[Federal Register Volume 78, Number 146 (Tuesday, July 30, 2013)]
[Notices]
[Pages 45993-45996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-18282]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70036; File No. SR-NASDAQ-2013-097]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Offer a New Dedicated OUCH Port Infrastructure Connectivity Option and 
Adopt Related Fees

July 25, 2013.
    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 23, 2013 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 and II 
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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    NASDAQ is proposing to offer a new Dedicated OUCH Port 
Infrastructure connectivity option and adopt related fees under Rule 
7015(g). The Exchange will implement the new service in October 2013, 
and will provide public notice thereof at least five days prior to the 
implementation date. NASDAQ will accept subscriptions to the service 
immediately; however, it will not assess the monthly subscription fee 
until the service is offered in October 2013. NASDAQ will begin 
assessing the installation fee immediately, but waive the fee for all 
subscriptions received by August 15, 2013.\3\
---------------------------------------------------------------------------

    \3\ The Exchange notes that the planned implementation timeframe 
is designed to provide it with adequate time to purchase and install 
new hardware, and to program and test the system.
---------------------------------------------------------------------------

    The text of the proposed rule change is below. Proposed new 
language is italicized; proposed deletions are in brackets.
* * * * *

7015. Access Services

    The following charges are assessed by Nasdaq for connectivity to 
systems operated by NASDAQ, including the Nasdaq Market Center, the 
FINRA/NASDAQ Trade Reporting Facility, and FINRA's OTCBB Service. The 
following fees are not applicable to the NASDAQ

[[Page 45994]]

Options Market LLC. For related options fees for Access Services refer 
to Chapter XV, Section 3 of the Options Rules.
    (a)-(f) No change.
    (g) Other Port Fees


                    Remote Multi-cast ITCH Wave Ports
------------------------------------------------------------------------
                                                               Recurring
                  Description                   Installation    monthly
                                                     fee          fee
------------------------------------------------------------------------
MITCH Wave Port at Secaucus, NJ...............        $2,500      $7,500
MITCH Wave Port at Weehawken, NJ..............         2,500       7,500
MITCH Wave Port at Newark, NJ.................         2,500       7,500
------------------------------------------------------------------------

    The following port fees shall apply in connection with the use of 
other trading telecommunication protocols:
     $500 per month for each port pair, other than Multicast 
ITCH[supreg] data feed pairs, for which the fee is $1000 per month for 
software-based TotalView-ITCH or $2,500 per month for combined 
software- and hardware-based TotalView-ITCH.
     An additional $200 per month for each port used for 
entering orders or quotes over the Internet.
     An additional $600 per month for each port used for market 
data delivery over the Internet.

Dedicated OUCH Port Infrastructure

    The Dedicated OUCH Port Infrastructure subscription allows a member 
firm to assign up to 30 of its OUCH ports to a dedicated server 
infrastructure for its exclusive use. A Dedicated OUCH Port 
Infrastructure subscription is available to a member firm for a fee of 
$5,000 per month, which is in addition to the standard fees assessed 
for each OUCH port. A one-time installation fee of $5,000 is assessed 
subscribers for each Dedicated OUCH Port Server subscription. NASDAQ is 
waiving the $5,000 installation fee for all subscriptions received 
through August 15, 2013.
    (h) No change.
* * * * *

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 offer a new connectivity option, and adopt 
related installation and subscription fees, which will provide member 
firms with remote access to dedicated server hardware for OUCH port 
connectivity \4\ to the NASDAQ System. Currently, NASDAQ distributes a 
member firm's OUCH ports among shared servers in order to facilitate 
all member firms' connectivity to NASDAQ. These servers act as 
switches, channeling the message traffic member firms send through 
their ports to the System. NASDAQ is proposing to provide individual 
member firms with access to a dedicated OUCH port server from NASDAQ. 
This service is optional and is available to all NASDAQ member firms.
---------------------------------------------------------------------------

    \4\ An ``OUCH port'' is a connectivity port designated to accept 
only OUCH protocol messaging. See http://www.nasdaqtrader.com/Trader.aspx?id=OUCH for a description of the OUCH protocol. Ports 
are available to member firms for the purpose of transacting on the 
Exchange system. Unlike other protocols, the OUCH protocol only 
provides a method for subscribers to send orders and receive status 
updates on those orders (see, e.g. http://www.nasdaqtrader.com/Trader.aspx?id=RASH).
---------------------------------------------------------------------------

    NASDAQ is proposing to offer the service for a one-time 
installation fee of $5,000 per subscription and a monthly subscription 
fee of $5,000. The monthly subscription fee is in addition to the 
standard per port fee assessed a member firm for the OUCH ports 
assigned to the Dedicated OUCH subscription \5\ and any other 
connectivity costs currently assessed member firms.\6\ The proposed 
fees are associated with the additional capital expenditures (hardware) 
and operating expenditures (personnel) associated with offering, 
supporting and maintaining this service. NASDAQ notes that the 
dedicated server assigned to a member firm for each subscription is 
limited to a maximum of 30 OUCH ports. As a consequence, a member firm 
with an excess of 30 OUCH ports that it would like assigned to 
dedicated infrastructure must have more than one Dedicated OUCH 
subscription.\7\ NASDAQ is proposing to assess the monthly subscription 
fee beginning with the rollout of the service in October 2013. NASDAQ 
is proposing to assess the installation fee effective immediately, but 
waive the fee for subscriptions received by August 15, 2013.
---------------------------------------------------------------------------

