81 FR 96152 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Administrative Charges for Distributors of Proprietary Data Feed Products
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 250 (December 29, 2016)
Federal Register Volume 81, Issue 250 (December 29, 2016)
| Page Range | 96152-96155 | |
| FR Document | 2016-31482 |
[Federal Register Volume 81, Number 250 (Thursday, December 29, 2016)] [Notices] [Pages 96152-96155] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-31482] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79667; File No. SR-BX-2016-071] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Administrative Charges for Distributors of Proprietary Data Feed Products December 22, 2016. 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 14, 2016, NASDAQ BX, Inc. (``BX'' 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 [[Page 96153]] 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 the Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange's market data fees at Rule 7035 to change the billing cycle for administrative fees paid by distributors of BX market data from annual to monthly, and to: (1) Replace the current $500 annual administrative fee assessed to distributors of delayed market data with a $50 monthly administrative fee, and (2) replace the current $1,000 annual administrative fee assessed to distributors of real-time market data with a $100 monthly administrative fee. The proposal is described further below.\3\ --------------------------------------------------------------------------- \3\ The NASDAQ Stock Market LLC and NASDAQ PHLX LLC are filing companion proposals similar to this one. All three proposals will change the billing cycle for administrative fees paid by distributors of market data from annual to monthly, and will: (1) Replace the current $500 annual administrative fee assessed to distributors of delayed market data with a $50 monthly administrative fee, and (2) replace the current $1,000 annual administrative fee assessed to distributors of real-time market data with a $100 monthly administrative fee. --------------------------------------------------------------------------- While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on January 1, 2017. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqbx.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 the proposed rule change is to change the billing cycle for administrative fees paid by distributors of BX market data from annual to monthly, and to: (1) Replace the current $500 annual administrative fee assessed to distributors of delayed market data with a $50 monthly administrative fee, and (2) replace the current $1,000 annual administrative fee assessed to distributors of real-time market data with a $100 monthly administrative fee. Annual Administrative Fee BX assesses an annual administrative fee to any market data distributor that receives a proprietary market data product. The amount of that fee is $500 for delayed market data and $1,000 for real-time market data. Distributors of both delayed and real-time market data are not required to pay both fees; they are charged only the higher fee. The time difference between ``delayed'' and ``real-time'' data varies by product. BX Last Sale (BLS), for example, is considered delayed after 15 minutes, while BX TotalView-ITCH data is considered delayed after midnight ET. The specific delay interval applicable to each product is published on the Nasdaq Trader Web site. The administrative fee is waived for BX members who, pursuant to BX rules, solely conduct an options business. The fee is not prorated if the distributor receives the data feed for less than a year. Proposed Changes The Exchange proposes to change the billing cycle for administrative fees paid by distributors of BX market data from annual to monthly, and to: (1) Replace the current $500 annual administrative fee assessed to distributors of delayed market data with a $50 monthly administrative fee, and (2) replace the current $1,000 annual administrative fee assessed to distributors of real-time market data with a $100 monthly administrative fee. The purposes of the proposal are to: (1) Facilitate billing by aligning the current annual administrative fee billing cycle with the standard monthly billing cycle used by the Exchange; (2) allocate the fee more equitably by charging distributors that receive less than a year of market data an administrative fee only for those months that they receive market data; and (3) bring the BX administrative fee into alignment with the Nasdaq and PHLX market data administrative fees, which, after current proposals take effect, will be charged the same administrative fees on the same billing cycle. The complexity of administering the market data program has increased significantly since the current fee was set in 2009. New, more complex products and services require the Exchange to expend more resources in administration and monitoring. For example, the introduction of Enhanced Display Solutions--which allow subscribers to view BX TotalView and BX Basic on computer monitors and export it to applications--required the Exchange to create new reporting systems and review mechanisms for the use of market data. New reporting and review mechanisms also had to be created to implement Managed Data Solutions, which allow electronic systems access to BX TotalView without human intervention. These programs were created in response to customer demand, and require administrative expenditures that had not been necessary when the amount of the administrative fee was set in 2009. The administrative fee is entirely optional in that it applies only to firms that elect to distribute BX market data. The proposed changes do not raise the cost of any other BX product, except to the extent that they increase the total cost of purchasing market data. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\4\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\5\ in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \4\ 15 U.S.C. 78f(b). \5\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ``has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.'' \6\ --------------------------------------------------------------------------- \6\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting Release''). --------------------------------------------------------------------------- Likewise, in NetCoalition v. Securities and Exchange Commission \7\ [[Page 96154]] (``NetCoalition'') the D.C. Circuit upheld the Commission's use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a cost-based approach.