80_FR_41238 80 FR 41104 - Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Market Data Section of Its Fee Schedule

80 FR 41104 - Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Market Data Section of Its Fee Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 134 (July 14, 2015)

Page Range41104-41109
FR Document2015-17175

Federal Register, Volume 80 Issue 134 (Tuesday, July 14, 2015)
[Federal Register Volume 80, Number 134 (Tuesday, July 14, 2015)]
[Notices]
[Pages 41104-41109]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-17175]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75397; File No. SR-EDGX-2015-28]


Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Market Data Section of Its Fee Schedule

July 8, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 1, 2015, EDGX Exchange, Inc. (the ``Exchange'' or 
``EDGX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Exchange has designated the proposed rule change as one establishing or 
changing a member due, fee, or other charge imposed by the Exchange 
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) 
thereunder,\4\ which renders the proposed rule change effective upon 
filing with the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend the Market Data section of 
its fee schedule to: (i) Adopt User fees, an Enterprise fee, and a 
Digital Media Enterprise fee for the EDGX Top and EDGX Last Sale feeds; 
and (ii) make a non-substantive change to the description of the BATS 
One Feed Enterprise Fee as well as correct a cross-reference within the 
definition of ``Non-Professional User''.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.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 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 proposes to amend the Market Data section of its fee 
schedule to: (i) Adopt User fees, an Enterprise fee, and a Digital 
Media Enterprise fee for the EDGX Top and EDGX Last Sale feeds; and 
(ii) make a non-substantive change to the description of the BATS One 
Feed Enterprise Fee as well as correct a cross-reference within the 
definition of ``Non-Professional User''.
EDGX Top and Last Sale Fees
    EDGX Top is a market data feed that includes top of book quotations 
and execution information for all equity securities traded on the 
Exchange.\5\ EDGX Last Sale is a market data feed that includes last 
sale information for all equity securities traded on Exchange.\6\
---------------------------------------------------------------------------

    \5\ See Exchange Rule 13.8(c).
    \6\ See Exchange Rule 13.8(d).

---------------------------------------------------------------------------

[[Page 41105]]

    Currently, the Exchange only charges fees for both internal and 
external distribution of the EDGX Last Sale and EDGX Top feeds. The 
cost of EDGX Last Sale for an Internal Distributor \7\ is $500 per 
month. Likewise, the cost of EDGX Top for an Internal Distributor is 
also $500 per month. The Exchange currently does not charge per User 
\8\ fees for either EDGX Last Sale or EDGX Top. Therefore, the Exchange 
does not currently require an External Distributor \9\ of EDGX Last 
Sale or EDGX Top to count, classify (e.g., professional or non-
professional), or report to the Exchange information regarding the 
customers to which they provide the data. Instead, the Exchange charges 
an External Distributor of EDGX Last Sale a flat fee of $1,250 per 
month. The Exchange also separately charges an External Distributor of 
EDGX Top a flat fee of $1,250 per month. End Users currently do not pay 
the Exchange for EDGX Last Sale or EDGX Top, nor are End Users required 
to enter into contracts with the Exchange.
---------------------------------------------------------------------------

    \7\ An ``Internal Distributor'' is defined as ``a Distributor 
that receives the Exchange Market Data product and then distributes 
that data to one or more Users within the Distributor's own 
entity.'' See the Exchange Fee Schedule available at http://batstrading.com/support/fee_schedule/edgx/. A ``Distributor'' is 
defined as ``any entity that receives the Exchange Market Data 
product directly from the Exchange or indirectly through another 
entity and then distributes it internally or externally to a third 
party.'' Id.
    \8\ A ``User'' is defined as ``a natural person, a 
proprietorship, corporation, partnership, or entity, or device 
(computer or other automated service), that is entitled to receive 
Exchange data.'' Id.
    \9\ An ``External Distributor'' is defined as ``a Distributor 
that receives the Exchange Market Data product and then distributes 
that data to a third party or one or more Users outside the 
Distributor's own entity.'' Id.
---------------------------------------------------------------------------

    Subscribers to either EDGX Top or EDGX Last Sale are able to 
receive, upon request and at no additional cost, EDGX Last Sale or EDGX 
Top, as applicable. The Exchange also offers a New External Distributor 
Credit under which new External Distributors of EDGX Top or EDGX Last 
Sale will not be charged a Distributor Fee for their first three (3) 
months.
    The Exchange now proposes to amend its fee schedule to incorporate 
additional fees related to the EDGX Top or EDGX Last Sale feeds.\10\ 
These fees include the following, each of which are described in detail 
below: (i) Usage Fees for both Professional \11\ and Non-Professional 
\12\ Users; \13\ (ii) Enterprise Fees; \14\ and (iii) a Digital Media 
Enterprise Fee.
---------------------------------------------------------------------------

    \10\ The Exchange notes that EDGA Exchange, Inc. (``EDGA''), 
BATS Y-Exchange, Inc. (``BYX'') and BATS Exchange, Inc. (``BZX'', 
together with the Exchange, EDGA and BYX, the ``BATS Exchanges'') 
also filed proposed rule changes with Commission to adopt similar 
fees for their respective Top and Last Sale market data product. See 
File Nos. SR-EDGA-2015-25, SR-BYX-2015-30, and SR-BATS-2015-48. The 
Exchange represents that the proposed fees will not cause the 
combined cost of subscribing to each of the BATS Exchanges' 
individual Top and Last Sale feeds to be greater than those 
currently charged to subscribe to the BATS One Feed. See Securities 
Exchange Act Release Nos. 74285 (February 18, 2015), 80 FR 9828 
(February 24, 2015) (SR-BATS-2015-11); 74283 (February 18, 2015), 80 
FR 9809 (February 24, 2015) (SR-EDGA-2015-09); 74282 (February 17, 
2015), 80 FR 9487 (February 23, 2015) (SR-EDGX-2015-09); and 74284 
(February 18, 2015), 80 FR 9792 (February 24, 2015) (SR-BYX-2015-09) 
(``Initial BATS One Feed Fee Filings''). In these filings, the 
Exchange represented that the cost of subscribing to each of the 
underlying individual feeds necessary to create the BATS One Feed 
would not be greater than the cost of subscribing to the BATS One 
Feed. Id.
    \11\ A ``Professional User'' is defined as ``any User other than 
a Non-Professional User.'' See the Exchange Fee Schedule available 
at http://batstrading.com/support/fee_schedule/edgx/.
    \12\ A ``Non-Professional User'' is defined as ``a natural 
person who is not: (i) Registered or qualified in any capacity with 
the Commission, the Commodity Futures Trading Commission, any state 
securities agency, any securities exchange or association, or any 
commodities or futures contract market or association; (ii) engaged 
as an ``investment adviser'' as that term is defined in Section 
[202(a)(11)] of the Investment Advisers Act of 1940 (whether or not 
registered or qualified under that Act); or (iii) employed by a bank 
or other organization exempt from registration under federal or 
state securities laws to perform functions that would require 
registration or qualification if such functions were performed for 
an organization not so exempt.'' Id.
    \13\ The Exchange notes that User fees as well as the 
distinctions based on professional and non-professional users have 
been previously filed with or approved by the Commission by the BATS 
Exchanges and the Nasdaq Stock Market LLC (``Nasdaq''). See 
Securities Exchange Act Release No. 59582 (March 16, 2009), 74 FR 
12423 (March 24, 2009) (Order approving SR-Nasdaq-2008-102). See 
also the Initial BATS One Feed Fee Filings, supra note 10.
    \14\ The Exchange notes that Enterprise fees have been 
previously filed with or approved by the Commission by the Exchange, 
EDGA, BYX, BZX, Nasdaq, NYSE, and the CTA/CQ Plans. See Nasdaq Rule 
7047. Securities Exchange Act Release Nos. 71507 (February 7, 2014), 
79 FR 8763 (February 13, 2014) (SR-NASDAQ-2014-011); 70211 (August 
15, 2013), 78 FR 51781 (August 21, 2013) (SR-NYSE-2013-58); and 
70010 (July 19, 2013) (File No. SR-CTA/CQ-2013-04). See also the 
Initial BATS One Feed Fee Filings, supra note 10.
---------------------------------------------------------------------------

    User Fees. The Exchange proposes to charge those who receive either 
EDGX Top or EDGX Last Sale from External Distributors different fees 
for both their Professional Users and Non-Professional Users. The 
Exchange will assess a monthly fee for Professional Users of $2.00 per 
User. Non-Professional Users will be assessed a monthly fee of $0.05 
per User.\15\ The Exchange does not propose to charge per User fees to 
Internal Distributors.
---------------------------------------------------------------------------

    \15\ The Exchange notes that EDGA, BYX and BZX also filed 
proposed rule changes with Commission to adopt User fees for their 
respective Top and Last Sale market data product. See File Nos. SR-
EDGA-2015-25, SR-BYX-2015-30, and SR-BATS-2015-48 (proposing a 
monthly fee of $2.00 per Professional User and of $0.05 per Non-
Professional User for EDGA and BYX and a monthly fee of $4.00 per 
Professional User and of $0.10 per Non-Professional User for BZX). A 
vendor that wishes to create a product like the BATS One Summary 
Feed could subscribe to each of the BATS Exchanges' Top and Last 
Sale feeds. See the Initial BATS One Feed Fee Filings, supra note 
10. Should a vendor subscribe to each of the BATS Exchanges' Top and 
Last Sale feeds, it would be charged a total of $10.00 per month per 
Professional User and $0.25 per month per Non-Professional User. 
This amount is equal to, and not greater than the User Fees charged 
for the BATS One Summary Feed. Id. (adopting fees of $10.00 per 
month per Professional User and $0.25 per month per Non-Professional 
User as well as a separate $1,000 per month Data Consolidation Fee 
for the BATS One Summary Feed).
---------------------------------------------------------------------------

    External Distributors would be required to count every Professional 
User and Non-Professional User to which they provide EDGX Top and/or 
EDGX Last Sale, the requirements for which are identical to that 
currently in place for the BATS One Feed.\16\ Thus, the External 
Distributor's count will include every person and device that accesses 
the data regardless of the purpose for which the individual or device 
uses the data. External Distributors must report all Professional and 
Non-Professional Users in accordance with the following:
---------------------------------------------------------------------------

    \16\ See the Initial BATS One Feed Fee Filings, supra note 10.
---------------------------------------------------------------------------

     In connection with an External Distributor's distribution 
of EDGX Top or EDGX Last Sale, the Distributor should count as one User 
each unique User that the Distributor has entitled to have access to 
EDGX Top or EDGX Last Sale. However, where a device is dedicated 
specifically to a single individual, the Distributor should count only 
the individual and need not count the device.
     The External Distributor should identify and report each 
unique User. If a User uses the same unique method to gain access to 
EDGX Top or EDGX Last Sale, the Distributor should count that as one 
User. However, if a unique User uses multiple methods to gain access to 
EDGX Top or EDGX Last Sale (e.g., a single User has multiple passwords 
and user identifications), the External Distributor should report all 
of those methods as an individual User.
     External Distributors should report each unique individual 
person who receives access through multiple devices as one User so long 
as each device is dedicated specifically to that individual.
     If an External Distributor entitles one or more 
individuals to use the same device, the External Distributor should 
include only the individuals, and not the device, in the count.
    Each External Distributor will receive a credit against its monthly 
Distributor

