
from each of the NASDAQ OMX equity markets at the same time the system
creating and supporting NLS Plus would for it to create NLS Plus.
Therefore, NASDAQ believes that a competing market data vendor could
obtain the underlying data elements from the NASDAQ OMX equity markets
on the same latency basis as the system that would be performing the
aggregation and consolidation of proposed NLS Plus, and provide a
similar product to its customers with the same latency they could
achieve by purchasing NLS Plus from the Exchange. As such, the Exchange
believes it would not have any unfair advantage over competing market
data vendors with respect to NLS Plus. The Exchange notes that it would
access the underlying NLS feed from the same point as would a market
data vendor and the Exchange would not have a speed advantage. The
Exchange also represents that NLS Plus would not have any speed
advantage vis-[agrave]-vis competing market data vendors with respect
to access to end user customers.
Fees for NLS Plus
The Exchange represents that it will file a separate proposal
regarding the NLS Plus fee structure. The Exchange also represents that
these fees will be designed to ensure that vendors could compete with
the Exchange by creating a similar product as NLS Plus. The Exchange
expects that the pricing will reflect the incremental cost of the
aggregation and consolidation function for NLS Plus, and would not be
lower than the cost to a vendor creating a competing product, including
the cost of receiving the underlying data feeds. The Exchange
represents that the pricing the Exchange would charge clients for NLS
Plus would enable a vendor to receive the underlying data feeds and
offer a similar product on a competitive basis and with no greater cost
than the Exchange. For these reasons, the Exchange believes that
vendors could readily offer a product similar to NLS Plus on a
competitive basis at a similar cost.
Miscellaneous Changes
The Exchange also proposes two housekeeping changes. In the Rule
7039 title, the Exchange adds the phrase ``and NASDAQ Last Sale Plus''
to make it clear that the rule contains both NLS and NLS Plus. In
section (a), the Exchange adds the phrase ``NASDAQ Last Sale'' to make
it clear that section (a), (b), and (c) refers only to NLS.
III. Discussion and Commission Findings
After carefully considering the proposal the Commission finds that
the proposed rule change is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to national
securities exchanges.\14\ In particular, the Commission finds that the
proposed rule change is consistent with the requirements of section
11A(c)(1)(C) of the Act \15\ and with Rule 603(a)(2) of Regulation NMS
thereunder,\16\ which requires that any national securities exchange,
national securities association, broker, or dealer that distributes
information with respect to quotations for or transactions in an NMS
stock to a securities information processor, broker, dealer, or other
persons shall do so on terms that are not unreasonably discriminatory.
The Commission also finds that the proposed rule change is consistent
with section 6(b)(5) of the Act, which requires that the rules of an
exchange be designed to promote just and equitable principles of trade,
remove impediments to and perfect the mechanisms of a free and open
market and a national market system and, in general, to protect
investors and the public interest, and section 6(b)(8) of the Act,
which requires that the rules of an exchange not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.\17\
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\14\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
\15\ Section 11A(c)(1)(C) of the Act requires, among other
things, that no self-regulatory organization, member thereof,
securities information processor, broker or dealer make use of the
mails or any means or instrumentality of interstate commerce to
collect, process, distribute, publish or prepare for distribution or
publication any information with respect to quotations for or
transactions in any security other than an exempted security in
contravention of such rules and regulations as the Commission shall
prescribe as necessary or appropriate in the public interest, for
the protection of investors, or otherwise in furtherance of the
purposes of the Act to assure that all securities information
processors may, for purposes of distribution and publication, obtain
on fair and reasonable terms such information with respect to
quotations for and transactions in such securities as is collected,
processed, or prepared for distribution or publication by an
exclusive processor of such information acting in such capacity. 15
U.S.C. 78k-1(c)(1)(C).
\16\ 17 CFR 242.603(a)(2).
\17\ 15 U.S.C. 78f(b)(5) and (b)(8).
