[Federal Register Volume 79, Number 5 (Wednesday, January 8, 2014)]
[Notices]
[Pages 1410-1412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00070]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71226; File No. SR-NASDAQ-2013-164]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Further Describe the Application of Fees Assessed for Connectivity to 
the Carteret Test Environment under Rule 7030(d)

January 2, 2014.
    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 December 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.
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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 proposed rule change to further describe 
the application of fees assessed pursuant to Rule 7030(d)(1)(C).
    The text of the proposed rule change is below. Proposed new 
language is italicized. Proposed deletions are in brackets.
* * * * *

7030. Other Services

    (a)-(c) No change.
    (d) Nasdaq Testing Facilities
    Nasdaq operates two testing environments. One is located in 
Ashburn, Virginia and the other in Carteret, New Jersey. Unless 
otherwise noted, reference to the ``Nasdaq Testing Facility'' or 
``NTF'' applies to both environments.
    (1) The following fees are assessed for access to the Nasdaq 
Testing Facility:
    (A) Subscribers that conduct tests of the computer-to-computer 
interface (CTCI) and the Financial Information Exchange (FIX) interface 
to ACT and ACES access protocols through the Nasdaq Testing Facility 
(NTF) shall pay the following charges:

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$285/hour.........................  For Active Connection testing during
                                     the normal operating hours of the
                                     NTF;

[[Page 1411]]

 
No Charge.........................  For Idle Connection testing;
$333/hour.........................  For Active Connection testing at all
                                     times other than the normal
                                     operating hours of the NTF.
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    (B) Subscribers that conduct tests of all Nasdaq access protocol 
connections not included in paragraph (A) above or of market data 
vendor feeds through the Nasdaq Testing Facility shall pay $300 per 
port, per month.
    (C) Subscribers to the Nasdaq Testing Facility located in Carteret, 
New Jersey shall pay a fee of $1,000 per hand-off, per month for 
connection to the NTF. The hand-off fee includes either a 1Gb or 10Gb 
switch port and a cross connect to the NTF. Subscribers shall also pay 
a one-time installation fee of $1,000 per hand-off, which is waived for 
all installations ordered prior to March 31, 2014.
    The connectivity provided under this rule also provides 
connectivity to the other test environments of NASDAQ OMX BX, Inc. and 
NASDAQ OMX PHLX LLC.
    (2)-(6) 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
    The Exchange is proposing to amend the Rule 7030(d) to more fully 
describe the application of the newly-adopted fee \3\ assessed for 
direct connectivity to the Testing Facility \4\ test environment 
located in Carteret, New Jersey (``Carteret''). The Testing Facility 
provides subscribers with a virtual Exchange System test environment 
that closely approximates the production environment and on which they 
may test their automated systems that integrate with the Exchange. The 
Exchange recently developed a test environment located in Carteret that 
provides Exchange equity trade testing functionality. The new test 
environment was developed together with equity test environments of the 
Exchange's sister exchanges, NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX 
LLC, also located at Carteret, New Jersey (collectively with NASDAQ, 
the ``Equity Markets'').
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    \3\ See Securities Exchange Act Release No. 70851 (November 13, 
2013), 78 FR 69485 (November 19, 2013) (SR-NASDAQ-2013-137).
    \4\ See http://www.nasdaqtrader.com/Trader.aspx?id=TestingFacility for a description of the Testing 
Facility.
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    The Exchange is proposing to add language to Rule 7030(d)(1)(C) 
that was erroneously omitted when the fee was originally adopted.\5\ 
The new rule text explains that a firm that is a member of more than 
one of the Equity Markets may access the test environments of each of 
the Equity Markets of which it is a member through a single 
connectivity subscription under the rule. The Exchange notes that each 
of the Equity Markets has identical installation and hand-off fees for 
Carteret connectivity and these fees relate to the physical connection 
to the hardware infrastructure that houses all three test environments 
of the Equity Markets. Members of the Equity Markets must separately 
pay port fees to connect to the individual test environments of the 
Equity Markets of which it is a member within the hardware 
infrastructure housing them.\6\ Therefore, a firm that is a member of 
multiple Equity Markets is not charged the Carteret connectivity fees 
for a hand-off under each of the identical rules of such markets, but 
rather is assessed a single market's Carteret connectivity fees. 
Consequently, a member firm of NASDAQ using the Carteret test 
environment may be assessed the connectivity fees under another Equity 
Markets' rules of which it is a member, yet pay the NASDAQ port fee to 
connect to the Exchange's test environment. Similarly, a member firm 
may subscribe to Carteret connectivity under NASDAQ Rule 7030(d)(1)(C) 
and not have an obligation to pay the same fee under the rules of the 
other Equity Markets of which it is a member, but have an obligation to 
pay those markets' port fees. The Exchange notes that, in adopting the 
identical fee for Carteret connectivity, NASDAQ OMX BX, Inc. included 
rule text consistent with the rule text proposed herein.\7\ 
Accordingly, the Exchange is adding rule text to Rule 7030(d)(1)(C) to 
reflect that the connectivity provided by the rule also provides access 
to the test environments of NASDAQ OMX BX, Inc. and NASDAQ OMX PHLX 
LLC.
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    \5\ Supra note 3.
    \6\ NASDAQ Rule 7030(d)(1)(B), Phlx Pricing Schedule Chapter 
VIII Testing Facilities subparagraph (a), and BX Rule 7030(d)(1).
    \7\ See Securities Exchange Act Release No. 71035 (December 11, 
2013), 78 FR 76344 (December 17, 2013) (SR-BX-2013-058).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \8\ in general, and with Section 6(b)(5) of the Act,\9\ 
in particular. The Exchange believes the proposal furthers the 
objectives of Section 6(b)(5) of the Act \10\ in that it is designed to 
promote just and equitable principles of trade, 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 and is not designed to permit unfair discrimination between 
customer, issuers, brokers and dealers. The Exchange is proposing to 
add clarifying language to the rule, which was erroneously omitted when 
the rule was adopted and further describes the application of the rule. 
Moreover, the proposed new rule text is consistent with the identical 
rule of BX and how fees are assessed under that rule. Accordingly, the 
Exchange believes that it is consistent with the protection of 
investors and the public interest to avoid potential market participant 
confusion that may be caused by the omission of the proposed rule text.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
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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, as amended. The 
proposed rule change clarifies how fees will be assessed to a firm that 
is a member of more than one of the Equity Markets and makes clear that 
a member firm may gain access to the test environments of the other 
Equity Markets through a subscription under the rule. Members of 
multiple Equity Markets are assessed the same fee for Carteret 
connectivity and must pay the port fees of each of the Equity Markets 
to gain access to such markets' test environments. As a consequence, 
the Exchange does not believe that the proposed rule change is 
impactful to competition in any respect.

[[Page 1412]]

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 has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) \12\ thereunder. 
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 \13\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\14\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of 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.
    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \15\ Id.
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Exchange has asked the Commission to waive the 30-day operative 
delay. The Exchange notes that such waiver will allow the Exchange to 
immediately add language to its rule text that was incorrectly omitted 
from a previous rule change, thereby clarifying its rules and avoiding 
potential market participant confusion.\17\ The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as the proposal is 
designed to avoid potential investor confusion regarding the Exchange's 
rules and provide clarification to the public. For these reasons, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\18\
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    \17\ See SR-NASDAQ-2013-164, Item 7.
    \18\ 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).
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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 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 change 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 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-2013-164 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-2013-164. 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 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-
164, and should be submitted on or before January 29, 2014.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00070 Filed 1-7-14; 8:45 am]
BILLING CODE 8011-01-P