80 FR 53364 - Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for a Market Data Product Known as EDGX Book Viewer

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 171 (September 3, 2015)

Page Range		53364-53369
FR Document		2015-21873

Federal Register, Volume 80 Issue 171 (Thursday, September 3, 2015)

[Federal Register Volume 80, Number 171 (Thursday, September 3, 2015)]
[Notices]
[Pages 53364-53369]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-21873]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75788; File No. SR-EDGX-2015-38]

Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for a Market Data Product Known as EDGX Book Viewer

August 28, 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 August 24, 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

[[Page 53365]]

solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

The Exchange filed a proposal to amend the Market Data section of
its fee schedule to adopt fees for a market data product called EDGX
Book Viewer.
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 adopt fees for a market data product called EDGX Book
Viewer. EDGX Book Viewer is a data feed that disseminates, on a real-
time basis, the aggregated two-side quotations for up to five (5) price
levels for all displayed orders for securities traded on the Exchange
and for which the Exchanges reports quotes under the Consolidated Tape
Association (``CTA'') Plan or the Nasdaq/UTP Plan. EDGX Book Viewer
also contains the last ten (10) trades including time of trade, price
and share quantity.\5\ EDGX Book Viewer is currently available via
www.batstrading.com without charge.
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\5\ See Securities Exchange Act Release No. 75713 (August 17,
2015), 80 FR 50896 (August 21, 2015) (SR-EDGX-2015-36) (Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change to
Amend Rule 13.8 to Describe the Market Data Product EDGX Book
Viewer).
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The Exchange now proposes to amend its fee schedule to incorporate
fees for distribution of EDGX Book Viewer to subscribers.\6\ EDGX Book
Viewer will remain available via www.batstrading.com for viewing
without charge. The proposed fees include the following, each of which
are described in detail below: (i) Distribution Fees for both Internal
and External Distributors; \7\ (ii) Usage Fees for both Professional
\8\ and Non-Professional \9\ Users; \10\ (iii) an Enterprise Fee; \11\
and (iv) a Digital Media Enterprise Fee.
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\6\ The Exchange notes that its affiliated exchanges, 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 intent to file proposed rule changes
with Commission to adopt similar fees for their respective Book
Viewer market data product.
\7\ 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.'' See the Exchange Fee Schedule
available at http://batstrading.com/support/fee_schedule/edgx/. 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.'' Id. 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.''
\8\ 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/.
\9\ 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.
\10\ 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 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'').
\11\ 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.
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Distribution Fees. As proposed, each Internal Distributor that
receives EDGX Book Viewer shall pay a fee of $500 per month. The
Exchange does not propose to charge any User fees for EDGX Book Viewer
where the data is received and subsequently internally distributed to
Professional or Non-Professional Users. In addition, the Exchange
proposes to charge External Distributors that receives EDGX Book Viewer
a fee of $2,500 per month.
User Fees. The Exchange proposes to charge those who receive EDGX
Book Viewer 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 $3.00 per User. Non-
Professional Users will be assessed a monthly fee of $0.15 per User.
The Exchange does not propose to charge per User fees to Internal
Distributors.
External Distributors that receives EDGX Book Viewer would be
required to count every Professional User and Non-Professional User to
which they provide EDGX Book Viewer, the requirements for which are
identical to that currently in place for the BATS One Feed.\12\ 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:
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\12\ See the Initial BATS One Feed Fee Filings, supra note 10.
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In connection with an External Distributor's distribution
of EDGX Book Viewer, the Distributor should count as one User each
unique User that the Distributor has entitled to have access to EDGX
Book Viewer. 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 Book Viewer, the Distributor should count that as one User.
However, if a unique User uses multiple methods to gain access to EDGX
Book Viewer (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

[[Page 53366]]

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 Fee for EDGX Book Viewer equal to the amount of its monthly
Usage Fees up to a maximum of the Distributor Fee for EDGX Book Viewer.
For example, an External Distributor will be subject to a $2,500
monthly Distributor Fee where they receive EDGX Book Viewer. If that
External Distributor reports User quantities totaling $2,500 or more of
monthly usage of EDGX Book Viewer, 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
$1,500 for the Distributor Fee. External Distributors will remain
subject to the per User fees discussed above.
Enterprise Fee. The Exchange also proposes to establish a $20,000
per month Enterprise Fee that will permit a recipient firm who receives
EDGX Book Viewer from an External Distributor to receive the data for
an unlimited number of Professional and Non-Professional Users. For
example, if a recipient firm had 15,000 Professional Users who each
receive EDGX Book Viewer at $3.00 per month, then that recipient firm
will pay $45,000 per month in Professional Users fees. Under the
proposed Enterprise Fee, the recipient firm will pay a flat fee of
$20,000 for an unlimited number of Professional and Non-Professional
Users for EDGX Book Viewer. A recipient firm must pay a separate
Enterprise Fee for each External Distributor that controls the display
of EDGX Book Viewer 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 Book Viewer User fees.
Digital Media Enterprise Fee. The Exchange proposes to adopt a
Digital Media Enterprise Fee of $5,000 per month for EDGX Book Viewer.
As an alternative to proposed User fees discussed above, a recipient
firm may purchase a monthly Digital Media Enterprise license to receive
EDGX Book Viewer 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 Book Viewer User fees.
Implementation Date
The Exchange proposes to implement the proposed changes to its fee
schedule on September 8, 2015.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the objectives of Section 6 of the Act,\13\ in general, and
furthers the objectives of Section 6(b)(4),\14\ 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.
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\13\ 15 U.S.C. 78f.
\14\ 15 U.S.C. 78f(b)(4).
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The Exchange also believes that the proposed rule change is
consistent with Section 11(A) of the Act \15\ 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,\16\ 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.
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\15\ 15 U.S.C. 78k-1.
\16\ See 17 CFR 242.603.
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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 Book Viewer is 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 Book Viewer 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 distribute its similar product than
the Exchange charges to consolidate and distribute EDGX Book Viewer,
prospective Users likely would not subscribe to, or would cease
subscribing to, EDGX Book Viewer.
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.\17\
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\17\ 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).

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[[Page 53367]]

Distributor Fee. The Exchange believes that the proposed
Distributor Fees are also reasonable, equitably allocated, and not
unreasonably discriminatory. The fees for Members and non-Members are
uniform except with respect to reasonable distinctions with respect to
internal and external distribution.\18\ The Exchange believes that the
Distributor Fees for EDGX Book Viewer are reasonable and fair in light
of alternatives offered by other market centers. For example, EDGX Book
Viewer provides investors with alternative market data and competes
with similar market data product currently offered by the New York
Stock Exchange, Inc. (``NYSE'') and the Nasdaq Stock Market LLC
(``Nasdaq'').\19\ Specifically, the NYSE charges an access fee of
$5,000 per month for NYSE OpenBook,\20\ which is higher than the
External Distributor fee proposed herein for EDGX Book Viewer.
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\18\ The Exchange notes that distinctions based on external
versus internal distribution have been previously filed with the
Commission by Nasdaq, Nasdaq OMX BX, and Nasdaq OMX PSX. See Nasdaq
Rule 019(b); see also Securities Exchange Act Release No. 62876
(September 9, 2010), 75 FR 56624 (September 16, 2010) (SR-PHLX-2010-
120); Securities Exchange Act Release No. 62907 (September 14,
2010), 75 FR 57314 (September 20, 2010) (SR-NASDAQ-2010-110);
Securities Exchange Act Release No. 63442 (December 6, 2010), 75 FR
77029 (December 10, 2010) (SR-BX-2010-081). See also the Initial
BATS One Feed Fee Filings, supra note 10.
\19\ See Nasdaq Rule 7023(a)(1)(C) (describing Nasdaq TotalView
is a depth-of-book data feed that includes all orders and quotes
from all Nasdaq members displayed in the Nasdaq Market Center as
well as the aggregate size of such orders and quotes at each price
level in the execution functionality of the Nasdaq Market Center).
See also Nasdaq Book Viewer, a description of which is available at
https://data.nasdaq.com/Book Viewer.aspx (last visited July 29,
2015). See NYSE OpenBook available at http://www.nyxdata.com/openbook (last visited July 29, 2015) (providing real-time view of
the NYSE limit order book).
\20\ See NYSE Market Data Pricing dated May 2015 available at
http://www.nyxdata.com/. Nasdaq charges distribution fees ranging
from $300 for 1-10 subscribers to $75,000 for more than $250 [sic]
subscribers. See Nasdaq Rule 7023(b)(4).
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User Fees. The Exchange believes that implementing the Professional
and Non-Professional User fees for EDGX Book Viewer are equitable and
reasonable because they will result in greater availability to
Professional and Non-Professional Users. Moreover, introducing a modest
Non-Professional User fee for EDGX Book Viewer is reasonable because it
provides an additional method for retail investors to access EDGX Book
Viewer 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.\21\ Offering EDGX Book
Viewer to Non-Professional Users with the same data available to
Professional Users results in greater equity among data recipients.
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\21\ 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.
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In addition, the proposed fees are reasonable when compared to
similar fees for comparable products offered by the NYSE and Nasdaq.
Specifically, NYSE offers NYSE OpenBook for a monthly fee of $60.00 per
professional subscriber and $15 per non-professional subscriber.\22\
Nasdaq offers Nasdaq BookViewer for the same fees as Nasdaq TotalView,
which is a monthly fee of $70.00 per professional subscriber and $14
per non-professional subscriber.\23\ The Exchange's proposed per User
Fees for EDGX Book Viewer are less than the NYSE and Nasdaq fees.
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\22\ See NYSE Market Data Pricing dated May 2015 available at
http://www.nyxdata.com/.
\23\ See Nasdaq Rule 7023(b)(2).
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Enterprise Fee. The proposed Enterprise Fee for EDGX Book Viewer is
equitable and reasonable as the fees proposed are less than the
enterprise fees currently charged for Nasdaq Book Viewer, which is
subject to the exact same fees as Nasdaq TotalView. Nasdaq charges an
enterprise fee of $100,000 per month for Nasdaq TotalView,\24\ which is
far greater than the proposed Enterprise Fee of $20,000 per month for
EDGX Book Viewer. 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 Book Viewer,
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 EDGX
Book Viewer, thereby expanding the distribution of this market data for
the benefit of investors.
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\24\ See Nasdaq Rule 7023(c)(2) (stating that a distributor that
is also a broker-dealer pays a monthly fee of $100,000 for the right
to provide Nasdaq TotalView and for display usage for internal
distribution, or for external distribution to both professional and
non-professional subscribers with whom the firm has a brokerage
relationship.) Nasdaq also charges an enterprise fee of $25,000 to
provide Nasdaq TotalView to an unlimited number of non-professional
subscribers only. See Nasdaq Rule 7023(c)(1).
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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 Book Viewer 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

[[Page 53368]]

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 Book Viewer 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 Book Viewer 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
$20,000 per month for to receive EDGX Book Viewer 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 Book
Viewer data is limited to television, Web sites, and mobile devices for
informational purposes only, while distribution of EDGX Book Viewer
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.\25\
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\25\ 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).
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(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. The
Exchange's ability to price EDGX Book Viewer is 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 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 Book Viewer competes with a number of alternative
products. For instance, EDGX Book Viewer does 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 and depth-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 Book Viewer,
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.

(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 \26\ and paragraph (f) of Rule 19b-4
thereunder.\27\ 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.
---------------------------------------------------------------------------

\26\ 15 U.S.C. 78s(b)(3)(A).
\27\ 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 proposal 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 rule-comments@sec.gov. Please include
File No. SR-EDGX-2015-38 on the subject line.

Paper Comments

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

[[Page 53369]]

All submissions should refer to File No. SR-EDGX-2015-38. 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 will also 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 No. SR-EDGX-2015-38 and should be
submitted on or before September 24, 2015.
---------------------------------------------------------------------------

\28\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-21873 Filed 9-2-15; 8:45 am]
BILLING CODE 8011-01-P

53364 Federal Register / Vol. 80, No. 171 / Thursday, September 3, 2015 / Notices

trade as principal with their customer (C) Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be
order flow. Statement on Comments on the available for Web site viewing and
In addition, BZX Book Viewer Proposed Rule Change Received From printing in the Commission’s Public
competes with a number of alternative Members, Participants or Others Reference Room, 100 F Street NE.,
products. For instance, BZX Book The Exchange has neither solicited Washington, DC 20549, on official
nor received written comments on the business days between the hours of
Viewer does provide a complete picture
proposed rule change. 10:00 a.m. and 3:00 p.m. Copies of such
of all trading activity in a security.
filing will also be available for
Rather, the other national securities III. Date of Effectiveness of the inspection and copying at the principal
exchanges, the several TRFs of FINRA, Proposed Rule Change and Timing for office of the Exchange. All comments
and Electronic Communication Commission Action received will be posted without change;
Networks (‘‘ECN’’) that produce The foregoing rule change has become the Commission does not edit personal
proprietary data all produce trades and effective pursuant to Section 19(b)(3)(A) identifying information from
trade reports. Each is currently of the Act 26 and paragraph (f) of Rule submissions. You should submit only
permitted to produce last sale 19b–4 thereunder.27 At any time within information that you wish to make
information products, and many 60 days of the filing of the proposed rule available publicly. All submissions
currently do, including Nasdaq and change, the Commission summarily may should refer to File No. SR–BATS–
NYSE. In addition, market participants temporarily suspend such rule change if 2015–64 and should be submitted on or
can gain access to BZX last sale and it appears to the Commission that such before September 24, 2015.
depth-of-book quotations, though action is necessary or appropriate in the For the Commission, by the Division of
integrated with the prices of other public interest, for the protection of Trading and Markets, pursuant to delegated
markets, on feeds made available investors, or otherwise in furtherance of authority.28
through the SIPs. the purposes of the Act. Robert W. Errett,
In sum, the availability of a variety of IV. Solicitation of Comments Deputy Secretary.
alternative sources of information Interested persons are invited to [FR Doc. 2015–21870 Filed 9–2–15; 8:45 am]
imposes significant competitive submit written data, views and BILLING CODE 8011–01–P
pressures on Exchange data products arguments concerning the foregoing,
and the Exchange’s compelling need to including whether the proposal is
attract order flow imposes significant consistent with the Act. Comments may SECURITIES AND EXCHANGE
competitive pressure on the Exchange to be submitted by any of the following COMMISSION
act equitably, fairly, and reasonably in methods:
setting the proposed data product fees. Electronic Comments
[Release No. 34–75788; File No. SR–EDGX–
The proposed data product fees are, in 2015–38]
part, responses to that pressure. The • Use the Commission’s Internet
Exchange believes that the proposed comment form (http://www.sec.gov/ Self-Regulatory Organizations; EDGX
rules/sro.shtml); or Exchange, Inc.; Notice of Filing and
fees would reflect an equitable
• Send an email to rule-comments@ Immediate Effectiveness of a Proposed
allocation of its overall costs to users of
sec.gov. Please include File No. SR– Rule Change Related to Fees for a
its facilities. BATS–2015–64 on the subject line. Market Data Product Known as EDGX
In addition, when establishing the Book Viewer
proposed fees, the Exchange considered Paper Comments
the competitiveness of the market for • Send paper comments in triplicate August 28, 2015.
proprietary data and all of the to Secretary, Securities and Exchange Pursuant to Section 19(b)(1) of the
implications of that competition. The Commission, 100 F Street NE., Securities Exchange Act of 1934 (the
Exchange believes that it has considered Washington, DC 20549–1090. ‘‘Act’’),1 and Rule 19b–4 thereunder,2
all relevant factors and has not All submissions should refer to File No. notice is hereby given that on August
considered irrelevant factors in order to SR–BATS–2015–64. This file number 24, 2015, EDGX Exchange, Inc. (the
establish fair, reasonable, and not should be included on the subject line ‘‘Exchange’’ or ‘‘EDGX’’) filed with the
unreasonably discriminatory fees and an if email is used. To help the Securities and Exchange Commission
equitable allocation of fees among all Commission process and review your (‘‘Commission’’) the proposed rule
Users. The existence of alternatives to comments more efficiently, please use change as described in Items I, II and III
only one method. The Commission will below, which Items have been prepared
BZX Book Viewer, including existing
post all comments on the Commission’s by the Exchange. The Exchange has
similar feeds by other exchanges,
Internet Web site (http://www.sec.gov/ designated the proposed rule change as
consolidated data, and proprietary data
rules/sro.shtml). Copies of the one establishing or changing a member
from other sources, ensures that the submission, all subsequent due, fee, or other charge imposed by the
Exchange cannot set unreasonable fees, amendments, all written statements Exchange under Section 19(b)(3)(A)(ii)
or fees that are unreasonably with respect to the proposed rule of the Act 3 and Rule 19b-4(f)(2)
discriminatory, when vendors and change that are filed with the thereunder,4 which renders the
subscribers can elect these alternatives Commission, and all written proposed rule change effective upon
or choose not to purchase a specific communications relating to the filing with the Commission. The
tkelley on DSK3SPTVN1PROD with NOTICES

proprietary data product if its cost to proposed rule change between the Commission is publishing this notice to
purchase is not justified by the returns Commission and any person, other than
any particular vendor or subscriber those that may be withheld from the 28 17 CFR 200.30–3(a)(12).
would achieve through the purchase. public in accordance with the 1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
26 15 U.S.C. 78s(b)(3)(A). 3 15 U.S.C. 78s(b)(3)(A)(ii).
27 17 CFR 240.19b–4(f). 4 17 CFR 240.19b–4(f)(2).

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53368 Federal Register / Vol. 80, No. 171 / Thursday, September 3, 2015 / Notices

variety of media and communication any burden on competition that is not Exchange believes that it has considered
devices that investors utilize today. The necessary or appropriate in furtherance all relevant factors and has not
Exchange believes the Digital Media of the purposes of the Act, as amended. considered irrelevant factors in order to
Enterprise Fee will be easy to The Exchange’s ability to price EDGX establish fair, reasonable, and not
administer because data recipients that Book Viewer is constrained by: (i) unreasonably discriminatory fees and an
purchase it would not be required to Competition among exchanges, other equitable allocation of fees among all
differentiate between Professional and trading platforms, and Trade Reporting Users. The existence of alternatives to
Non-Professional Users, account for the Facilities (‘‘TRF’’) that compete with EDGX Book Viewer, including existing
extent of access to the data, or report the each other in a variety of dimensions; similar feeds by other exchanges,
number of Users. This is a significant (ii) the existence of inexpensive real- consolidated data, and proprietary data
reduction on a recipient firm’s time consolidated data and market- from other sources, ensures that the
administrative burdens and is a specific data and free delayed data; and Exchange cannot set unreasonable fees,
significant value to investors. For (iii) the inherent contestability of the or fees that are unreasonably
example, a television broadcaster could market for proprietary data. discriminatory, when vendors and
display EDGX Book Viewer data during The Exchange and its market data subscribers can elect these alternatives
market-related programming and on its products are subject to significant or choose not to purchase a specific
Web site or allow viewers to view the competitive forces and the proposed proprietary data product if its cost to
data via their mobile devices, creating a fees represent responses to that purchase is not justified by the returns
more seamless distribution model that competition. To start, the Exchange any particular vendor or subscriber
will allow investors more choice in how competes intensely for order flow. It would achieve through the purchase.
they receive and view market data, all competes with the other national
securities exchanges that currently trade (C) Self-Regulatory Organization’s
without having to account for and/or Statement on Comments on the
measure who accesses the data and how equities, with electronic communication
networks, with quotes posted in Proposed Rule Change Received From
often they do so. Members, Participants or Others
The proposed Digital Media FINRA’s Alternative Display Facility,
Enterprise Fee is equitable and with alternative trading systems, and The Exchange has neither solicited
reasonable because it will also enable with securities firms that primarily nor received written comments on the
recipient firms to more widely trade as principal with their customer proposed rule change.
distribute data from EDGX Book Viewer order flow. III. Date of Effectiveness of the
to investors for informational purposes In addition, EDGX Book Viewer
Proposed Rule Change and Timing for
at a lower cost than is available today. competes with a number of alternative
Commission Action
For example, a recipient firm may products. For instance, EDGX Book
Viewer does provide a complete picture The foregoing rule change has become
purchase an Enterprise license in the effective pursuant to Section 19(b)(3)(A)
of all trading activity in a security.
amount of $20,000 per month for to of the Act 26 and paragraph (f) of Rule
Rather, the other national securities
receive EDGX Book Viewer from an 19b–4 thereunder.27 At any time within
exchanges, the several TRFs of FINRA,
External Distributor for an unlimited 60 days of the filing of the proposed rule
and Electronic Communication
number of Professional and Non- change, the Commission summarily may
Networks (‘‘ECN’’) that produce
Professional Users, which is greater than temporarily suspend such rule change if
proprietary data all produce trades and
the proposed Digital Media Enterprise it appears to the Commission that such
trade reports. Each is currently
Fee. The Exchange also believes the action is necessary or appropriate in the
permitted to produce last sale
amount of the Digital Media Enterprise public interest, for the protection of
information products, and many
Fee is reasonable as compared to the currently do, including Nasdaq and investors, or otherwise in furtherance of
existing enterprise fees discussed above NYSE. In addition, market participants the purposes of the Act.
because the distribution of EDGX Book can gain access to EDGX last sale and
Viewer data is limited to television, IV. Solicitation of Comments
depth-of-book quotations, though
Web sites, and mobile devices for integrated with the prices of other Interested persons are invited to
informational purposes only, while markets, on feeds made available submit written data, views and
distribution of EDGX Book Viewer data through the SIPs. arguments concerning the foregoing,
pursuant to an Enterprise license In sum, the availability of a variety of including whether the proposal is
contains no such limitation. The alternative sources of information consistent with the Act. Comments may
Exchange also believes that the imposes significant competitive be submitted by any of the following
proposed Digital Media Enterprise Fee pressures on Exchange data products methods:
is equitable and reasonable because it is and the Exchange’s compelling need to Electronic Comments
less than similar fees charged by other attract order flow imposes significant
exchanges.25 • Use the Commission’s Internet
competitive pressure on the Exchange to
comment form (http://www.sec.gov/
(B) Self-Regulatory Organization’s act equitably, fairly, and reasonably in
rules/sro.shtml); or
Statement on Burden on Competition setting the proposed data product fees. • Send an email to rule-comments@
The proposed data product fees are, in sec.gov. Please include File No. SR–
The Exchange does not believe that part, responses to that pressure. The
the proposed rule change will result in EDGX–2015–38 on the subject line.
Exchange believes that the proposed
fees would reflect an equitable Paper Comments
25 The Nasdaq Stock Market offers proprietary
tkelley on DSK3SPTVN1PROD with NOTICES

data products for distribution over the internet and allocation of its overall costs to users of • Send paper comments in triplicate
television under alternative fee schedules that are its facilities. to Secretary, Securities and Exchange
subject to maximum fee of $50,000 per month. See In addition, when establishing the Commission, 100 F Street NE.,
Nasdaq Rule 7039(b). The NYSE charges a Digit proposed fees, the Exchange considered
Media Enterprise fee of $40,000 per month for the
Washington, DC 20549–1090.
NYSE Trade Digital Media product. See Securities
the competitiveness of the market for
Exchange Act Release No. 69272 (April 2, 2013), 78 proprietary data and all of the 26 15 U.S.C. 78s(b)(3)(A).
FR 20983 (April 8, 2013) (SR–NYSE–2013–23). implications of that competition. The 27 17 CFR 240.19b–4(f).

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Federal Register / Vol. 80, No. 171 / Thursday, September 3, 2015 / Notices 53369

All submissions should refer to File No. Exchange Commission (‘‘Commission’’), Series 56 examination is administered
SR–EDGX–2015–38. This file number pursuant to Section 19(b)(1) of the by FINRA, however FINRA does not
should be included on the subject line Securities Exchange Act of 1934 recognize the exam as an acceptable
if email is used. To help the (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a qualification examination. Associated
Commission process and review your proposed rule change to establish the persons of FINRA members are required
comments more efficiently, please use Securities Trader and Securities Trader to pass the Series 55 examination to
only one method. The Commission will Principal registration categories. The engage in over-the-counter securities
post all comments on the Commission’s proposed rule change was published for trading. Consequently, individuals
Internet Web site (http://www.sec.gov/ comment in the Federal Register on July engaged in trading activities at broker-
rules/sro.shtml). Copies of the 14, 2015.3 The Commission received dealers may be subject to varying
submission, all subsequent two comment letters on the proposed qualification requirements, depending
amendments, all written statements rule change.4 This order approves the on whether their activities take place on
with respect to the proposed rule proposed rule change. a securities exchange or over-the-
change that are filed with the counter.6
II. Description of the Proposed Rule In its proposal, FINRA amends NASD
Commission, and all written
Change Rule 1032(f) to replace the Equity
communications relating to the
proposed rule change between the A. Securities Trader Registration Trader registration category and
Commission and any person, other than Category qualification examination (Series 55)
those that may be withheld from the Pursuant to NASD Rule 1032(f), each with a Securities Trader registration
public in accordance with the person associated with a FINRA category and qualification examination
provisions of 5 U.S.C. 552, will be member who is included within the (Series 57).7 FINRA also amends NASD
available for Web site viewing and definition of ‘‘representative’’ in NASD Rule 1032(f) to eliminate the
printing in the Commission’s Public Rule 1031 must register with FINRA as prerequisite registration requirement. In
Reference Room, 100 F Street NE., an Equity Trader if, with respect to addition, FINRA amends NASD Rule
Washington, DC 20549, on official transactions in equity (including equity 1032(f) to provide that a person solely
business days between the hours of options), preferred or convertible debt registered as a Securities Trader will not
10:00 a.m. and 3:00 p.m. Copies of such securities effected otherwise than on a be qualified to function in any other
filing will also be available for national securities exchange, the person registration category.
inspection and copying at the principal As proposed, a person registered as an
is engaged in proprietary trading, the
office of the Exchange. All comments Equity Trader in the Central Registration
execution of transactions on an agency
received will be posted without change; Depository (‘‘CRD’’) system on the
basis, or the direct supervision of such
the Commission does not edit personal effective date of the proposed rule
activities.5 Currently, before registering
identifying information from change 8 will be grandfathered as a
as an Equity Trader and taking the
submissions. You should submit only Securities Trader without having to take
Series 55 examination, the associated
information that you wish to make any additional examinations and
person must be registered as either a
available publicly. All submissions without having to take any other
General Securities Representative
should refer to File No. SR–EDGX– actions.9
(Series 7) or a Corporate Securities
2015–38 and should be submitted on or Representative (Series 62) and have B. Securities Trader Principal
before September 24,2015. passed either of the exams. Registration Category
For the Commission, by the Division of The exchanges, however, currently Currently, an associated person with
Trading and Markets, pursuant to delegated use the Series 56 examination as a direct supervisory responsibility over
authority.28 qualification standard for several
Robert W. Errett, registration categories relating to 6 FINRA notes that there is significant overlap in
Deputy Secretary. securities trading, including the the content of the Series 55 and 56 examinations.
[FR Doc. 2015–21873 Filed 9–2–15; 8:45 am] Proprietary Trader registration category, 7 FINRA will develop the Series 57 examination

BILLING CODE 8011–01–P and only NASDAQ recognizes the Series and will file the examination with the Commission
55 examination as an acceptable as part of a separate proposed rule change.
According to FINRA, while the Series 57
qualification standard under its examination will include the core knowledge
SECURITIES AND EXCHANGE registration rules. Unlike the Series 55 portion of the Series 7 examination, the Series 57
COMMISSION examination, there is no prerequisite examination will also be based on the current job
registration requirement for individuals functions of securities traders and include elements
[Release No. 34–75783; File No. SR–FINRA– of the Series 55 and 56 examination programs. In
2015–017] taking the Series 56 examination. The addition, FINRA will file a separate proposed rule
change to establish the fee for the Series 57
Self-Regulatory Organizations; 1 15 U.S.C. 78s(b)(1). examination.
2 17 8 The exchanges have indicated that they will
Financial Industry Regulatory CFR 240.19b–4.
3 See Securities Exchange Act Release No. 75394 replace the Series 56 examination with the Series
Authority, Inc.; Order Approving a (July 8, 2015), 80 FR 41119 (‘‘Notice’’). 57 examination for those registration categories,
Proposed Rule Change To Establish 4 See letters to Robert W. Errett, Deputy Secretary, such as the Proprietary Trader registration category,
the Securities Trader and Securities Commission, from Kevin Zambrowicz, Associate where the Series 56 is currently an acceptable
General Counsel & Managing Director, Securities qualification standard. The Commission expects the
Trader Principal Registration exchanges to file their proposed rule changes to
Industry and Financial Markets Association, dated
Categories July 10, 2015 (‘‘SIFMA Letter’’) and Michele Van effectuate this change before FINRA’s expected
Tassel, President, Association of Registration effective date for the Series 57—January 4, 2016.
August 28, 2015. Management, dated July 19, 2015 (‘‘ARM Letter’’). 9 A person who was registered as an Equity
tkelley on DSK3SPTVN1PROD with NOTICES

I. Introduction
5 There is an exception to this requirement for Trader in the CRD system before the effective date
any person associated with a FINRA member whose of the proposed rule change will be eligible to
On June 29, 2015, the Financial trading activities are conducted principally on register as a Securities Trader without having to
Industry Regulatory Authority, Inc. behalf of an investment company that is registered take any additional examinations, provided that no
with the Commission pursuant to the Investment more than two years has passed between the date
(‘‘FINRA’’) filed with the Securities and Company Act of 1940 and that controls, is the person was last registered as a representative
controlled by, or is under common control with the and the date the person registers as a Securities
28 17 CFR 200.30–3(a)(12). member. Trader.

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Document Created: 2015-12-15 09:56:25
Document Modified: 2015-12-15 09:56:25

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		80 FR 53364