81 FR 555 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Fees for Managed Data Solutions
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 3 (January 6, 2016)
Federal Register Volume 81, Issue 3 (January 6, 2016)
| Page Range | 555-559 | |
| FR Document | 2015-33209 |
[Federal Register Volume 81, Number 3 (Wednesday, January 6, 2016)] [Notices] [Pages 555-559] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-33209] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76796; File No. SR-BX-2015-084)] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Fees for Managed Data Solutions December 30, 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 December 18, 2015, The NASDAQ OMX BX, Inc (``BX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by BX. 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 the Substance of the Proposed Rule Change BX proposes to modify the charges to be paid for Managed Data Solutions (``MDS''). While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on January 1, 2016. The text of the proposed rule change is below. Proposed new language is italicized; proposed deletions are bracketed. Rules of NASDAQ OMX BX Equity Rules * * * * * 7026. Distribution Models (a) Managed Data Solutions. Distributors and Subscribers of Managed Data Solutions products containing BX TotalView data (non-display use only) shall pay the following fees: Fee Schedule for Managed Data ---------------------------------------------------------------------------------------------------------------- Solutions Price ---------------------------------------------------------------------------------------------------------------- Managed Data Solutions Administration Fee (for $[750]1,500/mo Per Distributor. the right to offer Managed Data Solutions to client organizations). BX Depth Data Professional Managed Data $1[0]50/mo Per Subscriber. Solutions Subscriber Fee (Internal Use Only and includes BX TotalView). BX Depth Data Managed Data Solutions Non- $20/mo Per Subscriber. Professional Subscriber Fee (Internal Use Only and includes BX TotalView). ---------------------------------------------------------------------------------------------------------------- [[Page 556]] (b) No change. * * * * * II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, BX 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. BX has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to increase the charges to be paid by distributors and subscribers of Managed Data Solutions products containing BX TotalView data (non-display use only). Specifically, the Exchange proposes to increase the fee charged to distributors for the right to offer Managed Data Solutions to client organizations to $1,500 per month per distributor (``MDS Administration Fee''), and the fee charged to professional subscribers to $150 per month per subscriber (``MDS Subscriber Fee''). This proposed rule change will not affect the pricing for non-professional subscribers. MDS is a data delivery option available to distributors of BX TotalView. Under the MDS fee structure, distributors may provide data feeds, Application Programming Interfaces (APIs) or similar automated delivery solutions to client organizations with only limited entitlement controls. Through this program, BX offers a much simpler administration process for MDS distributors and subscribers, reducing the burden and cost of administration. Subscribers of MDS may use the information for internal purposes only and may not distribute the information outside of their organization. MDS presents opportunities for small and mid-size firms to achieve significant cost savings over the cost of data feeds. Both the MDS Administration Fee and MDS Subscriber Fee have not changed since their introduction in 2013. Nevertheless, both distributors and subscribers reap the benefits of BX's constant focus on the performance and enhancements to these offerings. As such, BX recently completed a technology refresh to ensure that its data feeds continue to achieve a high level of performance and resiliency. The Exchange has also upgraded and refreshed its disaster recovery capabilities, adding to the increased focus on redundancy and resiliency. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of section 6 of the Act,\3\ in general, and with sections 6(b)(4) and 6(b)(5) of the Act,\4\ in particular, in that it provides an equitable allocation of reasonable fees among Subscribers and recipients of BX data and is not designed to permit unfair discrimination between them. BX's proposal to increase the MDS Administration Fee and MDS Subscriber Fee is also consistent with the Act in that it reflects an equitable allocation of reasonable fees. The Commission has long recognized the fair and equitable and not unreasonably discriminatory nature of assessing different fees for distributors and professional and non-professional users of the same data. BX also believes it is equitable to assess a higher fee per professional user than to an ordinary non-professional user due to the enhanced flexibility, lower overall costs and value that it offers distributors. --------------------------------------------------------------------------- \3\ 15 U.S.C. 78f. \4\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- In adopting Regulation NMS, the Commission granted self-regulatory organizations and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission concluded that Regulation NMS--by deregulating the market in proprietary data--would itself further the Act's goals of facilitating efficiency and competition: [E]fficiency is promoted when broker-dealers who do not need the data beyond the prices, sizes, market center identifications of the NBBO and consolidated last sale information are not required to receive (and pay for) such data. The Commission also believes that efficiency is promoted when broker-dealers may choose to receive (and pay for) additional market data based on their own internal analysis of the need for such data.