\8\ As the court emphasized, the Commission ``intended in Regulation NMS that `market forces, rather than regulatory requirements' play a role in determining the market data . . . to be made available to investors and at what cost.'' \9\ --------------------------------------------------------------------------- \7\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). \8\ See NetCoalition, at 534-535. \9\ Id. at 537. --------------------------------------------------------------------------- Further, ``[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers' . . . .'' \10\ --------------------------------------------------------------------------- \10\ Id. at 539 (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-21)). --------------------------------------------------------------------------- The Exchange believes that the proposal to replace the current $500 annual administrative fee assessed to distributors of delayed market data with a $50 monthly administrative fee, and the current $1,000 annual administrative fee assessed to distributors of real-time data with a $100 monthly administrative 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 change is reasonable and necessary to facilitate billing, allocate fees more equitably, and align the administrative fees with those of the Nasdaq and PHLX exchanges. Moreover, administrative fees are constrained by the Exchange's need to compete for order flow. The Exchange believes that the proposed change is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same fee to all similarly-situated distributors. 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. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. The proposal is to replace the current $500 annual administrative fee assessed to distributors of delayed market data with a $50 monthly administrative fee, and the current $1,000 annual administrative fee assessed to distributors of real-time market data with a $100 monthly administrative fee. If the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Specifically, market forces constrain administrative fees in three respects. First, all fees associated with proprietary data are constrained by competition among exchanges and other entities attracting order flow. Second, administrative fees impact the total cost of market data, and are constrained by the total cost of the market data offered by other entities. Third, competition among distributors constrains the total cost of market data, including administrative fees. Competition for Order Flow Administrative fees are constrained by competition among exchanges and other entities seeking to attract order flow. Order flow is the ``life blood'' of the exchanges. Broker-dealers currently have numerous alternative venues for their order flow, including thirteen self- regulatory organization (``SRO'') markets, as well as internalizing broker-dealers (``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 Trade Reporting Facilities (``TRFs'') compete to attract internalized transaction reports. The existence of fierce competition for order flow implies a high degree of price sensitivity on the part of BDs, which may readily reduce costs by directing orders toward the lowest-cost trading venues. The level of competition and contestability in the market for order flow is demonstrated by the numerous 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. For a variety of reasons, competition from new entrants, especially for order execution, has increased dramatically over the last decade. Each SRO, TRF, ATS, and BD that competes for order flow is permitted to produce proprietary data products. Many currently do or have announced plans to do so, including NYSE, NYSE Amex, NYSE Arca, BATS, and IEX. This is because Regulation NMS deregulated the market for proprietary data. While BDs had previously published their proprietary data individually, Regulation NMS encourages market data vendors and BDs to produce market data products cooperatively in a manner never before possible. Order routers and market data vendors can facilitate production of proprietary data products for single or multiple BDs. The potential sources of proprietary products are virtually limitless. The markets for order flow and market data are inextricably linked: A trading platform cannot generate market information unless it receives trade orders. As a result, the competition for order flow constrains the prices that platforms can charge for proprietary data products. Firms make decisions on how much and what types of data to consume based on the total cost of interacting with an exchange. Administrative fees are part of the total cost of proprietary data. A supracompetitive increase in the fees charged for either transactions or market data has the potential to impair revenues from both products. Competition From Market Data Providers Administrative fees are constrained by competition from other exchanges that sell market data. If administrative fees were to become excessive, distributors may elect to discontinue one or two products or services purchased from the Exchange, or reduce the level of their purchases, to signal that the overall cost of market data had become excessive. Such a reduction in purchases would act as a discipline to [[Page 96155]] the BX administrative fees, and would constrain the Exchange in its pricing decisions. Competition Among Distributors Distributors provide another form of price discipline for market data products. Distributors are in competition for users, and can curtail their purchases of market data if the total price of market data, including administrative fees, were set above competitive levels. In summary, market forces constrain the level of administrative fees through competition for order flow, competition from other sources of proprietary data, and in the competition among distributors for customers. For these reasons, the Exchange has provided a substantial basis demonstrating that the fee is equitable, fair, reasonable, and not unreasonably discriminatory, and therefore consistent with and in furtherance of the purposes of the Exchange Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.\11\ --------------------------------------------------------------------------- \11\ 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic 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-2016-071 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-2016-071. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-BX-2016-071, and should be submitted on or before January 19, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\12\ --------------------------------------------------------------------------- \12\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2016-31482 Filed 12-28-16; 8:45 am] BILLING CODE 8011-01-P
![96152 Federal Register / Vol. 81, No. 250 / Thursday, December 29, 2016 / Notices
met the proposed new standards (but B. Self-Regulatory Organization’s only one method. The Commission will
not those in the existing rule) and there Statement on Burden on Competition post all comments on the Commission’s
is no evidence that they have proven The Exchange does not believe that Internet Web site (http://www.sec.gov/
unfit for exchange trading. The the proposed rule change will impose rules/sro.shtml). Copies of the
Exchange also believes that the proposal any burden on competition that is not submission, all subsequent
to modify Section 102.06 to allow an AC necessary or appropriate in furtherance amendments, all written statements
to conduct a tender offer for all shares of the purposes of the Act. The with respect to the proposed rule
of all shareholders in exchange for a pro proposed rule change is designed to change that are filed with the
rata share of the cash held in trust by harmonize the Exchange’s rules with Commission, and all written
the AC in compliance with Rule 13e–4 changes in the AC structure prevalent in communications relating to the
and Regulation 14E under the Act the marketplace and embodied in the proposed rule change between the
instead of soliciting a shareholder vote rules of other listing markets. As such, Commission and any person, other than
protects investors and the public it is intended to promote competition those that may be withheld from the
interest, as it will help prevent public in accordance with the
for the listing of ACs.
‘‘greenmail’’ strategies where provisions of 5 U.S.C. 552, will be
professional investors seek to force ACs C. Self-Regulatory Organization’s available for Web site viewing and
to give them consideration not available Statement on Comments on the printing in the Commission’s Public
to other shareholders as a condition for Proposed Rule Change Received From Reference Room, 100 F Street NE.,
voting in favor of an acquisition. Members, Participants, or Others Washington, DC 20549 on official
No written comments were solicited business days between the hours of
The Exchange believes that it is 10:00 a.m. and 3:00 p.m. Copies of the
consistent with the protection of or received with respect to the proposed
rule change. filing also will be available for
investors to delete the requirement that inspection and copying at the principal
a Business Combination not go forward III. Date of Effectiveness of the office of the Exchange. All comments
if shareholders exceeding a threshold Proposed Rule Change and Timing for received will be posted without change;
amount exercise their conversion rights, Commission Action the Commission does not edit personal
as shareholders will be informed in Within 45 days of the date of identifying information from
advance of the fact that the size of the publication of this notice in the Federal submissions. You should submit only
post-Business Combination entity will Register or up to 90 days (i) as the information that you wish to make
vary depending on the amount of Commission may designate if it finds available publicly. All submissions
securities that are converted and they such longer period to be appropriate should refer to File Number SR–NYSE–
will be able to make their own informed and publishes its reasons for so finding 2016–72 and should be submitted on or
decisions as to whether to participate in or (ii) as to which the self-regulatory before January 19, 2017.
light of that disclosure. The Exchange organization consents, the Commission For the Commission, by the Division of
believes that the proposed amendments will: Trading and Markets, pursuant to delegated
to the continued listing standards are (A) by order approve or disapprove authority.10
consistent with the protection of the proposed rule change, or Eduardo A. Aleman,
investors as the requirements for pre- (B) institute proceedings to determine Assistant Secretary.
Business Combination ACs would be as whether the proposed rule change [FR Doc. 2016–31488 Filed 12–28–16; 8:45 am]
high as those applied to operating should be disapproved. BILLING CODE 8011–01–P
companies and the standard applied at
IV. Solicitation of Comments
the time of the Business Combination
would be significantly higher than that Interested persons are invited to SECURITIES AND EXCHANGE
applied to other continued listings. submit written data, views, and COMMISSION
arguments concerning the foregoing,
While the proposed amended [Release No. 34–79667; File No. SR–BX–
including whether the proposed rule
quantitative requirements for the listing 2016–071]
change is consistent with the Act.
of ACs would be lower than those for
Comments may be submitted by any of Self-Regulatory Organizations;
other listing applicants, the Exchange
the following methods: NASDAQ BX, Inc.; Notice of Filing and
does not believe that this difference is
unfairly discriminatory. The Exchange Electronic Comments Immediate Effectiveness of Proposed
believes this to be the case because • Use the Commission’s Internet Rule Change To Modify Administrative
market value-based listing standards are comment form (http://www.sec.gov/ Charges for Distributors of Proprietary
largely adopted to ensure adequate rules/sro.shtml); or Data Feed Products
trading liquidity and, consequently, • Send an email to rule-comments@ December 22, 2016.
efficient market pricing of a company’s sec.gov. Please include File Number SR– Pursuant to Section 19(b)(1) of the
securities. As an investment in an AC NYSE–2016–72 on the subject line. Securities Exchange Act of 1934
prior to its Business Combination (‘‘Act’’),1 and Rule 19b–4 thereunder,2
represents a right to a pro rata share of Paper Comments
notice is hereby given that on December
the AC’s assets held in trust, AC shares • Send paper comments in triplicate 14, 2016, NASDAQ BX, Inc. (‘‘BX’’ or
typically have a trading price very close to Brent J. Fields, Secretary, Securities
asabaliauskas on DSK3SPTVN1PROD with NOTICES
‘‘Exchange’’) filed with the Securities
to their liquidation value and the and Exchange Commission, 100 F Street and Exchange Commission (‘‘SEC’’ or
liquidity and market efficiency concerns NE., Washington, DC 20549–1090. ‘‘Commission’’) the proposed rule
relevant to listed operating companies All submissions should refer to File change as described in Items I, II, and
do not arise to the same degree. As such, Number SR–NYSE–2016–72. This file III below, which Items have been
the Exchange does not believe it is number should be included on the
unfairly discriminatory to apply subject line if email is used. To help the 10 17 CFR 200.30–3(a)(12).
different market value requirements to Commission process and review your 1 15 U.S.C. 78s(b)(1).
ACs than to other listing applicants. comments more efficiently, please use 2 17 CFR 240.19b–4.
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(‘‘NetCoalition’’) the D.C. Circuit upheld competitive market in which market costs by directing orders toward the
the Commission’s use of a market-based participants can readily favor competing lowest-cost trading venues.
approach in evaluating the fairness of venues if they deem fee levels at a The level of competition and
market data fees against a challenge particular venue to be excessive. In such contestability in the market for order
claiming that Congress mandated a cost- an environment, the Exchange must flow is demonstrated by the numerous
based approach.8 As the court continually adjust its fees to remain examples of entrants that swiftly grew
emphasized, the Commission ‘‘intended competitive with other exchanges and into some of the largest electronic
in Regulation NMS that ‘market forces, with alternative trading systems that trading platforms and proprietary data
rather than regulatory requirements’ have been exempted from compliance producers: Archipelago, Bloomberg
play a role in determining the market with the statutory standards applicable Tradebook, Island, RediBook, Attain,
data . . . to be made available to to exchanges. Because competitors are TracECN, BATS Trading and BATS/
investors and at what cost.’’ 9 free to modify their own fees in Direct Edge. A proliferation of dark
Further, ‘‘[n]o one disputes that response, and because market pools and other ATSs operate profitably
competition for order flow is ‘fierce.’ participants may readily adjust their with fragmentary shares of consolidated
. . . As the SEC explained, ‘[i]n the U.S. order routing practices, the Exchange market volume. For a variety of reasons,
national market system, buyers and believes that the degree to which fee competition from new entrants,
sellers of securities, and the broker- changes in this market may impose any especially for order execution, has
dealers that act as their order-routing burden on competition is extremely increased dramatically over the last
agents, have a wide range of choices of limited. decade.
where to route orders for execution’; The proposal is to replace the current Each SRO, TRF, ATS, and BD that
[and] ‘no exchange can afford to take its $500 annual administrative fee assessed competes for order flow is permitted to
market share percentages for granted’ produce proprietary data products.
to distributors of delayed market data
because ‘no exchange possesses a Many currently do or have announced
with a $50 monthly administrative fee,
monopoly, regulatory or otherwise, in plans to do so, including NYSE, NYSE
and the current $1,000 annual
the execution of order flow from broker Amex, NYSE Arca, BATS, and IEX. This
administrative fee assessed to
dealers’ . . . .’’ 10 is because Regulation NMS deregulated
distributors of real-time market data
The Exchange believes that the the market for proprietary data. While
with a $100 monthly administrative fee.
proposal to replace the current $500 BDs had previously published their
If the changes proposed herein are
annual administrative fee assessed to proprietary data individually,
unattractive to market participants, it is
distributors of delayed market data with Regulation NMS encourages market data
likely that the Exchange will lose
a $50 monthly administrative fee, and vendors and BDs to produce market data
market share as a result. products cooperatively in a manner
the current $1,000 annual
administrative fee assessed to Specifically, market forces constrain never before possible. Order routers and
distributors of real-time data with a administrative fees in three respects. market data vendors can facilitate
$100 monthly administrative fee, is fair First, all fees associated with production of proprietary data products
and equitable in accordance with proprietary data are constrained by for single or multiple BDs. The potential
Section 6(b)(4) of the Act, and not competition among exchanges and other sources of proprietary products are
unreasonably discriminatory in entities attracting order flow. Second, virtually limitless.
accordance with Section 6(b)(5) of the administrative fees impact the total cost The markets for order flow and
Act. As described above, the proposed of market data, and are constrained by market data are inextricably linked: A
fee change is reasonable and necessary the total cost of the market data offered trading platform cannot generate market
to facilitate billing, allocate fees more by other entities. Third, competition information unless it receives trade
equitably, and align the administrative among distributors constrains the total orders. As a result, the competition for
fees with those of the Nasdaq and PHLX cost of market data, including order flow constrains the prices that
exchanges. Moreover, administrative administrative fees. platforms can charge for proprietary
fees are constrained by the Exchange’s Competition for Order Flow data products. Firms make decisions on
need to compete for order flow. how much and what types of data to
The Exchange believes that the Administrative fees are constrained consume based on the total cost of
proposed change is an equitable by competition among exchanges and interacting with an exchange.
allocation and is not unfairly other entities seeking to attract order Administrative fees are part of the total
discriminatory because the Exchange flow. Order flow is the ‘‘life blood’’ of cost of proprietary data. A
will apply the same fee to all similarly- the exchanges. Broker-dealers currently supracompetitive increase in the fees
situated distributors. have numerous alternative venues for charged for either transactions or market
their order flow, including thirteen self- data has the potential to impair
B. Self-Regulatory Organization’s regulatory organization (‘‘SRO’’)
Statement on Burden on Competition revenues from both products.
markets, as well as internalizing broker-
The Exchange does not believe that dealers (‘‘BDs’’) and various forms of Competition From Market Data
the proposed rule change will impose alternative trading systems (‘‘ATSs’’), Providers
any burden on competition not including dark pools and electronic Administrative fees are constrained
necessary or appropriate in furtherance communication networks (‘‘ECNs’’). by competition from other exchanges
of the purposes of the Act. In terms of Each SRO market competes to produce that sell market data. If administrative
asabaliauskas on DSK3SPTVN1PROD with NOTICES
inter-market competition, the Exchange transaction reports via trade executions, fees were to become excessive,
notes that it operates in a highly and two FINRA-regulated Trade distributors may elect to discontinue
Reporting Facilities (‘‘TRFs’’) compete one or two products or services
8 See NetCoalition, at 534–535. to attract internalized transaction purchased from the Exchange, or reduce
9 Id.at 537.
10 Id. at 539 (quoting Securities Exchange Act
reports. The existence of fierce the level of their purchases, to signal
Release No. 59039 (December 2, 2008), 73 FR
competition for order flow implies a that the overall cost of market data had
74770, 74782–83 (December 9, 2008) (SR– high degree of price sensitivity on the become excessive. Such a reduction in
NYSEArca-2006–21)). part of BDs, which may readily reduce purchases would act as a discipline to
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![Federal Register / Vol. 81, No. 250 / Thursday, December 29, 2016 / Notices 96155
the BX administrative fees, and would • Send an email to rule-comments@ SUMMARY: The Aspire Challenge is a
constrain the Exchange in its pricing sec.gov. Please include File Number SR– prize competition conducted under the
decisions. BX–2016–071 on the subject line. America Competes Act. The objective of
the prizes is to spur the development
Competition Among Distributors Paper Comments
and provision of innovative
Distributors provide another form of • Send paper comments in triplicate entrepreneurial development and access
price discipline for market data to Secretary, Securities and Exchange to capital resources for formerly
products. Distributors are in Commission, 100 F Street NE., incarcerated individuals or those who
competition for users, and can curtail Washington, DC 20549–1090. are non-violent ex-offenders
their purchases of market data if the All submissions should refer to File DATES: The submission period for
total price of market data, including Number SR–BX–2016–071. This file entries will begin on December 29, 2016
administrative fees, were set above number should be included on the and close on February 13, 2017. SBA
competitive levels. subject line if email is used. To help the anticipates that winners will be
In summary, market forces constrain Commission process and review your announced no later than March 14,
the level of administrative fees through comments more efficiently, please use 2017.
competition for order flow, competition only one method. The Commission will
FOR FURTHER INFORMATION CONTACT:
from other sources of proprietary data, post all comments on the Commission’s
and in the competition among Internet Web site (http://www.sec.gov/ Matthew Stevens, Strategic Initiatives
distributors for customers. For these rules/sro.shtml). Copies of the Manager, Office of Entrepreneurial
reasons, the Exchange has provided a submission, all subsequent Development, U.S. Small Business
substantial basis demonstrating that the amendments, all written statements Administration, 409 Third Street SW.,
fee is equitable, fair, reasonable, and not with respect to the proposed rule 6th Floor, Washington, DC 20416, (202)
unreasonably discriminatory, and change that are filed with the 205–7699, SI@sba.gov.
therefore consistent with and in Commission, and all written SUPPLEMENTARY INFORMATION:
furtherance of the purposes of the communications relating to the Background
Exchange Act. proposed rule change between the
The U.S. Small Business
Commission and any person, other than
C. Self-Regulatory Organization’s Administration (SBA), officially
those that may be withheld from the
Statement on Comments on the established in 1953, maintains and
public in accordance with the
Proposed Rule Change Received From strengthens the nation’s economy by
provisions of 5 U.S.C. 552, will be
Members, Participants, or Others aiding, counseling, assisting, and
available for Web site viewing and
No written comments were either protecting the interests of small
printing in the Commission’s Public
solicited or received. businesses, and by helping families and
Reference Room, 100 F Street NE.,
businesses to recover from national
III. Date of Effectiveness of the Washington, DC 20549 on official
disasters. The SBA’s mission includes
Proposed Rule Change and Timing for business days between the hours of
assisting small businesses to start, grow,
Commission Action 10:00 a.m. and 3:00 p.m. Copies of such
and compete in markets by providing
filing also will be available for
The foregoing rule change has become quality training, counseling, and access
inspection and copying at the principal
effective pursuant to Section to resources.
office of the Exchange. All comments The Aspire Challenge is a prize
19(b)(3)(A)(ii) of the Act.11 received will be posted without change;
At any time within 60 days of the competition designed to spur the
the Commission does not edit personal development and provision of
filing of the proposed rule change, the identifying information from
Commission summarily may innovative entrepreneurial development
submissions. You should submit only and access to capital resources for
temporarily suspend such rule change if information that you wish to make
it appears to the Commission that such formerly incarcerated individuals or
available publicly. All submissions those who are non-violent ex-offenders.
action is: (i) Necessary or appropriate in should refer to File Number SR–BX–
the public interest; (ii) for the protection Of the 600,000 individuals released on
2016–071, and should be submitted on average each year from federal prisons,
of investors; or (iii) otherwise in or before January 19, 2017.
furtherance of the purposes of the Act. an estimated 60 percent remain
If the Commission takes such action, the For the Commission, by the Division of unemployed one year after their release,
Trading and Markets, pursuant to delegated raising the risk of recidivism and
Commission shall institute proceedings authority.12
to determine whether the proposed rule resulting in lost lifetime earnings. In
Eduardo A. Aleman, fact, two-thirds of these individuals
should be approved or disapproved.
Assistant Secretary. historically are rearrested within three
IV. Solicitation of Comments [FR Doc. 2016–31482 Filed 12–28–16; 8:45 am] years of their release.
Interested persons are invited to BILLING CODE 8011–01–P This challenge competition is separate
submit written data, views, and but builds on the momentum of the
arguments concerning the foregoing, Aspire Entrepreneurship Initiative, a
including whether the proposed rule SMALL BUSINESS ADMINISTRATION public-private partnership announced
change is consistent with the Act. in August 2016 between the SBA, W.K.
Announcement of the Aspire Kellogg Foundation and JUSTINE
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Comments may be submitted by any of
the following methods: Challenge—An Agency Prize Petersen. The three-year initiative is a
Competition pilot to test entrepreneurship education
Electronic Comments programming and microloan assistance
AGENCY: U.S. Small Business
• Use the Commission’s Internet Administration. through SBA Microloan Intermediaries
comment form (http://www.sec.gov/ to formerly incarcerated individuals in
ACTION: Notice.
rules/sro.shtml); or St. Louis, MO, Chicago, IL, Louisville,
KY and Detroit, MI. The goal of the
11 15 U.S.C. 78s(b)(3)(A)(ii). 12 17 CFR 200.30–3(a)(12). Aspire Challenge is to source additional
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Document Created: 2016-12-29 01:58:17
Document Modified: 2016-12-29 01:58:17
| 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 96152 |
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