[Federal Register Volume 80, Number 85 (Monday, May 4, 2015)]
[Notices]
[Pages 25353-25355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10283]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74823; File No. SR-NASDAQ-2015-046]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to Collection of Exchange Fees

April 28, 2015.
    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 April 27, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by NASDAQ. 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

    NASDAQ proposes to amend Exchange Rule 7007, which is currently 
reserved, and entitle it ``Collection of Exchange Fees and Other 
Claims'' and require each Nasdaq member, and all applicants for 
registration as such, to provide a clearing account number for an 
account at the National Securities Clearing Corporation (``NSCC'') for 
purposes of permitting the Exchange to debit certain fees, fines, 
charges and/or other monetary sanctions or other monies due and owing 
to the Exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.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 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 amend Rule 7007 to 
require NASDAQ members, and all applicants for registration as such, to 
provide a clearing account number for an account at NSCC for purposes 
of permitting the Exchange to debit any undisputed or final fees, 
fines, charges and/or other monetary sanctions or other monies due and 
owing to the Exchange or other charges related to certain 7000 series 
rules \3\ and the 8000 \4\ series rules which are due and owing to 
NASDAQ. The Exchange would entitle Rule 7007 ``Collection of Exchange 
Fees and Other Claims.''
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    \3\ The 7000 series rules in the NASDAQ Rulebook list charges 
for membership, services and equipment. Only the Rules which require 
payment to the Exchange would be subject to direct debit. By way of 
example, Rule 7003, Registration and Processing Fees, fees are 
collected by FINRA.
    \4\ The 8000 series rules in the NASDAQ Rulebook list sanctions 
associated with disciplinary actions. Any disciplinary fines or 
sanctions collected pursuant to the 8000 series shall be subject to 
direct debit to the extent described within this rule change. See 
also note 6 for exceptions to debits.
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    Currently, the Exchange requires all Options Participants to 
provide such an NSCC account number.\5\ The Exchange believes that the 
proposed debiting process for NASDAQ members that conduct an equities 
business would create an efficient method of collecting undisputed or 
final fees, fines, charges and/or other monetary sanctions or monies 
due and owing to the Exchange.\6\ Further, this proposal would provide 
a cost savings to the Exchange in that it would alleviate 
administrative processes related to the collection of monies owed to 
the Exchange by NASDAQ members conducting an equities business, as it 
does today for Options Participants on the NASDAQ Options Market LLC 
(``NOM'').\7\ Collection matters divert staff resources away from the 
Exchange's regulatory and business purposes. In addition, the debiting 
process would prevent NASDAQ member accounts from becoming overdue.
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    \5\ See Chapter XV, Section 1 in the NASDAQ Rules.
    \6\ The Exchange will not debit accounts for fees that are 
unusually large or for
     special circumstances, unless such debiting is requested by the 
NASDAQ member.
    \7\ See NOM Rules at Chapter XV, Section 1. NOM Participants are 
subject to the same process for direct debit as specified herein.
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    The Exchange proposes to require NASDAQ equity members and 
applicants to provide a clearing account number for an account at NSCC 
in order to permit the Exchange to debit any undisputed or final fees, 
fines, charges and/or monetary sanctions or other monies due and owing 
to the Exchange or other charges related to the 7000 series rules, as 
specified below, and the 8000 series rules. Specifically, the following 
7000 series Rules will be subject to proposed Rule 7007: 7001 
(Membership Fees), 7014 (Market Quality Incentive Programs: Investor 
Support Program), 7015 (Access Services), 7016 (Nasdaq Risk 
Management), 7018 (Nasdaq Market Center Order Execution and Routing), 
7021 (NasdaqTrader.com Trading and Compliance Data Package Fee), 7024 
(Clearly Erroneous Module), 7027 (Aggregation of Activity of Affiliated 
Members), 7029 (Installation, Removal or Relocation), 7030 (Other 
Services), 7034 (Co-Location Services), 7038 (Step-Outs and Sales Fees 
Transfers), 7041 (Nasdaq Regulation Reconnaissance Service), 7042 (Non-
Tape Riskless Submissions), 7043 (Inclusion of Transaction Fees in 
Clearing Reports Submitted to ACT), 7049 (Nasdaq InterACT), 7051 
(Direct Connectivity to Nasdaq), 7055 (Short Sale Monitor), 7058 
(QView), 7060 (Equity Trade Journal for Clearing Firms) and 7061 (Limit 
Locator).
    The Exchange would send a monthly invoice \8\ to each NASDAQ equity 
member on approximately the 3th--10th business day of the following 
month.\9\ The Exchange would also send a file to NSCC each month on 
approximately the 23rd of the following month to initiate the debit of 
the appropriate amount stated on the NASDAQ member's invoice for the 
prior month. Because the NASDAQ member would receive an invoice well 
before any monies are debited (normally within two weeks), the NASDAQ 
member would have adequate time to contact the staff with any questions 
concerning its invoice. If a NASDAQ member disagrees with the invoice, 
the Exchange would not commence the debit until the dispute is 
resolved. Specifically, the Exchange will not include the disputed 
amount in the debit if the member has disputed the amount in writing to 
the Exchange's designated staff by the 15th of the