\5\ --------------------------------------------------------------------------- \5\ See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005). By removing ``unnecessary regulatory restrictions'' on the ability of exchanges to sell their own data, Regulation NMS advanced the goals of the Act and the principles reflected in its legislative history. If the free market should determine whether proprietary data is sold to broker-dealers at all, it follows that the price at which such data is sold should be set by the market as well. BX TotalView is precisely the sort of market data products that the Commission envisioned when it adopted Regulation NMS. The decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010) (``NetCoalition I''), upheld the Commission's reliance upon competitive markets to set reasonable and equitably allocated fees for market data. ``In fact, the legislative history indicates that the Congress intended that the market system `evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed' and that the SEC wield its regulatory power `in those situations where competition may not be sufficient,' such as in the creation of a `consolidated transactional reporting system.' NetCoalition I, at 535 (quoting H.R. Rep. No. 94-229, at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323). The court agreed with the Commission's conclusion that ``Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' '' \6\ --------------------------------------------------------------------------- \6\ NetCoalition I, at 535. --------------------------------------------------------------------------- The Court in NetCoalition I, while upholding the Commission's conclusion that competitive forces may be relied upon to establish the fairness of prices, nevertheless concluded that the record in that case did not adequately support the Commission's conclusions as to the competitive nature of the market for NYSE Arca's data product at issue in that case. As explained below in BX's Statement on Burden on Competition, however, BX believes that there is substantial evidence of competition in the marketplace for data that was not in the record in the NetCoalition I case, and that the Commission is entitled to rely upon such evidence in concluding fees are the product of competition, and therefore in accordance with the relevant statutory standards.\7\ Accordingly, any findings of the court with respect to that product may not be [[Page 557]] relevant to the product at issue in this filing. --------------------------------------------------------------------------- \7\ It should also be noted that section 916 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank Act'') has amended paragraph (A) of section 19(b)(3) of the Act, 15 U.S.C. 78s(b)(3), to make it clear that all exchange fees, including fees for market data, may be filed by exchanges on an immediately effective basis. See also NetCoalition v. SEC, 715 F.3d 342 (D.C. Cir. 2013) (``NetCoalition II'') (finding no jurisdiction to review Commission's non-suspension of immediately effective fee changes). --------------------------------------------------------------------------- BX believes that the allocation of the proposed fee is fair and equitable in accordance with section 6(b)(4) of the Act, and not unreasonably discriminatory in accordance with section 6(b)(5) of the Act. As described above, the proposed fee is based on pricing conventions and distinctions that exist in BX's current fee schedule. These distinctions are each based on principles of fairness and equity that have helped for many years to maintain fair, equitable, and not unreasonably discriminatory fees, and that apply with equal or greater force to the current proposal. As described in greater detail below, if BX has calculated improperly and the market deems the proposed fees to be unfair, inequitable, or unreasonably discriminatory, firms can discontinue the use of their data because the proposed product is entirely optional to all parties. Firms are not required to purchase data and BX is not required to make data available or to offer specific pricing alternatives for potential purchases. BX can discontinue offering a pricing alternative (as it has in the past) and firms can discontinue their use at any time and for any reason (as they often do), including due to their assessment of the reasonableness of fees charged. BX continues to establish and revise pricing policies aimed at increasing fairness and equitable allocation of fees among Subscribers. BX believes that periodically it must adjust the Subscriber fees to reflect market forces. BX believes it is an appropriate time to adjust this fee to more accurately reflect the investments made to enhance this product through capacity upgrades. This also reflects that the market for this information is highly competitive and continually evolves as products develop and change. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. Notwithstanding its determination that the Commission may rely upon competition to establish fair and equitably allocated fees for market data, the NetCoalition court found that the Commission had not, in that case, compiled a record that adequately supported its conclusion that the market for the data at issue in the case was competitive. BX believes that a record may readily be established to demonstrate the competitive nature of the market in question. There is intense competition between trading platforms that provide transaction execution and routing services and proprietary data products. 