[[Page 41106]]

Fee for EDGX Top or EDGX Last Sale equal to the amount of its monthly 
Usage Fees up to a maximum of the Distributor Fee for EDGX Top or EDGX 
Last Sale. For example, an External Distributor will be subject to a 
$1,250 monthly Distributor Fee where they elect to receive EDGX Top. If 
that External Distributor reports User quantities totaling $1,250 or 
more of monthly usage of EDGX Top, it will pay no net Distributor Fee, 
whereas if that same External Distributor were to report User 
quantities totaling $1,000 of monthly usage, it will pay a net of $250 
for the Distributor Fee. External Distributors will remain subject to 
the per User fees discussed above. The same would apply to receipt of 
EDGX Last Sale.
    Enterprise Fee. The Exchange also proposes to establish a $15,000 
per month Enterprise Fee that will permit a recipient firm who receives 
EDGX Top or EDGX Last Sale from an External Distributor to receive the 
data for an unlimited number of Professional and Non-Professional 
Users.\17\ For example, if a recipient firm had 15,000 Professional 
Users who each receive EDGX Top or EDGX Last Sale at $2.00 per month, 
then that recipient firm will pay $30,000 per month in Professional 
Users fees. Under the proposed Enterprise Fee, the recipient firm will 
pay a flat fee of $15,000 for an unlimited number of Professional and 
Non-Professional Users for EDGX Top or EDGX Last Sale. A recipient firm 
must pay a separate Enterprise Fee for each External Distributor that 
controls display of EDGX Top or EDGX Last Sale if it wishes such User 
to be covered by an Enterprise Fee rather than by per User fees. A 
recipient firm that pays the Enterprise Fee will not have to report its 
number of such Users on a monthly basis. However, every six months, a 
recipient firm must provide the Exchange with a count of the total 
number of natural person users of each product, including both 
Professional and Non-Professional Users. Lastly, the proposed 
Enterprise Fee would be counted towards the Distributor Fee credit 
described above, under which an External Distributor receives a credit 
towards its Distributor Fee equal to the amount of its monthly EDGX Top 
or EDGX Last Sale usage fees.
---------------------------------------------------------------------------

    \17\ The Exchange notes that EDGA, BYX and BZX also filed 
proposed rule changes with Commission to adopt Enterprise Fees for 
their respective Top and Last Sale market data product. File Nos. 
SR-EDGA-2015-25, SR-BYX-2015-30, and SR-BATS-2015-48 (proposing a 
monthly Enterprise Fee of $15,000 for BZX Top and BZX Last Sale and 
$10,000 for EDGA Top and Last Sale as well as BYX Top and Last 
Sale). A vendor that wishes to create a product like the BATS One 
Summary Feed could subscribe to each of the BATS Exchanges' Top and 
Last Sale feeds. See the Initial BATS One Feed Fee Filings, supra 
note 10. Should a vendor subscribe to each of the BATS Exchanges' 
Top and Last Sale feeds, it would be charged a total monthly 
Enterprise Fee of $50,000. This amount is equal to, and not greater 
than the Enterprise Fee charged for the BATS One Summary Feed. Id. 
(adopting a monthly Enterprise Fee of $50,000 as well as a separate 
$1,000 per month Data Consolidation Fee for the BATS One Summary 
Feed).
---------------------------------------------------------------------------

    Digital Media Enterprise Fee. The Exchange proposes to adopt a 
Digital Media Enterprise Fee of $2,500 per month for EDGX Top and EDGX 
Last Sale.\18\ As an alternative to proposed User fees discussed above, 
a recipient firm may purchase a monthly Digital Media Enterprise 
license to receive EDGX Top and EDGX Last Sale from an External 
Distributor to distribute to an unlimited number of Professional and 
Non-Professional Users for viewing via television, Web sites, and 
mobile devices for informational and non-trading purposes only without 
having to account for the extent of access to the data or the report 
the number of Users to the Exchange. Lastly, the proposed Digital Media 
Enterprise Fee would be counted towards the Distributor Fee credit 
described above, under which an External Distributor receives a credit 
towards its Distributor Fee equal to the amount of its monthly EDGX Top 
and/or EDGX Last Sale usage fees.
---------------------------------------------------------------------------

    \18\ The Exchange notes that EDGA, BYX and BZX also filed 
proposed rule changes with Commission to adopt a Digital Media 
Enterprise Fee for their respective Top and Last Sale market data 
product. See File Nos. SR-EDGA-2015-25, SR-BYX-2015-30, and SR-BATS-
2015-48 (proposing a monthly Digital Media Enterprise Fee of $2,500 
for their respective Top and Last Sale feeds). A vendor that wishes 
to create a product like the BATS One Summary Feed could subscribe 
to each of the BATS Exchanges' Top and Last Sale feeds. See the 
Initial BATS One Feed Fee Filings, supra note 10. Should a vendor 
subscribe to each of the BATS Exchanges' Top and Last Sale feeds, it 
would be charged a total monthly Digital Media Enterprise Fee of 
$10,000. This amount is less than the Digital Media Enterprise Fee 
charged for the BATS One Summary Feed. See Securities Exchange Act 
Release Nos. 74598 (March 27, 2015), 80 FR 17791 (April 2, 2015) 
(SR-BATS-2015-24); 74599 (March 27, 2015), 80 FR 17812 (April 2, 
2015) (SR-BYX-2015-19); 74600 (March 27, 2014), 80 FR 17797 (April 
2, 2015) (SR-EDGA-2015-14); and 74601 (March 27, 2015), 80 FR 17804 
(April 2, 2015) (SR-EDGX-2015-14) (adopting a monthly Digital Media 
Enterprise Fee of $15,000 for the BATS One Summary Feed).
---------------------------------------------------------------------------

Non-Substantive, Corrective Changes
    The Exchange proposes to make a non-substantive change to the 
description of the BATS One Feed Enterprise Fee as well as correct a 
cross-reference within the definition of ``Non-Professional User''.
    First, the proposed change to the description of the BATS One Feed 
\19\ Enterprise Fee is intended to align with the descriptions of the 
Enterprise Fees for EDGX Top and EDGX Last Sale proposed above. The fee 
schedule currently states that:
---------------------------------------------------------------------------

    \19\ In sum, the BATS One Feed is a data feed that disseminates, 
on a real-time basis, the aggregate best bid and offer (``BBO'') of 
all displayed orders for securities traded on EDGX and its 
affiliated exchanges and for which the BATS Exchanges report quotes 
under the Consolidated Tape Association (``CTA'') Plan or the 
Nasdaq/UTP Plan. The BATS One Feed also contains the individual last 
sale information for the BATS Exchanges (collectively with the 
aggregate BBO, the ``BATS One Summary Feed''). In addition, the BATS 
One Feed contains optional functionality which enables recipients to 
receive aggregated two-sided quotations from the BATS Exchanges for 
up to five (5) price levels (``BATS One Premium Feed''). See 
Securities Exchange Act Release No. 73918 (December 23, 2014), 79 FR 
78920 (December 31, 2014) (File Nos. SR-EDGX-2014-25; SR-EDGA-2014-
25; SR-BATS-2014-055; SR-BYX-2014-030) (Notice of Amendments No. 2 
and Order Granting Accelerated Approval to Proposed Rule Changes, as 
Modified by Amendments Nos. 1 and 2, to Establish a New Market Data 
Product called the BATS One Feed) (``BATS One Approval Order'').

[a]s an alternative to User fees, a recipient firm may purchase a 
monthly Enterprise license to receive the BATS One Feed from an 
External Distributor to an unlimited number of Professional and Non-
Professional Users. A recipient firm must pay a separate Enterprise 
Fee for each External Distributor that controls the display of the 
BATS One Feed if it wishes such User to be covered by the Enterprise 
---------------------------------------------------------------------------
Fee. The Enterprise Fee is in addition to the Distributor Fee.

The Exchange proposes to delete the last sentence of the above 
description stating that the Enterprise Fee is in addition to the 
Distributor Fee. The original purpose of this sentence was to clarify 
that the Distributor Fee and Enterprise Fee were separate fees. 
However, the Exchange understands that this sentence has led to 
confusion for the following reason. As is the case for the proposed 
Enterprise Fees for EDGX Top and EDGX Last Sale described above, the 
BATS One Feed Enterprise Fee is counted towards the Distributor Fee 
credit, under which an External Distributor receives a credit towards 
its Distributor Fee equal to the amount of its monthly BATS One Feed 
Usage Fees. Stating that the Enterprise and Distributor fees were 
separate fees has caused confusion regarding the application of the 
Distributor Fee Usage Fee credit. Therefore, the Exchange proposes to 
delete the last sentence stating that the Enterprise Fee is in addition 
to the Distributor Fee. Deleting this sentence does not alter the 
manner in which the Enterprise Fee is charged. Rather, it is intended 
to avoid confusion and align the description with that of the proposed 
Enterprise Fees for EDGX Top and EDGX Last Sale described above.
    Second, the Exchange proposes to correct a cross-reference within 
the

[[Page 41107]]

definition of ``Non-Professional User''. In part, a ``Non-Professional 
User'' is currently defined as ``a natural person who is not: . . . 
engaged as an ``investment adviser'' as that term is defined in Section 
201(11) of the Investment Advisers Act of 1940 (whether or not 
registered or qualified under that Act) . . .'' The definition 
incorrectly states that the term ``investment adviser is defined under 
Section 201(11) of the Investment Advisers Act of 1940, when it is, in 
fact, defined under Section 202(a)(11) of the Investment Advisers Act 
of 1940. Therefore, the Exchange proposes to replace the reference to 
Section 201(11) with Section 202(a)(11) within the definition of Non-
Professional User.
Implementation Date
    The Exchange proposes to implement the proposed changes to its fee 
schedule on July 1, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\20\ in general, and 
furthers the objectives of Section 6(b)(4),\21\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and other recipients of 
Exchange data. The Exchange believes that the proposed rates are 
equitable and non-discriminatory in that they apply uniformly to all 
recipients of Exchange data. The Exchange believes the proposed fees 
are competitive with those charged by other venues and, therefore, 
reasonable and equitably allocated to recipients. Lastly, the Exchange 
also believes that the proposed fees are reasonable and non-
discriminatory because they will apply uniformly to all recipients of 
Exchange data.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78f.
    \21\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange also believes that the proposed rule change is 
consistent with Section 11(A) of the Act \22\ in that it supports (i) 
fair competition among brokers and dealers, among exchange markets, and 
between exchange markets and markets other than exchange markets and 
(ii) the availability to brokers, dealers, and investors of information 
with respect to quotations for and transactions in securities. 
Furthermore, the proposed rule change is consistent with Rule 603 of 
Regulation NMS,\23\ which provides that any national securities 
exchange that distributes information with respect to quotations for or 
transactions in an NMS stock do so on terms that are not unreasonably 
discriminatory. In adopting Regulation NMS, the Commission granted 
self-regulatory organizations and broker-dealers increased authority 
and flexibility to offer new and unique market data to the public. It 
was believed that this authority would expand the amount of data 
available to consumers, and also spur innovation and competition for 
the provision of market data.
---------------------------------------------------------------------------

