[Federal Register Volume 82, Number 193 (Friday, October 6, 2017)]
[Notices]
[Pages 46877-46879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21541]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81798; File No. SR-NASDAQ-2017-097]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Exchange's Connectivity Fees at Rule 7051

October 2, 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 September 18, 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 Rule 7051, which sets forth the 
schedule of fees that the Exchange charges to its clients for 
connecting directly to the Exchange's data centers and/or receiving 
third party market data feeds and other non-Exchange services from the 
Exchange via circuits provided by third party telecommunications 
providers.
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on October 1, 2017.
    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 Exchange proposes to amend Rule 7051, which sets forth the 
schedule of fees that the Exchange charges to its clients for 
connecting directly to the Exchange's data centers and/or receiving 
third party market data feeds and other non-Exchange services from the 
Exchange via circuits provided by third party telecommunications 
providers.
    Subscribers may use the connectivity provided under Rule 7051 to 
link them

[[Page 46878]]

to the Exchange for order entry and to receive proprietary data feeds, 
to receive public quote feeds from Securities Information Processors, 
and to connect to facilities of FINRA, such as the FINRA/Nasdaq TRF. 
The Exchange provides various direct connectivity options based on the 
capacity of the connection. A subscriber generally determines the 
capacity of the connection it needs based on the number of data 
services it wishes to receive and its estimated usage for trading and 
trade reporting purposes.
    For direct connectivity to Nasdaq, Rule 7051(a) provides for 1 GB, 
1 GB Ultra, and 10 GB Ultra hand-offs. The installation fee for all 
such connections is $1,500 and the monthly fee is $7,500 for 10 GB 
connections and $2,500 for both 1 GB and 1 GB Ultra hand-offs. The 
Exchange also charges a $925 fee to customers that choose to install a 
cable router in its data center and a monthly fee of $150 for customers 
that choose to install equipment in the Exchange's data center to 
support the connectivity.
    For direct connectivity to third party services, Rule 7051(b) 
provides for 1GB Ultra and 10 GB Ultra hand-offs. The installation fee 
for both 10 GB Ultra and 1 GB Ultra direct connections is $1,500. 
Meanwhile, the monthly fee is $5,000 for 10 GB Ultra connections and 
$2,000 for 1 GB Ultra hand-offs. For 1 GB Ultra or 10 GB Ultra 
connections for UTP only, the installation fee and monthly fee is 
waived for the first two connections and thereafter the installation 
fee is $100 and the monthly fee is also $100. Again, the Exchange 
charges a $925 fee to customers that choose to install a cable router 
in its data center for purposes of receiving these third party services 
and a monthly fee of $150 for customers that choose to install 
equipment in the Exchange's data center to support the connectivity.
    In order to reflect the changing nature of the Exchange's ecosystem 
and of the connection technologies it employs, the Exchange proposes to 
clarify Rule 7051 in several respects.
    First, the Exchange proposes to list separately those fees it 
charges for certain connectivity that it presently includes under the 
general heading of Direct Connectivity, pursuant to Rule 7051(a). 
Specifically, the Exchange proposes to break out the fees it charges to 
clients that connect directly to the Exchange through a ``Point of 
Presence'' or ``POP'' from the fees it charges to clients that connect 
through a direct circuit connection. In contrast to a traditional 
direct circuit connection, in which a client uses an external 
telecommunications provider's circuit to connect directly to the 
Exchange's primary data center in Carteret, New Jersey, a ``POP'' 
connection is one in which a client directly connects to the Exchange 
at one of its satellite data centers located elsewhere. Each such POP, 
in turn, has a fully redundant connection to the Exchange's primary 
data center.
    The Exchange proposes to list POP connectivity fees separately from 
traditional direct circuit connectivity fees because it wishes to 
highlight POP connectivity as a distinct connection option, 
particularly as it contemplates expanding the numbers and locations of 
its POPs in the future.
    To effect the foregoing change, the Exchange proposes to add a new 
subsection (c) to Rule 7051 entitled ``Point of Presence 
Connectivity.'' Under proposed Rule 7051(c), the installation and 
monthly fees that the Exchange proposes to charge expressly for POP 
connectivity would not be new fees and they would differ only in name, 
and not in amount, from those fees that clients presently pay under 
Rule 7051(a) for the same connectivity. The new subsection would 
