80_FR_72076 80 FR 71855 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding NASDAQ Last Sale Plus

80 FR 71855 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding NASDAQ Last Sale Plus

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 221 (November 17, 2015)

Page Range71855-71858
FR Document2015-29217

Federal Register, Volume 80 Issue 221 (Tuesday, November 17, 2015)
[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)]
[Notices]
[Pages 71855-71858]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-29217]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76403; File No. SR-Phlx-2015-87]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Regarding 
NASDAQ Last Sale Plus

November 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 October 27, 2015, NASDAQ OMX PHLX LLC (``Phlx'' 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.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend Chapter VIII of NASDAQ OMX PSX Fees 
(``PSX Chapter VIII''), in the section entitled PSX Last Sale Data 
Feeds and NASDAQ Last Sale Plus Data Feeds (``Last Sale''), with 
language clarifying that the data consolidation component of the fees 
for NASDAQ Last Sale Plus (``NLS Plus''), a comprehensive data feed 
offered by NASDAQ OMX Information LLC,\3\ will be charged solely to 
firms that are Internal Distributors and External Distributors 
(collectively, ``Distributors'' of the data feed) that receive a NLS 
Plus direct data feed.\4\
---------------------------------------------------------------------------

    \3\ NASDAQ OMX Information LLC is a subsidiary of Nasdaq, Inc. 
(formerly, The NASDAQ OMX Group, Inc.), separate and apart from The 
NASDAQ Stock Market LLC. The primary purpose of NASDAQ OMX 
Information LLC is to combine publicly available data from the three 
filed last sale products of the exchange subsidiaries of Nasdaq, 
Inc. and from the network processors for the ease and convenience of 
market data users and vendors, and ultimately the investing public. 
In that role, the function of NASDAQ OMX Information LLC is 
analogous to that of other market data vendors, and it has no 
competitive advantage over other market data vendors; NASDAQ OMX 
Information LLC performs precisely the same functions as Bloomberg, 
Thomson Reuters, and other market data vendors.
    \4\ ``Internal Distributors'' are Distributors that receive 
NASDAQ Last Sale Plus data and then distribute that data to one or 
more Subscribers within the Distributor's own entity. ``External 
Distributors'' are Distributors that receive NASDAQ Last Sale Plus 
data and then distribute that data to one or more Subscribers 
outside the Distributor's own entity. Internal Distributors and 
External Distributors are together known as ``Distributors''. 
Proposed BX Rule 7039(b)(1).
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this proposal is to amend PSX Chapter VIII, Last 
Sale (b) with language clarifying that the data consolidation component 
of the fees for NLS Plus will be charged solely to firms that are 
Distributors that receive an NLS Plus direct data feed.\5\
---------------------------------------------------------------------------

    \5\ Thus, the fee does not apply to persons that receive the NLS 
Plus data feed indirectly, through an Internal Distributor or 
External Distributor.
---------------------------------------------------------------------------

    NLS Plus \6\ allows data distributors to access last sale products 
offered by each

[[Page 71856]]

of Nasdaq, Inc.'s three U.S. equity exchanges.\7\ NLS Plus includes all 
transactions from these exchanges, as well as FINRA/NASDAQ TRF data 
that is included in the current NLS product. In addition, NLS Plus 
features total cross-market volume information at the issue level, 
thereby providing redistribution of consolidated volume information 
(``consolidated volume'') from the securities information processors 
(``SIPs'') for Tape A, B, and C securities.\8\ Thus, NLS Plus covers 
all securities listed on NASDAQ and New York Stock Exchange (``NYSE'') 
(now under the Intercontinental Exchange (``ICE'') umbrella), as well 
as US ``regional'' exchanges such as NYSE MKT, NYSE Arca, and BATS 
(also known as BATS/Direct Edge).\9\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release Nos. 75763 (August 26, 
2015), 80 FR 52817 (September 1, 2015) (SR-Phlx-2015-72) (notice of 
filing and immediate effectiveness regarding NLS Plus on PSX); 75890 
(September 10, 2015), 80 FR 55692 (September 16, 2015) (SR-Phlx-
2015-76) (notice of filing and immediate effectiveness regarding 
fees for NLS Plus on PSX); 75709 (August 14, 2015), 80 FR 50671 
(August 20, 2015) (SR-BX-2015-047) (notice of filing and immediate 
effectiveness regarding NLS Plus on BX); 75830 (September 3, 2015), 
80 FR 54640 (September 10, 2015) (SR-BX-2015-054) (notice of filing 
and immediate effectiveness regarding fees for NLS Plus on BX); 
75257 (June 22, 2015), 80 FR 36862 (June 26, 2015)(SR-NASDAQ-2015-
055) (order approving proposed rule change regarding NLS Plus); and 
75600 (August 4, 2015), 80 FR 47968 (August 10, 2015)(SR-NASDAQ-
2015-088) (notice of filing and immediate effectiveness regarding 
fees for NLS Plus) (the ``NLS Plus fee proposal'').
    \7\ The NASDAQ OMX U.S. equity markets include the Exchange,\,\ 
The NASDAQ Stock Market LLC (``NASDAQ''), and NASDAQ OMX BX, Inc. 
(``BX'') (together known as the ``NASDAQ OMX equity markets''). BX 
and NASDAQ are filing companion proposals similar to this one. 
NASDAQ's last sale product, NASDAQ Last Sale, includes last sale 
information from the FINRA/NASDAQ Trade Reporting Facility (``FINRA/
NASDAQ TRF''), which is jointly operated by NASDAQ and the Financial 
Industry Regulatory Authority (``FINRA''). See Securities Exchange 
Act Release No. 71350 (January 17, 2014), 79 FR 4218 (January 24, 
2014) (SR-FINRA-2014-002). For proposed rule changes submitted with 
respect to NASDAQ Last Sale, BX Last Sale, and PSX Last Sale, see, 
e.g., Securities Exchange Act Release Nos. 57965 (June 16, 2008), 73 
FR 35178, (June 20, 2008) (SR-NASDAQ-2006-060) (order approving 
NASDAQ Last Sale data feeds pilot); 61112 (December 4, 2009), 74 FR 
65569, (December 10, 2009) (SR-BX-2009-077) (notice of filing and 
immediate effectiveness regarding BX Last Sale data feeds); and 
62876 (September 9, 2010), 75 FR 56624, (September 16, 2010) (SR-
Phlx-2010-120) (notice of filing and immediate effectiveness 
regarding PSX Last Sale data feeds).
    \8\ Tape A and Tape B securities are disseminated pursuant to 
the Security Industry Automation Corporation's (``SIAC'') 
Consolidated Tape Association Plan/Consolidated Quotation System, or 
CTA/CQS (``CTA''). Tape C securities are disseminated pursuant to 
the NASDAQ Unlisted Trading Privileges (``UTP'') Plan. NLS Plus 
reflects real-time trading activity for Tape C securities and 15-
minute delayed information for Tape A and Tape B securities.
    \9\ Registered U.S. exchanges are listed at http://www.sec.gov/divisions/marketreg/mrexchanges.shtml.
---------------------------------------------------------------------------

    NLS Plus is currently codified in PSX Chapter VIII, Last Sale (b). 
The fees for NLS Plus are set forth in PSX Chapter VIII, Last Sale 
(b)(1)-(b)(3) as follows:
    (1) Firms that receive NLS Plus shall pay the annual administration 
fees for NLS, BX Last Sale, and PSX Last Sale, and a data consolidation 
fee of $350 per month.
    (2) Firms that receive NLS Plus would either be liable for NLS fees 
or NASDAQ Basic fees.
    (3) In the event that NASDAQ OMX BX and/or NASDAQ OMX PHLX adopt 
user fees for BX Last Sale and/or PSX Last Sale, firms that receive NLS 
Plus would also be liable for such fees.\10\
---------------------------------------------------------------------------

    \10\ Annual administrative fees are in BX Rule 7035, NASDAQ Rule 
7035, and NASDAQ OMX PSX Fees Chapter VIII. These remain unchanged 
at: $1,000 for NASDAQ, $1,000 for BX, and $1,000 for PSX. For 
purposes of conformity, ``administration'' is changed to 
``administrative'' in PSX Chapter VIII, Last Sale (b)(1), discussed 
below.
---------------------------------------------------------------------------

    The Exchange now proposes to clarify how the data consolidation fee 
in PSX Chapter VIII, Last Sale (b) will be charged. Specifically, the 
Exchange proposes to clarify that firms that are Distributors that 
receive a NASDAQ Last Sale Plus direct data feed and are Distributors 
shall pay a data consolidation fee of $350 per month. Thus, only 
Distributors that receive NLS Plus would be charged the data 
consolidation fee. As proposed to be amended, PSX Chapter VIII, Last 
Sale (b)(1) would state:
    (1) Firms that receive NLS Plus shall pay the annual administrative 
fees for NLS, BX Last Sale, and PSX Last Sale. Additionally, Internal 
Distributors or External Distributors shall pay a data consolidation 
fee of $350 per month.\11\ ``Internal Distributors'' are Distributors 
that receive NLS Plus data and then distribute that data to one or more 
Subscribers within the Distributor's own entity. ``External 
Distributors'' are Distributors that receive NLS Plus data and then 
distribute that data to one or more Subscribers outside the 
Distributor's own entity.\12\
---------------------------------------------------------------------------

    \11\ The Exchange notes that those that have received NASDAQ 
Last Sale Plus directly from the Exchange have all, in fact, been 
firms. While the NASDAQ Last Sale Plus feed is available to all that 
subscribe and pay the requisite costs, the Exchange believes that in 
light of such costs it will continue to experience only firms 
receiving the feed directly from the Exchange.
    \12\ PSX Chapter VIII, Last Sale (b)(2) and (b)(3) would remain 
unchanged.
---------------------------------------------------------------------------

    The NLS Plus fee structure as amended continues to be designed to 
ensure that vendors could compete with the Exchange by creating a 
product similar to NLS Plus.\13\ The proposed fee structure reflects 
the cost of the data feeds underlying NLS Plus (including user fees and 
annual administrative fees), as well as the incremental cost of the 
aggregation and consolidation function (the ``consolidation function'') 
for NLS Plus. Accordingly, the Exchange believes that the fee structure 
would not result in charges for NLS Plus that are lower than the cost 
to a vendor creating a competing product, including the cost of 
receiving the underlying data feeds and consolidating them. The data 
consolidation fee recognizes that NLS Plus is created from data derived 
from NASDAQ Last Sale, BX Last Sale, PSX Last Sale, and data from the 
SIPs to which a consolidation function is applied. Charging the 
consolidation fee will not impede an entity receiving the underlying 
direct data feeds from creating a competing product to the NLS Plus 
feed based on combining individual data feeds, and charging its clients 
a fee that it believes reflects the value of the consolidation 
function. The Exchange believes that the incremental cost of 
aggregation to an entity that wants to re-create NLS Plus will be 
factored into the entity's revenue opportunity and may be 
inconsequential where the vendor has in place systems to perform these 
functions as part of creating its proprietary market data products and 
allocating costs over numerous products and customer relationships. For 
these reasons, the Exchange believes that vendors could readily offer a 
product similar to the NLS Plus on a competitive basis at a similar 
cost.
---------------------------------------------------------------------------

    \13\ For additional discussion regarding potential competition 
with NLS Plus, see supra note 6 and filings cited therein.
---------------------------------------------------------------------------

    The amendment to clarify that the consolidation fee applies to 
Distributors that receive the NLS Plus data feed directly but does not 
apply to persons that receive NLS Plus indirectly through a Distributor 
is designed to ensure that the Exchange charges the fee only to those 
persons that directly benefit from the consolidation function. 
Specifically, if a person wished to combine the products that underlie 
NLS Plus and distribute them to customers or internal users, it would 
incur its own consolidation costs. By purchasing NLS Plus for 
distribution, a Distributor foregoes these costs and instead opts to 
pay the Exchange to perform the consolidation function for it. Thus, 
imposing this fee upon Distributors is a logical corollary to the 
service being provided. By contrast, imposing the fee upon persons 
receiving the product through Distributors would effectively impose a 
duplicative charge, since such persons consume the data but are not in 
the business of distributing it and therefore do not forego 
consolidation costs when receiving the product. The Exchange further 
notes that the consolidation fee for BATS One, an analogous product of 
competing exchanges, is charged solely to external distributors of that 
product.\14\
---------------------------------------------------------------------------

    \14\ See, e.g., Securities Exchange Act Release No. 73918 
(December 23, 2014), 79 FR 78920 (December 31, 2014) (SR-BATS-2014-
055; SR-BYX-2014-030; SR-EDGA-2014-25; SR-EDGX-2014-25) (order 
approving market data product called BATS One Feed being offered by 
four affiliated exchanges).

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

[[Page 71857]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\15\ in general, and with 
Sections 6(b)(4) and (5) of the Act,\16\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers and other persons using its 
facilities, and does not unfairly discriminate between customers, 
issuers, brokers or dealers. All recipients of the NLS Plus data 
offering continue to pay the underlying data feed fees and annual 
administrative fees for NLS, BX Last Sale, and PSX Last Sale. The 
Exchange is simply clarifying that the data consolidation component of 
the fees for NLS Plus will be charged solely to firms that receive a 
NASDAQ Last Sale Plus direct data feed and are Distributors.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    This change is reasonable and consistent with an equitable 
allocation of fees because it is designed to ensure that the Exchange 
charges the fee only to those persons that directly benefit from the 
consolidation function. Specifically, if a person wished to combine the 
products that underlie NLS Plus and distribute them to customers or 
internal users, it would incur its own consolidation costs. By 
purchasing NLS Plus for distribution, a Distributor foregoes these 
costs and instead opts to pay the Exchange to perform the consolidation 
function for it. Thus, imposing this fee upon Distributors is a logical 
corollary to the service being provided. The change is also not 
unfairly discriminatory. Indeed, imposing the fee upon persons 
receiving NLS Plus indirectly through Distributors would effectively 
impose a duplicative charge upon them, since such persons consume the 
data but are not in the business of distributing it and therefore do 
not forego consolidation costs when receiving the product. The Exchange 
further notes that the consolidation fee for BATS One, an analogous 
product of competing exchanges, is charged solely to external 
distributors of that product.\17\ Accordingly, the exchanges that 
distribute BATS One take an analogous approach, in that they do not 
charge a consolidation fee to indirect recipients of the product, but 
rather charge the fee only to a subset of its distributors.
---------------------------------------------------------------------------

    \17\ See, e.g., Securities Exchange Act Release No. 73918 
(December 23, 2014), 79 FR 78920 (December 31, 2014) (SR-BATS-2014-
055; SR-BYX-2014-030; SR-EDGA-2014-25; SR-EDGX-2014-25) (order 
approving market data product called BATS One Feed being offered by 
four affiliated exchanges).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The change proposed herein is 
designed to ensure that the consolidation fee for NLS Plus is 
appropriately assessed to Distributors of the product that benefit from 
the consolidation function performed by NASDAQ OMX Information LLC in 
creating the product and insures that a duplicative charge is not also 
assessed against indirect recipients of the product. Thus, the change 
will avoid the imposition of fees on certain product recipients, while 
not increasing fees for any recipients.
    The market for data products is extremely competitive and firms may 
freely choose alternative venues and data vendors based on the 
aggregate fees assessed, the data offered, and the value provided. This 
rule proposal does not burden competition, which is reflected in the 
offerings of other exchanges that sell alternative data products \18\ 
and in the ability of competing data feed vendors to combine underlying 
data feeds in direct competition with NLS Plus. NASDAQ OMX Information 
LLC was constructed specifically to establish a level playing field 
with market data vendors and to preserve fair competition between them. 
NASDAQ OMX Information LLC receives NLS, BX Last Sale, and PSX Last 
Sale from each NASDAQ-operated exchange in the same manner, at the same 
speed, and reflecting the same fees as for all market data vendors. 
Therefore, NASDAQ OMX Information LLC has no competitive advantage with 
respect to these last sale products and NASDAQ commits to maintaining 
this level playing field in the future. In other words, NASDAQ will 
continue to disseminate separately the underlying last sale products to 
avoid creating a latency differential between NASDAQ OMX Information 
LLC and other market data vendors, and to avoid creating a pricing 
advantage for NASDAQ OMX Information LLC.
---------------------------------------------------------------------------

    \18\ Id.
---------------------------------------------------------------------------

    NLS Plus exists in a market for proprietary last sale data products 
that is currently competitive and inherently contestable because there 
is fierce competition for the inputs necessary to the creation of 
proprietary data and strict pricing discipline for the proprietary 
products themselves. Numerous exchanges compete with each other for 
listings, trades, and market data itself, providing virtually limitless 
opportunities for entrepreneurs who wish to produce and distribute 
their own market data. This proprietary data is produced by each 
individual exchange, as well as other entities, in a vigorously 
competitive market. Similarly, with respect to the FINRA/NASDAQ TRF 
data that is a component of NLS and NLS Plus, allowing exchanges to 
operate TRFs has permitted them to earn revenues by providing 
technology and data in support of the non-exchange segment of the 
market. This revenue opportunity has also resulted in fierce 
competition between the two current TRF operators, with both TRFs 
charging extremely low trade reporting fees and rebating the majority 
of the revenues they receive from core market data to the parties 
reporting trades.
    Transaction execution and proprietary data products are 
complementary in that market data is both an input and a byproduct of 
the execution service. In fact, market data and trade execution are a 
paradigmatic example of joint products with joint costs. The decision 
whether and on which platform to post an order will depend on the 
attributes of the platform where the order can be posted, including the 
execution fees, data quality and price, and distribution of its data 
products. Without trade executions, exchange data products cannot 
exist. Moreover, data products are valuable to many end users only 
insofar as they provide information that end users expect will assist 
them or their customers in making trading decisions.
    The costs of producing market data include not only the costs of 
the data distribution infrastructure, but also the costs of designing, 
maintaining, and operating the exchange's transaction execution 
platform and the cost of regulating the exchange to ensure its fair 
operation and maintain investor confidence. The total return that a 
trading platform earns reflects the revenues it receives from both 
products and the joint costs it incurs. Moreover, the operation of the 
exchange is characterized by high fixed costs and low marginal costs. 
This cost structure is common in content and content distribution 
industries such as software, where developing new software typically 
requires a large initial investment (and continuing large investments 
to upgrade the software), but once the software is developed, the 
incremental cost of providing that software to an additional user is

[[Page 71858]]

typically small, or even zero (e.g., if the software can be downloaded 
over the internet after being purchased).\19\ In NASDAQ's case, it is 
costly to build and maintain a trading platform, but the incremental 
cost of trading each additional share on an existing platform, or 
distributing an additional instance of data, is very low. Market 
information and executions are each produced jointly (in the sense that 
the activities of trading and placing orders are the source of the 
information that is distributed) and are each subject to significant 
scale economies. In such cases, marginal cost pricing is not feasible 
because if all sales were priced at the margin, NASDAQ would be unable 
to defray its platform costs of providing the joint products. 
Similarly, data products cannot make use of TRF trade reports without 
the raw material of the trade reports themselves, and therefore 
necessitate the costs of operating, regulating,\20\ and maintaining a 
trade reporting system, costs that must be covered through the fees 
charged for use of the facility and sales of associated data.
---------------------------------------------------------------------------

    \19\ See William J. Baumol and Daniel G. Swanson, ``The New 
Economy and Ubiquitous Competitive Price Discrimination: Identifying 
Defensible Criteria of Market Power,'' Antitrust Law Journal, Vol. 
70, No. 3 (2003).
    \20\ It should be noted that the costs of operating the FINRA/
NASDAQ TRF borne by NASDAQ include regulatory charges paid by NASDAQ 
to FINRA.
---------------------------------------------------------------------------

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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\21\ the Exchange 
has designated this proposal as establishing or changing a due, fee, or 
other charge imposed on any person, whether or not the person is a 
member of the self-regulatory organization, which renders the proposed 
rule change effective upon filing.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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-Phlx-2015-87 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-Phlx-2015-87. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.
    All submissions should refer to File Number SR-Phlx-2015-87 and 
should be submitted on or before December 8, 2015.
---------------------------------------------------------------------------

    \22\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29217 Filed 11-16-15; 8:45 am]
 BILLING CODE 8011-01-P



                                                                             Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices                                                      71855

                                                  services, finds that it is consistent with              available publicly. All submissions                      be charged solely to firms that are
                                                  the protection of investors and the                     should refer to File Number SR–NYSE–                     Internal Distributors and External
                                                  public interest to waive the 30-day                     2015–55 and should be submitted on or                    Distributors (collectively, ‘‘Distributors’’
                                                  operative date and to permit the                        before December 8, 2015.                                 of the data feed) that receive a NLS Plus
                                                  proposal to take effect upon filing.15                    For the Commission, by the Division of                 direct data feed.4
                                                                                                          Trading and Markets, pursuant to delegated                  The text of the proposed rule change
                                                  IV. Solicitation of Comments                                                                                     is available on the Exchange’s Web site
                                                                                                          authority.16
                                                    Interested persons are invited to                     Robert W. Errett,                                        at http://
                                                  submit written data, views, and                                                                                  nasdaqomxphlx.cchwallstreet.com, at
                                                                                                          Deputy Secretary.
                                                  arguments concerning the foregoing,                                                                              the principal office of the Exchange, and
                                                  including whether the proposed rule                     [FR Doc. 2015–29219 Filed 11–16–15; 8:45 am]
                                                                                                                                                                   at the Commission’s Public Reference
                                                  change is consistent with the Act.                      BILLING CODE 8011–01–P
                                                                                                                                                                   Room.
                                                  Comments may be submitted by any of
                                                  the following methods:                                                                                           II. Self-Regulatory Organization’s
                                                                                                          SECURITIES AND EXCHANGE                                  Statement of the Purpose of, and
                                                  Electronic Comments                                     COMMISSION                                               Statutory Basis for, the Proposed Rule
                                                    • Use the Commission’s Internet                       [Release No. 34–76403; File No. SR–Phlx–
                                                                                                                                                                   Change
                                                  comment form (http://www.sec.gov/                       2015–87]                                                    In its filing with the Commission, the
                                                  rules/sro.shtml); or                                                                                             Exchange included statements
                                                    • Send an email to rule-comments@                     Self-Regulatory Organizations;                           concerning the purpose of and basis for
                                                  sec.gov. Please include File Number SR–                 NASDAQ OMX PHLX LLC; Notice of                           the proposed rule change and discussed
                                                  NYSE–2015–55 on the subject line.                       Filing and Immediate Effectiveness of                    any comments it received on the
                                                  Paper Comments                                          Proposed Rule Change Regarding                           proposed rule change. The text of these
                                                                                                          NASDAQ Last Sale Plus                                    statements may be examined at the
                                                     • Send paper comments in triplicate                                                                           places specified in Item IV below. The
                                                  to Brent J. Fields, Secretary, Securities               November 10, 2015.
                                                                                                                                                                   Exchange has prepared summaries, set
                                                  and Exchange Commission, 100 F Street                      Pursuant to Section 19(b)(1) of the                   forth in sections A, B, and C below, of
                                                  NE., Washington, DC 20549–1090.                         Securities Exchange Act of 1934                          the most significant aspects of such
                                                  All submissions should refer to File                    (‘‘Act’’),1 and Rule 19b–4 thereunder,2                  statements.
                                                  Number SR–NYSE–2015–55. This file                       notice is hereby given that on October
                                                  number should be included on the                        27, 2015, NASDAQ OMX PHLX LLC                            A. Self-Regulatory Organization’s
                                                  subject line if email is used. To help the              (‘‘Phlx’’ or ‘‘Exchange’’) filed with the                Statement of the Purpose of, and
                                                  Commission process and review your                      Securities and Exchange Commission                       Statutory Basis for, the Proposed Rule
                                                  comments more efficiently, please use                   (‘‘SEC’’ or ‘‘Commission’’) the proposed                 Change
                                                  only one method. The Commission will                    rule change as described in Items I, II,                 1. Purpose
                                                  post all comments on the Commission’s                   and III, below, which Items have been
                                                                                                          prepared by the Exchange. The                               The purpose of this proposal is to
                                                  Internet Web site (http://www.sec.gov/
                                                                                                          Commission is publishing this notice to                  amend PSX Chapter VIII, Last Sale (b)
                                                  rules/sro.shtml). Copies of the
                                                                                                          solicit comments on the proposed rule                    with language clarifying that the data
                                                  submission, all subsequent
                                                                                                          change from interested persons.                          consolidation component of the fees for
                                                  amendments, all written statements
                                                                                                                                                                   NLS Plus will be charged solely to firms
                                                  with respect to the proposed rule
                                                                                                          I. Self-Regulatory Organization’s                        that are Distributors that receive an NLS
                                                  change that are filed with the
                                                                                                          Statement of the Terms of Substance of                   Plus direct data feed.5
                                                  Commission, and all written
                                                                                                          the Proposed Rule Change                                    NLS Plus 6 allows data distributors to
                                                  communications relating to the
                                                                                                            The Exchange proposes to amend                         access last sale products offered by each
                                                  proposed rule change between the
                                                  Commission and any person, other than                   Chapter VIII of NASDAQ OMX PSX
                                                                                                                                                                   data vendors; NASDAQ OMX Information LLC
                                                  those that may be withheld from the                     Fees (‘‘PSX Chapter VIII’’), in the                      performs precisely the same functions as
                                                  public in accordance with the                           section entitled PSX Last Sale Data                      Bloomberg, Thomson Reuters, and other market
                                                  provisions of 5 U.S.C. 552, will be                     Feeds and NASDAQ Last Sale Plus Data                     data vendors.
                                                                                                                                                                      4 ‘‘Internal Distributors’’ are Distributors that
                                                  available for Web site viewing and                      Feeds (‘‘Last Sale’’), with language
                                                                                                                                                                   receive NASDAQ Last Sale Plus data and then
                                                  printing in the Commission’s Public                     clarifying that the data consolidation                   distribute that data to one or more Subscribers
                                                  Reference Room, 100 F Street NE.,                       component of the fees for NASDAQ Last                    within the Distributor’s own entity. ‘‘External
                                                  Washington, DC 20549, on official                       Sale Plus (‘‘NLS Plus’’), a                              Distributors’’ are Distributors that receive NASDAQ
                                                  business days between the hours of                      comprehensive data feed offered by                       Last Sale Plus data and then distribute that data to
                                                                                                                                                                   one or more Subscribers outside the Distributor’s
                                                  10:00 a.m. and 3:00 p.m. Copies of the                  NASDAQ OMX Information LLC,3 will                        own entity. Internal Distributors and External
                                                  filing will also be available for                                                                                Distributors are together known as ‘‘Distributors’’.
                                                                                                            16 17  CFR 200.30–3(a)(12).
                                                  inspection and copying at the NYSE’s                                                                             Proposed BX Rule 7039(b)(1).
                                                                                                            1 15  U.S.C. 78s(b)(1).                                   5 Thus, the fee does not apply to persons that
                                                  principal office and on its Internet Web
                                                                                                             2 17 CFR 240.19b–4.                                   receive the NLS Plus data feed indirectly, through
                                                  site at www.nyse.com. All comments                         3 NASDAQ OMX Information LLC is a subsidiary          an Internal Distributor or External Distributor.
                                                  received will be posted without change;                 of Nasdaq, Inc. (formerly, The NASDAQ OMX                   6 See Securities Exchange Act Release Nos. 75763
                                                  the Commission does not edit personal                   Group, Inc.), separate and apart from The NASDAQ         (August 26, 2015), 80 FR 52817 (September 1, 2015)
                                                  identifying information from                            Stock Market LLC. The primary purpose of                 (SR–Phlx–2015–72) (notice of filing and immediate
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  submissions. You should submit only                     NASDAQ OMX Information LLC is to combine                 effectiveness regarding NLS Plus on PSX); 75890
                                                                                                          publicly available data from the three filed last sale   (September 10, 2015), 80 FR 55692 (September 16,
                                                  information that you wish to make                       products of the exchange subsidiaries of Nasdaq,         2015) (SR–Phlx–2015–76) (notice of filing and
                                                                                                          Inc. and from the network processors for the ease        immediate effectiveness regarding fees for NLS Plus
                                                     15 For purposes only of accelerating the operative   and convenience of market data users and vendors,        on PSX); 75709 (August 14, 2015), 80 FR 50671
                                                  date of this proposal, the Commission has               and ultimately the investing public. In that role, the   (August 20, 2015) (SR–BX–2015–047) (notice of
                                                  considered the proposed rule’s impact on                function of NASDAQ OMX Information LLC is                filing and immediate effectiveness regarding NLS
                                                  efficiency, competition, and capital formation. 15      analogous to that of other market data vendors, and      Plus on BX); 75830 (September 3, 2015), 80 FR
                                                  U.S.C. 78c(f).                                          it has no competitive advantage over other market                                                   Continued




                                             VerDate Sep<11>2014   18:14 Nov 16, 2015   Jkt 238001   PO 00000   Frm 00086   Fmt 4703   Sfmt 4703   E:\FR\FM\17NON1.SGM     17NON1


                                                  71856                      Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices

                                                  of Nasdaq, Inc.’s three U.S. equity                        (2) Firms that receive NLS Plus would                that are lower than the cost to a vendor
                                                  exchanges.7 NLS Plus includes all                       either be liable for NLS fees or NASDAQ                 creating a competing product, including
                                                  transactions from these exchanges, as                   Basic fees.                                             the cost of receiving the underlying data
                                                  well as FINRA/NASDAQ TRF data that                         (3) In the event that NASDAQ OMX                     feeds and consolidating them. The data
                                                  is included in the current NLS product.                 BX and/or NASDAQ OMX PHLX adopt                         consolidation fee recognizes that NLS
                                                  In addition, NLS Plus features total                    user fees for BX Last Sale and/or PSX                   Plus is created from data derived from
                                                  cross-market volume information at the                  Last Sale, firms that receive NLS Plus                  NASDAQ Last Sale, BX Last Sale, PSX
                                                  issue level, thereby providing                          would also be liable for such fees.10                   Last Sale, and data from the SIPs to
                                                  redistribution of consolidated volume                      The Exchange now proposes to clarify                 which a consolidation function is
                                                  information (‘‘consolidated volume’’)                   how the data consolidation fee in PSX                   applied. Charging the consolidation fee
                                                  from the securities information                         Chapter VIII, Last Sale (b) will be                     will not impede an entity receiving the
                                                  processors (‘‘SIPs’’) for Tape A, B, and                charged. Specifically, the Exchange                     underlying direct data feeds from
                                                  C securities.8 Thus, NLS Plus covers all                proposes to clarify that firms that are                 creating a competing product to the NLS
                                                  securities listed on NASDAQ and New                     Distributors that receive a NASDAQ                      Plus feed based on combining
                                                  York Stock Exchange (‘‘NYSE’’) (now                     Last Sale Plus direct data feed and are                 individual data feeds, and charging its
                                                  under the Intercontinental Exchange                     Distributors shall pay a data                           clients a fee that it believes reflects the
                                                  (‘‘ICE’’) umbrella), as well as US                      consolidation fee of $350 per month.                    value of the consolidation function. The
                                                  ‘‘regional’’ exchanges such as NYSE                     Thus, only Distributors that receive NLS                Exchange believes that the incremental
                                                  MKT, NYSE Arca, and BATS (also                          Plus would be charged the data                          cost of aggregation to an entity that
                                                  known as BATS/Direct Edge).9                            consolidation fee. As proposed to be                    wants to re-create NLS Plus will be
                                                     NLS Plus is currently codified in PSX                amended, PSX Chapter VIII, Last Sale                    factored into the entity’s revenue
                                                  Chapter VIII, Last Sale (b). The fees for               (b)(1) would state:                                     opportunity and may be inconsequential
                                                  NLS Plus are set forth in PSX Chapter                      (1) Firms that receive NLS Plus shall                where the vendor has in place systems
                                                  VIII, Last Sale (b)(1)–(b)(3) as follows:               pay the annual administrative fees for                  to perform these functions as part of
                                                     (1) Firms that receive NLS Plus shall                NLS, BX Last Sale, and PSX Last Sale.                   creating its proprietary market data
                                                  pay the annual administration fees for                  Additionally, Internal Distributors or                  products and allocating costs over
                                                  NLS, BX Last Sale, and PSX Last Sale,                   External Distributors shall pay a data                  numerous products and customer
                                                  and a data consolidation fee of $350 per                consolidation fee of $350 per month.11                  relationships. For these reasons, the
                                                  month.                                                  ‘‘Internal Distributors’’ are Distributors              Exchange believes that vendors could
                                                                                                          that receive NLS Plus data and then                     readily offer a product similar to the
                                                  54640 (September 10, 2015) (SR–BX–2015–054)                                                                     NLS Plus on a competitive basis at a
                                                  (notice of filing and immediate effectiveness
                                                                                                          distribute that data to one or more
                                                  regarding fees for NLS Plus on BX); 75257 (June 22,     Subscribers within the Distributor’s own                similar cost.
                                                  2015), 80 FR 36862 (June 26, 2015)(SR–NASDAQ–           entity. ‘‘External Distributors’’ are                      The amendment to clarify that the
                                                  2015–055) (order approving proposed rule change         Distributors that receive NLS Plus data                 consolidation fee applies to Distributors
                                                  regarding NLS Plus); and 75600 (August 4, 2015),                                                                that receive the NLS Plus data feed
                                                  80 FR 47968 (August 10, 2015)(SR–NASDAQ–                and then distribute that data to one or
                                                  2015–088) (notice of filing and immediate               more Subscribers outside the                            directly but does not apply to persons
                                                  effectiveness regarding fees for NLS Plus) (the ‘‘NLS   Distributor’s own entity.12                             that receive NLS Plus indirectly through
                                                  Plus fee proposal’’).                                      The NLS Plus fee structure as                        a Distributor is designed to ensure that
                                                     7 The NASDAQ OMX U.S. equity markets include

                                                  the Exchange,, The NASDAQ Stock Market LLC
                                                                                                          amended continues to be designed to                     the Exchange charges the fee only to
                                                  (‘‘NASDAQ’’), and NASDAQ OMX BX, Inc. (‘‘BX’’)          ensure that vendors could compete with                  those persons that directly benefit from
                                                  (together known as the ‘‘NASDAQ OMX equity              the Exchange by creating a product                      the consolidation function. Specifically,
                                                  markets’’). BX and NASDAQ are filing companion          similar to NLS Plus.13 The proposed fee                 if a person wished to combine the
                                                  proposals similar to this one. NASDAQ’s last sale
                                                  product, NASDAQ Last Sale, includes last sale           structure reflects the cost of the data                 products that underlie NLS Plus and
                                                  information from the FINRA/NASDAQ Trade                 feeds underlying NLS Plus (including                    distribute them to customers or internal
                                                  Reporting Facility (‘‘FINRA/NASDAQ TRF’’), which        user fees and annual administrative                     users, it would incur its own
                                                  is jointly operated by NASDAQ and the Financial                                                                 consolidation costs. By purchasing NLS
                                                  Industry Regulatory Authority (‘‘FINRA’’). See
                                                                                                          fees), as well as the incremental cost of
                                                  Securities Exchange Act Release No. 71350 (January      the aggregation and consolidation                       Plus for distribution, a Distributor
                                                  17, 2014), 79 FR 4218 (January 24, 2014) (SR–           function (the ‘‘consolidation function’’)               foregoes these costs and instead opts to
                                                  FINRA–2014–002). For proposed rule changes              for NLS Plus. Accordingly, the                          pay the Exchange to perform the
                                                  submitted with respect to NASDAQ Last Sale, BX
                                                  Last Sale, and PSX Last Sale, see, e.g., Securities     Exchange believes that the fee structure                consolidation function for it. Thus,
                                                  Exchange Act Release Nos. 57965 (June 16, 2008),        would not result in charges for NLS Plus                imposing this fee upon Distributors is a
                                                  73 FR 35178, (June 20, 2008) (SR–NASDAQ–2006–                                                                   logical corollary to the service being
                                                  060) (order approving NASDAQ Last Sale data feeds          10 Annual administrative fees are in BX Rule         provided. By contrast, imposing the fee
                                                  pilot); 61112 (December 4, 2009), 74 FR 65569,          7035, NASDAQ Rule 7035, and NASDAQ OMX
                                                  (December 10, 2009) (SR–BX–2009–077) (notice of                                                                 upon persons receiving the product
                                                                                                          PSX Fees Chapter VIII. These remain unchanged at:
                                                  filing and immediate effectiveness regarding BX
                                                                                                          $1,000 for NASDAQ, $1,000 for BX, and $1,000 for
                                                                                                                                                                  through Distributors would effectively
                                                  Last Sale data feeds); and 62876 (September 9,                                                                  impose a duplicative charge, since such
                                                                                                          PSX. For purposes of conformity, ‘‘administration’’
                                                  2010), 75 FR 56624, (September 16, 2010) (SR–
                                                  Phlx–2010–120) (notice of filing and immediate
                                                                                                          is changed to ‘‘administrative’’ in PSX Chapter VIII,   persons consume the data but are not in
                                                                                                          Last Sale (b)(1), discussed below.                      the business of distributing it and
                                                  effectiveness regarding PSX Last Sale data feeds).
                                                                                                             11 The Exchange notes that those that have
                                                     8 Tape A and Tape B securities are disseminated                                                              therefore do not forego consolidation
                                                  pursuant to the Security Industry Automation            received NASDAQ Last Sale Plus directly from the
                                                                                                          Exchange have all, in fact, been firms. While the       costs when receiving the product. The
                                                  Corporation’s (‘‘SIAC’’) Consolidated Tape
                                                                                                          NASDAQ Last Sale Plus feed is available to all that     Exchange further notes that the
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                  Association Plan/Consolidated Quotation System,
                                                  or CTA/CQS (‘‘CTA’’). Tape C securities are             subscribe and pay the requisite costs, the Exchange     consolidation fee for BATS One, an
                                                  disseminated pursuant to the NASDAQ Unlisted            believes that in light of such costs it will continue   analogous product of competing
                                                  Trading Privileges (‘‘UTP’’) Plan. NLS Plus reflects    to experience only firms receiving the feed directly
                                                                                                          from the Exchange.                                      exchanges, is charged solely to external
                                                  real-time trading activity for Tape C securities and
                                                  15-minute delayed information for Tape A and               12 PSX Chapter VIII, Last Sale (b)(2) and (b)(3)     distributors of that product.14
                                                  Tape B securities.                                      would remain unchanged.
                                                     9 Registered U.S. exchanges are listed at http://       13 For additional discussion regarding potential       14 See, e.g., Securities Exchange Act Release No.

                                                  www.sec.gov/divisions/marketreg/                        competition with NLS Plus, see supra note 6 and         73918 (December 23, 2014), 79 FR 78920 (December
                                                  mrexchanges.shtml.                                      filings cited therein.                                  31, 2014) (SR–BATS–2014–055; SR–BYX–2014–



                                             VerDate Sep<11>2014   18:14 Nov 16, 2015   Jkt 238001   PO 00000   Frm 00087   Fmt 4703   Sfmt 4703   E:\FR\FM\17NON1.SGM    17NON1


                                                                             Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices                                           71857

                                                  2. Statutory Basis                                      charge a consolidation fee to indirect                proprietary products themselves.
                                                    The Exchange believes that the                        recipients of the product, but rather                 Numerous exchanges compete with
                                                  proposed rule change is consistent with                 charge the fee only to a subset of its                each other for listings, trades, and
                                                  the provisions of Section 6 of the Act,15               distributors.                                         market data itself, providing virtually
                                                  in general, and with Sections 6(b)(4) and                                                                     limitless opportunities for entrepreneurs
                                                                                                          B. Self-Regulatory Organization’s
                                                                                                                                                                who wish to produce and distribute
                                                  (5) of the Act,16 in particular, in that it             Statement on Burden on Competition
                                                                                                                                                                their own market data. This proprietary
                                                  provides for the equitable allocation of                   The Exchange does not believe that                 data is produced by each individual
                                                  reasonable dues, fees, and other charges                the proposed rule change will impose                  exchange, as well as other entities, in a
                                                  among its members, issuers and other                    any burden on competition not                         vigorously competitive market.
                                                  persons using its facilities, and does not              necessary or appropriate in furtherance               Similarly, with respect to the FINRA/
                                                  unfairly discriminate between                           of the purposes of the Act. The change                NASDAQ TRF data that is a component
                                                  customers, issuers, brokers or dealers.                 proposed herein is designed to ensure                 of NLS and NLS Plus, allowing
                                                  All recipients of the NLS Plus data                     that the consolidation fee for NLS Plus               exchanges to operate TRFs has
                                                  offering continue to pay the underlying                 is appropriately assessed to Distributors             permitted them to earn revenues by
                                                  data feed fees and annual administrative                of the product that benefit from the                  providing technology and data in
                                                  fees for NLS, BX Last Sale, and PSX Last                consolidation function performed by                   support of the non-exchange segment of
                                                  Sale. The Exchange is simply clarifying                 NASDAQ OMX Information LLC in                         the market. This revenue opportunity
                                                  that the data consolidation component                   creating the product and insures that a               has also resulted in fierce competition
                                                  of the fees for NLS Plus will be charged                duplicative charge is not also assessed               between the two current TRF operators,
                                                  solely to firms that receive a NASDAQ                   against indirect recipients of the                    with both TRFs charging extremely low
                                                  Last Sale Plus direct data feed and are                 product. Thus, the change will avoid the              trade reporting fees and rebating the
                                                  Distributors.                                           imposition of fees on certain product                 majority of the revenues they receive
                                                     This change is reasonable and                        recipients, while not increasing fees for             from core market data to the parties
                                                  consistent with an equitable allocation                 any recipients.                                       reporting trades.
                                                  of fees because it is designed to ensure                   The market for data products is                       Transaction execution and proprietary
                                                  that the Exchange charges the fee only                  extremely competitive and firms may                   data products are complementary in that
                                                  to those persons that directly benefit                  freely choose alternative venues and                  market data is both an input and a
                                                  from the consolidation function.                        data vendors based on the aggregate fees              byproduct of the execution service. In
                                                  Specifically, if a person wished to                     assessed, the data offered, and the value             fact, market data and trade execution are
                                                  combine the products that underlie NLS                  provided. This rule proposal does not                 a paradigmatic example of joint
                                                  Plus and distribute them to customers or                burden competition, which is reflected                products with joint costs. The decision
                                                  internal users, it would incur its own                  in the offerings of other exchanges that              whether and on which platform to post
                                                  consolidation costs. By purchasing NLS                  sell alternative data products 18 and in              an order will depend on the attributes
                                                  Plus for distribution, a Distributor                    the ability of competing data feed                    of the platform where the order can be
                                                  foregoes these costs and instead opts to                vendors to combine underlying data                    posted, including the execution fees,
                                                  pay the Exchange to perform the                         feeds in direct competition with NLS                  data quality and price, and distribution
                                                  consolidation function for it. Thus,                    Plus. NASDAQ OMX Information LLC                      of its data products. Without trade
                                                  imposing this fee upon Distributors is a                was constructed specifically to establish             executions, exchange data products
                                                  logical corollary to the service being                  a level playing field with market data                cannot exist. Moreover, data products
                                                  provided. The change is also not                        vendors and to preserve fair competition              are valuable to many end users only
                                                  unfairly discriminatory. Indeed,                        between them. NASDAQ OMX                              insofar as they provide information that
                                                  imposing the fee upon persons receiving                 Information LLC receives NLS, BX Last                 end users expect will assist them or
                                                  NLS Plus indirectly through Distributors                Sale, and PSX Last Sale from each                     their customers in making trading
                                                  would effectively impose a duplicative                  NASDAQ-operated exchange in the                       decisions.
                                                  charge upon them, since such persons                    same manner, at the same speed, and                      The costs of producing market data
                                                  consume the data but are not in the                     reflecting the same fees as for all market            include not only the costs of the data
                                                  business of distributing it and therefore               data vendors. Therefore, NASDAQ OMX                   distribution infrastructure, but also the
                                                  do not forego consolidation costs when                  Information LLC has no competitive                    costs of designing, maintaining, and
                                                  receiving the product. The Exchange                     advantage with respect to these last sale             operating the exchange’s transaction
                                                  further notes that the consolidation fee                products and NASDAQ commits to                        execution platform and the cost of
                                                  for BATS One, an analogous product of                   maintaining this level playing field in               regulating the exchange to ensure its fair
                                                  competing exchanges, is charged solely                  the future. In other words, NASDAQ                    operation and maintain investor
                                                  to external distributors of that                        will continue to disseminate separately               confidence. The total return that a
                                                  product.17 Accordingly, the exchanges                   the underlying last sale products to                  trading platform earns reflects the
                                                  that distribute BATS One take an                        avoid creating a latency differential                 revenues it receives from both products
                                                  analogous approach, in that they do not                 between NASDAQ OMX Information                        and the joint costs it incurs. Moreover,
                                                                                                          LLC and other market data vendors, and                the operation of the exchange is
                                                  030; SR–EDGA–2014–25; SR–EDGX–2014–25)                  to avoid creating a pricing advantage for             characterized by high fixed costs and
                                                  (order approving market data product called BATS        NASDAQ OMX Information LLC.                           low marginal costs. This cost structure
                                                  One Feed being offered by four affiliated
                                                  exchanges).
                                                                                                             NLS Plus exists in a market for                    is common in content and content
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                    15 15 U.S.C. 78f.                                     proprietary last sale data products that              distribution industries such as software,
                                                    16 15 U.S.C. 78f(b)(4) and (5).                       is currently competitive and inherently               where developing new software
                                                    17 See, e.g., Securities Exchange Act Release No.     contestable because there is fierce                   typically requires a large initial
                                                  73918 (December 23, 2014), 79 FR 78920 (December        competition for the inputs necessary to               investment (and continuing large
                                                  31, 2014) (SR–BATS–2014–055; SR–BYX–2014–               the creation of proprietary data and                  investments to upgrade the software),
                                                  030; SR–EDGA–2014–25; SR–EDGX–2014–25)
                                                  (order approving market data product called BATS        strict pricing discipline for the                     but once the software is developed, the
                                                  One Feed being offered by four affiliated                                                                     incremental cost of providing that
                                                  exchanges).                                               18 Id.                                              software to an additional user is


                                             VerDate Sep<11>2014   18:14 Nov 16, 2015   Jkt 238001   PO 00000   Frm 00088   Fmt 4703   Sfmt 4703   E:\FR\FM\17NON1.SGM   17NON1


                                                  71858                      Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices

                                                  typically small, or even zero (e.g., if the             to determine whether the proposed rule                   For the Commission, by the Division of
                                                  software can be downloaded over the                     should be approved or disapproved.                     Trading and Markets, pursuant to delegated
                                                  internet after being purchased).19 In                                                                          authority.22
                                                                                                          IV. Solicitation of Comments                           Robert W. Errett,
                                                  NASDAQ’s case, it is costly to build and
                                                  maintain a trading platform, but the                      Interested persons are invited to                    Deputy Secretary.
                                                  incremental cost of trading each                        submit written data, views, and                        [FR Doc. 2015–29217 Filed 11–16–15; 8:45 am]
                                                  additional share on an existing platform,               arguments concerning the foregoing,                    BILLING CODE 8011–01–P
                                                  or distributing an additional instance of               including whether the proposed rule
                                                  data, is very low. Market information                   change is consistent with the Act.
                                                  and executions are each produced                        Comments may be submitted by any of                    SECURITIES AND EXCHANGE
                                                  jointly (in the sense that the activities of            the following methods:                                 COMMISSION
                                                  trading and placing orders are the
                                                  source of the information that is                       Electronic Comments
                                                                                                                                                                 [Release No. 34–76420; File No. SR–MSRB–
                                                  distributed) and are each subject to                      • Use the Commission’s Internet                      2015–03]
                                                  significant scale economies. In such                    comment form (http://www.sec.gov/
                                                  cases, marginal cost pricing is not                     rules/sro.shtml); or                                   Self-Regulatory Organizations;
                                                  feasible because if all sales were priced                                                                      Municipal Securities Rulemaking
                                                                                                            • Send an email to rule-comments@
                                                  at the margin, NASDAQ would be                                                                                 Board; Notice of Filing of Amendment
                                                                                                          sec.gov. Please include File Number SR–
                                                  unable to defray its platform costs of                                                                         No. 2 to Proposed Rule Change
                                                                                                          Phlx–2015–87 on the subject line.
                                                  providing the joint products. Similarly,                                                                       Consisting of Proposed New Rule G–
                                                  data products cannot make use of TRF                    Paper Comments                                         42, on Duties of Non-Solicitor
                                                  trade reports without the raw material of                                                                      Municipal Advisors, and Proposed
                                                  the trade reports themselves, and                         • Send paper comments in triplicate
                                                                                                                                                                 Amendments to Rule G–8, on Books
                                                  therefore necessitate the costs of                      to Brent J. Fields, Secretary, Securities
                                                                                                                                                                 and Records To Be Made by Brokers,
                                                  operating, regulating,20 and maintaining                and Exchange Commission, 100 F Street
                                                                                                                                                                 Dealers, Municipal Securities Dealers,
                                                  a trade reporting system, costs that must               NE., Washington, DC 20549–1090.
                                                                                                                                                                 and Municipal Advisors
                                                  be covered through the fees charged for                 All submissions should refer to File
                                                  use of the facility and sales of associated             Number SR–Phlx–2015–87. This file                        November 10, 2015.
                                                  data.                                                   number should be included on the                       I. Introduction
                                                  C. Self-Regulatory Organization’s                       subject line if email is used. To help the
                                                                                                          Commission process and review your                        On April 24, 2015, the Municipal
                                                  Statement on Comments on the                                                                                   Securities Rulemaking Board (‘‘MSRB’’)
                                                  Proposed Rule Change Received From                      comments more efficiently, please use
                                                                                                          only one method. The Commission will                   filed with the Securities and Exchange
                                                  Members, Participants, or Others                                                                               Commission (‘‘SEC’’ or ‘‘Commission’’),
                                                                                                          post all comments on the Commission’s
                                                    No written comments were either                       Internet Web site (http://www.sec.gov/                 pursuant to Section 19(b)(1) of the
                                                  solicited or received.                                  rules/sro.shtml).                                      Securities Exchange Act of 1934
                                                  III. Date of Effectiveness of the                          Copies of the submission, all                       (‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule
                                                  Proposed Rule Change and Timing for                     subsequent amendments, all written                     19b–4 thereunder,2 a proposed rule
                                                  Commission Action                                       statements with respect to the proposed                change consisting of proposed new Rule
                                                                                                          rule change that are filed with the                    G–42, on duties of non-solicitor
                                                     Pursuant to Section 19(b)(3)(A)(ii) of                                                                      municipal advisors, and proposed
                                                  the Act,21 the Exchange has designated                  Commission, and all written
                                                                                                          communications relating to the                         amendments to Rule G–8, on books and
                                                  this proposal as establishing or changing                                                                      records to be made by brokers, dealers,
                                                  a due, fee, or other charge imposed on                  proposed rule change between the
                                                                                                          Commission and any person, other than                  municipal securities dealers, and
                                                  any person, whether or not the person                                                                          municipal advisors. The proposed rule
                                                  is a member of the self-regulatory                      those that may be withheld from the
                                                                                                          public in accordance with the                          change was published for comment in
                                                  organization, which renders the                                                                                the Federal Register on May 8, 2015.3
                                                  proposed rule change effective upon                     provisions of 5 U.S.C. 552, will be
                                                                                                          available for Web site viewing and                     The Commission received fifteen
                                                  filing.                                                                                                        comment letters on the proposal.4 On
                                                     At any time within 60 days of the                    printing in the Commission’s Public
                                                                                                          Reference Room, 100 F Street NE.,                      June 16, 2015, the MSRB granted an
                                                  filing of the proposed rule change, the
                                                                                                          Washington, DC 20549, on official                      extension of time for the Commission to
                                                  Commission summarily may
                                                                                                          business days between the hours of                     act on the filing until August 6, 2015.
                                                  temporarily suspend such rule change if
                                                                                                          10:00 a.m. and 3:00 p.m. Copies of the                 On August 6, 2015, the Commission
                                                  it appears to the Commission that such
                                                                                                          filing also will be available for                      issued an order instituting proceedings
                                                  action is necessary or appropriate in the
                                                  public interest, for the protection of                  inspection and copying at the principal                (‘‘OIP’’) under Section 19(b)(2)(B) of the
                                                  investors, or otherwise in furtherance of               office of the Exchange. All comments                   Act 5 to determine whether to approve
                                                  the purposes of the Act. If the                         received will be posted without change;                or disapprove the proposed rule
                                                  Commission takes such action, the                       the Commission does not edit personal                  change.6 On August 12, 2015, the MSRB
                                                  Commission shall institute proceedings                  identifying information from
                                                                                                                                                                   1 15 U.S.C. 78s(b)(1).
                                                                                                          submissions. You should submit only
                                                                                                                                                                   2 17 CFR 240.19b–4.
                                                    19 See   William J. Baumol and Daniel G. Swanson,     information that you wish to make
mstockstill on DSK4VPTVN1PROD with NOTICES




                                                                                                                                                                   3 Exchange Act Release No. 74860 (May 4, 2015),
                                                  ‘‘The New Economy and Ubiquitous Competitive            available publicly.
                                                  Price Discrimination: Identifying Defensible Criteria                                                          80 FR 26752 (‘‘Notice’’). The comment period
                                                  of Market Power,’’ Antitrust Law Journal, Vol. 70,         All submissions should refer to File                closed on May 29, 2015.
                                                  No. 3 (2003).                                           Number SR–Phlx–2015–87 and should                        4 Comment letters are available at www.sec.gov/

                                                     20 It should be noted that the costs of operating
                                                                                                          be submitted on or before December 8,                  comments/sr-msrb-2015-03/msrb201503.shtml.
                                                  the FINRA/NASDAQ TRF borne by NASDAQ                                                                             5 15 U.S.C. 78s(b)(2)(B).

                                                  include regulatory charges paid by NASDAQ to
                                                                                                          2015.                                                    6 See Securities Exchange Act Release No. 75628
                                                  FINRA.                                                                                                         (August 6, 2015), 80 FR 48355 (August 12, 2015).
                                                     21 15 U.S.C. 78s(b)(3)(A)(ii).                         22 17   CFR 200.30–3(a)(12).                         The comment period closed on September 11, 2015.



                                             VerDate Sep<11>2014   18:14 Nov 16, 2015   Jkt 238001   PO 00000   Frm 00089    Fmt 4703   Sfmt 4703   E:\FR\FM\17NON1.SGM   17NON1



Document Created: 2015-12-14 14:01:24
Document Modified: 2015-12-14 14:01:24
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 71855 

2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR