82_FR_19196 82 FR 19118 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fees at Rule 7030(d)(3)

82 FR 19118 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fees at Rule 7030(d)(3)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 78 (April 25, 2017)

Page Range19118-19120
FR Document2017-08285

Federal Register, Volume 82 Issue 78 (Tuesday, April 25, 2017)
[Federal Register Volume 82, Number 78 (Tuesday, April 25, 2017)]
[Notices]
[Pages 19118-19120]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-08285]



[[Page 19118]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80487; File No. SR-NASDAQ-2017-037]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Fees at Rule 7030(d)(3)

April 19, 2017.
    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 April 10, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's fees at Rule 
7030(d)(3) to limit the time that the waiver of fees provided by the 
rule are available and to change how the current limitation under Rule 
7030(d)(3)(C) is triggered.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.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 Exchange initially filed the proposed pricing changes on April 
3, 2017 (SR-NASDAQ-2017-036). On April 10, 2017, the Exchange withdrew 
that filing and submitted this filing.
    The purpose of the proposed rule change is to amend the Exchange's 
fees at Rule 7030(d)(3) to limit all of the waiver of fees provided by 
the rules and to change how the current limitation under Rule 
7030(d)(3)(C) is triggered. Rule 7030(d) provides fees for use of the 
Nasdaq Testing Facility (``NTF''). The NTF provides subscribers with a 
virtual Nasdaq System test environment that closely approximates the 
production environment and on which they may test their automated 
systems that integrate with Nasdaq. For example, the NTF provides 
subscribers a virtual System environment for testing upcoming Nasdaq 
releases and product enhancements, as well as testing firm software 
prior to implementation.
    The Exchange assesses certain fees under the rule for use of the 
NTF. Subscribers that conduct tests of the computer-to-computer 
interface and the Financial Information Exchange interface to ACT and 
ACES access protocols through the NTF are assessed a fee of $285/hour 
for Active Connection testing during the normal operating hours of the 
NTF. Subscribers are also assessed $333/hour for Active Connection 
testing at all times other than the normal operating hours of the NTF. 
Subscribers are not assessed a fee for Idle Connection testing. 
Moreover, subscribers that conduct tests of all Nasdaq access protocol 
connections not described above, or of market data vendor feeds through 
the NTF, are assessed $300 per port, per month. Last, subscribers to 
the NTF located in Carteret, New Jersey are assessed a fee of $1,000 
per hand-off, per month for connection to the NTF. The hand-off fee 
includes either a 1Gb or 10Gb switch port and a cross connect to the 
NTF. Subscribers are also assessed a one-time installation fee of 
$1,000 per handoff.
    Under Rule 7030(d)(3), the Exchange provides three exemptions from 
the testing fees described above. First, a subscriber is not assessed a 
fee for testing new or enhanced services and/or software provided by 
Nasdaq.\3\ Second, a subscriber is not assessed a fee for testing 
modifications to software and/or services initiated by Nasdaq in 
response to a contingency.\4\ Third, a subscriber is not assessed a fee 
for testing by a subscriber of a Nasdaq service that the subscriber has 
not used previously, except if more than 30 days have elapsed since the 
subscriber commenced the testing of such Nasdaq service.\5\
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    \3\ See Rule 7030(d)(3)(A).
    \4\ See Rule 7030(d)(3)(B).
    \5\ See Rule 7030(d)(3)(C).
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    The Exchange is proposing to limit the duration of all exemptions 
from the fees provided under Rule 7030(d)(3). First, the Exchange is 
proposing to segregate testing of new services provided by Nasdaq from 
enhanced services provided by Nasdaq. As noted above, such services are 
currently not subject to limitation on the exemption from testing fees. 
As discussed below, the Exchange is proposing to allow testing at no 
cost for new services for 60 calendar days from the subscriber's 
notification to Nasdaq \6\ of its commencement of testing, which will 
be incorporated into Rule 7030(d)(C). The Exchange is proposing to 
allow free testing of enhanced services and/or software provided by 
Nasdaq for 30 calendar days from the subscriber's notification to 
Nasdaq \7\ of its commencement of testing.
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    \6\ The Exchange will require subscribers to provide notice to 
the Exchange via email to NTFbilling@nasdaq.com. Without such 
notice, normal fees under the rule would apply.
    \7\ Id.
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    Second, the Exchange is proposing to limit the free period for 
testing of modifications to software and/or services initiated by 
Nasdaq in response to a contingency to 30 calendar days from the 
subscriber's notification to Nasdaq that it is commencing testing. The 
Exchange believes that 30 calendar days is a reasonable time for a 
subscriber to fully test modifications to software and/or services 
initiated by Nasdaq in response to a contingency because such changes 
are less impactful to subscribers as compared to a wholly-new service, 
or one that is wholly-new to that subscriber. Like the proposed 60 
calendar day period allowed for testing a service that a member has not 
used previously and the proposed 30 calendar day period for enhanced 
services and/or software, the Exchange is proposing to begin the 30 
calendar period upon the subscriber's notification to Nasdaq \8\ of its 
commencement of testing.
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    \8\ Id.
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    Last, the Exchange is proposing to change what triggers the 
limitation under Rule 7030(d)(3)(C) and increase the free period from 
30 to 60 calendar days. Currently under Rule 7030(d)(3)(C), testing by 
a subscriber of