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The Commission notes that, to create NLS Plus, the Exchange would
use underlying data feeds that belong to the NASDAQ OMX Equity Markets:
NLS, BX Last Sale and PSX Last Sale. Accordingly, the Commission's
review of the Exchanges' proposals has focused, in particular, on
whether the proposals would result in affiliated exchanges--which are
separate self-regulatory organizations under the Act--making their data
products or services available to one another at terms (e.g., content,
pricing, or latency) that are more favorable than those available to
unaffiliated market participants.
The Exchange represents that NLS Plus would be created using
underlying data feeds that are available for subscription by vendors.
In recognition that the Exchange is the source of its own market data
and that it is affiliated with the other NASDAQ OMX equity markets, the
Exchange also represents that it will continue to make available all of
the individual underlying feeds and that the source of the market data
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they would use to create the proposed NLS Plus feed is the same as the
source available to competing vendors.
With respect to latency, the Exchange represents that a competing
vendor could obtain the underlying data feeds on the same latency basis
as the system that would be performing the aggregation and
consolidation of the proposed NLS Plus feed and could provide the same
kind of product to its customers with the same latency they could
achieve by purchasing the NLS Plus feed from NASDAQ.\18\ The Exchange
also represents that it has designed the NLS Plus feed so that it will
have no advantages over a competing vendor with respect to the speed of
access to the underlying feeds.
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\18\ The Exchange represents that, in order to create NLS Plus,
the system creating and supporting NLS Plus receives the individual
data feeds from each of the NASDAQ OMX equity markets and, in turn,
aggregates and summarizes that data to create NLS Plus and then
distribute it to end users. The Exchange further represents that
this is the same process that a competing market data vendor would
undergo should it want to create a market data product similar to
NLS Plus to distribute to its end users. The Exchange also
represents that a competing market data vendor could receive the
individual data feeds from each of the NASDAQ OMX equity markets at
the same time the system creating and supporting NLS Plus would for
it to create NLS Plus. Therefore, a competing market data vendor
could obtain the underlying data elements from the NASDAQ OMX equity
markets on the same latency basis as the system that would be
performing the aggregation and consolidation of proposed NLS Plus,
and provide a similar product to its customers with the same latency
they could achieve by purchasing NLS Plus from the Exchange. The
Exchange further represents that it would access the underlying NLS
feed from the same point as would a market data vendor.
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With respect to pricing, although specific fees to be charged for
NLS Plus are not part of the proposed rule change, the Exchange
represents that the pricing will reflect the incremental cost of the
aggregation and consolidation function for NLS Plus, and would not be
lower than the cost to a vendor creating a competing product, including
the cost of receiving the underlying data feeds. The Exchange further
represents that the pricing it would charge clients for NLS Plus would
enable a vendor to receive the underlying data feeds and offer a
similar product on a competitive basis and with no greater cost than
the Exchange.
Based on the Exchange's representations with respect to the
content, latency, and pricing of NLS Plus--which are central to the
Commission's analysis of the proposal--the Commission finds that the
proposal is consistent with the Act and the rules and regulations
thereunder applicable to national securities exchanges. The Commission
believes that these representations are designed to ensure that the
NASDAQ OMX equity markets, which are separate self-regulatory
organizations, do not, because of their relationship as affiliates,
offer one another products or services on a more favorable basis than
that available to other competing market participants.
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with section 11A(c)(1)(C) of the Act and Rule
603(a)(2) of Regulation NMS thereunder,\19\ and sections 6(b)(5) and
(b)(8) of the Act.\20\
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\19\ 15 U.S.C. 78k-1(c)(1)(C) and 17 CFR 242.603(a)(2).
\20\ 15 U.S.C. 78f(b)(5) and (b)(8).
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IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\21\ that the proposed rule change (SR-NASDAQ-2015-055) be, and
hereby is, approved.
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\21\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
Robert W. Errett,
Deputy Secretary.
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\22\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-15690 Filed 6-25-15; 8:45 am]
BILLING CODE 8011-01-P