[Federal Register Volume 78, Number 170 (Tuesday, September 3, 2013)]
[Notices]
[Pages 54336-54338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-21297]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70269; File No. SR-NASDAQ-2013-106]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Amend Rule 7026

August 27, 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 August 16, 2013, 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes a rule change to NASDAQ Rule 7026 
(Distribution Models) regarding Managed Data Solutions (``MDS''), to 
indicate that this option is available for non-display use only. This 
would conform non-display MDS in Rule 7026(b) with non-display MDS on 
PSX, the equity market of NASDAQ OMX PHLX LLC (``Phlx''), and on NASDAQ 
OMX BX, Inc. (``BX'').
    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 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 this proposal is to amend Rule 7026(b) to indicate 
that NASDAQ MDS is available for non-display use only. This would 
conform non-display MDS on NASDAQ with recent immediately effective 
proposals establishing non-display MDS on PSX and on BX.\3\
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    \3\ See Securities Exchange Release Nos. 69182 (March 19, 2013), 
78 FR 18378 (March 26, 2013) (SR-Phlx-2013-28) (notice of filing and 
immediate effectiveness implementing MDS on PSX) (the ``PSX MDS 
filing''); and 69041 (March 5, 2013), 78 FR 15791 (March 12, 2013) 
(SR-BX-2013-018) (notice of filing and immediate effectiveness 
implementing MDS on BX) (the ``BX MDS filing'').
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    No other changes to Rule 7026 are proposed or made by this filing.
    MDS has been available on NASDAQ since 2010,\4\ and is, in all 
material respects, similar to MDS on PSX and on BX, except that MDS is 
currently available for display on NASDAQ. This proposal aligns and 
conforms the non-display nature of MDS for all three Self-Regulatory 
Organization (``SRO'') exchanges under the umbrella of the NASDAQ OMX 
Group Inc., (``NASDAQ OMX Group''), namely NASDAQ, PSX, and BX.
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    \4\ See Securities Exchange Release No. 63276 (November 8, 
2010), 75 FR 69717 (November 15, 2010) (SR-NASDAQ-2010-138) (notice 
of filing and immediate effectiveness implementing MDS on NASDAQ) 
(the ``NASDAQ MDS filing''). Other markets have also implemented a 
managed data solution. See, for example, Securities Exchange Release 
No. 65678 (November 3, 2011), 76 FR 70178 (November 10, 2011) (SR-
ISE-2011-67) (notice of filing and immediate effectiveness 
implementing a managed data solution on ISE).

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[[Page 54337]]

    MDS is a pricing and administrative option available on NASDAQ to 
firms seeking simplified market data administration for MDS products 
containing TotalView, Level 2, and Open View (known as ``Depth 
Data'').\5\ The MDS pricing and administrative option is reflected in 
the established NASDAQ fee schedule in Rule 7026(b) for Distributors, 
non-professional, and professional subscribers \6\ of NASDAQ Depth Data 
that provide datafeed solutions such as an Application Programming 
Interface (API) or similar automated delivery solutions to recipients 
with limited entitlement controls (e.g., usernames and/or passwords) 
(``Managed Data Recipients''). A Distributor must, however, first agree 
to reformat, redisplay and/or alter the NASDAQ Depth Data prior to 
retransmission, but not to affect the integrity of the NASDAQ Depth 
Data and not to render it inaccurate, unfair, uninformative, 
fictitious, misleading, or discriminatory. MDS is an optional 
distribution model for any retransmission datafeed product containing 
NASDAQ Depth Data offered by a Distributor where the Distributor 
manages and monitors, but does not necessarily control, the 
information. However, the Distributor does maintain contracts with the 
Managed Data Recipients and is liable for any unauthorized use by the 
Managed Data Recipients. The Managed Data Recipients may not distribute 
the information outside of their organization and may only use the 
information for internal, non-display use.
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    \5\ MDS on PSX and on BX includes TotalView only, and as such, 
MDS on NASDAQ is priced higher than on PSX and on BX. As noted in 
this proposal, there is no change to the fee structure, or any other 
aspect of MDS, on NASDAQ.
    \6\ The term ``Distributor'' shall have the same meaning as set 
forth in NASDAQ Rule 7019(c). The term ``non-professional'' shall 
have the same meaning as set forth in NASDAQ Rule 7011(b). MDS fees 
do not change, and remain the same: An administrative fee of $1,500/
month per Distributor; a professional subscriber fee of $300/month 
per subscriber; and a non-professional fee of $60/month per 
subscriber.
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    The Exchange believes that this proposal is reasonable, proper, and 
desirable. First, it aligns and conforms the equities exchanges market 
data products on NASDAQ, PSX, and BX. Second, NASDAQ is not aware of 
Managed Data Recipients using MDS in display; rather they use the 
Enhanced Display Solution (``EDS'') for the ability to display data. 
Separation of MDS and EDS makes it easier for users to understand and 
control the use of these functionalities. Third, MDS continues to give 
Managed Data Recipients a reduction in fees for a specific non-display 
use scenario. And fourth, MDS provides Distributors and Subscribers a 
new unit of count option; smaller firms receive a value added service 
at a reduced cost to help lower even further the potential barriers to 
entry.\7\
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    \7\ Moreover, MDS may ease the administrative burden on 
Subscribers by refocusing administrative costs from smaller 
recipients to larger Distributors that are better able to absorb the 
cost through economies of scale.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder, including the 
requirements of Section 6(b) of the Act.\8\ In particular, the Exchange 
believes the proposed rule change is consistent with the Section 
6(b)(5) \9\ requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and to perfect the mechanism for a free and open market 
and a national market system, and, in general, to protect investors and 
the public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that, in addition to being consistent with 
the Act, this proposal is beneficial for market participants. First, 
the proposal aligns and conforms Market Data Recipients on NASDAQ with 
recipients of similar data on PSX and BX, so that Recipients of MDS on 
all three exchanges are treated similarly. Second, NASDAQ is not aware 
of Managed Data Recipients using MDS in display; rather they use EDS 
for the ability to display data. Separation of MDS and EDS makes it 
easier for users to understand and control the use of these 
functionalities. Third, MDS continues to give Managed Data Recipients a 
reduction in fees for a specific non-display use scenario. And fourth, 
MDS provides Distributors and Subscribers a new unit of count option; 
smaller firms receive a value added service at a reduced cost to help 
lower even further the potential barriers to entry.

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. To the contrary, 
MDS has been available on NASDAQ for more than two years as a display 
option, and has, as proposed herein, been available on PSX and BX as a 
non-display option. Thus, combined with the very limited scope of this 
proposal, the Exchange believes that there is no burden on inter- or 
intra-exchange competition.

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 Exchange believes that the foregoing proposed rule change may 
take effect upon filing with the Commission pursuant to Section 
19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6)(iii) thereunder \11\ 
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.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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

[[Page 54338]]

Number SR-NASDAQ-2013-106 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-2013-106. 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 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-2013-106, and 
should be submitted on or before September 24, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21297 Filed 8-30-13; 8:45 am]
BILLING CODE 8011-01-P