[[Page 19119]]

a Nasdaq service that the subscriber has not used previously is 
provided at no cost, except if more than 30 days have elapsed since the 
subscriber commenced the testing of such Nasdaq service. The Exchange 
is proposing to harmonize the trigger of the free period with that of 
the other proposed free periods by amending the rule to reflect that 
initiation of the period will begin upon the subscriber's notification 
to Nasdaq \9\ of its commencement of testing instead of the actual 
initiation thereof. As noted above, the Exchange is also incorporating 
testing of new services provided by Nasdaq under current Rule 
7030(d)(3)(A) into Rule 7030(d)(3)(C). The Exchange notes that all new 
services provided by Nasdaq are, by definition, new to a subscriber. 
Thus, current Rule 7030(d)(3)(A) is unclear at what point a new service 
provided by Nasdaq is no longer ``new.'' Accordingly, the Exchange is 
instead treating every service that is new to the subscriber equally 
under the rule. Although the Exchange believes that testing of a new 
service may be completed within 30 calendar days, the Exchange is 
increasing the fee waiver period to 60 calendar days. The Exchange 
believes that, given the complexity of the markets and the need to 
ensure that systems function as intended prior to implementation, 60 
calendar days is a reasonable time during which a member can adequately 
test a service that is new to them.
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    \9\ Id.
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    The Exchange is also proposing to delete text concerning a limited 
time waiver of fees, which has since expired.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\10\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed change is reasonable 
because it will apply the current fees under Rule 7030(d), which have 
previously been determined to be reasonable, after a certain time has 
passed. As described above, the fees under Rule 7030(d) are currently 
waived for an indefinite time under Rules 7030(d)(3)(A) and (B). The 
proposed change will apply the fees under Rule 7030(d) once the 
applicable new fee waiver period has expired.
    The Exchange believes that the proposed change is equitably 
allocated and not unfairly discriminatory to subscribers because the 
proposal removes a distinction that is currently made in the rules that 
provides subscribers unlimited testing opportunities at no cost in 
perpetuity, which benefits subscribers that are slow to test changes 
over those that test timely. Specifically, the Exchange incurs expense 
in offering the NTF, which is covered by the fees that it assesses for 
the use thereof. Users of the NTF that are inefficient in their testing 
represent an inordinate cost based on their use as compared to users of 
the NTF that test efficiently because inefficient users typically use 
the NTF significantly more over a longer period of time, which in turn 
leads to increased costs to the Exchange in offering the platform free 
of charge indefinitely. These costs are ultimately borne by all users 
of the NTF in the fees that are assessed by the Exchange for use 
thereof. Instead of proposing an increase to the fees, the Exchange is 
instead proposing to apply discipline to the use of the NTF by limiting 
the fee waiver period for new services to 60 calendar days from the 
subscriber's notification to Nasdaq of its commencement of the testing 
of a service that has not been used by the subscriber previously, and 
limiting the fee waiver period to 30 calendar days from the 
subscriber's notification to Nasdaq of its commencement of the testing 
of enhanced or modified services and/or software provided by Nasdaq. 
Thus, all subscribers may take the steps necessary to test changes and 
new software and services within the proposed fair length of time or 
test such changes for a fee pursuant to the fee schedule to the extent 
the subscriber is unable to complete such testing during the free 
waiver period. The Exchange has determined that 30 calendar days is a 
fair length of time for subscribers to test enhanced services and/or 
software, as well as modifications to software and/or services, as it 
is consistent with the current limited waiver provided under Rule 
7030(d)(3)(C). The Exchange believes that providing 60 calendar days 
following a subscriber's notification to Nasdaq of its commencement of 
the testing of a service that has not been used by the subscriber 
previously as compared to 30 calendar days for all other types of 
testing under Rule 7030(d)(3) is an equitable allocation and not 
unfairly discriminatory because enhancements and modifications to 
existing services or software are less impactful to subscribers as 
compared to a wholly-new service, or one that is wholly-new to that 
subscriber. Last, amending the trigger of the free period for testing 
of a Nasdaq service that the subscriber has not used previously from 
the date of commencement of testing to the date that the subscriber 
notified Nasdaq that it has commenced testing will make the application 
of the waiver consistent with the proposed waivers provided under 
proposed Rules 7030(d)(3)(A) and (B), and will more accurately reflect 
the method that Nasdaq currently uses.