    \5\ The OUCH ports assigned to the service may be currently 
subscribed ports, newly-subscribed, or a combination thereof.
    \6\ All the fees a member firm is currently assessed will 
continue, unaffected by a subscription to the Dedicated OUCH 
service.
    \7\ In such a case, a member firm may assign its OUCH ports to 
its multiple dedicated servers in any ratio it wishes, so long as no 
one server has more than 30 OUCH ports assigned to it.
---------------------------------------------------------------------------

    NASDAQ notes that member firms will not have physical access to 
their dedicated server within the NASDAQ data center and thus cannot 
make any modifications to the server. All port servers (including 
servers used for this service) are owned and operated by NASDAQ. NASDAQ 
will assign the same type of server to Dedicated OUCH subscribers as is 
provided to existing OUCH port users on shared servers.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\8\ in general, and with Section 
6(b)(5) of the Act \9\ in particular, in that the proposal 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. The Exchange notes that the 
servers under the proposed new service are owned and operated by the 
Exchange. A subscribing member firm will not have the ability to modify 
the infrastructure in any way. In addition, the proposed dedicated 
infrastructure will not change the process by which order message 
traffic reaches the System. Rather, it merely provides certainty to a 
subscribing member firm that its OUCH ports are not on shared 
infrastructure.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange also believes the proposed rule change is consistent 
with Section 6(b)(4) of the Act \10\ 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 it does not unfairly

[[Page 45995]]

discriminate between customers, issuers, brokers or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange determined that the proposed fees are reasonable based 
on market demand as well as the costs associated with purchasing 
hardware (capital expenditures) and supporting and maintaining the 
infrastructure (operating expenditures) for this Dedicated OUCH 
connectivity option for member firms. To the extent such costs are 
covered, the proposed fees may provide NASDAQ with a profit. Member 
firms are not obligated to subscribe to this service and may continue 
to access the NASDAQ System through shared servers at no additional 
cost. As such, the Exchange believes that if a member firm determines 
that the installation and subscription fees are not cost-efficient for 
its needs or does [sic] not provide sufficient value to the firm, it 
may elect not to subscribe to the service and continue to access the 
System, unchanged. NASDAQ notes that member firms may subscribe to OUCH 
ports at any time, in addition to or in replacement of, existing means 
of accessing NASDAQ. NASDAQ also believes that waiver of the 
installation fee is reasonable as it promotes member firms' 
subscription to the connectivity option, thus providing NASDAQ with a 
successful launch of the new service option while also promoting a 
wider use of the connectivity among member firms that might not be 
initially realized without the waiver.
    The Exchange believes that the proposed fees are equitable and not 
unfairly discriminatory because member firms that voluntarily elect to 
subscribe to this service will be charged the same fees. Furthermore, 
this service is optional and is available to all NASDAQ member firms. 
With Dedicated OUCH, member firms can develop a tailored trading 
solution by controlling their message traffic in order to optimize 
their trading strategies. In this regard, some member firms may find 
little benefit in having [sic] dedicated server, and may continue their 
use of the shared servers, unchanged. The Exchange has no plans to 
eliminate shared servers and require subscription to the dedicated 
infrastructure. NASDAQ also believes that the waiver of the 
installation fee is equitable and not unfairly discriminatory because 
it is offered to all member firms and it is applied equally to all 
member firms that subscribe by a date certain.

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

    NASDAQ 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. NASDAQ notes that 
the connectivity option is wholly optional and therefore member firms 
are not compelled to subscribe. Moreover, NASDAQ believes that the 
proposed rule change is pro-competitive as it adds an additional 
connectivity option available to NASDAQ members.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \13\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\14\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing.
---------------------------------------------------------------------------

    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
The Exchange proposes to offer a waiver of the installation fee for 
those who subscribe to this new connectivity option by August 15, 2013. 
NASDAQ's waiver of the installation fee will benefit those who purchase 
this new connectivity option by August 15, 2013, and will allow NASDAQ 
to begin without delay the process of purchasing hardware and 
installation so that subscribers may use the service beginning with its 
commencement in October 2013. The proposed rule change presents no 
novel issues, and waiver of the operative delay provides benefits to 
NASDAQ and member firms subscribing to the service. Therefore, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\15\
---------------------------------------------------------------------------

    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 under 
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2013-097 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-2013-097. 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

[[Page 45996]]

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 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-2013-097, and should be submitted on or before 
August 20, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-18282 Filed 7-29-13; 8:45 am]
BILLING CODE 8011-01-P