83 FR 48492 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7021

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 186 (September 25, 2018)

[Federal Register Volume 83, Number 186 (Tuesday, September 25, 2018)]
[Notices]
[Pages 48492-48495]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-20761]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84209; File No. SR-NASDAQ-2018-073]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 7021

September 19, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 6, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Rule 7021 to address the transition 
of reports available on Report Center to a new underlying platform, and 
to make technical and clarifying changes.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at

[[Page 48493]]

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 is proposing to amend Rule 7021, concerning the Report 
Center, to address the transition of reports available on Report Center 
to a new underlying platform, and to make technical and clarifying 
changes. Report Center provides members with various reports containing 
information concerning the member's own historical quoting and trading 
activity on Nasdaq and the FINRA/Nasdaq Trade Reporting Facility, which 
is located in Carteret, NJ (``TRF Carteret''). The Exchange will begin 
operating a second trade reporting facility, FINRA/Nasdaq TRF Chicago 
(``TRF Chicago''), in September of 2018.\3\ The purpose of this 
proposed rule change is to inform members of the transition to the new 
underlying platform, to clarify the contents of certain reports in 
light of the new TRF Chicago, and to make clarifying changes concerning 
how the fee is assessed.
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    \3\ See Securities Exchange Act Release No. 83559 (June 29, 
2018), 83 FR 31589 (July 6, 2018) (SR-FINRA-2018-013).
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    The Exchange is beginning a process of replacing the underlying 
platform of Report Center with a new platform, Report HQ. Report HQ 
will be more robust and user friendly, and thus an improvement over the 
existing Report Center platform. Nasdaq is not proposing to change the 
fees assessed for the reports under Rule 7021 or assess an additional 
fee for access to the Rule 7021 reports on Report HQ. Nasdaq is 
beginning the transition with reports that may include TRF data, which 
are certain Historical Research Reports under Rule 7021(b) and the 
Market Recap report under Rule 7021(d). These reports will be available 
on both platforms concurrent with the launch of the TRF Chicago, which 
is currently scheduled for September 2018. In light of the timing of 
the TRF Chicago and the transition to the Report HQ,\4\ Nasdaq will not 
be adding TRF Chicago data to the Historical Research Reports and 
Market Recap reports available on Report Center, but will make TRF 
Chicago data in those reports available through the Report HQ platform. 
The remaining reports available under Rule 7021 do not include TRF data 
and consequently will be identical on each platform as they are 
transferred over the course of the transition.\5\
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    \4\ In this regard, Nasdaq notes that it is beginning the 
transition to Report HQ with the only reports that include TRF data. 
Thus the Exchange is avoiding the time and expense of programming 
new reports for the Report Center platform, which will become 
defunct upon completion of the transition.
    \5\ The Exchange will provide prior notice via Equity Trader 
Alerts of the availability of the reports under Rule 7021 on Report 
HQ.
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    Any member may have access to the Report HQ platform upon request. 
Specifically, an existing Report Center subscriber must submit a Report 
HQ Request Form available at https://www.nasdaqtrader.com/EASP/TraderEASP.aspx?id=ReportHQSignUp. Nasdaq will then verify the account 
and send the member a registration link.\6\ Upon completion of the 
registration process, the member will be able to access both platforms 
to access reports, and will not be charged any additional fees for 
these reports. If a member does not have an existing Report Center 
subscription and requests Report HQ access to the Rule 7021 reports 
using the process described immediately above, Nasdaq will create a 
login to the Report Center platform in addition to a Report HQ login 
for the member, and the member will be charged the current monthly $250 
per entitled user, per MPID \7\ fee under Rule 7021. This registration 
process ensures that customers are able to access the whole breadth of 
reports available and covered by Rule 7021. Any new subscriber to 
Report Center will receive both a Report Center and Report HQ login. 
Last, during the process of transitioning reports from Report Center to 
Report HQ, subscribers will be able to access up to a total of 100 
reports under (b)-(f) of the rule on each platform. This will 
effectively double the number of reports available for a subscription 
for the duration of the transition. All members may access the Rule 
7021 reports on Report HQ upon completion of the Report HQ registration 
process noted above.
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    \6\ See https://business.nasdaq.com/media/NasdaqReportHQ_tcm5044-43704.pdf.
    \7\ The Exchange is proposing to clarify under Rule 7021 that 
the fee is assessed per entitled user, per MPID, because under the 
Nasdaq Report Center each entitled user is entitled to reports for a 
single MPID.
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    The Exchange is also proposing to remove Monthly Summaries from 
Rule 7021, and hold Rule 7021(a) in reserve. No member has accessed 
Monthly Summaries in over a year and Nasdaq does not currently provide 
the report in Report Center. The Exchange believes that the report is 
no longer useful to members and consequently is proposing to eliminate 
the report from Rule 7021.
    Last, the Exchange is proposing to make two clarifying changes to 
Rule 7021. First, as noted above, accessing reports under (b)-(f) do 
count toward the cap under Rule 7021. In this regard, when the Exchange 
added several reports to the Rule in 2014,\8\ it noted that the 
following reports count toward the report cap: Nasdaq Order Execution 
and Routing; Market Recap; QView Historical Reports; and Real-Time 
Registered Market Maker Report. These reports are found under 
paragraphs (c)-(f) of the Rule. In the 2014 filing, the Exchange also 
added text that made it clear that the newly-added reports under (g)-
(k) do not count toward the report cap.\9\ The Exchange is proposing to 
make it clear that the reports under (b)-(f) are counted toward the 
monthly cap. Second, the Exchange is making it clear that the monthly 
fee under Rule 7021 is assessed per entitled user, per MPID. Currently 
under Rule 7021, a member is billed by each entitled user, i.e., a user 
ID, which is tied to a single MPID of the member. The 100 report limit 
is tied to a user ID. In practice, a member may have multiple user IDs 
so that they may access reports concerning multiple MPIDs. Report HQ 
has simplified access to reports by not requiring multiple user IDs, 
but rather allows a single user ID per person, who then may be given 
access to reports for multiple MPIDs (each for the $250 monthly fee). 
Thus, Report HQ will simplify access to the reports under Rule 7021, 
but will not alter the fee or what reports are provided in return for 
the fee. During the transition, a Report Center subscription will 
provide the user with access to the reports for the same MPID for 
Report HQ, as described above.
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    \8\ See Securities Exchange Act Release No. 73815 (December 11, 
2014), 79 FR 75223 (December 17, 2014) (SR-NASDAQ-2014-121).
    \9\ Id.
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b)

