[Federal Register Volume 87, Number 1 (Monday, January 3, 2022)]
[Notices]
[Pages 130-132]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28395]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93868; File No. SR-NASDAQ-2021-102]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Withdraw Its Trading Insights Product From Sale

December 27, 2021.
    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 16, 2021, 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 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to withdraw its Trading Insights product from 
sale.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 is to withdraw the Trading 
Insights product from sale. Trading Insights is an optional market data 
service designed to help members analyze their own order activity. 
Nasdaq has determined, however, that the product is no longer needed, 
and, for certain components of the product, members are able to gather 
similar insights into their own order activity using existing messaging 
received on their order acknowledgments. Because Trading Insights is no 
longer needed in the industry, Nasdaq has decided to redirect the 
resources used to offer Trading Insights toward new tools and services, 
and withdraw the product from sale.
Trading Insights
    Trading Insights is an optional market data service designed to 
help members analyze their own order activity. It is comprised of three 
components: (a) Missed Opportunity--Liquidity; (b) Missed Opportunity--
Latency; and (c) Peer Benchmarking.\3\
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    \3\ See Securities Exchange Act Release No. 78886 (September 20, 
2016), 81 FR 66113 (September 26, 2016) (SR-Nasdaq-2016-101); see 
also Securities Exchange Release No. 79035 (October 4, 2016), 81 FR 
70207 (October 11, 2016) (SR-Nasdaq-2016-124) (setting fees for 
Trading Insights); Securities Exchange Act Release No. 80856 (June 
5, 2017), 82 FR 26820 (June 9, 2017) (SR-Nasdaq-2017-051) (modifying 
fees to allow members to sponsor their customers to receive Trading 
Insights and extending a free trial offer). The initial proposal had 
included a Liquidity Dynamics Analysis component, which was to help 
market participants identify pockets of accessible liquidity, but 
the Exchange later announced that this component would be delayed 
and was never made available to subscribers. See Securities Exchange 
Release No. 79119 (October 19, 2016), 81 FR 73157 (October 24, 2016) 
(SR-Nasdaq-2016-138).
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    The Missed Opportunity--Liquidity component identifies when an 
order from a market participant could have been increased in size, 
resulting in the execution of additional shares, and is designed to 
provide information to a market participant interested in gaining 
insight into pockets of liquidity.\4\
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    \4\ The data elements for this component, in summary, are: (i) 
Issue (Nasdaq symbol for the issue); (ii) Buy/Sell Indicator (side 
of the market at which the market participants are quoting); (iii) 
Price (the price (inclusive of decimal point) at which Nasdaq Market 
Center market participants had order interest for the given security 
at the given time); (iv) Order Reference Number (the unique 
reference number assigned to the new order at the time of receipt); 
(v) Order Entry Time Stamp (the time order was received in the 
system); (vi) Share Quantity (total number of shares submitted on 
original order); and (vii) Missed Opportunity Quantity (total number 
of shares missed).
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    The Missed Opportunity--Latency component identifies the amount of 
time by which an otherwise marketable order missed execution, and is 
designed to provide information to market participants interested in 
optimizing their models and trading patterns.\5\
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    \5\ The data elements for this component, in summary, are: (i) 
Issue (Nasdaq symbol for the issue); (ii) Buy/Sell Indicator (side 
of the market at which the market participants are quoting); (iii) 
Price (the price (inclusive of decimal point) at which Nasdaq Market 
Center market participants had order interest for the given security 
at the given time); (iv) Order Reference Number (the unique 
reference number assigned to the new order at the time of receipt); 
(v) Order Size; (vi) Matching Engine times for incoming orders; 
(vii) Missed Opportunity times; and (viii) Reasons for not getting 
fills. The Missed Opportunity--Latency component would not provide 
specific information about resting orders on the Exchange order 
book.
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    The Peer Benchmarking component ranks the quality of a market 
participant's trading performance against its peers, allowing each 
participant to view its relative trading performance by port.\6\ It is 
designed to help participants better understand trends over time, their 
relative performance relative to their competitors in general, and 
whether behavioral changes translate into expected results.
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    \6\ A port is a means by which a member firm connects to 
Nasdaq's systems. Each port would be categorized into a peer 
grouping that would be based upon a given set of metrics that would 
share similar trading behavior characteristics, and there would be 
at least ten peers within a security. The data elements for this 
component, in summary, include: (i) Total Dollar Volume; (ii) Total 
Share Volume, Share Volume of Liquidity Provision and Accessible for 
Tape A, Tape B and Tape C; (iii) Number of Trades, including Hidden 
Orders and Number of Hidden Trades; (iv) Mean/Median Trade Size; (v) 
Mean/Median Size of Hidden Orders; (vi) Number of Buy/Sell Orders 
Received; (vii) Number of Aggressive Orders, Mean Size of Aggressive 
Buy/Sell Orders; (viii) Number of Passive Orders, Mean Size of 
Displayed Passive Order, Hidden Passive for Buy and Sell Orders; 
(ix) Number of Orders at Best Bid/Ask Level; (x) Mean Cost to 
Execute for Buy and Sell for 1,000, 5,000, 10,000 Shares; (xi) 
Number of Modified/Cancelled Buy/Sell Orders; (xii) Mean Buy/Sell 
Price Range; (xiii) Total Number of Buy/Sell Price; (xiv) Number, 
Mean--Resting Buy/Sell Price Points; (xv) Missed Opportunities--
Liquidity, Latency; (xvi) Mean Share Volume Against Hidden, Mean 
Quote Rotation Time.
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    All of the data offered by Trading Insights is specific to the 
market participant's port, and no participant would be able to receive 
another market participant's data.
    All data is provided on a T+1 basis.
Proposed Withdrawal
    Nasdaq regularly reviews its product catalog to ensure that the 
tools and services it offers fit the needs of its customers. As 
explained above, Trading Insights is an optional market data service 
designed to help members analyze their own order activity. Nasdaq

