[Federal Register Volume 77, Number 148 (Wednesday, August 1, 2012)]
[Notices]
[Pages 45700-45702]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18790]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67511; File No. SR-NASDAQ-2012-086]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Fees for Access to BONO and ITTO Ports

July 26, 2012.
    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 July 24, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' 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

    NASDAQ proposes to modify Chapter XV, Sec. 3 entitled ``NASDAQ 
Options Market--Access Services,'' related to fees assessed by NASDAQ 
for connectivity to the NASDAQ Options Market (``NOM''), NASDAQ's 
facility for executing and routing standardized equity and index 
options.
    While fee changes pursuant to this proposal are effective upon 
filing, the Exchange has designated these changes to be operative on 
September 3, 2012.
    The text of the proposed rule change is set forth below. Proposed 
new text is in italics and deleted text is in brackets.
* * * * *

Chapter XV Options Pricing

    NASDAQ Options Market Participants may be subject to the Charges 
for Membership, Services and Equipment in the Rule 7000 Series as well 
as the fees in this Chapter XV.
* * * * *

Sec. 3 NASDAQ Options Market--Access Services

    The following charges are assessed by Nasdaq for connectivity to 
the NASDAQ Options Market:
    (a) TradeInfo
     Members not subscribing to the Nasdaq Workstation using 
TradeInfo will be charged a fee of $95 per user per month.
    (b) Port Fees, per port per month, as follows:

Order Entry Port Fee--$500.00
CTI Port Fee--$500.00
OTTO Port Fee--$500.00
ITTO Port Fee \1\--$500.00
BONO Port Fee \1\--$500.00
Order Entry DROP Port Fee--$500.00
OTTO DROP Port Fee--$500.00
SQF Port Fee--$250.00

    \1\ ITTO and BONO Port fees will be assessed to non-NOM 
Participants and NOM Participants.
* * * * *
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.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. The 
text of these statements may be examined at

[[Page 45701]]

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
    NASDAQ is proposing to amend Chapter XV, Sec. 3(b) to assess fees 
for the Best of NASDAQ Options (``BONOSM'') \3\ and NASDAQ 
ITCH to Trade Options (``ITTO'') \4\ ports to non-NOM Participants and 
NOM Participants for purposes of receiving the BONO and ITTO data 
feeds.\5\
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    \3\ BONOSM is a data feed that provides the NOM Best 
Bid and Offer (``NOM NBBO'') and last sale information for trades 
executed on NOM. The NOM NBBO and last sale information are 
identical to the information that NOM sends the Options Price 
Regulatory Authority (``OPRA'') and which OPRA disseminates via the 
consolidated data feed for options. BONO is the options equivalent 
of the NASDAQ Basic data feed offered for equities under NASDAQ Rule 
7047. See Chapter VI, Section 1 at subsection (a)(3)(B).
    \4\ ITTO is a data feed that provides quotation information for 
individual orders on the NOM book, last sale information for trades 
executed on NOM, and Order Imbalance Information as set forth in NOM 
Rules Chapter VI, Section 8. ITTO is the options equivalent of the 
NASDAQ TotalView/ITCH data feed that NASDAQ offers under NASDAQ Rule 
7023 with respect to equities traded on NASDAQ. As with TotalView, 
members use ITTO to ``build'' their view of the NOM book by adding 
individual orders that appear on the feed, and subtracting 
individual orders that are executed. See Chapter VI, Section 1 at 
subsection (a)(3)(A).
    \5\ The BONO and ITTO data feeds are described in Chapter XV, 
Section 4. The Exchange assesses monthly fees for firms that are 
distributors of BONO and ITTO market data. A ``distributor'' of 
NASDAQ options market data is any entity that receives a feed or 
data file of NASDAQ data directly from NASDAQ or indirectly through 
another entity and then distributes the data either internally 
(within that entity) or externally (outside that entity). The 
Exchange assesses fees for BONO and ITTO data on a per-user basis. 
These fees are separate from port fees. These fees vary based on 
whether they are for Professional users or Non-Professional users. 
The term ``Non-Professional'' shall have the same meaning as in 
NASDAQ Rule 7011(b)(2). Rule 7011(b)(2) defines a ``Non-
Professional'' as a natural person who is neither: (A) Registered or 
qualified in any capacity with the Commission, the Commodities 
Futures Trading Commission, any state securities agency, any 
securities exchange or association, or any commodities or futures 
contract market or association; (B) engaged as an ``investment 
adviser'' as that term is defined in Section 201(11) of the 
Investment Advisors Act of 1940 (whether or not registered or 
qualified under that Act); nor (C) employed by a bank or other 
organization exempt from registration under federal or state 
securities laws to perform functions that would require registration 
or qualification if such functions were performed for an 
organization not so exempt. A Professional user is any user that is 
not a non-Professional. For BONO data, the per-user fee is $5 per 
Professional user; and $1 per non-Professional user. For ITTO data, 
the per-user fee is $10 per Professional user; and $1 per Non-
Professional user.
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    When the Exchange filed to adopt pricing for the BONO and ITTO data 
feeds, the Exchange noted in its filing that ``* * * NASDAQ has made a 
voluntary decision to make this market data available. NASDAQ is not 
required by the Exchange Act in the first instance to make the data 
available, unlike the best bid and offer which must be made available 
under the Act. NASDAQ has chosen to make the noted data available to 
improve market quality, to attract order flow, and to increase 
transparency; and will continue to make the data available until such 
time as NASDAQ changes its rule.'' Further, ``NASDAQ believes that its 
ITTO and BONO(SM) which includes the NOM NBBO and last sale 
information for trades executed on NOM in BONO,(SM) are 
precisely the sort of market data products that the Commission 
envisioned when it adopted Regulation NMS.'' \6\
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    \6\ See Securities Exchange Act Release No. 64652 (June 13, 
2011), 76 FR 35498 (June 17, 2011) (SR-NASDAQ-2011-075).
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    The Exchange currently assesses fees to NOM Participants for 
connectivity to various types of ports,\7\ among them the BONO and ITTO 
ports. The fees for these ports are currently assessed only to NOM 
Participants.\8\ The BONO and ITTO ports are necessary in order for 
subscribers to BONO and ITTO to receive those data feeds. Today, non-
NOM Participants are not assessed fees for BONO and ITTO ports that 
they are utilizing to receive data.\9\ The Exchange proposes to assess 
fees for BONO and ITTO ports to non-NOM Participants as well as NOM 
Participants.
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    \7\ The Exchange assesses fees for a CTI Port, OTTO Port, ITTO 
Port, BONO Port, Order Entry DROP Port, OTTO DROP Port and SQF Port 
in Section 3(b) of Chapter XV of the Options Rules. Non-NOM 
Participants only have access to the BONO and ITTO ports.
    \8\ NOM Participants are assessed a $500 per port per month fee 
to obtain a BONO or ITTO port.
    \9\ NOM Participants and non-NOM Participants are assessed fees 
today for the BONO and ITTO data. Only NOM Participants are assessed 
port fees today.
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    Similar to the BONO and ITTO data feeds in Sec. 4 of Chapter XV, 
NASDAQ will issue an invoice to non-NOM Participants for BONO and ITTO 
ports fees on behalf of the NASDAQ OMX Global Data Products group.\10\ 
The Exchange proposes to include a footnote within Sec. 3(b) of Chapter 
XV to specify that ITTO and BONO port fees will be assessed to non-NOM 
Participants and NOM Participants.
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    \10\ Today, the BONO and ITTO market data distributor fees are 
invoiced by The NASDAQ Stock Market LLC. NOM will continue to 
invoice and collect fees for all ports specified in Sec. 3(b) of 
Chapter XV including BONO and ITTO ports for NOM Participants.
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2. Statutory Basis
    NASDAQ believes that its proposal to amend its pricing is 
consistent with Section 6(b) of the Act \11\ in general, and furthers 
the objectives of Section 6(b)(4) of the Act \12\ in particular, in 
that it is an equitable allocation of reasonable fees and other charges 
among Exchange members and other persons using any facility or system 
which NASDAQ operates or controls.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
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    In adopting Regulation NMS, the Commission granted self-regulatory 
organizations and broker-dealers increased authority and flexibility to 
offer new and unique market data to the public. It was believed that 
this authority would expand the amount of data available to consumers, 
and also spur innovation and competition for the provision of market 
data. NASDAQ has made a voluntary decision to make the BONO and ITTO 
market data available. NASDAQ has chosen to make the noted data 
available to improve market quality, to attract order flow, and to 
increase transparency; and will continue to make the data available 
until such time as NASDAQ changes it rules. In order to obtain the 
data, all subscribers require a BONO and/or ITTO port.
    The Exchange believes that assessing non-NOM Participants port fees 
for BONO and ITTO ports in addition to NOM Participants is reasonable, 
equitable and not unfairly discriminatory because all subscribers to 
the data would be assessed the same rate to obtain a port. Today, non-
NOM Participants are not assessed BONO and ITTO port fees and NOM 
Participants pay a $500 per port per month fee. This proposal would 
uniformly assess all subscribers a $500 per port per month fee.

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. There is intense 
competition between trading platforms that provide transaction 
execution and routing services and proprietary data products. 
Transaction execution and proprietary data products are complementary 
in that market data is both an input and a by-product of the execution 
service. The fees assessed by the Exchange must

[[Page 45702]]

remain competitive with fees assessed by other venues and therefore 
must continue to be reasonable and equitably allocated to those 
subscribers that desire to subscribe to services at the Exchange rather 
than competing venues.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\13\ 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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    \13\ 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 email to [email protected]. Please include 
File Number SR-NASDAQ-2012-086 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-NASDAQ-2012-086. 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 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 publicly available. All 
submissions should refer to File Number SR-NASDAQ-2012-086 and should 
be submitted on or before August 22, 2012.

    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. 2012-18790 Filed 7-31-12; 8:45 am]
BILLING CODE 8011-01-P