[[Page 48494]]

of the Act,\10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\11\ in particular, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to and perfect the mechanism of a free and open market and a national 
market system, and, in general to protect investors and the public 
interest, by allowing the Exchange to upgrade its systems, which will 
benefit members that use Report Center to access the reports found 
under Rule 7021. As noted above, Report HQ will be more robust and user 
friendly, and thus an improvement over the existing Report Center 
platform. The Exchange notes that all members may access the reports 
available through Report HQ without additional cost in addition to the 
existing fees. Nasdaq is not proposing to change the fees assessed for 
the reports under Rule 7021 or assess an additional fee for access to 
the Rule 7021 reports on Report HQ. The proposed rule change will not 
change the content of any of the reports under Rule 7021, other than 
the addition of TRF Chicago data and the deletion of an unused report 
that is not currently offered, as discussed above. Moreover, the 
Exchange is proposing to allow members to access 100 reports under Rule 
7021(b)-(f) on either system. To access these reports, member need only 
complete the registration process, which is provided in a non-
discriminatory manner. As noted above, if a member does not have an 
existing Report Center subscription and requests Report HQ access to 
the Rule 7021 reports using the process described above, Nasdaq will 
create a login to the Report Center platform in addition to a Report HQ 
login for the member, and the member will be charged the current 
monthly $250 per entitled user fee. Thus, all members receiving the 
same reports under Rule 7021 will be assessed the same fee. The 
Exchange notes that providing members with a cap of 100 reports under 
Rule 7021(b)-(f) on each system will allow firms to more easily 
transition between the systems. The Exchange believes that the proposed 
clarifying changes protect investors and the public interest by 
removing ambiguities from the rule, which may cause market participant 
confusion over how the fee is assessed and what is included in the 100 
report monthly limit. Last, the Exchange believes that removal of the 
Monthly Summaries report from Rule 7021 further perfects the Exchange's 
rule book and is consistent with the protection of investors because 
the Exchange is eliminating an unused report from its rule. As noted 
above, no member has accessed Monthly Summaries in over a year and 
Nasdaq does not currently provide the report in Report Center. Keeping 
the Monthly Summaries text under Rule 7021 would lead to investor 
confusion over what reports are available under the rule. Accordingly, 
the Exchange believes that it is consistent with the purposes of the 
Act to delete the text.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes the proposed rule change is consistent with 
Section 6(b)(4) of the Act \12\ in that it provides for the equitable 
allocation of reasonable dues, fees and other charges among members and 
issuers and other persons using any facility or system which the 
Exchange operates or controls, and it does not unfairly discriminate 
between customers, issuers, brokers or dealers. The Exchange is 
proposing a transition process that will not affect the fee assessed 
for the reports under Rule 7021. In this regard, the Exchange notes 
that all members receiving the reports under Rule 7021 will be assessed 
the same fee. Accordingly, the Exchange believes that the proposed 
change is an equitable allocation of a reasonable fee and does not 
unfairly discriminate.
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    \12\ 15 U.S.C. 78f(b)(4).
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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, but it is rather pro-
competitive. The proposal is reflective of the Exchange's efforts to 
upgrade its systems to improve the experience of its members. The 
Exchange is not increasing fees nor limiting the information available 
to members through a subscription under Rule 7021 other than the 
elimination of an unused report. Moreover, the proposed rule change 
will ensure that all members receiving the same reports under Rule 7021 
will be assessed the same fee regardless of the platform used to access 
the report. To the extent that the upgraded platform improves the 
experience of members, it may make the Exchange a more attractive 
venue, which will help to retain existing members and potentially 
attract new members. Consequently, other trading venues may be 
compelled to improve their services in response.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \15\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \16\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay so 
that the proposed rule change may become operative upon filing. Waiver 
of the operative delay would allow the Exchange to provide members with 
access to TRF Chicago data through Report HQ and make related changes 
to Rule 7021 concurrent with the launch of TRF Chicago in September 
2018. The Commission believes that waiver of the 30-day operative delay 
is consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposed rule change operative upon filing.\17\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 17 CFR 240.19b-4(f)(6)(iii).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the

[[Page 48495]]

public interest, for the protection of investors, or otherwise in 
furtherance of the purposes of the Act. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule change should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2018-073 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-2018-073. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2018-073, and should be submitted 
on or before October 16, 2018.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
Brent J. Fields,
Secretary.
[FR Doc. 2018-20761 Filed 9-24-18; 8:45 am]
 BILLING CODE 8011-01-P