provide for clients to choose between 10 GB Ultra and 1 GB Ultra 
bandwidth hand-offs for connections to POPs. However, the proposed 
subsection (c) will not include charges for installing optional cable 
routers or cabinet space rentals insofar as clients may not install 
routers in or rent cabinet space directly from the Exchange at the 
POPs. Likewise, proposed subsection (c) will not include fees for 
regular 1 GB hand-offs insofar such hand-offs are not available for 
connections to POPs.
    In addition to the above, the Exchange proposes to update the 
headings of Rule 7051(a) and (b) so that they more accurately reflect 
the nature of the services to which they apply. Because Rule 7051(a) 
and (b) list the fees that the Exchange charges customers for 
installing and maintaining direct telecommunications ``circuit'' 
connectivity with the Exchange, the Exchange proposes to change the 
heading of subsection (a) from ``Direct Connectivity to Nasdaq'' to 
``Direct Circuit Connection to Nasdaq'' and the heading of subsection 
(b) from ``Direct Connectivity to Third Party Services'' to ``Direct 
Circuit Connection to Third Party Services.''
    Lastly, the Exchange proposes to amend Rule 7051 to state that the 
connectivity provided under the Rule also applies to connectivity to 
the markets of The NASDAQ Stock Market LLC, NASDAQ BX, Inc., NASDAQ 
PHLX LLC, Nasdaq ISE LLC, Nasdaq MRX LLC, and Nasdaq GEMX LLC. This 
purpose of this proposal is to specify that a client can use the 
connections it establishes and maintains under the Rule to connect, not 
only to the Exchange, but also to any or all of its sister Exchanges, 
and in doing so, it will be billed only once. Certain of the Exchange's 
other Rules already include similar language, including Rules 7030 and 
7034. The Exchange wishes now to add such language to Rule 7051.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with section 
6(b) of the Act,\3\ in general, and furthers the objectives of sections 
6(b)(4) and 6(b)(5) of the Act,\4\ 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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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that its proposal to separately list its fees 
for POP connectivity is reasonable as a means of clearly distinguishing 
POP connectivity from traditional direct circuit connectivity as set 
forth in Rule 7051(a). The proposal will not assess any new or 
different fees to customers that connect to the Exchange through POPs. 
Instead, the proposal will merely re-characterize the fees that clients 
presently pay under Rule 7051(a) as relating specifically to POP 
connectivity. The Exchange also believes that this proposal is an 
equitable allocation and is not unfairly discriminatory because it will 
apply all similarly situated clients that connect through POPs.
    The Exchange believes that its proposal to modify the headings of 
subsections (a) and (b) of Rule 7051 is also reasonable because it 
clarifies that the fees in these subsections pertain specifically to 
connections to the Exchange that involve circuits provided by external 
telecommunications providers. Again, this proposal is an equitable 
allocation and is not unfairly discriminatory in that it will apply to 
all clients that use such direct circuits to connect to the Exchange.
    Lastly, the Exchange believes that its proposal is reasonable and 
nondiscriminatory to clarify that each of the connection options and 
fees set forth in Rule 7051 generally provide for connectivity to The 
NASDAQ Stock Market LLC, NASDAQ BX, Inc., NASDAQ PHLX LLC, Nasdaq ISE 
LLC, Nasdaq MRX LLC, and Nasdaq GEMX LLC. The Exchange does not 
restrict its clients from utilizing their direct

[[Page 46879]]

connections to it to also access its sister exchanges, and it does not 
charge its clients more than once to do so. Although certain of the 
Exchange's other connectivity Rules already make these points clear 
(e.g., Rules 7030 and 7034), Rule 7051 does not do so. The Exchange 
therefore believes its proposal to clarify Rule 7051 is warranted.

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. The proposal merely clarifies 
the Exchange's existing services and associated fees and the Exchange 
does not anticipate that such clarifications will have any impact on 
competition whatsoever.

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.\5\
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    \5\ 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-2017-097 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-2017-097. 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 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-2017-097, and should 
be submitted on or before October 27, 2017.
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    \6\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
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pursuant to delegated authority.\6\

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21541 Filed 10-5-17; 8:45 am]
BILLING CODE 8011-01-P