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month, or the following business day if the 15th is not a business day, 
and the amount in dispute is at least $10,000 or greater.
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    \8\ The monthly invoice will indicate that the amount on the 
invoice will be debited from the designated NSCC account. Each 
month, the Exchange will send a file to the NASDAQ member's clearing 
firm which will indicate the amounts to be debited from each member. 
If a NASDAQ member is ``self-clearing'', no such file would be sent 
as the member would receive the invoice, as noted above, which would 
indicate the amount to be debited.
    \9\ NASDAQ members may receive invoices either electronically, 
by mail or by both
    methods.
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    Once NSCC receives the file from the Exchange, NSCC would proceed 
to debit the amounts indicated from the clearing members account. In 
the instance where the NASDAQ member clears through an Exchange 
clearing member, the estimated transaction fees owed to the Exchange 
are typically debited by the clearing member on a daily basis in order 
to ensure adequate funds have been escrowed. The Exchange would debit 
any monies owed including undisputed or final fees, fines, charges and/
or monetary sanctions or monies due and owed to the Exchange.\10\ The 
Exchange believes that the debit process would eliminate the risk of 
unpaid invoices because of the large amounts of capital held at NSCC by 
NASDAQ equity members.
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    \10\ This includes, among other things, fines and sanctions 
which result from disciplinary proceedings or actions taken pursuant 
to the 8000 series of NASDAQ Rules. With respect to disciplinary 
proceedings, the Exchange would not debit any monies until such 
action is final. The Exchange would not consider an action final 
until all appeal periods have run and/or all appeal timeframes are 
exhausted. With respect to non-disciplinary actions, the Exchange 
would similarly not take action to debit a member account until all 
appeal periods have run and/or all appeal timeframes are exhausted. 
Any uncontested disciplinary or non-disciplinary actions will be 
debited, and the amount due will appear on the NASDAQ member's 
invoice prior to the actual NSCC debit.
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    The Exchange proposes this rule change become operative on July 1, 
2015. On August 24, 2015, the Exchange will debit July 2015 billing 
pursuant to the process described in this rule change.\11\ The Exchange 
will notify NASDAQ equity members of this rule change in an Equity 
Trader Alert to provide its members ample time to provide the Exchange 
with the information necessary for the direct debit and prepare for the 
change to the collection process. NASDAQ members' primary NSCC account 
number will be utilized unless the NASDAQ member contacts the Exchange 
prior to July 1, 2015 with an alternate NSCC account number.
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    \11\ The initial debit will include all outstanding fees through 
August 2015.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \12\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \13\ in particular, in that it 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 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 by providing NASDAQ equity 
members with an efficient process to pay undisputed or final fees, 
fines, charges and/or monetary sanctions or monies dues and owing to 
the Exchange.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposal to debit NSCC accounts is 
reasonable because it would ease the NASDAQ equity member's 
administrative burden in paying monthly invoices, avoid overdue 
balances and provide same day collection from all NASDAQ members who 
owe monies to the Exchange.
    The Exchange believes that its proposal to debit NSCC accounts is 
equitable and not unfairly discriminatory because it will apply to all 
NASDAQ members in a uniform manner. Today, the debit process is applied 
to all NOM Participants.\14\
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    \14\ See note 7.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ does not believe that the proposed rule change will impose 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. With this proposal, the 
proposed debit process would apply uniformly to all NASDAQ members as 
it does today with all Options Participants.
    Further, this proposal would provide a cost savings to the Exchange 
in that it would alleviate administrative processes related to the 
collection of monies owed to the Exchange for NASDAQ members conducting 
an equities business, as it does today for NOM Participants. Collection 
matters divert staff resources away from the Exchange's regulatory and 
business purposes. In addition, the debiting process would prevent 
NASDAQ member accounts from becoming overdue.

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

    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)(iii) of the Act \15\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\16\
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    \15\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \16\ 17 CFR 240.19b-4(f)(6). 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 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 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-2015-046 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2015-046. 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

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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-2015-046, and should 
be submitted on or before May 26, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-10283 Filed 5-1-15; 8:45 am]
 BILLING CODE 8011-01-P