[Federal Register Volume 82, Number 38 (Tuesday, February 28, 2017)]
[Notices]
[Pages 12148-12150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-03846]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80088; File No. SR-NASDAQ-2017-017]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Exchange's Port-Related Fees at Rules 7015 and 7016(b) To 
Eliminate Prorated Billing

February 22, 2017.
    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 February 9, 2017, 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, 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

    The Exchange proposes to amend the Exchange's port-related fees at 
Rules 7015 and 7016(b) to eliminate prorated billing.
    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 the proposed rule change \3\ is to harmonize the 
billing practices for subscription to Nasdaq ports and other services 
provided under Rules 7015 \4\ and 7016(b) \5\ with those of the 
Nasdaq's Options Market (``NOM'') by no longer applying a prorated fee 
for subscriptions that are effective other than the first of any given 
month.\6\ The Exchange does not prorate NOM connectivity subscriptions; 
thus, Options Participants \7\ are assessed a full month's fee for a 
connectivity subscription if they direct the Exchange to make the 
subscribed connectivity live on any day of the month, including the 
last day thereof. The Exchange notes that the NASDAQ PHLX does not 
prorate port connectivity under both [sic] its equity and options 
rules.\8\
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    \3\ The Exchange initially filed the proposed pricing changes on 
February 1, 2017 (SR-NASDAQ-2017-009). On February 9, 2017, the 
Exchange withdrew that filing and submitted this filing.
    \4\ Rule 7015 is titled ``Ports and other Services'' and 
provides the options for connecting to the Nasdaq equity market 
together with the fees associated with such connectivity.
    \5\ Rule 7016(b) concerns the fees assessed for Pre-trade Risk 
Management service ports. Pre-trade Risk Management provides Members 
with the ability to set a wide range of parameters for orders to 
facilitate pre-trade protection for FIX, Rash, OUCH and FLITE ports.
    \6\ See NOM Rules Chapter XV, Section 3(b).
    \7\ As defined by NOM Rules Chapter I, Section 1(a)(40).
    \8\ See Securities Exchange Act Release No. 78665 (August 24, 
2016), 81 FR 59693 (August 30, 2016) (SR-PHLX-2016-85) (eliminating 
prorated billing as applied to PSX ports under Access Services 
Fees).

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[[Page 12149]]

    Currently, connectivity on Nasdaq's equity market under Rules 7015 
and 7016(b) is prorated based on the day that it is activated, with the 
Nasdaq Member \9\ only fee liable for the remaining days of the partial 
month. The Exchange has found that prorating billing has resulted in 
complexity and increased costs associated with the billing process. As 
a consequence, the Exchange is harmonizing the billing process with 
that of the Exchange's Options market and is not permitting prorated 
billing effective February 1, 2017.
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    \9\ As defined by Rule 0120(i).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ in particular, 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, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that elimination of prorated fees under Rules 
7015 and 7016(b) is reasonable because it will reduce complexity and 
costs associated with the billing process, and will harmonize it with 
the process applied to Options Participants. As noted above, Members 
are currently able to choose when they want a new connectivity 
subscription to become effective and thus make the determination of 
when they wish to become fee liable. Members will continue to choose 
when they become fee liable under the proposed change, but now the 
Exchange will assess the full month's fee regardless of when the port 
is subscribed. Thus, Members must weigh whether subscription to a 
service covered by the rules for less than a full month is worth the 
full monthly fee.
    The Exchange believes that elimination of prorated fees under Rules 
7015 and 7016(b) is an equitable allocation and is not unfairly 
discriminatory because it will apply to all new subscribers to the 
port-related services under Rules 7015 and 7016(b), who are free to 
choose the date on which their subscription becomes active and thus fee 
liable. Moreover, the Exchange believes the proposed change is an 
equitable allocation and is not unfairly discriminatory because it will 
harmonize the billing process with that of NOM. Thus, the Exchange will 
apply the same process to both its Options Participants and Equities 
Members.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. In terms of inter-market 
competition, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other exchanges and with 
alternative trading systems that have been exempted from compliance 
with the statutory standards applicable to exchanges. Because 
competitors are free to modify their own fees in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.
    In this instance, although eliminating prorated fees for 
subscriptions under the rules may result in an increase in fees for new 
subscriptions to the extent a Member determines to subscribe to a 
service under Rules 7015 or 7016(b) on a day other than the first day 
of a given month, the Exchange notes that it is doing so to both 
simplify the process and harmonize it with the process applied to the 
Exchange's Options Participants. Moreover, Members may choose the day 
on which such services become effective and may therefore choose the 
first day of a month, which would result in no fee increase. Last, the 
proposed change does not impose a burden on competition because the 
Exchange's services are completely voluntary and subject to extensive 
competition both from other exchanges and from off-exchange venues. In 
sum, if the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. Accordingly, the Exchange does not believe that the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.

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.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-2017-017 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2017-017. 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

[[Page 12150]]

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 
the 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 available publicly.
    All submissions should refer to File Number SR-NASDAQ-2017-017 and 
should be submitted on or before March 21, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-03846 Filed 2-27-17; 8:45 am]
 BILLING CODE 8011-01-P