[[Page 131]]

has found, however, that members are able to use messaging received on 
their order acknowledgments, coupled with internal software, to obtain 
the same insights into trading activity that certain components of 
Trading Insights was designed to convey.\7\ Because the product is no 
longer needed in the industry, Nasdaq has decided to withdraw it and 
its associated fees from the market.
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    \7\ Nasdaq had noted previously that some market participants 
may be able to derive some of the data provided by Nasdaq Trading 
Insights based on executions and internal algorithms created by 
customers. See Securities Exchange Act Release No. 78886 (September 
20, 2016), 81 FR 66113 (September 26, 2016) (SR-Nasdaq-2016-101).
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    The withdrawal of Trading Insights will not materially impact 
either Nasdaq's members or the market as a whole. Currently, less than 
ten customers purchase Trading Insights. Nasdaq has discussed the 
proposed withdrawal with each, and none indicated that withdrawal would 
materially impact their operations. Nasdaq also publicly announced its 
intent to withdraw Trading Insights in a Data News publication issued 
on October 1, 2021,\8\ and received no feedback indicating that 
withdrawal would be problematic.
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    \8\ See Nasdaq Data News No. 2021-8 (October 1, 2021), available 
at http://www.nasdaqtrader.com/TraderNews.aspx?id=dn2021-8.
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    Withdrawal of Trading Insights will not have a different impact on 
different types of market participants. Members that currently purchase 
the product have not indicated that they would be materially 
disadvantaged by its withdrawal, and members that do not currently 
purchase the product would remain unaffected.
    In light of the small number of customers currently using the 
product, the ability of members to analyze their own order activity 
using in-house software, and the lack of any negative feedback after 
discussing the proposed withdrawal with Trading Insights customers and 
announcing it publicly, Nasdaq proposes to withdraw Trading Insights 
from sale as of December 31, 2021.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\10\ in particular, 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 
customers, issuers, brokers or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    Withdrawing a product that is no longer needed in the industry is 
the quintessence of competition. The Proposal promotes competition 
because Nasdaq, like all of its competitors, has limited resources with 
which to attract customers, and, to remain competitive, Nasdaq must use 
its resources effectively. Withdrawal will allow Nasdaq to redirect its 
internal resources into developing other products that more effectively 
meet customer demand.
    The Proposal will not permit unfair discrimination between 
customers, issuers, brokers, or dealers. Members that currently 
purchase the product have not indicated that they would be materially 
disadvantaged by its withdrawal, and members that do not currently 
purchase the product will remain unaffected. The Proposal therefore 
does not permit unfair discrimination.
    For all of these reasons, the proposed withdrawal of Trading 
Insights promotes just and equitable principles of trade, removes 
impediments to and perfects the mechanism of a free and open market and 
a national market system, and, in general, protects investors and the 
public interest, and does not permit unfair discrimination.

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.
Intermarket Competition
    The withdrawal of Trading Insights will have no impact on 
intermarket competition (the competition among SROs). As explained 
above, the Proposal would allow Nasdaq to redirect its internal 
resources into developing other products that more effectively meet 
customer demand. Other platforms may use the opportunity of this 
withdrawal to introduce their own versions of Trading Insights, 
although, as is evident from Nasdaq's experience, such a product may 
not elicit high customer demand.
Intramarket Competition
    The Proposal will not cause any unnecessary or inappropriate burden 
on intramarket competition (competition among exchange customers). As 
explained in our discussion of unfair discrimination above, members 
that currently purchase the product have not indicated that they would 
be materially disadvantaged by its withdrawal, and members that do not 
currently purchase the product will remain unaffected. The Proposal 
therefore will not cause any unnecessary or inappropriate burden on 
intramarket competition.

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) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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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 a self-regulatory organization to give the Commission 
written notice of its 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 met this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that it can withdraw Trading Insights on December 31, 2021. According 
to the Exchange, it has publicly announced its intent to withdraw 
Trading Insights in October 2021 and received no feedback indicating 
that withdrawal would be problematic, and it has discussed the 
withdrawal with each of the customers currently purchasing the product 
and no customer indicated that withdrawal would materially impact their 
operations. For these reasons, the Commission believes that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission hereby 
waives the 30-day operative delay and designates the

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proposed rule change operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also 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-2021-102 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-2021-102. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2021-102 and should be submitted 
on or before January 24, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2021-28395 Filed 12-30-21; 8:45 am]
BILLING CODE 8011-01-P