    \22\ 15 U.S.C. 78k-1.
    \23\ See 17 CFR 242.603.
---------------------------------------------------------------------------

    In addition, the proposed fees would not permit unfair 
discrimination because all of the Exchange's customers and market data 
vendors will be subject to the proposed fees on an equivalent basis. 
EDGX Last Sale and EDGX Top are distributed and purchased on a 
voluntary basis, in that neither the Exchange nor market data 
distributors are required by any rule or regulation to make this data 
available. Accordingly, Distributors and Users can discontinue use at 
any time and for any reason, including due to an assessment of the 
reasonableness of fees charged. Firms have a wide variety of 
alternative market data products from which to choose, such as similar 
proprietary data products offered by other exchanges and consolidated 
data. Moreover, the Exchange is not required to make any proprietary 
data products available or to offer any specific pricing alternatives 
to any customers.
    In addition, the fees that are the subject of this rule filing are 
constrained by competition. As explained below in the Exchange's 
Statement on Burden on Competition, the existence of alternatives to 
EDGX Top and EDGX Last Sale further ensures that the Exchange cannot 
set unreasonable fees, or fees that are unreasonably discriminatory, 
when vendors and subscribers can elect such alternatives. That is, the 
Exchange competes with other exchanges (and their affiliates) that 
provide similar market data products. If another exchange (or its 
affiliate) were to charge less to consolidate and distribute its 
similar product than the Exchange charges to consolidate and distribute 
EDGX Top or EDGX Last Sale, prospective Users likely would not 
subscribe to, or would cease subscribing to, the EDGX Top or EDGX Last 
Sale.
    The Exchange notes that the Commission is not required to undertake 
a cost-of-service or rate-making approach. The Exchange believes that, 
even if it were possible as a matter of economic theory, cost-based 
pricing for non-core market data would be so complicated that it could 
not be done practically.\24\
---------------------------------------------------------------------------

    \24\ The Exchange believes that cost-based pricing would be 
impractical because it would create enormous administrative burdens 
for all parties, including the Commission, to cost-regulate a large 
number of participants and standardize and analyze extraordinary 
amounts of information, accounts, and reports. In addition, it is 
impossible to regulate market data prices in isolation from prices 
charged by markets for other services that are joint products. Cost-
based rate regulation would also lead to litigation and may distort 
incentives, including those to minimize costs and to innovate, 
leading to further waste. Under cost-based pricing, the Commission 
would be burdened with determining a fair rate of return, and the 
industry could experience frequent rate increases based on 
escalating expense levels. Even in industries historically subject 
to utility regulation, cost-based ratemaking has been discredited. 
As such, the Exchange believes that cost-based ratemaking would be 
inappropriate for proprietary market data and inconsistent with 
Congress's direction that the Commission use its authority to foster 
the development of the national market system, and that market 
forces will continue to provide appropriate pricing discipline. See 
Appendix C to NYSE's comments to the Commission's 2000 Concept 
Release on the Regulation of Market Information Fees and Revenues, 
which can be found on the Commission's Web site at http://www.sec.gov/rules/concept/s72899/buck1.htm. See also Securities 
Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200 
(December 17, 2014) (SR-NYSE-2014-64) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change to Establish an 
Access Fee for the NYSE Best Quote and Trades Data Feed, Operative 
December 1, 2014).
---------------------------------------------------------------------------

    User Fees. The Exchange believes that implementing the Professional 
and Non-Professional User fees for EDGX Top and EDGX Last Sale is 
equitable and reasonable because it will result in greater availability 
to Professional and Non-Professional Users. Moreover, introducing a 
modest Non-Professional User fee for EDGX Top and EDGX Last Sale is 
reasonable because it provides an additional method for retail 
investors to access EDGX Top and EDGX Last Sale data by providing the 
same data that is available to Professional Users. The Exchange 
believes that the proposed fees are equitable and not unfairly 
discriminatory because they will be charged uniformly to recipient 
firms and Users. The fee structure of differentiated Professional and 
Non-Professional fees is utilized by the Exchange for the BATS One Feed 
and has long been used by other exchanges for their proprietary data 
products, and by the Nasdaq UTP and the CTA and CQ Plans in order to 
reduce the price of data to retail investors and make it more broadly 
available.\25\ Offering EDGX Top and EDGX Last Sale to Non-Professional 
Users with the same data available to

[[Page 41108]]

Professional Users results in greater equity among data recipients.
---------------------------------------------------------------------------

    \25\ See the Initial BATS One Feed Fee Filings, supra note 10. 
See also, e.g., Securities Exchange Act Release No. 20002, File No. 
S7-433 (July 22, 1983) (establishing nonprofessional fees for CTA 
data); Nasdaq Rules 7023(b), 7047.
---------------------------------------------------------------------------

    In addition, the proposed fees are reasonable when compared to 
similar fees for comparable products offered by the NYSE. Specifically, 
NYSE offers NYSE BBO, which includes best bid and offer for NYSE traded 
securities, for a monthly fee of $4.00 per professional subscriber and 
$0.20 per non-professional subscriber.\26\ NYSE also offers NYSE 
Trades, which is a data feed that provides the last sale information 
for NYSE traded securities, for the same price as NYSE BBO. The 
Exchange's proposed per User Fees for EDGX Top and EDGX Last Sale are 
less than the NYSE's fees for NYSE Trades and NYSE BBO.
---------------------------------------------------------------------------

    \26\ See NYSE Market Data Pricing dated May 2015 available at 
http://www.nyxdata.com/.
---------------------------------------------------------------------------

    Enterprise Fee. The proposed Enterprise Fee for EDGX Top and EDGX 
Last Sale are equitable and reasonable as the fees proposed are less 
than the enterprise fees currently charged for NYSE Trades and NYSE 
BBO. The NYSE charges a separate enterprise fee of $190,000 per month 
for NYSE Trades and NYSE BBO.\27\ In addition, the Enterprise Fee 
proposed by the Exchange could result in a fee reduction for recipient 
firms with a large number of Professional and Non-Professional Users. 
If a recipient firm has a smaller number of Professional Users of EDGX 
Top or EDGX Last Sale, then it may continue using the per User 
structure and benefit from the per User Fee reductions. By reducing 
prices for recipient firms with a large number of Professional and Non-
Professional Users, the Exchange believes that more firms may choose to 
receive and to distribute the EDGX Top or EDGX Last Sale, thereby 
expanding the distribution of this market data for the benefit of 
investors.
---------------------------------------------------------------------------

    \27\ Id.
---------------------------------------------------------------------------

    The Exchange further believes that the proposed Enterprise Fee is 
reasonable because it will simplify reporting for certain recipients 
that have large numbers of Professional and Non-Professional Users. 
Firms that pay the proposed Enterprise Fee will not have to report the 
number of Users on a monthly basis as they currently do, but rather 
will only have to count natural person users every six months, which is 
a significant reduction in administrative burden. Finally, the Exchange 
believes that it is equitable and not unfairly discriminatory to 
establish an Enterprise Fee because it reduces the Exchange's costs and 
the Distributor's administrative burdens in tracking and auditing large 
numbers of Users.
    Digital Media Enterprise Fee. The Exchange believes that the 
proposed Digital Media Enterprise Fee for EDGX Top and EDGX Last Sale 
provides for an equitable allocation of reasonable fees among 
recipients of the data and is not designed to permit unfair 
discrimination among customers, brokers, or dealers. In establishing 
the Digital Media Enterprise Fee, the Exchange recognizes that there is 
demand for a more seamless and easier-to-administer data distribution 
model that takes into account the expanded variety of media and 
communication devices that investors utilize today. The Exchange 
believes the Digital Media Enterprise Fee will be easy to administer 
because data recipients that purchase it would not be required to 
differentiate between Professional and Non-Professional Users, account 
for the extent of access to the data, or report the number of Users. 
This is a significant reduction on a recipient firm's administrative 
burdens and is a significant value to investors. For example, a 
television broadcaster could display EDGX Top and/or EDGX Last Sale 
data during market-related programming and on its Web site or allow 
viewers to view the data via their mobile devices, creating a more 
seamless distribution model that will allow investors more choice in 
how they receive and view market data, all without having to account 
for and/or measure who accesses the data and how often they do so.
    The proposed Digital Media Enterprise Fee is equitable and 
reasonable because it will also enable recipient firms to more widely 
distribute data from EDGX Top and EDGX Last Sale to investors for 
informational purposes at a lower cost than is available today. For 
example, a recipient firm may purchase an Enterprise license in the 
amount of $15,000 per month for to receive EDGX Top and/or EDGX Last 
Sale from an External Distributor for an unlimited number of 
Professional and Non-Professional Users, which is greater than the 
proposed Digital Media Enterprise Fee. The Exchange also believes the 
amount of the Digital Media Enterprise Fee is reasonable as compared to 
the existing enterprise fees discussed above because the distribution 
of EDGX Top and EDGX Last Sale data is limited to television, Web 
sites, and mobile devices for informational purposes only, while 
distribution of EDGX Top and EDGX Last Sale data pursuant to an 
Enterprise license contains no such limitation. The Exchange also 
believes that the proposed Digital Media Enterprise Fee is equitable 
and reasonable because it is less than similar fees charged by other 
exchanges.\28\
---------------------------------------------------------------------------

    \28\ The Nasdaq Stock Market offers proprietary data products 
for distribution over the internet and television under alternative 
fee schedules that are subject to maximum fee of $50,000 per month. 
See Nasdaq Rule 7039(b). The NYSE charges a Digit Media Enterprise 
fee of $40,000 per month for the NYSE Trade Digital Media product. 
See Securities Exchange Act Release No. 69272 (April 2, 2013), 78 FR 
20983 (April 8, 2013) (SR-NYSE-2013-23).
---------------------------------------------------------------------------

    Non-Substantive, Corrective Changes. The Exchange believes that the 
proposed non-substantive, corrective changes are consistent with 
Section 6(b) of the Act,\29\ in general, and Section 6(b)(4) of the 
Act,\30\ in particular, in that they provide for an equitable 
allocation of reasonable fees among recipients of the data and is not 
designed to permit unfair discrimination among customers, brokers, or 
dealers. These proposed changes are equitable and reasonable because 
the changes are designed to clarify the fee schedule and avoid 
potential investor confusion. The amendment to the BATS One Enterprise 
Fee is also intended to align the description with that of the proposed 
Enterprise Fees for EDGX Top and EDGX Last Sale described above. The 
proposed changes are also non-discriminatory as they would apply to all 
recipient firms uniformly.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78f.
    \30\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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.
EDGX Top and EDGX Last Sale
    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 
Exchange's ability to price EDGX Last Sale and EDGX Top are constrained 
by: (i) Competition among exchanges, other trading platforms, and Trade 
Reporting Facilities (``TRF'') that compete with each other in a 
variety of dimensions; (ii) the existence of inexpensive real-time 
consolidated data and market-specific data and free delayed data; and 
(iii) the inherent contestability of the market for proprietary data.
    The Exchange and its market data products are subject to 
significant competitive forces and the proposed fees represent 
responses to that competition. To start, the Exchange competes 
intensely for order flow. It

[[Page 41109]]

competes with the other national securities exchanges that currently 
trade equities, with electronic communication networks, with quotes 
posted in FINRA's Alternative Display Facility, with alternative 
trading systems, and with securities firms that primarily trade as 
principal with their customer order flow.
    In addition, EDGX Last Sale and EDGX Top compete with a number of 
alternative products. For instance, EDGX Last Sale and EDGX Top do not 
provide a complete picture of all trading activity in a security. 
Rather, the other national securities exchanges, the several TRFs of 
FINRA, and Electronic Communication Networks (``ECN'') that produce 
proprietary data all produce trades and trade reports. Each is 
currently permitted to produce last sale information products, and many 
currently do, including Nasdaq and NYSE. In addition, market 
participants can gain access to EDGX last sale prices and top-of-book 
quotations, though integrated with the prices of other markets, on 
feeds made available through the SIPs.
    In sum, the availability of a variety of alternative sources of 
information imposes significant competitive pressures on Exchange data 
products and the Exchange's compelling need to attract order flow 
imposes significant competitive pressure on the Exchange to act 
equitably, fairly, and reasonably in setting the proposed data product 
fees. The proposed data product fees are, in part, responses to that 
pressure. The Exchange believes that the proposed fees would reflect an 
equitable allocation of its overall costs to users of its facilities.
    In addition, when establishing the proposed fees, the Exchange 
considered the competitiveness of the market for proprietary data and 
all of the implications of that competition. The Exchange believes that 
it has considered all relevant factors and has not considered 
irrelevant factors in order to establish fair, reasonable, and not 
unreasonably discriminatory fees and an equitable allocation of fees 
among all Users. The existence of alternatives to EDGX Last Sale and 
EDGX Top, including existing similar feeds by other exchanges, 
consolidated data, and proprietary data from other sources, ensures 
that the Exchange cannot set unreasonable fees, or fees that are 
unreasonably discriminatory, when vendors and subscribers can elect 
these alternatives or choose not to purchase a specific proprietary 
data product if its cost to purchase is not justified by the returns 
any particular vendor or subscriber would achieve through the purchase.
Non-Substantive, Corrective Changes
    The proposed non-substantive, corrective changes to the fee 
schedule will not have any impact on completion. The proposed changes 
are designed to clarify the fee schedule and avoid potential investor 
confusion.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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) of the Act \31\ and paragraph (f) of Rule 19b-4 
thereunder.\32\ 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.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

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-EDGX-2015-28 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-EDGX-2015-28. 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 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-EDGX-2015-28, and should be 
submitted on or before August 4, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-17175 Filed 7-13-15; 8:45 am]
 BILLING CODE 8011-01-P



                                                    41104                           Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices

                                                    delay and designates the proposal                        public in accordance with the                             comments on the proposed rule change
                                                    effective upon filing.33                                 provisions of 5 U.S.C. 552, will be                       from interested persons.
                                                       At any time within 60 days of the                     available for Web site viewing and
                                                                                                                                                                       I. Self-Regulatory Organization’s
                                                    filing of the proposed rule change, the                  printing in the Commission’s Public
                                                                                                                                                                       Statement of the Terms of the Substance
                                                    Commission summarily may                                 Reference Room, 100 F Street NE.,
                                                                                                                                                                       of the Proposed Rule Change
                                                    temporarily suspend such rule change if                  Washington, DC 20549, on official
                                                    it appears to the Commission that such                   business days between the hours of                           The Exchange filed a proposal to
                                                    action is: (i) Necessary or appropriate in               10:00 a.m. and 3:00 p.m. Copies of the                    amend the Market Data section of its fee
                                                    the public interest; (ii) for the protection             filing also will be available for                         schedule to: (i) Adopt User fees, an
                                                    of investors; or (iii) otherwise in                      inspection and copying at the principal                   Enterprise fee, and a Digital Media
                                                    furtherance of the purposes of the Act.                  office of the Exchange. All comments                      Enterprise fee for the EDGX Top and
                                                    If the Commission takes such action, the                 received will be posted without change;                   EDGX Last Sale feeds; and (ii) make a
                                                    Commission shall institute proceedings                   the Commission does not edit personal                     non-substantive change to the
                                                    to determine whether the proposed rule                   identifying information from                              description of the BATS One Feed
                                                    should be approved or disapproved. The                   submissions. You should submit only                       Enterprise Fee as well as correct a cross-
                                                    Exchange has provided the Commission                     information that you wish to make                         reference within the definition of ‘‘Non-
                                                    written notice of its intent to file the                 available publicly. All submissions                       Professional User’’.
                                                    proposed rule change, along with a brief                 should refer to File Number SR–                              The text of the proposed rule change
                                                    description and text of the proposed                     NASDAQ–2015–061 and should be                             is available at the Exchange’s Web site
                                                    rule change, at least five business days                 submitted on or before August 4, 2015.                    at www.batstrading.com, at the
                                                    prior to the date of filing of the                         For the Commission, by the Division of                  principal office of the Exchange, and at
                                                    proposed rule change.                                    Trading and Markets, pursuant to delegated                the Commission’s Public Reference
                                                                                                             authority.34                                              Room.
                                                    IV. Solicitation of Comments
                                                                                                             Brent J. Fields,                                          II. Self-Regulatory Organization’s
                                                      Interested persons are invited to                      Secretary.                                                Statement of the Purpose of, and
                                                    submit written data, views, and
                                                                                                             [FR Doc. 2015–17169 Filed 7–13–15; 8:45 am]               Statutory Basis for, the Proposed Rule
                                                    arguments concerning the foregoing,
                                                                                                             BILLING CODE 8011–01–P                                    Change
                                                    including whether the proposed rule
                                                    change is consistent with the Act.                                                                                   In its filing with the Commission, the
                                                    Comments may be submitted by any of                                                                                Exchange included statements
                                                                                                             SECURITIES AND EXCHANGE
                                                    the following methods:                                                                                             concerning the purpose of and basis for
                                                                                                             COMMISSION
                                                                                                                                                                       the proposed rule change and discussed
                                                    Electronic Comments
                                                                                                             [Release No. 34–75397; File No. SR–EDGX–                  any comments it received on the
                                                      • Use the Commission’s Internet                        2015–28]                                                  proposed rule change. The text of these
                                                    comment form (http://www.sec.gov/                                                                                  statements may be examined at the
                                                    rules/sro.shtml); or                                     Self-Regulatory Organizations; EDGX                       places specified in Item IV below. The
                                                      • Send an email to rule-comments@                      Exchange, Inc.; Notice of Filing and                      Exchange has prepared summaries, set
                                                    sec.gov. Please include File Number SR–                  Immediate Effectiveness of a Proposed                     forth in Sections A, B, and C below, of
                                                    NASDAQ–2015–061 on the subject line.                     Rule Change To Amend the Market                           the most significant parts of such
                                                                                                             Data Section of Its Fee Schedule                          statements.
                                                    Paper Comments
                                                       • Send paper comments in triplicate                   July 8, 2015.                                             A. Self-Regulatory Organization’s
                                                    to Brent J. Fields, Secretary, Securities                   Pursuant to Section 19(b)(1) of the                    Statement of the Purpose of, and
                                                    and Exchange Commission, 100 F Street                    Securities Exchange Act of 1934 (the                      Statutory Basis for, the Proposed Rule
                                                    NE., Washington, DC 20549–1090.                          ‘‘Act’’),1 and Rule 19b–4 thereunder,2                    Change
                                                    All submissions should refer to File                     notice is hereby given that on July 1,                    1. Purpose
                                                    Number SR–NASDAQ–2015–061. This                          2015, EDGX Exchange, Inc. (the
                                                                                                             ‘‘Exchange’’ or ‘‘EDGX’’) filed with the                    The Exchange proposes to amend the
                                                    file number should be included on the                                                                              Market Data section of its fee schedule
                                                    subject line if email is used. To help the               Securities and Exchange Commission
                                                                                                             (‘‘Commission’’) the proposed rule                        to: (i) Adopt User fees, an Enterprise fee,
                                                    Commission process and review your                                                                                 and a Digital Media Enterprise fee for
                                                    comments more efficiently, please use                    change as described in Items I, II, and
                                                                                                             III below, which Items have been                          the EDGX Top and EDGX Last Sale
                                                    only one method. The Commission will                                                                               feeds; and (ii) make a non-substantive
                                                    post all comments on the Commission’s                    prepared by the Exchange. The
                                                                                                             Exchange has designated the proposed                      change to the description of the BATS
                                                    Internet Web site (http://www.sec.gov/                                                                             One Feed Enterprise Fee as well as
                                                    rules/sro.shtml). Copies of the                          rule change as one establishing or
                                                                                                             changing a member due, fee, or other                      correct a cross-reference within the
                                                    submission, all subsequent                                                                                         definition of ‘‘Non-Professional User’’.
                                                    amendments, all written statements                       charge imposed by the Exchange under
                                                    with respect to the proposed rule                        Section 19(b)(3)(A)(ii) of the Act 3 and                  EDGX Top and Last Sale Fees
                                                    change that are filed with the                           Rule 19b–4(f)(2) thereunder,4 which
                                                                                                             renders the proposed rule change                            EDGX Top is a market data feed that
                                                    Commission, and all written                                                                                        includes top of book quotations and
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                    communications relating to the                           effective upon filing with the
                                                                                                             Commission. The Commission is                             execution information for all equity
                                                    proposed rule change between the                                                                                   securities traded on the Exchange.5
                                                    Commission and any person, other than                    publishing this notice to solicit
                                                                                                                                                                       EDGX Last Sale is a market data feed
                                                    those that may be withheld from the                                                                                that includes last sale information for all
                                                                                                                  34 17 CFR 200.30–3(a)(12).
                                                      33 For
                                                                                                                  1 15 U.S.C. 78s(b)(1).                               equity securities traded on Exchange.6
                                                             purposes of waiving the 30-day operative
                                                                                                                  2 17 CFR 240.19b–4.
                                                    delay, the Commission has considered the proposed
                                                                                                                  3 15 U.S.C. 78s(b)(3)(A)(ii).                          5 See   Exchange Rule 13.8(c).
                                                    rule’s impact on efficiency, competition, and capital
                                                    formation. See 15 U.S.C. 78c(f).                              4 17 CFR 240.19b–4(f)(2).                              6 See   Exchange Rule 13.8(d).



                                               VerDate Sep<11>2014   19:09 Jul 13, 2015   Jkt 235001   PO 00000     Frm 00114    Fmt 4703    Sfmt 4703   E:\FR\FM\14JYN1.SGM     14JYN1


                                                                                     Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices                                                       41105

                                                       Currently, the Exchange only charges                   include the following, each of which are                 propose to charge per User fees to
                                                    fees for both internal and external                       described in detail below: (i) Usage Fees                Internal Distributors.
                                                    distribution of the EDGX Last Sale and                    for both Professional 11 and Non-                          External Distributors would be
                                                    EDGX Top feeds. The cost of EDGX Last                     Professional 12 Users; 13 (ii) Enterprise                required to count every Professional
                                                    Sale for an Internal Distributor 7 is $500                Fees; 14 and (iii) a Digital Media                       User and Non-Professional User to
                                                    per month. Likewise, the cost of EDGX                     Enterprise Fee.                                          which they provide EDGX Top and/or
                                                    Top for an Internal Distributor is also                     User Fees. The Exchange proposes to                    EDGX Last Sale, the requirements for
                                                    $500 per month. The Exchange                              charge those who receive either EDGX                     which are identical to that currently in
                                                    currently does not charge per User 8 fees                 Top or EDGX Last Sale from External                      place for the BATS One Feed.16 Thus,
                                                    for either EDGX Last Sale or EDGX Top.                    Distributors different fees for both their               the External Distributor’s count will
                                                    Therefore, the Exchange does not                          Professional Users and Non-Professional                  include every person and device that
                                                    currently require an External                             Users. The Exchange will assess a                        accesses the data regardless of the
                                                    Distributor 9 of EDGX Last Sale or EDGX                   monthly fee for Professional Users of                    purpose for which the individual or
                                                    Top to count, classify (e.g., professional                $2.00 per User. Non-Professional Users                   device uses the data. External
                                                    or non-professional), or report to the                    will be assessed a monthly fee of $0.05                  Distributors must report all Professional
                                                    Exchange information regarding the                        per User.15 The Exchange does not                        and Non-Professional Users in
                                                    customers to which they provide the                                                                                accordance with the following:
                                                    data. Instead, the Exchange charges an                    BATS One Feed. See Securities Exchange Act                 • In connection with an External
                                                    External Distributor of EDGX Last Sale                    Release Nos. 74285 (February 18, 2015), 80 FR 9828       Distributor’s distribution of EDGX Top
                                                                                                              (February 24, 2015) (SR–BATS–2015–11); 74283
                                                    a flat fee of $1,250 per month. The                       (February 18, 2015), 80 FR 9809 (February 24, 2015)      or EDGX Last Sale, the Distributor
                                                    Exchange also separately charges an                       (SR–EDGA–2015–09); 74282 (February 17, 2015), 80         should count as one User each unique
                                                    External Distributor of EDGX Top a flat                   FR 9487 (February 23, 2015) (SR–EDGX–2015–09);           User that the Distributor has entitled to
                                                    fee of $1,250 per month. End Users                        and 74284 (February 18, 2015), 80 FR 9792
                                                                                                              (February 24, 2015) (SR–BYX–2015–09) (‘‘Initial
                                                                                                                                                                       have access to EDGX Top or EDGX Last
                                                    currently do not pay the Exchange for                     BATS One Feed Fee Filings’’). In these filings, the      Sale. However, where a device is
                                                    EDGX Last Sale or EDGX Top, nor are                       Exchange represented that the cost of subscribing to     dedicated specifically to a single
                                                    End Users required to enter into                          each of the underlying individual feeds necessary        individual, the Distributor should count
                                                    contracts with the Exchange.                              to create the BATS One Feed would not be greater
                                                                                                              than the cost of subscribing to the BATS One Feed.
                                                                                                                                                                       only the individual and need not count
                                                       Subscribers to either EDGX Top or                      Id.                                                      the device.
                                                    EDGX Last Sale are able to receive, upon                     11 A ‘‘Professional User’’ is defined as ‘‘any User     • The External Distributor should
                                                    request and at no additional cost, EDGX                   other than a Non-Professional User.’’ See the            identify and report each unique User. If
                                                    Last Sale or EDGX Top, as applicable.                     Exchange Fee Schedule available at http://               a User uses the same unique method to
                                                                                                              batstrading.com/support/fee_schedule/edgx/.
                                                    The Exchange also offers a New External                      12 A ‘‘Non-Professional User’’ is defined as ‘‘a      gain access to EDGX Top or EDGX Last
                                                    Distributor Credit under which new                        natural person who is not: (i) Registered or qualified   Sale, the Distributor should count that
                                                    External Distributors of EDGX Top or                      in any capacity with the Commission, the                 as one User. However, if a unique User
                                                    EDGX Last Sale will not be charged a                      Commodity Futures Trading Commission, any state          uses multiple methods to gain access to
                                                    Distributor Fee for their first three (3)                 securities agency, any securities exchange or
                                                                                                              association, or any commodities or futures contract      EDGX Top or EDGX Last Sale (e.g., a
                                                    months.                                                   market or association; (ii) engaged as an                single User has multiple passwords and
                                                       The Exchange now proposes to amend                     ‘‘investment adviser’’ as that term is defined in        user identifications), the External
                                                    its fee schedule to incorporate                           Section [202(a)(11)] of the Investment Advisers Act      Distributor should report all of those
                                                    additional fees related to the EDGX Top                   of 1940 (whether or not registered or qualified
                                                                                                              under that Act); or (iii) employed by a bank or other    methods as an individual User.
                                                    or EDGX Last Sale feeds.10 These fees                     organization exempt from registration under federal        • External Distributors should report
                                                                                                              or state securities laws to perform functions that       each unique individual person who
                                                       7 An ‘‘Internal Distributor’’ is defined as ‘‘a        would require registration or qualification if such      receives access through multiple
                                                    Distributor that receives the Exchange Market Data        functions were performed for an organization not so
                                                    product and then distributes that data to one or          exempt.’’ Id.                                            devices as one User so long as each
                                                    more Users within the Distributor’s own entity.’’            13 The Exchange notes that User fees as well as       device is dedicated specifically to that
                                                    See the Exchange Fee Schedule available at                the distinctions based on professional and non-          individual.
                                                    http://batstrading.com/support/fee_schedule/edgx/.        professional users have been previously filed with         • If an External Distributor entitles
                                                    A ‘‘Distributor’’ is defined as ‘‘any entity that         or approved by the Commission by the BATS
                                                    receives the Exchange Market Data product directly        Exchanges and the Nasdaq Stock Market LLC
                                                                                                                                                                       one or more individuals to use the same
                                                    from the Exchange or indirectly through another           (‘‘Nasdaq’’). See Securities Exchange Act Release        device, the External Distributor should
                                                    entity and then distributes it internally or externally   No. 59582 (March 16, 2009), 74 FR 12423 (March           include only the individuals, and not
                                                    to a third party.’’ Id.                                   24, 2009) (Order approving SR-Nasdaq-2008–102).          the device, in the count.
                                                       8 A ‘‘User’’ is defined as ‘‘a natural person, a       See also the Initial BATS One Feed Fee Filings,
                                                    proprietorship, corporation, partnership, or entity,      supra note 10.
                                                                                                                                                                         Each External Distributor will receive
                                                    or device (computer or other automated service),             14 The Exchange notes that Enterprise fees have       a credit against its monthly Distributor
                                                    that is entitled to receive Exchange data.’’ Id.          been previously filed with or approved by the
                                                       9 An ‘‘External Distributor’’ is defined as ‘‘a        Commission by the Exchange, EDGA, BYX, BZX,              Professional User for BZX). A vendor that wishes
                                                    Distributor that receives the Exchange Market Data        Nasdaq, NYSE, and the CTA/CQ Plans. See Nasdaq           to create a product like the BATS One Summary
                                                    product and then distributes that data to a third         Rule 7047. Securities Exchange Act Release Nos.          Feed could subscribe to each of the BATS
                                                    party or one or more Users outside the Distributor’s      71507 (February 7, 2014), 79 FR 8763 (February 13,       Exchanges’ Top and Last Sale feeds. See the Initial
                                                    own entity.’’ Id.                                         2014) (SR–NASDAQ–2014–011); 70211 (August 15,            BATS One Feed Fee Filings, supra note 10. Should
                                                       10 The Exchange notes that EDGA Exchange, Inc.         2013), 78 FR 51781 (August 21, 2013) (SR–NYSE–           a vendor subscribe to each of the BATS Exchanges’
                                                    (‘‘EDGA’’), BATS Y-Exchange, Inc. (‘‘BYX’’) and           2013–58); and 70010 (July 19, 2013) (File No. SR–        Top and Last Sale feeds, it would be charged a total
                                                                                                              CTA/CQ–2013–04). See also the Initial BATS One           of $10.00 per month per Professional User and
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                    BATS Exchange, Inc. (‘‘BZX’’, together with the
                                                    Exchange, EDGA and BYX, the ‘‘BATS Exchanges’’)           Feed Fee Filings, supra note 10.                         $0.25 per month per Non-Professional User. This
                                                    also filed proposed rule changes with Commission             15 The Exchange notes that EDGA, BYX and BZX          amount is equal to, and not greater than the User
                                                    to adopt similar fees for their respective Top and        also filed proposed rule changes with Commission         Fees charged for the BATS One Summary Feed. Id.
                                                    Last Sale market data product. See File Nos. SR–          to adopt User fees for their respective Top and Last     (adopting fees of $10.00 per month per Professional
                                                    EDGA–2015–25, SR–BYX–2015–30, and SR–BATS–                Sale market data product. See File Nos. SR–EDGA–         User and $0.25 per month per Non-Professional
                                                    2015–48. The Exchange represents that the                 2015–25, SR–BYX–2015–30, and SR–BATS–2015–               User as well as a separate $1,000 per month Data
                                                    proposed fees will not cause the combined cost of         48 (proposing a monthly fee of $2.00 per                 Consolidation Fee for the BATS One Summary
                                                    subscribing to each of the BATS Exchanges’                Professional User and of $0.05 per Non-Professional      Feed).
                                                    individual Top and Last Sale feeds to be greater          User for EDGA and BYX and a monthly fee of $4.00           16 See the Initial BATS One Feed Fee Filings,

                                                    than those currently charged to subscribe to the          per Professional User and of $0.10 per Non-              supra note 10.



                                               VerDate Sep<11>2014    19:09 Jul 13, 2015   Jkt 235001   PO 00000   Frm 00115   Fmt 4703   Sfmt 4703   E:\FR\FM\14JYN1.SGM     14JYN1


                                                    41106                           Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices

                                                    Fee for EDGX Top or EDGX Last Sale                       product, including both Professional                     Enterprise Fee is intended to align with
                                                    equal to the amount of its monthly                       and Non-Professional Users. Lastly, the                  the descriptions of the Enterprise Fees
                                                    Usage Fees up to a maximum of the                        proposed Enterprise Fee would be                         for EDGX Top and EDGX Last Sale
                                                    Distributor Fee for EDGX Top or EDGX                     counted towards the Distributor Fee                      proposed above. The fee schedule
                                                    Last Sale. For example, an External                      credit described above, under which an                   currently states that:
                                                    Distributor will be subject to a $1,250                  External Distributor receives a credit                   [a]s an alternative to User fees, a recipient
                                                    monthly Distributor Fee where they                       towards its Distributor Fee equal to the                 firm may purchase a monthly Enterprise
                                                    elect to receive EDGX Top. If that                       amount of its monthly EDGX Top or                        license to receive the BATS One Feed from
                                                    External Distributor reports User                        EDGX Last Sale usage fees.                               an External Distributor to an unlimited
                                                    quantities totaling $1,250 or more of                       Digital Media Enterprise Fee. The                     number of Professional and Non-Professional
                                                    monthly usage of EDGX Top, it will pay                   Exchange proposes to adopt a Digital                     Users. A recipient firm must pay a separate
                                                    no net Distributor Fee, whereas if that                                                                           Enterprise Fee for each External Distributor
                                                                                                             Media Enterprise Fee of $2,500 per                       that controls the display of the BATS One
                                                    same External Distributor were to report                 month for EDGX Top and EDGX Last                         Feed if it wishes such User to be covered by
                                                    User quantities totaling $1,000 of                       Sale.18 As an alternative to proposed                    the Enterprise Fee. The Enterprise Fee is in
                                                    monthly usage, it will pay a net of $250                 User fees discussed above, a recipient                   addition to the Distributor Fee.
                                                    for the Distributor Fee. External                        firm may purchase a monthly Digital                      The Exchange proposes to delete the last
                                                    Distributors will remain subject to the                  Media Enterprise license to receive                      sentence of the above description stating
                                                    per User fees discussed above. The same                  EDGX Top and EDGX Last Sale from an                      that the Enterprise Fee is in addition to
                                                    would apply to receipt of EDGX Last                      External Distributor to distribute to an                 the Distributor Fee. The original
                                                    Sale.                                                    unlimited number of Professional and
                                                       Enterprise Fee. The Exchange also                                                                              purpose of this sentence was to clarify
                                                                                                             Non-Professional Users for viewing via                   that the Distributor Fee and Enterprise
                                                    proposes to establish a $15,000 per                      television, Web sites, and mobile
                                                    month Enterprise Fee that will permit a                                                                           Fee were separate fees. However, the
                                                                                                             devices for informational and non-                       Exchange understands that this sentence
                                                    recipient firm who receives EDGX Top                     trading purposes only without having to
                                                    or EDGX Last Sale from an External                                                                                has led to confusion for the following
                                                                                                             account for the extent of access to the                  reason. As is the case for the proposed
                                                    Distributor to receive the data for an                   data or the report the number of Users
                                                    unlimited number of Professional and                                                                              Enterprise Fees for EDGX Top and
                                                                                                             to the Exchange. Lastly, the proposed                    EDGX Last Sale described above, the
                                                    Non-Professional Users.17 For example,                   Digital Media Enterprise Fee would be
                                                    if a recipient firm had 15,000                                                                                    BATS One Feed Enterprise Fee is
                                                                                                             counted towards the Distributor Fee                      counted towards the Distributor Fee
                                                    Professional Users who each receive                      credit described above, under which an
                                                    EDGX Top or EDGX Last Sale at $2.00                                                                               credit, under which an External
                                                                                                             External Distributor receives a credit                   Distributor receives a credit towards its
                                                    per month, then that recipient firm will                 towards its Distributor Fee equal to the
                                                    pay $30,000 per month in Professional                                                                             Distributor Fee equal to the amount of
                                                                                                             amount of its monthly EDGX Top and/                      its monthly BATS One Feed Usage Fees.
                                                    Users fees. Under the proposed                           or EDGX Last Sale usage fees.
                                                    Enterprise Fee, the recipient firm will                                                                           Stating that the Enterprise and
                                                    pay a flat fee of $15,000 for an unlimited               Non-Substantive, Corrective Changes                      Distributor fees were separate fees has
                                                    number of Professional and Non-                                                                                   caused confusion regarding the
                                                                                                               The Exchange proposes to make a                        application of the Distributor Fee Usage
                                                    Professional Users for EDGX Top or                       non-substantive change to the
                                                    EDGX Last Sale. A recipient firm must                                                                             Fee credit. Therefore, the Exchange
                                                                                                             description of the BATS One Feed                         proposes to delete the last sentence
                                                    pay a separate Enterprise Fee for each                   Enterprise Fee as well as correct a cross-
                                                    External Distributor that controls                                                                                stating that the Enterprise Fee is in
                                                                                                             reference within the definition of ‘‘Non-                addition to the Distributor Fee. Deleting
                                                    display of EDGX Top or EDGX Last Sale                    Professional User’’.
                                                    if it wishes such User to be covered by                                                                           this sentence does not alter the manner
                                                                                                               First, the proposed change to the                      in which the Enterprise Fee is charged.
                                                    an Enterprise Fee rather than by per                     description of the BATS One Feed 19
                                                    User fees. A recipient firm that pays the                                                                         Rather, it is intended to avoid confusion
                                                    Enterprise Fee will not have to report its                 18 The Exchange notes that EDGA, BYX and BZX
                                                                                                                                                                      and align the description with that of
                                                    number of such Users on a monthly                        also filed proposed rule changes with Commission
                                                                                                                                                                      the proposed Enterprise Fees for EDGX
                                                    basis. However, every six months, a                      to adopt a Digital Media Enterprise Fee for their        Top and EDGX Last Sale described
                                                    recipient firm must provide the                          respective Top and Last Sale market data product.        above.
                                                                                                             See File Nos. SR–EDGA–2015–25, SR–BYX–2015–                 Second, the Exchange proposes to
                                                    Exchange with a count of the total                       30, and SR–BATS–2015–48 (proposing a monthly             correct a cross-reference within the
                                                    number of natural person users of each                   Digital Media Enterprise Fee of $2,500 for their
                                                                                                             respective Top and Last Sale feeds). A vendor that
                                                                                                             wishes to create a product like the BATS One             bid and offer (‘‘BBO’’) of all displayed orders for
                                                      17 The  Exchange notes that EDGA, BYX and BZX
                                                                                                             Summary Feed could subscribe to each of the BATS         securities traded on EDGX and its affiliated
                                                    also filed proposed rule changes with Commission                                                                  exchanges and for which the BATS Exchanges
                                                    to adopt Enterprise Fees for their respective Top        Exchanges’ Top and Last Sale feeds. See the Initial
                                                                                                             BATS One Feed Fee Filings, supra note 10. Should         report quotes under the Consolidated Tape
                                                    and Last Sale market data product. File Nos. SR–                                                                  Association (‘‘CTA’’) Plan or the Nasdaq/UTP Plan.
                                                    EDGA–2015–25, SR–BYX–2015–30, and SR–BATS–               a vendor subscribe to each of the BATS Exchanges’
                                                                                                                                                                      The BATS One Feed also contains the individual
                                                    2015–48 (proposing a monthly Enterprise Fee of           Top and Last Sale feeds, it would be charged a total
                                                                                                                                                                      last sale information for the BATS Exchanges
                                                    $15,000 for BZX Top and BZX Last Sale and                monthly Digital Media Enterprise Fee of $10,000.
                                                                                                                                                                      (collectively with the aggregate BBO, the ‘‘BATS
                                                    $10,000 for EDGA Top and Last Sale as well as BYX        This amount is less than the Digital Media
                                                                                                                                                                      One Summary Feed’’). In addition, the BATS One
                                                    Top and Last Sale). A vendor that wishes to create       Enterprise Fee charged for the BATS One Summary          Feed contains optional functionality which enables
                                                    a product like the BATS One Summary Feed could           Feed. See Securities Exchange Act Release Nos.           recipients to receive aggregated two-sided
                                                                                                             74598 (March 27, 2015), 80 FR 17791 (April 2,
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                    subscribe to each of the BATS Exchanges’ Top and                                                                  quotations from the BATS Exchanges for up to five
                                                    Last Sale feeds. See the Initial BATS One Feed Fee       2015) (SR–BATS–2015–24); 74599 (March 27,                (5) price levels (‘‘BATS One Premium Feed’’). See
                                                    Filings, supra note 10. Should a vendor subscribe        2015), 80 FR 17812 (April 2, 2015) (SR–BYX–2015–         Securities Exchange Act Release No. 73918
                                                    to each of the BATS Exchanges’ Top and Last Sale         19); 74600 (March 27, 2014), 80 FR 17797 (April 2,       (December 23, 2014), 79 FR 78920 (December 31,
                                                    feeds, it would be charged a total monthly               2015) (SR–EDGA–2015–14); and 74601 (March 27,            2014) (File Nos. SR–EDGX–2014–25; SR–EDGA–
                                                    Enterprise Fee of $50,000. This amount is equal to,      2015), 80 FR 17804 (April 2, 2015) (SR–EDGX–             2014–25; SR–BATS–2014–055; SR–BYX–2014–030)
                                                    and not greater than the Enterprise Fee charged for      2015–14) (adopting a monthly Digital Media               (Notice of Amendments No. 2 and Order Granting
                                                    the BATS One Summary Feed. Id. (adopting a               Enterprise Fee of $15,000 for the BATS One               Accelerated Approval to Proposed Rule Changes, as
                                                    monthly Enterprise Fee of $50,000 as well as a           Summary Feed).                                           Modified by Amendments Nos. 1 and 2, to Establish
                                                    separate $1,000 per month Data Consolidation Fee           19 In sum, the BATS One Feed is a data feed that       a New Market Data Product called the BATS One
                                                    for the BATS One Summary Feed).                          disseminates, on a real-time basis, the aggregate best   Feed) (‘‘BATS One Approval Order’’).



                                               VerDate Sep<11>2014   19:09 Jul 13, 2015   Jkt 235001   PO 00000   Frm 00116   Fmt 4703   Sfmt 4703   E:\FR\FM\14JYN1.SGM    14JYN1


                                                                                    Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices                                                     41107

                                                    definition of ‘‘Non-Professional User’’.                 distributes information with respect to               be so complicated that it could not be
                                                    In part, a ‘‘Non-Professional User’’ is                  quotations for or transactions in an NMS              done practically.24
                                                    currently defined as ‘‘a natural person                  stock do so on terms that are not                       User Fees. The Exchange believes that
                                                    who is not: . . . engaged as an                          unreasonably discriminatory. In                       implementing the Professional and Non-
                                                    ‘‘investment adviser’’ as that term is                   adopting Regulation NMS, the                          Professional User fees for EDGX Top
                                                    defined in Section 201(11) of the                        Commission granted self-regulatory                    and EDGX Last Sale is equitable and
                                                    Investment Advisers Act of 1940                          organizations and broker-dealers                      reasonable because it will result in
                                                    (whether or not registered or qualified                  increased authority and flexibility to                greater availability to Professional and
                                                    under that Act) . . .’’ The definition                   offer new and unique market data to the               Non-Professional Users. Moreover,
                                                    incorrectly states that the term                         public. It was believed that this                     introducing a modest Non-Professional
                                                    ‘‘investment adviser is defined under                    authority would expand the amount of                  User fee for EDGX Top and EDGX Last
                                                    Section 201(11) of the Investment                        data available to consumers, and also                 Sale is reasonable because it provides an
                                                    Advisers Act of 1940, when it is, in fact,               spur innovation and competition for the               additional method for retail investors to
                                                    defined under Section 202(a)(11) of the                  provision of market data.                             access EDGX Top and EDGX Last Sale
                                                    Investment Advisers Act of 1940.                            In addition, the proposed fees would               data by providing the same data that is
                                                    Therefore, the Exchange proposes to                      not permit unfair discrimination                      available to Professional Users. The
                                                    replace the reference to Section 201(11)                 because all of the Exchange’s customers               Exchange believes that the proposed
                                                    with Section 202(a)(11) within the                       and market data vendors will be subject               fees are equitable and not unfairly
                                                    definition of Non-Professional User.                     to the proposed fees on an equivalent                 discriminatory because they will be
                                                                                                             basis. EDGX Last Sale and EDGX Top                    charged uniformly to recipient firms
                                                    Implementation Date
                                                                                                             are distributed and purchased on a                    and Users. The fee structure of
                                                      The Exchange proposes to implement                     voluntary basis, in that neither the
                                                    the proposed changes to its fee schedule                                                                       differentiated Professional and Non-
                                                                                                             Exchange nor market data distributors                 Professional fees is utilized by the
                                                    on July 1, 2015.                                         are required by any rule or regulation to             Exchange for the BATS One Feed and
                                                    2. Statutory Basis                                       make this data available. Accordingly,                has long been used by other exchanges
                                                                                                             Distributors and Users can discontinue                for their proprietary data products, and
                                                       The Exchange believes that the                        use at any time and for any reason,
                                                    proposed rule change is consistent with                                                                        by the Nasdaq UTP and the CTA and CQ
                                                                                                             including due to an assessment of the                 Plans in order to reduce the price of
                                                    the objectives of Section 6 of the Act,20                reasonableness of fees charged. Firms
                                                    in general, and furthers the objectives of                                                                     data to retail investors and make it more
                                                                                                             have a wide variety of alternative                    broadly available.25 Offering EDGX Top
                                                    Section 6(b)(4),21 in particular, as it is               market data products from which to
                                                    designed to provide for the equitable                                                                          and EDGX Last Sale to Non-Professional
                                                                                                             choose, such as similar proprietary data              Users with the same data available to
                                                    allocation of reasonable dues, fees and                  products offered by other exchanges and
                                                    other charges among its members and                      consolidated data. Moreover, the
                                                    other recipients of Exchange data. The                   Exchange is not required to make any
                                                                                                                                                                      24 The Exchange believes that cost-based pricing

                                                    Exchange believes that the proposed                                                                            would be impractical because it would create
                                                                                                             proprietary data products available or to             enormous administrative burdens for all parties,
                                                    rates are equitable and non-                             offer any specific pricing alternatives to            including the Commission, to cost-regulate a large
                                                    discriminatory in that they apply                        any customers.                                        number of participants and standardize and analyze
                                                    uniformly to all recipients of Exchange                     In addition, the fees that are the
                                                                                                                                                                   extraordinary amounts of information, accounts,
                                                    data. The Exchange believes the                                                                                and reports. In addition, it is impossible to regulate
                                                                                                             subject of this rule filing are constrained           market data prices in isolation from prices charged
                                                    proposed fees are competitive with                       by competition. As explained below in                 by markets for other services that are joint products.
                                                    those charged by other venues and,                       the Exchange’s Statement on Burden on                 Cost-based rate regulation would also lead to
                                                    therefore, reasonable and equitably                      Competition, the existence of
                                                                                                                                                                   litigation and may distort incentives, including
                                                    allocated to recipients. Lastly, the                                                                           those to minimize costs and to innovate, leading to
                                                                                                             alternatives to EDGX Top and EDGX                     further waste. Under cost-based pricing, the
                                                    Exchange also believes that the                          Last Sale further ensures that the                    Commission would be burdened with determining
                                                    proposed fees are reasonable and non-                    Exchange cannot set unreasonable fees,                a fair rate of return, and the industry could
                                                    discriminatory because they will apply                   or fees that are unreasonably
                                                                                                                                                                   experience frequent rate increases based on
                                                    uniformly to all recipients of Exchange                                                                        escalating expense levels. Even in industries
                                                                                                             discriminatory, when vendors and                      historically subject to utility regulation, cost-based
                                                    data.                                                    subscribers can elect such alternatives.              ratemaking has been discredited. As such, the
                                                       The Exchange also believes that the                   That is, the Exchange competes with                   Exchange believes that cost-based ratemaking
                                                    proposed rule change is consistent with                  other exchanges (and their affiliates)
                                                                                                                                                                   would be inappropriate for proprietary market data
                                                    Section 11(A) of the Act 22 in that it                                                                         and inconsistent with Congress’s direction that the
                                                                                                             that provide similar market data                      Commission use its authority to foster the
                                                    supports (i) fair competition among                      products. If another exchange (or its                 development of the national market system, and
                                                    brokers and dealers, among exchange                      affiliate) were to charge less to                     that market forces will continue to provide
                                                    markets, and between exchange markets                    consolidate and distribute its similar
                                                                                                                                                                   appropriate pricing discipline. See Appendix C to
                                                    and markets other than exchange                                                                                NYSE’s comments to the Commission’s 2000
                                                                                                             product than the Exchange charges to                  Concept Release on the Regulation of Market
                                                    markets and (ii) the availability to                     consolidate and distribute EDGX Top or                Information Fees and Revenues, which can be
                                                    brokers, dealers, and investors of                       EDGX Last Sale, prospective Users                     found on the Commission’s Web site at http://
                                                    information with respect to quotations                   likely would not subscribe to, or would
                                                                                                                                                                   www.sec.gov/rules/concept/s72899/buck1.htm. See
                                                    for and transactions in securities.                                                                            also Securities Exchange Act Release No. 73816
                                                                                                             cease subscribing to, the EDGX Top or                 (December 11, 2014), 79 FR 75200 (December 17,
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                    Furthermore, the proposed rule change                    EDGX Last Sale.                                       2014) (SR–NYSE–2014–64) (Notice of Filing and
                                                    is consistent with Rule 603 of                              The Exchange notes that the                        Immediate Effectiveness of Proposed Rule Change
                                                    Regulation NMS,23 which provides that                    Commission is not required to
                                                                                                                                                                   to Establish an Access Fee for the NYSE Best Quote
                                                    any national securities exchange that                                                                          and Trades Data Feed, Operative December 1,
                                                                                                             undertake a cost-of-service or rate-                  2014).
                                                      20 15
                                                                                                             making approach. The Exchange                            25 See the Initial BATS One Feed Fee Filings,
                                                            U.S.C. 78f.                                                                                            supra note 10. See also, e.g., Securities Exchange
                                                      21 15 U.S.C. 78f(b)(4).
                                                                                                             believes that, even if it were possible as
                                                                                                                                                                   Act Release No. 20002, File No. S7–433 (July 22,
                                                      22 15 U.S.C. 78k–1.                                    a matter of economic theory, cost-based               1983) (establishing nonprofessional fees for CTA
                                                      23 See 17 CFR 242.603.                                 pricing for non-core market data would                data); Nasdaq Rules 7023(b), 7047.



                                               VerDate Sep<11>2014   19:09 Jul 13, 2015   Jkt 235001   PO 00000   Frm 00117   Fmt 4703   Sfmt 4703   E:\FR\FM\14JYN1.SGM   14JYN1


                                                    41108                           Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices

                                                    Professional Users results in greater                       Digital Media Enterprise Fee. The                  Enterprise Fee is equitable and
                                                    equity among data recipients.                            Exchange believes that the proposed                   reasonable because it is less than similar
                                                       In addition, the proposed fees are                    Digital Media Enterprise Fee for EDGX                 fees charged by other exchanges.28
                                                    reasonable when compared to similar                      Top and EDGX Last Sale provides for an                  Non-Substantive, Corrective Changes.
                                                    fees for comparable products offered by                  equitable allocation of reasonable fees               The Exchange believes that the
                                                    the NYSE. Specifically, NYSE offers                      among recipients of the data and is not               proposed non-substantive, corrective
                                                    NYSE BBO, which includes best bid and                    designed to permit unfair                             changes are consistent with Section 6(b)
                                                    offer for NYSE traded securities, for a                  discrimination among customers,                       of the Act,29 in general, and Section
                                                    monthly fee of $4.00 per professional                    brokers, or dealers. In establishing the              6(b)(4) of the Act,30 in particular, in that
                                                    subscriber and $0.20 per non-                            Digital Media Enterprise Fee, the                     they provide for an equitable allocation
                                                    professional subscriber.26 NYSE also                     Exchange recognizes that there is                     of reasonable fees among recipients of
                                                    offers NYSE Trades, which is a data feed                 demand for a more seamless and easier-                the data and is not designed to permit
                                                    that provides the last sale information                  to-administer data distribution model                 unfair discrimination among customers,
                                                    for NYSE traded securities, for the same                 that takes into account the expanded                  brokers, or dealers. These proposed
                                                    price as NYSE BBO. The Exchange’s                        variety of media and communication                    changes are equitable and reasonable
                                                    proposed per User Fees for EDGX Top                      devices that investors utilize today. The             because the changes are designed to
                                                    and EDGX Last Sale are less than the                     Exchange believes the Digital Media                   clarify the fee schedule and avoid
                                                    NYSE’s fees for NYSE Trades and NYSE                     Enterprise Fee will be easy to                        potential investor confusion. The
                                                    BBO.                                                     administer because data recipients that               amendment to the BATS One Enterprise
                                                       Enterprise Fee. The proposed                          purchase it would not be required to                  Fee is also intended to align the
                                                    Enterprise Fee for EDGX Top and EDGX                     differentiate between Professional and                description with that of the proposed
                                                    Last Sale are equitable and reasonable as                Non-Professional Users, account for the               Enterprise Fees for EDGX Top and
                                                    the fees proposed are less than the                      extent of access to the data, or report the           EDGX Last Sale described above. The
                                                    enterprise fees currently charged for                    number of Users. This is a significant                proposed changes are also non-
                                                    NYSE Trades and NYSE BBO. The                            reduction on a recipient firm’s                       discriminatory as they would apply to
                                                    NYSE charges a separate enterprise fee                   administrative burdens and is a                       all recipient firms uniformly.
                                                    of $190,000 per month for NYSE Trades                    significant value to investors. For                   B. Self-Regulatory Organization’s
                                                    and NYSE BBO.27 In addition, the                         example, a television broadcaster could               Statement on Burden on Competition
                                                    Enterprise Fee proposed by the                           display EDGX Top and/or EDGX Last
                                                    Exchange could result in a fee reduction                                                                         The Exchange does not believe that
                                                                                                             Sale data during market-related
                                                    for recipient firms with a large number                                                                        the proposed rule change will result in
                                                                                                             programming and on its Web site or
                                                    of Professional and Non-Professional                                                                           any burden on competition that is not
                                                                                                             allow viewers to view the data via their              necessary or appropriate in furtherance
                                                    Users. If a recipient firm has a smaller                 mobile devices, creating a more
                                                    number of Professional Users of EDGX                                                                           of the purposes of the Act, as amended.
                                                                                                             seamless distribution model that will
                                                    Top or EDGX Last Sale, then it may                       allow investors more choice in how they               EDGX Top and EDGX Last Sale
                                                    continue using the per User structure                    receive and view market data, all
                                                    and benefit from the per User Fee                                                                                The Exchange does not believe that
                                                                                                             without having to account for and/or                  the proposed rule change will result in
                                                    reductions. By reducing prices for                       measure who accesses the data and how
                                                    recipient firms with a large number of                                                                         any burden on competition that is not
                                                                                                             often they do so.                                     necessary or appropriate in furtherance
                                                    Professional and Non-Professional
                                                    Users, the Exchange believes that more                      The proposed Digital Media                         of the purposes of the Act, as amended.
                                                    firms may choose to receive and to                       Enterprise Fee is equitable and                       The Exchange’s ability to price EDGX
                                                                                                             reasonable because it will also enable                Last Sale and EDGX Top are constrained
                                                    distribute the EDGX Top or EDGX Last
                                                                                                             recipient firms to more widely                        by: (i) Competition among exchanges,
                                                    Sale, thereby expanding the distribution
                                                                                                             distribute data from EDGX Top and                     other trading platforms, and Trade
                                                    of this market data for the benefit of
                                                                                                             EDGX Last Sale to investors for                       Reporting Facilities (‘‘TRF’’) that
                                                    investors.
                                                       The Exchange further believes that the                informational purposes at a lower cost                compete with each other in a variety of
                                                    proposed Enterprise Fee is reasonable                    than is available today. For example, a               dimensions; (ii) the existence of
                                                    because it will simplify reporting for                   recipient firm may purchase an                        inexpensive real-time consolidated data
                                                    certain recipients that have large                       Enterprise license in the amount of                   and market-specific data and free
                                                    numbers of Professional and Non-                         $15,000 per month for to receive EDGX                 delayed data; and (iii) the inherent
                                                    Professional Users. Firms that pay the                   Top and/or EDGX Last Sale from an                     contestability of the market for
                                                    proposed Enterprise Fee will not have to                 External Distributor for an unlimited                 proprietary data.
                                                                                                             number of Professional and Non-                         The Exchange and its market data
                                                    report the number of Users on a
                                                                                                             Professional Users, which is greater than             products are subject to significant
                                                    monthly basis as they currently do, but
                                                                                                             the proposed Digital Media Enterprise                 competitive forces and the proposed
                                                    rather will only have to count natural
                                                                                                             Fee. The Exchange also believes the                   fees represent responses to that
                                                    person users every six months, which is
                                                                                                             amount of the Digital Media Enterprise                competition. To start, the Exchange
                                                    a significant reduction in administrative
                                                                                                             Fee is reasonable as compared to the                  competes intensely for order flow. It
                                                    burden. Finally, the Exchange believes
                                                    that it is equitable and not unfairly                    existing enterprise fees discussed above
                                                                                                                                                                      28 The Nasdaq Stock Market offers proprietary
                                                                                                             because the distribution of EDGX Top
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                    discriminatory to establish an Enterprise                                                                      data products for distribution over the internet and
                                                    Fee because it reduces the Exchange’s                    and EDGX Last Sale data is limited to                 television under alternative fee schedules that are
                                                    costs and the Distributor’s                              television, Web sites, and mobile                     subject to maximum fee of $50,000 per month. See
                                                    administrative burdens in tracking and                   devices for informational purposes only,              Nasdaq Rule 7039(b). The NYSE charges a Digit
                                                                                                             while distribution of EDGX Top and                    Media Enterprise fee of $40,000 per month for the
                                                    auditing large numbers of Users.                                                                               NYSE Trade Digital Media product. See Securities
                                                                                                             EDGX Last Sale data pursuant to an                    Exchange Act Release No. 69272 (April 2, 2013), 78
                                                      26 See NYSE Market Data Pricing dated May 2015         Enterprise license contains no such                   FR 20983 (April 8, 2013) (SR–NYSE–2013–23).
                                                    available at http://www.nyxdata.com/.                    limitation. The Exchange also believes                   29 15 U.S.C. 78f.
                                                      27 Id.                                                 that the proposed Digital Media                          30 15 U.S.C. 78f(b)(4).




                                               VerDate Sep<11>2014   19:09 Jul 13, 2015   Jkt 235001   PO 00000   Frm 00118   Fmt 4703   Sfmt 4703   E:\FR\FM\14JYN1.SGM   14JYN1


                                                                                    Federal Register / Vol. 80, No. 134 / Tuesday, July 14, 2015 / Notices                                                       41109

                                                    competes with the other national                         subscriber would achieve through the                        rules/sro.shtml). Copies of the
                                                    securities exchanges that currently trade                purchase.                                                   submission, all subsequent
                                                    equities, with electronic communication                                                                              amendments, all written statements
                                                                                                             Non-Substantive, Corrective Changes
                                                    networks, with quotes posted in                                                                                      with respect to the proposed rule
                                                    FINRA’s Alternative Display Facility,                      The proposed non-substantive,                             change that are filed with the
                                                    with alternative trading systems, and                    corrective changes to the fee schedule                      Commission, and all written
                                                    with securities firms that primarily                     will not have any impact on completion.                     communications relating to the
                                                    trade as principal with their customer                   The proposed changes are designed to                        proposed rule change between the
                                                    order flow.                                              clarify the fee schedule and avoid                          Commission and any person, other than
                                                       In addition, EDGX Last Sale and                       potential investor confusion.                               those that may be withheld from the
                                                    EDGX Top compete with a number of                                                                                    public in accordance with the
                                                                                                             C. Self-Regulatory Organization’s
                                                    alternative products. For instance,                                                                                  provisions of 5 U.S.C. 552, will be
                                                                                                             Statement on Comments on the
                                                    EDGX Last Sale and EDGX Top do not                                                                                   available for Web site viewing and
                                                                                                             Proposed Rule Change Received From
                                                    provide a complete picture of all trading                                                                            printing in the Commission’s Public
                                                                                                             Members, Participants, or Others
                                                    activity in a security. Rather, the other                                                                            Reference Room, 100 F Street NE.,
                                                    national securities exchanges, the                         The Exchange has neither solicited                        Washington, DC 20549 on official
                                                    several TRFs of FINRA, and Electronic                    nor received written comments on the                        business days between the hours of
                                                    Communication Networks (‘‘ECN’’) that                    proposed rule change.                                       10:00 a.m. and 3:00 p.m. Copies of such
                                                    produce proprietary data all produce                     III. Date of Effectiveness of the                           filing also will be available for
                                                    trades and trade reports. Each is                        Proposed Rule Change and Timing for                         inspection and copying at the principal
                                                    currently permitted to produce last sale                 Commission Action                                           office of the Exchange. All comments
                                                    information products, and many                                                                                       received will be posted without change;
                                                                                                                The foregoing rule change has become                     the Commission does not edit personal
                                                    currently do, including Nasdaq and
                                                                                                             effective pursuant to Section 19(b)(3)(A)                   identifying information from
                                                    NYSE. In addition, market participants
                                                                                                             of the Act 31 and paragraph (f) of Rule                     submissions. You should submit only
                                                    can gain access to EDGX last sale prices
                                                                                                             19b–4 thereunder.32 At any time within                      information that you wish to make
                                                    and top-of-book quotations, though
                                                                                                             60 days of the filing of the proposed rule                  available publicly. All submissions
                                                    integrated with the prices of other
                                                                                                             change, the Commission summarily may                        should refer to File Number SR–EDGX–
                                                    markets, on feeds made available
                                                                                                             temporarily suspend such rule change if                     2015–28, and should be submitted on or
                                                    through the SIPs.
                                                                                                             it appears to the Commission that such                      before August 4, 2015.
                                                       In sum, the availability of a variety of
                                                                                                             action is necessary or appropriate in the                     For the Commission, by the Division of
                                                    alternative sources of information
                                                                                                             public interest, for the protection of                      Trading and Markets, pursuant to delegated
                                                    imposes significant competitive
                                                                                                             investors, or otherwise in furtherance of                   authority.33
                                                    pressures on Exchange data products
                                                                                                             the purposes of the Act.                                    Brent J. Fields,
                                                    and the Exchange’s compelling need to
                                                    attract order flow imposes significant                   IV. Solicitation of Comments                                Secretary.
                                                    competitive pressure on the Exchange to                    Interested persons are invited to
                                                                                                                                                                         [FR Doc. 2015–17175 Filed 7–13–15; 8:45 am]
                                                    act equitably, fairly, and reasonably in                 submit written data, views, and                             BILLING CODE 8011–01–P
                                                    setting the proposed data product fees.                  arguments concerning the foregoing,
                                                    The proposed data product fees are, in                   including whether the proposed rule
                                                    part, responses to that pressure. The                                                                                SECURITIES AND EXCHANGE
                                                                                                             change is consistent with the Act.                          COMMISSION
                                                    Exchange believes that the proposed                      Comments may be submitted by any of
                                                    fees would reflect an equitable                          the following methods:                                      [Release No. 34–75390; File No. SR–EDGA–
                                                    allocation of its overall costs to users of                                                                          2015–26]
                                                    its facilities.                                          Electronic Comments
                                                       In addition, when establishing the                      • Use the Commission’s Internet                           Self-Regulatory Organizations; EDGA
                                                    proposed fees, the Exchange considered                   comment form (http://www.sec.gov/                           Exchange, Inc.; Notice of Filing and
                                                    the competitiveness of the market for                    rules/sro.shtml); or                                        Immediate Effectiveness of a Proposed
                                                    proprietary data and all of the                            • Send an email to rule-comments@                         Rule Change Related to Fees for Use
                                                    implications of that competition. The                    sec.gov. Please include File Number SR–                     of EDGA Exchange, Inc.
                                                    Exchange believes that it has considered                 EDGX–2015–28 on the subject line.                           July 8, 2015.
                                                    all relevant factors and has not                                                                                        Pursuant to Section 19(b)(1) of the
                                                    considered irrelevant factors in order to                Paper Comments
                                                                                                                                                                         Securities Exchange Act of 1934 (the
                                                    establish fair, reasonable, and not                        • Send paper comments in triplicate                       ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                                    unreasonably discriminatory fees and an                  to Brent J. Fields, Secretary, Securities                   notice is hereby given that on June 26,
                                                    equitable allocation of fees among all                   and Exchange Commission, 100 F Street                       2015, EDGA Exchange, Inc. (the
                                                    Users. The existence of alternatives to                  NE., Washington, DC 20549–1090.                             ‘‘Exchange’’ or ‘‘EDGA’’) filed with the
                                                    EDGX Last Sale and EDGX Top,                             All submissions should refer to File                        Securities and Exchange Commission
                                                    including existing similar feeds by other                Number SR–EDGX–2015–28. This file                           (‘‘Commission’’) the proposed rule
                                                    exchanges, consolidated data, and                        number should be included on the                            change as described in Items I, II and III
                                                    proprietary data from other sources,
asabaliauskas on DSK5VPTVN1PROD with NOTICES




                                                                                                             subject line if email is used. To help the                  below, which Items have been prepared
                                                    ensures that the Exchange cannot set                     Commission process and review your                          by the Exchange. The Exchange has
                                                    unreasonable fees, or fees that are                      comments more efficiently, please use                       designated the proposed rule change as
                                                    unreasonably discriminatory, when                        only one method. The Commission will                        one establishing or changing a member
                                                    vendors and subscribers can elect these                  post all comments on the Commission’s                       due, fee, or other charge imposed by the
                                                    alternatives or choose not to purchase a                 Internet Web site (http://www.sec.gov/
                                                    specific proprietary data product if its                                                                               33 17 CFR 200.30–3(a)(12).
                                                    cost to purchase is not justified by the                      31 15 U.S.C. 78s(b)(3)(A).                               1 15 U.S.C. 78s(b)(1).
                                                    returns any particular vendor or                              32 17 CFR 240.19b–4(f).                                  2 17 CFR 240.19b–4.




                                               VerDate Sep<11>2014   19:09 Jul 13, 2015   Jkt 235001   PO 00000     Frm 00119   Fmt 4703       Sfmt 4703   E:\FR\FM\14JYN1.SGM     14JYN1



Document Created: 2018-02-23 09:19:47
Document Modified: 2018-02-23 09:19:47
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation80 FR 41104 

2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR