80 FR 55698 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend NASDAQ Rules 7015(b) and (g) to Modify Port Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 179 (September 16, 2015)

[Federal Register Volume 80, Number 179 (Wednesday, September 16, 2015)]
[Notices]
[Pages 55698-55700]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-23212]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75882; File No. SR-NASDAQ-2015-110]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Amend NASDAQ Rules 7015(b) and (g) to Modify Port Fees

September 10, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on September 3, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to reduce the fee charged for FIX Trading 
Ports under Rule 7015(b) and certain other ports under Rule 7015(g) in 
light of the Exchange removing recently-upgraded hardware supporting 
the ports, which was the basis for an increased fee. The Exchange will 
implement the proposed new fees on September 1, 2015.
    The text of the proposed rule change is below; proposed new 
language is underlined; proposed deletions are in brackets.
* * * * *
7015. Access Services
    The following charges are assessed by Nasdaq for connectivity to 
systems operated by NASDAQ, including the Nasdaq Market Center, the 
FINRA/NASDAQ Trade Reporting Facility, and FINRA's OTCBB Service. The 
following fees are not applicable to the NASDAQ Options Market LLC. For 
related options fees for Access Services refer to Chapter XV, Section 3 
of the Options Rules.
    (a) No change.
    (b) Financial Information Exchange (FIX)

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                   Ports                                Price
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FIX Trading Port..........................  $550[75]/port/month.

[[Page 55699]]

 
FIX Port for Services Other than Trading..  $500/port/month.
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    (c)--(f) No change.
    (g) Other Port Fees

                    Remote Multi-Cast ITCH Wave Ports
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                                           Installation      Recurring
               Description                      fee         monthly fee
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MITCH Wave Port at Secaucus, NJ.........          $2,500          $7,500
MITCH Wave Port at Weehawken, NJ........           2,500           7,500
MITCH Wave Port at Mahwah, NJ...........           5,000          12,500
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    The following port fees shall apply in connection with the use of 
other trading telecommunication protocols:
     $550[75] per month for each port pair, other than 
Multicast ITCH[supreg] data feed pairs, for which the fee is $1,000 per 
month for software-based TotalView-ITCH or $2,500 per month for 
combined software- and hardware-based TotalView-ITCH, and TCP ITCH data 
feed pairs, for which the fee is $750 per month.
     An additional $200 per month for each port used for 
entering orders or quotes over the Internet.
     An additional $600 per month for each port used for market 
data delivery over the Internet.
Dedicated OUCH Port Infrastructure
    The Dedicated OUCH Port Infrastructure subscription allows a member 
firm to assign up to 30 of its OUCH ports to a dedicated server 
infrastructure for its exclusive use. A Dedicated OUCH Port 
Infrastructure subscription is available to a member firm for a fee of 
$5,000 per month, which is in addition to the standard fees assessed 
for each OUCH port. A one-time installation fee of $5,000 is assessed 
subscribers for each Dedicated OUCH Port Server subscription.
    (h)--(i) No change.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ is proposing to amend NASDAQ Rules 7015(b) and (g) to modify 
the monthly fee it charges for ports used to enter orders in the NASDAQ 
Market Center for the trading of equities, in connection with the use 
of FIX and other trading telecommunication protocols.\3\ NASDAQ 
recently increased fees for FIX Ports under Rule 7015(b) and for ports 
with certain other protocols under Rule 7015(g).\4\ NASDAQ increased 
the fees to offset costs associated with upgrading these ports with new 
field-programmable gate array (``FPGA'') technology, which is a 
hardware-delivery mechanism that provides improved performance in terms 
of predictability.\5\ The Exchange implemented the new FPGA hardware 
and increased the related port fees on August 3, 2015.
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    \3\ Under Rule 7015(g), the Exchange assesses certain port fees 
that apply in connection with the use of other trading 
telecommunication protocols. NASDAQ charges a $575 per month, per 
port pair fee for OUCH and RASH protocol ports, $1,000 per month, 
per port pair for software-based TotalView-ITCH, $2,500 per month, 
per port pair for combined software- and hardware-based TotalView-
ITCH, and $750 per month, per port pair for TCP ITCH data feed 
pairs. Under the rule, the Exchange also assesses an additional $200 
per month for each port used for entering orders or quotes over the 
Internet and an additional $600 per month for each port used for 
market data delivery over the Internet.
    \4\ See Securities Exchange Act Release No. 75557 (July 30, 
2015), 80 FR 46640 (August 5, 2015) (SR-NASDAQ-2015-086).
    \5\ FPGA hardware is able to process more data packets during 
peak market conditions without the introduction of variable queuing 
latency, which improves the predictability of telecommunications 
ports over non-FPGA hardware and thereby adds value to the user.
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    NASDAQ recently completed internal testing of future functionality 
related to the trading systems and through this testing identified a 
potential unforeseen risk, which could cause a disruption to trading 
with the FPGA updated ports. As a consequence, the Exchange has 
determined that the risk associated with keeping the FPGA technology in 
terms of potential disruption to trading outweighs the benefit provided 
in terms of increased performance. Additionally, NASDAQ would like to 
conduct additional testing and further review of the implementation 
before reintroducing the offering. Accordingly, the Exchange is 
reverting the affected ports back to the hardware used prior to the 
FPGA hardware as a precautionary measure and concurrently reducing the 
monthly fees for those ports to their pre-upgrade levels.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\6\ in general, and with Section 
6(b)(5) of the Act \7\ in particular, in that the proposal is designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The Exchange believes that 
removing the FPGA hardware and reverting back to the hardware used 
prior to the FPGA upgrade will further perfect the NASDAQ market and 
serve to protect investors because the change is designed to minimize a 
newly-identified risk of a market disruption caused by a technical 
issue within the Exchange's control to eliminate. The Exchange 
determined that the risk, while unlikely to occur, would be disruptive 
to trading and consequently outweighs the benefit it provided.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule change is consistent with 
Section

[[Page 55700]]

6(b)(4) of the Act \8\ in that it provides for the equitable allocation 
of reasonable dues, fees and other charges among members and issuers 
and other persons using any facility or system which the Exchange 
operates or controls, and it does not unfairly discriminate between 
customers, issuers, brokers or dealers. The Exchange believes that the 
proposed reduction in port fees under Rules 7015(b) and (g) to their 
pre-FPGA upgrade levels is reasonable because NASDAQ is removing the 
upgraded hardware from the ports, the cost of which was the basis for 
increasing the fees. In addition, applying the lower fees will allow 
NASDAQ to keep the fee in line with its realized capital and operating 
expenditures, which will be lower going forward based on the operation 
of the ports with the pre-upgrade hardware. The Exchange believes that 
the proposed reduction of the fees to their prior levels is both 
equitably allocated and not unfairly discriminatory because it will 
apply uniformly to all market participants that subscribe to FIX Ports 
under Rule 7015(b), and OUCH and RASH Ports under Rule 7015(g) based on 
the number of such ports subscribed. Accordingly, market participants 
will be assessed the fees in place prior to the increase and will have 
the same hardware supported by those fees.
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    \8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ 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 
believes that the proposal is irrelevant to competition because it is 
not driven by, and will have no impact on, competition. Specifically, 
the Exchange is reverting fees to their prior, lower levels in light of 
the Exchange removing upgraded hardware that was the basis for the fee 
increase. Reverting the fees to their lower levels will keep the fees 
assessed in line with the Exchange's expenditures at this juncture 
associated with offering the ports. As such, the Exchange does not 
believe the proposed change will have any impact on competition, as 
market participants will be assessed the same fee for their ports with 
the same hardware that was in place prior to the fee increase.

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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\9\
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2015-110 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2015-110. 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-NASDAQ-2015-110 and should 
be submitted on or before October 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-23212 Filed 9-15-15; 8:45 am]
 BILLING CODE 8011-01-P