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

    In this instance, the proposed changes to the waiver of charges 
assessed under Rule 7030(d) for use of the NTF do not impose a burden 
on competition because the Exchange is changing the length of time 
within which a subscriber may test a service at no cost. The Exchange 
is providing reasonable timeframes during which a subscriber may test 
at no cost, after which the subscriber may continue to test but for a 
fee as provided by the rule. Thus, a subscriber will have adequate time 
to test at no cost and use of the NTF beyond the allocated free testing 
periods is completely voluntary. The proposed limitation of the fee 
waiver will bring discipline to the use of the NTF while also providing 
ample time for subscribers to use the NTF for testing services and 
software pursuant to Rule 7030(d)(3). In this regard, to the extent a 
subscriber does not complete the testing exempted under proposed new 
Rules 7030(d)(3)(A) through (C), the subscriber may continue to test 
the changes, but will be assessed the fees for use of the NTF under the 
rule. In sum, if the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. Accordingly, the Exchange does not believe that the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.

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.

[[Page 19120]]

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.\12\
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    \12\ 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 Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2017-037 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2017-037. 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-NASDAQ-2017-037, and should 
be submitted on or before May 16, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08285 Filed 4-24-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    19118                             Federal Register / Vol. 82, No. 78 / Tuesday, April 25, 2017 / Notices

                                                    SECURITIES AND EXCHANGE                                    A. Self-Regulatory Organization’s                        to a contingency.4 Third, a subscriber is
                                                    COMMISSION                                                 Statement of the Purpose of, and                         not assessed a fee for testing by a
                                                                                                               Statutory Basis for, the Proposed Rule                   subscriber of a Nasdaq service that the
                                                    [Release No. 34–80487; File No. SR–                        Change                                                   subscriber has not used previously,
                                                    NASDAQ–2017–037]                                                                                                    except if more than 30 days have
                                                                                                               1. Purpose
                                                                                                                                                                        elapsed since the subscriber
                                                                                                                  The Exchange initially filed the                      commenced the testing of such Nasdaq
                                                    Self-Regulatory Organizations; The
                                                                                                               proposed pricing changes on April 3,                     service.5
                                                    NASDAQ Stock Market LLC; Notice of
                                                                                                               2017 (SR–NASDAQ–2017–036). On                               The Exchange is proposing to limit
                                                    Filing and Immediate Effectiveness of                      April 10, 2017, the Exchange withdrew                    the duration of all exemptions from the
                                                    Proposed Rule Change To Amend                              that filing and submitted this filing.                   fees provided under Rule 7030(d)(3).
                                                    Fees at Rule 7030(d)(3)                                       The purpose of the proposed rule                      First, the Exchange is proposing to
                                                    April 19, 2017.
                                                                                                               change is to amend the Exchange’s fees                   segregate testing of new services
                                                                                                               at Rule 7030(d)(3) to limit all of the                   provided by Nasdaq from enhanced
                                                       Pursuant to Section 19(b)(1) of the                     waiver of fees provided by the rules and                 services provided by Nasdaq. As noted
                                                    Securities Exchange Act of 1934                            to change how the current limitation                     above, such services are currently not
                                                    (‘‘Act’’),1 and Rule 19b–4 thereunder,2                    under Rule 7030(d)(3)(C) is triggered.                   subject to limitation on the exemption
                                                    notice is hereby given that on April 10,                   Rule 7030(d) provides fees for use of the                from testing fees. As discussed below,
                                                    2017, The NASDAQ Stock Market LLC                          Nasdaq Testing Facility (‘‘NTF’’). The                   the Exchange is proposing to allow
                                                    (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the                NTF provides subscribers with a virtual                  testing at no cost for new services for 60
                                                    Securities and Exchange Commission                         Nasdaq System test environment that                      calendar days from the subscriber’s
                                                    (‘‘SEC’’ or ‘‘Commission’’) the proposed                   closely approximates the production                      notification to Nasdaq 6 of its
                                                    rule change as described in Items I, II,                   environment and on which they may                        commencement of testing, which will be
                                                    and III below, which Items have been                       test their automated systems that                        incorporated into Rule 7030(d)(C). The
                                                    prepared by the Exchange. The                              integrate with Nasdaq. For example, the                  Exchange is proposing to allow free
                                                    Commission is publishing this notice to                    NTF provides subscribers a virtual                       testing of enhanced services and/or
                                                                                                               System environment for testing                           software provided by Nasdaq for 30
                                                    solicit comments on the proposed rule
                                                                                                               upcoming Nasdaq releases and product                     calendar days from the subscriber’s
                                                    change from interested persons.
                                                                                                               enhancements, as well as testing firm                    notification to Nasdaq 7 of its
                                                    I. Self-Regulatory Organization’s                          software prior to implementation.                        commencement of testing.
                                                    Statement of the Terms of the Substance                       The Exchange assesses certain fees                       Second, the Exchange is proposing to
                                                    of the Proposed Rule Change                                under the rule for use of the NTF.                       limit the free period for testing of
                                                                                                               Subscribers that conduct tests of the                    modifications to software and/or
                                                       The Exchange proposes to amend the                      computer-to-computer interface and the                   services initiated by Nasdaq in response
                                                    Exchange’s fees at Rule 7030(d)(3) to                      Financial Information Exchange                           to a contingency to 30 calendar days
                                                    limit the time that the waiver of fees                     interface to ACT and ACES access                         from the subscriber’s notification to
                                                    provided by the rule are available and                     protocols through the NTF are assessed                   Nasdaq that it is commencing testing.
                                                    to change how the current limitation                       a fee of $285/hour for Active                            The Exchange believes that 30 calendar
                                                    under Rule 7030(d)(3)(C) is triggered.                     Connection testing during the normal                     days is a reasonable time for a
                                                                                                               operating hours of the NTF. Subscribers                  subscriber to fully test modifications to
                                                       The text of the proposed rule change                    are also assessed $333/hour for Active                   software and/or services initiated by
                                                    is available on the Exchange’s Web site                    Connection testing at all times other                    Nasdaq in response to a contingency
                                                    at http://nasdaq.cchwallstreet.com, at                     than the normal operating hours of the                   because such changes are less impactful
                                                    the principal office of the Exchange, and                  NTF. Subscribers are not assessed a fee                  to subscribers as compared to a wholly-
                                                    at the Commission’s Public Reference                       for Idle Connection testing. Moreover,                   new service, or one that is wholly-new
                                                    Room.                                                      subscribers that conduct tests of all                    to that subscriber. Like the proposed 60
                                                    II. Self-Regulatory Organization’s                         Nasdaq access protocol connections not                   calendar day period allowed for testing
                                                    Statement of the Purpose of, and                           described above, or of market data                       a service that a member has not used
                                                    Statutory Basis for, the Proposed Rule                     vendor feeds through the NTF, are                        previously and the proposed 30
                                                                                                               assessed $300 per port, per month. Last,                 calendar day period for enhanced
                                                    Change
                                                                                                               subscribers to the NTF located in                        services and/or software, the Exchange
                                                      In its filing with the Commission, the                   Carteret, New Jersey are assessed a fee                  is proposing to begin the 30 calendar
                                                    Exchange included statements                               of $1,000 per hand-off, per month for                    period upon the subscriber’s
                                                    concerning the purpose of and basis for                    connection to the NTF. The hand-off fee                  notification to Nasdaq 8 of its
                                                    the proposed rule change and discussed                     includes either a 1Gb or 10Gb switch                     commencement of testing.
                                                                                                               port and a cross connect to the NTF.                        Last, the Exchange is proposing to
                                                    any comments it received on the
                                                                                                               Subscribers are also assessed a one-time                 change what triggers the limitation
                                                    proposed rule change. The text of these
                                                                                                               installation fee of $1,000 per handoff.                  under Rule 7030(d)(3)(C) and increase
                                                    statements may be examined at the
                                                                                                                  Under Rule 7030(d)(3), the Exchange                   the free period from 30 to 60 calendar
                                                    places specified in Item IV below. The                     provides three exemptions from the                       days. Currently under Rule
                                                    Exchange has prepared summaries, set                       testing fees described above. First, a                   7030(d)(3)(C), testing by a subscriber of
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    forth in sections A, B, and C below, of                    subscriber is not assessed a fee for
                                                    the most significant aspects of such                       testing new or enhanced services and/or                    4 See Rule 7030(d)(3)(B).
                                                    statements.                                                software provided by Nasdaq.3 Second,                      5 See Rule 7030(d)(3)(C).
                                                                                                                                                                          6 The Exchange will require subscribers to
                                                                                                               a subscriber is not assessed a fee for
                                                                                                                                                                        provide notice to the Exchange via email to
                                                                                                               testing modifications to software and/or                 NTFbilling@nasdaq.com. Without such notice,
                                                                                                               services initiated by Nasdaq in response                 normal fees under the rule would apply.
                                                      1 15   U.S.C. 78s(b)(1).                                                                                            7 Id.
                                                      2 17   CFR 240.19b–4.                                      3 See   Rule 7030(d)(3)(A).                              8 Id.




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                                                                                          Federal Register / Vol. 82, No. 78 / Tuesday, April 25, 2017 / Notices                                       19119

                                                    a Nasdaq service that the subscriber has                   under Rule 7030(d) once the applicable                existing services or software are less
                                                    not used previously is provided at no                      new fee waiver period has expired.                    impactful to subscribers as compared to
                                                    cost, except if more than 30 days have                        The Exchange believes that the                     a wholly-new service, or one that is
                                                    elapsed since the subscriber                               proposed change is equitably allocated                wholly-new to that subscriber. Last,
                                                    commenced the testing of such Nasdaq                       and not unfairly discriminatory to                    amending the trigger of the free period
                                                    service. The Exchange is proposing to                      subscribers because the proposal                      for testing of a Nasdaq service that the
                                                    harmonize the trigger of the free period                   removes a distinction that is currently               subscriber has not used previously from
                                                    with that of the other proposed free                       made in the rules that provides                       the date of commencement of testing to
                                                    periods by amending the rule to reflect                    subscribers unlimited testing                         the date that the subscriber notified
                                                    that initiation of the period will begin                   opportunities at no cost in perpetuity,               Nasdaq that it has commenced testing
                                                    upon the subscriber’s notification to                      which benefits subscribers that are slow              will make the application of the waiver
                                                    Nasdaq 9 of its commencement of testing                    to test changes over those that test
                                                    instead of the actual initiation thereof.                                                                        consistent with the proposed waivers
                                                                                                               timely. Specifically, the Exchange                    provided under proposed Rules
                                                    As noted above, the Exchange is also                       incurs expense in offering the NTF,
                                                    incorporating testing of new services                                                                            7030(d)(3)(A) and (B), and will more
                                                                                                               which is covered by the fees that it                  accurately reflect the method that
                                                    provided by Nasdaq under current Rule                      assesses for the use thereof. Users of the
                                                    7030(d)(3)(A) into Rule 7030(d)(3)(C).                                                                           Nasdaq currently uses.
                                                                                                               NTF that are inefficient in their testing
                                                    The Exchange notes that all new                            represent an inordinate cost based on                 B. Self-Regulatory Organization’s
                                                    services provided by Nasdaq are, by                        their use as compared to users of the                 Statement on Burden on Competition
                                                    definition, new to a subscriber. Thus,                     NTF that test efficiently because
                                                    current Rule 7030(d)(3)(A) is unclear at                   inefficient users typically use the NTF                  In this instance, the proposed changes
                                                    what point a new service provided by                       significantly more over a longer period               to the waiver of charges assessed under
                                                    Nasdaq is no longer ‘‘new.’’                               of time, which in turn leads to increased             Rule 7030(d) for use of the NTF do not
                                                    Accordingly, the Exchange is instead                       costs to the Exchange in offering the                 impose a burden on competition
                                                    treating every service that is new to the                  platform free of charge indefinitely.                 because the Exchange is changing the
                                                    subscriber equally under the rule.                         These costs are ultimately borne by all               length of time within which a subscriber
                                                    Although the Exchange believes that                        users of the NTF in the fees that are                 may test a service at no cost. The
                                                    testing of a new service may be                            assessed by the Exchange for use                      Exchange is providing reasonable
                                                    completed within 30 calendar days, the                     thereof. Instead of proposing an increase             timeframes during which a subscriber
                                                    Exchange is increasing the fee waiver                      to the fees, the Exchange is instead                  may test at no cost, after which the
                                                    period to 60 calendar days. The                            proposing to apply discipline to the use              subscriber may continue to test but for
                                                    Exchange believes that, given the                          of the NTF by limiting the fee waiver
                                                    complexity of the markets and the need                                                                           a fee as provided by the rule. Thus, a
                                                                                                               period for new services to 60 calendar                subscriber will have adequate time to
                                                    to ensure that systems function as                         days from the subscriber’s notification
                                                    intended prior to implementation, 60                                                                             test at no cost and use of the NTF
                                                                                                               to Nasdaq of its commencement of the                  beyond the allocated free testing periods
                                                    calendar days is a reasonable time                         testing of a service that has not been
                                                    during which a member can adequately                                                                             is completely voluntary. The proposed
                                                                                                               used by the subscriber previously, and                limitation of the fee waiver will bring
                                                    test a service that is new to them.                        limiting the fee waiver period to 30
                                                       The Exchange is also proposing to                                                                             discipline to the use of the NTF while
                                                                                                               calendar days from the subscriber’s
                                                    delete text concerning a limited time                                                                            also providing ample time for
                                                                                                               notification to Nasdaq of its
                                                    waiver of fees, which has since expired.                                                                         subscribers to use the NTF for testing
                                                                                                               commencement of the testing of
                                                                                                               enhanced or modified services and/or                  services and software pursuant to Rule
                                                    2. Statutory Basis
                                                                                                               software provided by Nasdaq. Thus, all                7030(d)(3). In this regard, to the extent
                                                       The Exchange believes that its                                                                                a subscriber does not complete the
                                                    proposal is consistent with Section 6(b)                   subscribers may take the steps necessary
                                                                                                               to test changes and new software and                  testing exempted under proposed new
                                                    of the Act,10 in general, and furthers the                                                                       Rules 7030(d)(3)(A) through (C), the
                                                    objectives of Sections 6(b)(4) and 6(b)(5)                 services within the proposed fair length
                                                                                                               of time or test such changes for a fee                subscriber may continue to test the
                                                    of the Act,11 in particular, in that it
                                                                                                               pursuant to the fee schedule to the                   changes, but will be assessed the fees for
                                                    provides for the equitable allocation of
                                                                                                               extent the subscriber is unable to                    use of the NTF under the rule. In sum,
                                                    reasonable dues, fees and other charges
                                                                                                               complete such testing during the free                 if the changes proposed herein are
                                                    among members and issuers and other
                                                    persons using any facility, and is not                     waiver period. The Exchange has                       unattractive to market participants, it is
                                                    designed to permit unfair                                  determined that 30 calendar days is a                 likely that the Exchange will lose
                                                    discrimination between customers,                          fair length of time for subscribers to test           market share as a result. Accordingly,
                                                    issuers, brokers, or dealers.                              enhanced services and/or software, as                 the Exchange does not believe that the
                                                       The Exchange believes that the                          well as modifications to software and/or              proposed changes will impair the ability
                                                    proposed change is reasonable because                      services, as it is consistent with the                of members or competing order
                                                    it will apply the current fees under Rule                  current limited waiver provided under                 execution venues to maintain their
                                                    7030(d), which have previously been                        Rule 7030(d)(3)(C). The Exchange                      competitive standing in the financial
                                                    determined to be reasonable, after a                       believes that providing 60 calendar days              markets.
                                                                                                               following a subscriber’s notification to
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                                                    certain time has passed. As described
                                                    above, the fees under Rule 7030(d) are                     Nasdaq of its commencement of the                     C. Self-Regulatory Organization’s
                                                    currently waived for an indefinite time                    testing of a service that has not been                Statement on Comments on the
                                                    under Rules 7030(d)(3)(A) and (B). The                     used by the subscriber previously as                  Proposed Rule Change Received From
                                                    proposed change will apply the fees                        compared to 30 calendar days for all                  Members, Participants, or Others
                                                                                                               other types of testing under Rule
                                                      9 Id.                                                    7030(d)(3) is an equitable allocation and               No written comments were either
                                                      10 15   U.S.C. 78f(b).                                   not unfairly discriminatory because                   solicited or received.
                                                      11 15   U.S.C. 78f(b)(4) and (5).                        enhancements and modifications to


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                                                    19120                                Federal Register / Vol. 82, No. 78 / Tuesday, April 25, 2017 / Notices

                                                    III. Date of Effectiveness of the                          Washington, DC 20549 on official                      solicit comments on the Proposed Rule
                                                    Proposed Rule Change and Timing for                        business days between the hours of                    Changes from interested persons.
                                                    Commission Action                                          10:00 a.m. and 3:00 p.m. Copies of the
                                                                                                                                                                     I. Clearing Agencies’ Statements of the
                                                       The foregoing rule change has become                    filing also will be available for
                                                                                                                                                                     Terms of Substance of the Proposed
                                                    effective pursuant to Section                              inspection and copying at the principal
                                                                                                                                                                     Rule Changes
                                                    19(b)(3)(A)(ii) of the Act.12                              office of the Exchange. All comments
                                                                                                               received will be posted without change;                  The Proposed Rule Changes would
                                                       At any time within 60 days of the                                                                             adopt the Clearing Agency Liquidity
                                                    filing of the proposed rule change, the                    the Commission does not edit personal
                                                                                                               identifying information from                          Risk Management Framework
                                                    Commission summarily may                                                                                         (‘‘Framework’’) of the Clearing
                                                    temporarily suspend such rule change if                    submissions. You should submit only
                                                                                                               information that you wish to make                     Agencies, described below. The
                                                    it appears to the Commission that such                                                                           Framework would apply to both of
                                                    action is: (i) Necessary or appropriate in                 available publicly. All submissions
                                                                                                               should refer to File Number SR–                       FICC’s divisions, the Government
                                                    the public interest; (ii) for the protection                                                                     Securities Division (‘‘GSD’’) and the
                                                    of investors; or (iii) otherwise in                        NASDAQ–2017–037, and should be
                                                                                                               submitted on or before May 16, 2017.                  Mortgage-Backed Securities Division
                                                    furtherance of the purposes of the Act.                                                                          (‘‘MBSD’’). The Framework would be
                                                    If the Commission takes such action, the                     For the Commission, by the Division of
                                                                                                                                                                     maintained by the Clearing Agencies in
                                                    Commission shall institute proceedings                     Trading and Markets, pursuant to delegated
                                                                                                               authority.13                                          compliance with Rule 17Ad–22(e)(7)(i),
                                                    to determine whether the proposed rule                                                                           (ii), and (iv) through (ix) under the Act,
                                                    should be approved or disapproved.                         Eduardo A. Aleman,
                                                                                                                                                                     as described below.3
                                                                                                               Assistant Secretary.                                     Although the Clearing Agencies
                                                    IV. Solicitation of Comments
                                                                                                               [FR Doc. 2017–08285 Filed 4–24–17; 8:45 am]           would consider the Framework to be a
                                                      Interested persons are invited to                        BILLING CODE 8011–01–P                                rule, the Proposed Rule Changes do not
                                                    submit written data, views, and                                                                                  require any changes to the Rules, By-
                                                    arguments concerning the foregoing,                                                                              laws and Organization Certificate of
                                                    including whether the proposed rule                        SECURITIES AND EXCHANGE                               DTC (‘‘DTC Rules’’), the Rulebook of
                                                    change is consistent with the Act.                         COMMISSION                                            GSD (‘‘GSD Rules’’), the Clearing Rules
                                                    Comments may be submitted by any of                                                                              of MBSD (‘‘MBSD Rules’’), or the Rules
                                                    the following methods:                                     [Release No. 34–80489; File No. SR–DTC–
                                                                                                               2017–004; SR–NSCC–2017–005; SR–FICC–                  & Procedures of NSCC (‘‘NSCC Rules’’),
                                                    Electronic Comments                                        2017–008]                                             as the Framework would be a
                                                                                                                                                                     standalone document.4
                                                      • Use the Commission’s Internet                          Self-Regulatory Organizations; The
                                                    comment form (http://www.sec.gov/                                                                                II. Clearing Agencies’ Statements of the
                                                                                                               Depository Trust Company; National
                                                    rules/sro.shtml); or                                                                                             Purpose of, and Statutory Basis for, the
                                                                                                               Securities Clearing Corporation; Fixed
                                                      • Send an email to rule-comments@                        Income Clearing Corporation; Notice of
                                                                                                                                                                     Proposed Rule Changes
                                                    sec.gov. Please include File Number SR–                    Filings of Proposed Rule Changes, as                     In their filings with the Commission,
                                                    NASDAQ–2017–037 on the subject line.                       Modified by Amendments No. 1, To                      the Clearing Agencies included
                                                    Paper Comments                                             Adopt the Clearing Agency Liquidity                   statements concerning the purpose of
                                                                                                               Risk Management Framework                             and basis for the Proposed Rule Changes
                                                       • Send paper comments in triplicate                                                                           and discussed any comments they
                                                    to Secretary, Securities and Exchange                      April 19, 2017.                                       received on the Proposed Rule Changes.
                                                    Commission, 100 F Street NE.,                                 Pursuant to Section 19(b)(1) of the                The text of these statements may be
                                                    Washington, DC 20549–1090.                                 Securities Exchange Act of 1934                       examined at the places specified in Item
                                                    All submissions should refer to File                       (‘‘Act’’) 1 and Rule 19b–4 thereunder,2               IV below. The Clearing Agencies have
                                                    Number SR–NASDAQ–2017–037. This                            notice is hereby given that on April 6,               prepared summaries, set forth in
                                                    file number should be included on the                      2017, The Depository Trust Company                    sections A, B, and C below, of the most
                                                    subject line if email is used. To help the                 (‘‘DTC’’), National Securities Clearing               significant aspects of such statements.
                                                    Commission process and review your                         Corporation (‘‘NSCC’’), and Fixed
                                                    comments more efficiently, please use                      Income Clearing Corporation (‘‘FICC’’,                (A) Clearing Agencies’ Statements of the
                                                    only one method. The Commission will                       and together with DTC and NSCC, the                   Purpose of, and Statutory Basis for, the
                                                    post all comments on the Commission’s                      ‘‘Clearing Agencies’’), filed with the                Proposed Rule Changes
                                                    Internet Web site (http://www.sec.gov/                     Securities and Exchange Commission                    1. Purpose
                                                    rules/sro.shtml). Copies of the                            (‘‘Commission’’) the proposed rule                       The Clearing Agencies are proposing
                                                    submission, all subsequent                                 changes. On April 13, 2017, the Clearing              to adopt the Framework, which would
                                                    amendments, all written statements                         Agencies filed Amendments No. 1 to the                set forth the manner in which the
                                                    with respect to the proposed rule                          proposed rule changes, which made                     Clearing Agencies measure, monitor and
                                                    change that are filed with the                             technical corrections to the Table of
                                                    Commission, and all written                                Contents in the Exhibit 5s. The                          3 17 CFR 240.17Ad–22(e)(7)(i), (ii), and (iv)
                                                    communications relating to the                             proposed rule changes, as modified by                 through (ix). The Commission adopted amendments
                                                    proposed rule change between the                           Amendments No. 1 (hereinafter,                        to Rule 17Ad–22, including the addition of new
                                                                                                                                                                     section 17Ad–22(e), on September 28, 2016. See
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                    Commission and any person, other than                      collectively ‘‘Proposed Rule Changes’’),
                                                                                                                                                                     Securities Exchange Act Release No. 78961
                                                    those that may be withheld from the                        are described in Items I and II below,                (September 28, 2016), 81 FR 70786 (October 13,
                                                    public in accordance with the                              which Items have been prepared                        2016) (S7–03–14). Each of the Clearing Agencies is
                                                    provisions of 5 U.S.C. 552, will be                        primarily by the Clearing Agencies. The               a ‘‘covered clearing agency’’ as defined in Rule
                                                    available for Web site viewing and                         Commission is publishing this notice to               17Ad–22(a)(5), and must comply with new section
                                                                                                                                                                     (e) of Rule 17Ad–22 by April 11, 2017.
                                                    printing in the Commission’s Public                                                                                 4 Capitalized terms not defined herein are defined
                                                    Reference Room, 100 F Street NE.,                            13 17 CFR 200.30–3(a)(12).                          in the DTC Rules, GSD Rules, MBSD Rules, or
                                                                                                                 1 15 U.S.C. 78s(b)(1).                              NSCC Rules, as applicable, available at http://
                                                      12 15   U.S.C. 78s(b)(3)(A)(ii).                           2 17 CFR 240.19b–4.                                 dtcc.com/legal/rules-and-procedures.



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Document Created: 2017-04-25 02:18:18
Document Modified: 2017-04-25 02:18:18
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 Citation82 FR 19118 

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