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. Data products are valuable to many end Subscribers only insofar as they provide information that end Subscribers 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, an exchange's customers view the costs of transaction executions and of data as a unified cost of doing business with the exchange. A broker-dealer (``BD'') will direct orders to a particular exchange only if the expected revenues from executing trades on the exchange exceed net transaction execution costs and the cost of data that the BD chooses to buy to support its trading decisions (or those of its customers). The choice of data products is, in turn, a product of the value of the products in making profitable trading decisions. If the cost of the product exceeds its expected value, the BD will choose not to buy it. Moreover, as a BD chooses to direct fewer orders to a particular exchange, the value of the product to that BD decreases, for two reasons. First, the product will contain less information, because executions of the BD's orders will not be reflected in it. Second, and perhaps more important, the product will be less valuable to that BD because it does not provide information about the venue to which it is directing its orders. Data from the competing venue to which the BD is directing orders will become correspondingly more valuable. Thus, an increase in the fees charged for either transactions or data has the potential to impair revenues from both products. ``No one disputes that competition for order flow is `fierce'.'' NetCoalition at 24. However, the existence of fierce competition for order flow implies a high degree of price sensitivity on the part of BDs with order flow, since they may readily reduce costs by directing orders toward the lowest-cost trading venues. A BD that shifted its order flow from one platform to another in response to order execution price differentials would both reduce the value of that platform's market data and reduce its own need to consume data from the disfavored platform. Similarly, if a platform increases its market data fees, the change will affect the overall cost of doing business with the platform, and affected BDs will assess whether they can lower their trading costs by directing orders elsewhere and thereby lessening the need for the more expensive data. Analyzing the cost of market data distribution in isolation from the cost of all of the inputs supporting the creation of market data will inevitably underestimate the cost of the data. Thus, because it is impossible to create data without a fast, technologically robust, and well-regulated execution system, system costs and regulatory costs affect the price of market data. It would be equally misleading, however, to attribute all of the exchange's costs to the market data portion of an exchange's joint product. Rather, all of the exchange's costs are incurred for the unified purposes of attracting order flow, executing and/or routing orders, and generating and selling data about market activity. The total return that an exchange earns reflects the revenues it receives from the joint products and the total costs of the joint products. Competition among trading platforms can be expected to constrain the aggregate return each platform earns from the sale of its joint products, but different platforms may choose from a range of possible, and equally reasonable, pricing strategies as the means of recovering total costs. BX pays rebates to attract orders, charges relatively low prices for market information and charges relatively high prices for accessing posted liquidity. Other platforms may choose a strategy of paying lower liquidity rebates to attract orders, setting relatively low prices for accessing posted liquidity, and setting relatively high prices for market information. Still others may provide most data free of charge and rely exclusively on transaction fees to recover their costs. Finally, some platforms may incentivize use by providing opportunities for equity ownership, which may allow them to charge lower direct fees for executions and data. In this environment, there is no economic basis for regulating maximum prices for one of the joint products in an [[Page 558]] industry in which suppliers face competitive constraints with regard to the joint offering. Such regulation is unnecessary because an ``excessive'' price for one of the joint products will ultimately have to be reflected in lower prices for other products sold by the firm, or otherwise the firm will experience a loss in the volume of its sales that will be adverse to its overall profitability. In other words, an increase in the price of data will ultimately have to be accompanied by a decrease in the cost of executions, or the volume of both data and executions will fall. The level of competition and contestability in the market is evident in the numerous alternative venues that compete for order flow, including eleven SRO markets, as well as internalizing BDs and various forms of alternative trading systems (``ATSs''), including dark pools and electronic communication networks (``ECNs''). Each SRO market competes to produce transaction reports via trade executions, and two FINRA-regulated TRFs compete to attract internalized transaction reports. It is common for BDs to further and exploit this competition by sending their order flow and transaction reports to multiple markets, rather than providing them all to a single market. Competitive markets for order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products. The large number of SROs, TRFs, BDs, and ATSs that currently produce proprietary data or are currently capable of producing it provides further pricing discipline for proprietary data products. Each SRO, TRF, ATS, and BD is currently permitted to produce proprietary data products, and many currently do or have announced plans to do so, including BX, NYSE, NYSE MKT, NYSE Arca, and BATS/Direct Edge. Any ATS or BD can combine with any other ATS, BD, or multiple ATSs or BDs to produce joint proprietary data products. Additionally, order routers and market data vendors can facilitate single or multiple BDs' production of proprietary data products. The potential sources of proprietary products are virtually limitless. Notably, the potential sources of data include the BDs that submit trade reports to TRFs and that have the ability to consolidate and distribute their data without the involvement of FINRA or an exchange-operated TRF. The fact that proprietary data from ATSs, BDs, and vendors can by- pass SROs is significant in two respects. First, non-SROs can compete directly with SROs for the production and sale of proprietary data products, as BATS and NYSE Arca did before registering as exchanges by publishing proprietary book data on the internet. Second, because a single order or transaction report can appear in a core data product, an SRO proprietary product, and/or a non-SRO proprietary product, the data available in proprietary products is exponentially greater than the actual number of orders and transaction reports that exist in the marketplace. In addition to the competition and price discipline described above, the market for proprietary data products is also highly contestable because market entry is rapid, inexpensive, and profitable. The history of electronic trading is replete with examples of entrants that swiftly grew into some of the largest electronic trading platforms and proprietary data producers: Archipelago, Bloomberg Tradebook, Island, RediBook, Attain, TracECN, BATS Trading and BATS/Direct Edge. A proliferation of dark pools and other ATSs operate profitably with fragmentary shares of consolidated market volume. Regulation NMS, by deregulating the market for proprietary data, has increased the contestability of that market. While BDs have previously published their proprietary data individually, Regulation NMS encourages market data vendors and BDs to produce proprietary products cooperatively in a manner never before possible. Multiple market data vendors already have the capability to aggregate data and disseminate it on a profitable scale, including Bloomberg and Thomson Reuters. In Europe, Cinnober aggregates and disseminates data from over 40 brokers and multilateral trading facilities.\8\ --------------------------------------------------------------------------- \8\ See http://www.cinnober.com/boat-trade-reporting. --------------------------------------------------------------------------- In this environment, a super-competitive increase in the fees charged for either transactions or data has the potential to impair revenues from both products. ``No one disputes that competition for order flow is `fierce'.'' NetCoalition I at 539. The existence of fierce competition for order flow implies a high degree of price sensitivity on the part of BDs with order flow, since they may readily reduce costs by directing orders toward the lowest-cost trading venues. A BD that shifted its order flow from one platform to another in response to order execution price differentials would both reduce the value of that platform's market data and reduce its own need to consume data from the disfavored platform. If a platform increases its market data fees, the change will affect the overall cost of doing business with the platform, and affected BDs will assess whether they can lower their trading costs by directing orders elsewhere and thereby lessening the need for the more expensive data. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act.\9\ 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. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78s(b)(3)(a)(ii). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse 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-BX-2015-084 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2015-084. 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 [[Page 559]] 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 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal offices 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-BX-2015-084, and should be submitted on or before January 27, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\ --------------------------------------------------------------------------- \10\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-33209 Filed 1-5-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 3 / Wednesday, January 6, 2016 / Notices 555
comply with the Act’s requirements. estimates that 4,918,064 are new clients SECURITIES AND EXCHANGE
These programs differ from investment and 11,619,717 are continuing clients. COMMISSION
companies because, among other things, The staff estimates that each year the
they provide individualized investment investment advisory program sponsors’ [Release No. 34–76796; File No. SR–BX–
advice to the client. The rule’s staff engage in 1.5 hours per new client 2015–084)]
provisions have the effect of ensuring and 1 hour per continuing client to
that clients in a program relying on the prepare, conduct and/or review Self-Regulatory Organizations;
rule receive advice tailored to the interviews regarding the client’s NASDAQ OMX BX, Inc.; Notice of Filing
client’s needs. financial situation and investment and Immediate Effectiveness of
For a program to be eligible for the objectives as required by the rule. Proposed Rule Change To Modify the
rule’s safe harbor, each client’s account Furthermore, the staff estimates that Fees for Managed Data Solutions
must be managed on the basis of the each year the investment advisory
client’s financial situation and program sponsors’ staff spends 1 hour December 30, 2015.
investment objectives and in accordance per client to prepare and mail quarterly Pursuant to section 19(b)(1) of the
with any reasonable restrictions the client account statements, including Securities Exchange Act of 1934
client imposes on managing the notices to update information. Based on
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
account. When an account is opened, the estimates above, the Commission
notice is hereby given that on December
the sponsor (or its designee) must obtain estimates that the total annual burden of
18, 2015, The NASDAQ OMX BX, Inc
information from each client regarding the rule’s paperwork requirements is
(‘‘BX’’) filed with the Securities and
the client’s financial situation and 35,534,594 hours.
The estimate of average burden hours Exchange Commission (‘‘Commission’’)
investment objectives, and must allow the proposed rule change as described
the client an opportunity to impose is made solely for the purposes of the
Paperwork Reduction Act. The estimate in Items I, II, and III below, which Items
reasonable restrictions on managing the have been prepared by BX. The
account. In addition, the sponsor (or its is not derived from a comprehensive or
even a representative survey or study of Commission is publishing this notice to
designee) must contact the client solicit comments on the proposed rule
annually to determine whether the the costs of Commission rules and
forms. An agency may not conduct or change from interested persons.
client’s financial situation or investment
objectives have changed and whether sponsor, and a person is not required to I. Self-Regulatory Organization’s
the client wishes to impose any respond to, a collection of information Statement of the Terms of the Substance
reasonable restrictions on the unless it displays a currently valid OMB of the Proposed Rule Change
management of the account or control number.
The public may view the background BX proposes to modify the charges to
reasonably modify existing restrictions.
documentation for this information be paid for Managed Data Solutions
The sponsor (or its designee) must also
collection at the following Web site, (‘‘MDS’’). While the changes proposed
notify the client quarterly, in writing, to
www.reginfo.gov. Comments should be herein are effective upon filing, the
contact the sponsor (or its designee)
directed to: (i) Desk Officer for the Exchange has designated that the
regarding changes to the client’s
Securities and Exchange Commission, amendments be operative on January 1,
financial situation, investment
Office of Information and Regulatory 2016.
objectives, or restrictions on the Affairs, Office of Management and
account’s management. The text of the proposed rule change
Budget, Room 10102, New Executive
Additionally, the sponsor (or its is below. Proposed new language is
Office Building, Washington, DC 20503,
designee) must provide each client with italicized; proposed deletions are
or by sending an email to: Shagufta_
a quarterly statement describing all bracketed.
Ahmed@omb.eop.gov; and (ii) Pamela
activity in the client’s account during Dyson, Director/Chief Information Rules of NASDAQ OMX BX
the previous quarter. The sponsor and Officer, Securities and Exchange
personnel of the client’s account Equity Rules
Commission, c/o Remi Pavlik-Simon,
manager who know about the client’s 100 F Street NE., Washington, DC 20549 * * * * *
account and its management must be or send an email to: PRA_Mailbox@
reasonably available to consult with the sec.gov. Comments must be submitted to 7026. Distribution Models
client. Each client also must retain OMB within 30 days of this notice.
certain indicia of ownership of all (a) Managed Data Solutions.
securities and funds in the account. Dated: December 30, 2015. Distributors and Subscribers of
The Commission staff estimates that Jill M. Peterson, Managed Data Solutions products
16,537,781 clients participate each year Assistant Secretary. containing BX TotalView data (non-
in investment advisory programs relying [FR Doc. 2015–33212 Filed 1–5–16; 8:45 am] display use only) shall pay the
on rule 3a–4. Of that number, the staff BILLING CODE 8011–01–P following fees:
FEE SCHEDULE FOR MANAGED DATA
Solutions Price
Managed Data Solutions Administration Fee (for the right to offer Managed Data Solutions to client organi- $[750]1,500/mo Per Distributor.
mstockstill on DSK4VPTVN1PROD with NOTICES
zations).
BX Depth Data Professional Managed Data Solutions Subscriber Fee (Internal Use Only and includes BX $1[0]50/mo Per Subscriber.
TotalView).
BX Depth Data Managed Data Solutions Non-Professional Subscriber Fee (Internal Use Only and includes $20/mo Per Subscriber.
BX TotalView).
1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4.
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![556 Federal Register / Vol. 81, No. 3 / Wednesday, January 6, 2016 / Notices
(b) No change. such, BX recently completed a sold to broker-dealers at all, it follows
* * * * * technology refresh to ensure that its data that the price at which such data is sold
feeds continue to achieve a high level of should be set by the market as well. BX
II. Self-Regulatory Organization’s performance and resiliency. The TotalView is precisely the sort of market
Statement of the Purpose of, and Exchange has also upgraded and data products that the Commission
Statutory Basis for, the Proposed Rule refreshed its disaster recovery envisioned when it adopted Regulation
Change capabilities, adding to the increased NMS.
In its filing with the Commission, BX focus on redundancy and resiliency. The decision of the United States
included statements concerning the 2. Statutory Basis Court of Appeals for the District of
purpose of and basis for the proposed Columbia Circuit in NetCoalition v.
rule change and discussed any The Exchange believes that the SEC, 615 F.3d 525 (D.C. Cir. 2010)
comments it received on the proposed proposed rule change is consistent with (‘‘NetCoalition I’’), upheld the
rule change. The text of these statements the provisions of section 6 of the Act,3 Commission’s reliance upon
may be examined at the places specified in general, and with sections 6(b)(4) and competitive markets to set reasonable
in Item IV below. BX has prepared 6(b)(5) of the Act,4 in particular, in that and equitably allocated fees for market
summaries, set forth in Sections A, B, it provides an equitable allocation of data. ‘‘In fact, the legislative history
and C below, of the most significant reasonable fees among Subscribers and indicates that the Congress intended
aspects of such statements. recipients of BX data and is not that the market system ‘evolve through
designed to permit unfair the interplay of competitive forces as
A. Self-Regulatory Organization’s discrimination between them. BX’s
Statement of the Purpose of, and unnecessary regulatory restrictions are
proposal to increase the MDS
Statutory Basis for, the Proposed Rule removed’ and that the SEC wield its
Administration Fee and MDS Subscriber
Change regulatory power ‘in those situations
Fee is also consistent with the Act in
where competition may not be
1. Purpose that it reflects an equitable allocation of
sufficient,’ such as in the creation of a
reasonable fees. The Commission has
The purpose of the proposed rule ‘consolidated transactional reporting
long recognized the fair and equitable
change is to increase the charges to be system.’ NetCoalition I, at 535 (quoting
and not unreasonably discriminatory
paid by distributors and subscribers of H.R. Rep. No. 94–229, at 92 (1975), as
nature of assessing different fees for
Managed Data Solutions products reprinted in 1975 U.S.C.C.A.N. 321,
distributors and professional and non-
containing BX TotalView data (non- professional users of the same data. BX 323). The court agreed with the
display use only). Specifically, the also believes it is equitable to assess a Commission’s conclusion that
Exchange proposes to increase the fee higher fee per professional user than to ‘‘Congress intended that ‘competitive
charged to distributors for the right to an ordinary non-professional user due forces should dictate the services and
offer Managed Data Solutions to client to the enhanced flexibility, lower practices that constitute the U.S.
organizations to $1,500 per month per overall costs and value that it offers national market system for trading
distributor (‘‘MDS Administration distributors. equity securities.’ ’’ 6
Fee’’), and the fee charged to In adopting Regulation NMS, the The Court in NetCoalition I, while
professional subscribers to $150 per Commission granted self-regulatory upholding the Commission’s conclusion
month per subscriber (‘‘MDS Subscriber organizations and broker-dealers that competitive forces may be relied
Fee’’). This proposed rule change will increased authority and flexibility to upon to establish the fairness of prices,
not affect the pricing for non- offer new and unique market data to the nevertheless concluded that the record
professional subscribers. public. in that case did not adequately support
MDS is a data delivery option The Commission concluded that the Commission’s conclusions as to the
available to distributors of BX Regulation NMS—by deregulating the competitive nature of the market for
TotalView. Under the MDS fee market in proprietary data—would itself NYSE Arca’s data product at issue in
structure, distributors may provide data further the Act’s goals of facilitating that case. As explained below in BX’s
feeds, Application Programming efficiency and competition: Statement on Burden on Competition,
Interfaces (APIs) or similar automated [E]fficiency is promoted when broker- however, BX believes that there is
delivery solutions to client dealers who do not need the data beyond the substantial evidence of competition in
organizations with only limited prices, sizes, market center identifications of the marketplace for data that was not in
entitlement controls. Through this the NBBO and consolidated last sale the record in the NetCoalition I case,
program, BX offers a much simpler information are not required to receive (and and that the Commission is entitled to
administration process for MDS pay for) such data. The Commission also rely upon such evidence in concluding
believes that efficiency is promoted when fees are the product of competition, and
distributors and subscribers, reducing broker-dealers may choose to receive (and
the burden and cost of administration. pay for) additional market data based on their therefore in accordance with the
Subscribers of MDS may use the own internal analysis of the need for such relevant statutory standards.7
information for internal purposes only data.5 Accordingly, any findings of the court
and may not distribute the information with respect to that product may not be
By removing ‘‘unnecessary regulatory
outside of their organization. MDS restrictions’’ on the ability of exchanges
presents opportunities for small and to sell their own data, Regulation NMS
6 NetCoalition I, at 535.
mid-size firms to achieve significant advanced the goals of the Act and the
7 Itshould also be noted that section 916 of the
Dodd-Frank Wall Street Reform and Consumer
mstockstill on DSK4VPTVN1PROD with NOTICES
cost savings over the cost of data feeds. principles reflected in its legislative Protection Act of 2010 (‘‘Dodd-Frank Act’’) has
Both the MDS Administration Fee and
history. If the free market should amended paragraph (A) of section 19(b)(3) of the
MDS Subscriber Fee have not changed Act, 15 U.S.C. 78s(b)(3), to make it clear that all
determine whether proprietary data is
since their introduction in 2013. exchange fees, including fees for market data, may
Nevertheless, both distributors and be filed by exchanges on an immediately effective
3 15 U.S.C. 78f. basis. See also NetCoalition v. SEC, 715 F.3d 342
subscribers reap the benefits of BX’s 4 15 U.S.C. 78f(b)(4) and (5). (D.C. Cir. 2013) (‘‘NetCoalition II’’) (finding no
constant focus on the performance and 5 See Securities Exchange Act Release No. 51808 jurisdiction to review Commission’s non-
enhancements to these offerings. As (June 9, 2005), 70 FR 37496 (June 29, 2005). suspension of immediately effective fee changes).
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![Federal Register / Vol. 81, No. 3 / Wednesday, January 6, 2016 / Notices 559
amendments, all written statements to the Congress pursuant to sections Sincerely,
with respect to the proposed rule 36(c) and 36(d) must be published in the Julia Frifield,
change that are filed with the Federal Register when they are Assistant Secretary Legislative Affairs
Commission, and all written transmitted to Congress or as soon March 17, 2015 (Transmittal No. DDTC 14–
communications relating to the thereafter as practicable. 141)
proposed rule change between the Following are such notifications to Honorable John A. Boehner, Speaker of the
Commission and any person, other than the Congress: House of Representatives
those that may be withheld from the March 11, 2015 (Transmittal No. DDTC 14– Dear Mr. Speaker:
public in accordance with the 143)
Pursuant to Section 36(c) of the Arms Export
provisions of 5 U.S.C. 552, will be Honorable John A. Boehner, Speaker of the Control Act, I am transmitting certification of
available for Web site viewing and House of Representatives a proposed license for the export of technical
printing in the Commission’s Public Dear Mr. Speaker: data and defense services in the amount of
Reference Room on official business Pursuant to Section 36(c) of the Arms Export $50,000,000 or more.
days between the hours of 10:00 a.m. Control Act, I am transmitting certification of The transaction contained in the attached
and 3:00 p.m. Copies of such filing also a proposed license for the export of firearm certification involves the transfer of technical
will be available for inspection and parts and components abroad controlled data and defense services to support the
copying at the principal offices of the under Category I of the United States Falcon 9 integration and launch of the
Exchange. All comments received will Munitions List in amount of $1,000,000 or JCSAT–14 Commercial Communication
more. Satellite from Cape Canaveral.
be posted without change; the
Commission does not edit personal The transaction contained in the attached The United States government is prepared to
certification involves the export of Sig Sauer license the export of these items having taken
identifying information from into account political, military, economic,
rifles model Sig 516 full-auto rifles and
submissions. You should submit only accessories, model 516G2 full-auto rifles and human rights, and arms control
information that you wish to make accessories, and SD rifle silencers to the considerations.
available publicly. All submissions Indonesian Defence Force in Indonesia. More detailed information is contained in the
should refer to File Number SR–BX– The United States government is prepared to formal certification which, though
2015–084, and should be submitted on license the export of these items having taken unclassified, contains business information
or before January 27, 2016. into account political, military, economic, submitted to the Department of State by the
human rights, and arms control applicant, publication of which could cause
For the Commission, by the Division of
considerations. competitive harm to the United States firm
Trading and Markets, pursuant to delegated
authority.10 concerned.
More detailed information is contained in the
Jill M. Peterson, formal certification which, though Sincerely,
Assistant Secretary. unclassified, contains business information Julia Frifield,
submitted to the Department of State by the Assistant Secretary Legislative Affairs
[FR Doc. 2015–33209 Filed 1–5–16; 8:45 am] applicant, publication of which could cause
BILLING CODE 8011–01–P March 18, 2015 (Transmittal No. DDTC 14–
competitive harm to the United States firm
151)
concerned.
Sincerely, Honorable John A. Boehner, Speaker of the
DEPARTMENT OF STATE House of Representatives
Julia Frifield
Dear Mr. Speaker:
[Public Notice: 9397] Assistant Secretary Legislative Affairs
Pursuant to Section 36(c) of the Arms Export
March 16, 2015 (Transmittal No. DDTC 14– Control Act, I am transmitting certification of
Notifications to the Congress of 110) a proposed license for the export of firearms
Proposed Commercial Export Licenses Honorable John A. Boehner, Speaker of the and components abroad controlled under
AGENCY: Bureau of Political-Military House of Representatives Category I of the United States Munitions List
Dear Mr. Speaker: in amount of $1,000,000 or more.
Affairs, Directorate of Defense Trade
Controls, Department of State. Pursuant to Section 36(c) of the Arms Export The transaction contained in the attached
Control Act, I am transmitting certification of certification involves the export of various
ACTION: Notice. rifles, pistols, and revolvers with spare parts
a proposed license for the export of defense
articles, to include technical data, and and accessories to Smith & Wesson
SUMMARY: Notice is hereby given that
defense services in the amount of Distributing, Inc. in Belgium.
the Department of State has forwarded
$100,000,000 or more. The United States Government is prepared to
the attached Notifications of Proposed
The transaction contained in the attached license the export of these items having taken
Export Licenses to the Congress on the into account political, military, economic,
dates indicated on the attachments certification involves the export of defense
articles, including technical data, and human rights, and arms control
pursuant to sections 36(c) and 36(d), considerations.
defense services to the Republic of Korea to
and in compliance with section 36(f), of support the Patriot Guidance Enhances More detailed information is contained in the
the Arms Export Control Act. Missile-Tactical (GEM–T) upgrade program formal certification which, though
DATES: Effective Date: As shown on each and the Missile Assembly/Disassembly unclassified, contains business information
of the 48 letters. Facility (MADF). submitted to the Department of State by the
FOR FURTHER INFORMATION CONTACT: Ms. The United States government is prepared to applicant, publication of which could cause
license the export of these items having taken competitive harm to the United States firm
Lisa V. Aguirre, Directorate of Defense concerned.
Trade Controls, Department of State, into account political, military, economic,
human rights, and arms control Sincerely,
telephone (202) 663–2830; email
mstockstill on DSK4VPTVN1PROD with NOTICES
considerations. Julia Frifield
DDTCResponseTeam@state.gov. ATTN:
Congressional Notification of Licenses. More detailed information is contained in the Assistant Secretary Legislative Affairs
formal certification which, though March 20, 2015 (Transmittal No. DDTC 14–
SUPPLEMENTARY INFORMATION: Section unclassified, contains business information
36(f) of the Arms Export Control Act (22 153)
submitted to the Department of State by the
U.S.C. 2778) mandates that notifications applicant, publication of which could cause Honorable John A. Boehner, Speaker of the
competitive harm to the United States firm House of Representatives
10 17 CFR 200.30–3(a)(12). concerned. Dear Mr. Speaker:
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Document Created: 2016-01-06 04:01:56
Document Modified: 2016-01-06 04:01:56
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 555 |
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