[Federal Register Volume 76, Number 132 (Monday, July 11, 2011)]
[Notices]
[Pages 40761-40763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-17329]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64802; File No. SR-BX-2011-038]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Its Co-Location Fee Schedule To Establish Fees for Access to Market 
Data Feeds From the Toronto Stock Exchange and the TSX Venture Exchange

July 5, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 40762]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 23, 2011, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``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 Substance 
of the Proposed Rule Change

    The Exchange proposes to modify its co-location fee schedule to 
establish fees for access to market data feeds from the Toronto Stock 
Exchange (``TSX'') and the TSX Venture Exchange (``TSXV'').
    The Exchange will implement the proposed change on July 1, 2011. 
The text of the proposed rule change is available at http://nasdaqomxbx.cchwallstreet.com/, at the Exchange'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, 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 proposed rule change is to modify the Exchange's 
co-location fee schedule to establish fees for access to market data 
feeds from TSX and TSXV. The Exchange proposes: (1) A one-time fee of 
$1,000 for the installation of telecommunications connectivity for 
selected TSX and TSXV real-time market data feeds, along with (2) a 
per-month connectivity fee of $300 if a client wishes to receive the 
TSX and TSXV Level 1 Feed; a per-month connectivity fee of $1,000 if a 
client wishes to receive the TSX and TSVX Level 2 Feed; a per-month 
connectivity fee of $100 if a client wishes to receive the TSX Quantum 
Level 1 Feed; and a per-month connectivity fee of $300 if a client 
wishes to receive the TSX Quantum Level 2 Feed.
    The Exchange is making the TSX [sic] market data feeds available as 
a convenience to customers and notes that receipt of these feeds is 
completely voluntary. The Exchange also notes that such feeds may be 
freely obtained from other vendors for use by customers in the 
datacenter. These fees are similar to fees already charged by BX for 
receipt of market data from other exchanges in the data center. See 
also the market data connectivity fees for SIAC, the Chicago Mercantile 
Exchange, and the BATS Exchange on the Exchange's co-location fee 
schedule.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\3\ in general, and with 
Section 6(b)(4) of the Act,\4\ 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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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
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    The Exchange operates in a highly competitive market in which 
exchanges offer co-location services as a means to facilitate the 
trading activities of those members who believe that co-location 
enhances the efficiency of their trading. Accordingly, fees charged for 
co-location services are constrained by the active competition for the 
order flow of such members. If a particular exchange charges excessive 
fees for co-location services, affected members will opt to terminate 
their co-location arrangements with that exchange, and adopt a possible 
range of alternative strategies, including co-locating with a different 
exchange, placing their servers in a physically proximate location 
outside the exchange's data center, or pursuing trading strategies not 
dependent upon co-location. Accordingly, the exchange charging 
excessive fees would stand to lose not only co-location revenues but 
also revenues associated with the execution of orders routed to it by 
affected members. The Exchange believes that this competitive dynamic 
imposes powerful restraints on the ability of any exchange to charge 
unreasonable fees for co-location services.
    It should be noted, however, that the costs associated with 
operating a co-location facility, like the costs of operating the 
electronic trading facility with which the co-location facility is 
associated, are primarily fixed costs, and in the case of co-location 
are primarily the costs of renting or owning data center space and 
retaining a staff of technical personnel. Accordingly, the Exchange 
establishes a range of co-location fees with the goal of covering these 
fixed costs, covering less significant marginal costs, such as the cost 
of electricity, and to the extent the costs are covered, earns [sic] a 
profit. Because fixed costs must be allocated among all customers, the 
Exchange's fee schedule reflects an effort to assess a range of 
relatively low fees for specific aspects of co-location services, 
which, in the aggregate, will allow the Exchange to cover its costs and 
earn a profit; [sic] to the extent the costs are covered.
    In the case the proposed fees for installation and connectivity to 
select TSX and TSXV real-time market data feeds, the proposed fees 
cover the costs charged by Nasdaq Technology Services for establishing 
and maintaining the telecommunication networks to obtain and republish 
these market data feeds. The fees are based on anticipated bandwidth 
needed to accommodate a particular feed. The proposed fees also allow 
the Exchange [sic] earn a profit; [sic] to the extent the costs are 
covered. The Exchange notes that it is not the exclusive method to 
obtain market data connectivity. The Exchange believes that it is 
reasonable to use fees assessed on this basis as a means to recoup BX's 
share of the costs associated with the proposed market data feeds, 
provide a convenience for the customers, and to the extent the costs 
are covered, provide the Exchange a profit.
    The Exchange notes that its installation and monthly connectivity 
rates proposed for TSX and TSXV market data feeds are similar to 
connectivity fees imposed by other vendors. The Exchange also notes 
that the fees charged by the Exchange are generally lower or comparable 
to prices charged by other exchanges or unregulated vendors for similar 
services. For instance, NYSE is charging charges [sic] fees of $500 to 
$5,750 for selected CME market data feeds and charges a $950 
installation fee.\5\
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    \5\ See http://www.nyxdata.com/doc/50210.
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    Furthermore, because the proposed co-location services are entirely 
voluntary and available to all members, the Exchange's fees for 
proposed co-location services are equitably allocated and non-
discriminatory. In addition, the

[[Page 40763]]

market data feeds may be obtained from other sources.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.

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 rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\6\ 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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    \6\ 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 e-mail to [email protected]. Please include 
File Number SR-BX-2011-038 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-BX-2011-038. This file 
number should be included on the subject line if e-mail 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 a.m. and 3 
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-2011-038 and 
should be submitted on or before August 1, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-17329 Filed 7-8-11; 8:45 am]
BILLING CODE 8011-01-P