[Federal Register Volume 84, Number 68 (Tuesday, April 9, 2019)]
[Notices]
[Pages 14183-14188]
[FR Doc No: 2019-06931]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85504; File No. SR-NASDAQ-2019-024]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Equity 7 Pricing Schedule, Section 139

April 3, 2019.
    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 March 28, 2019, 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.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend the Equity 7 Pricing Schedule,
Section 139, to introduce, for no additional fee, an enterprise license
for the distribution of Nasdaq Last Sale (``NLS'') data for personal
use. The Exchange expects the proposed license to lower the cost of
distributing last sale data and expand its availability to the general
investing public by: (i) Eliminating certain counting requirements for
NLS usage, and (ii) expanding the available mechanisms for the delivery
of NLS data. The proposed enterprise license will not increase any fee
because it will replace the current maximum fee of $41,500 for
distribution of NLS data with a monthly enterprise license for the same
amount.
    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 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 introduce, for no
additional fee, an enterprise license for the distribution of NLS data
for personal use. The Exchange expects the proposed license to lower
the cost of distributing last sale data and expand its availability to
the general investing public by: (i) Eliminating certain counting
requirements for NLS usage, and (ii) expanding the available mechanisms
for the delivery of NLS data. The proposed enterprise license will not
increase any fee because it will replace the current maximum fee of
$41,500 for distribution of NLS data with a monthly enterprise license
for the same amount.\3\
---------------------------------------------------------------------------

    \3\ The Exchange initially filed the proposed rule change on
March 14, 2019 (SR-NASDAQ-2019-018). On March 28, 2019, the Exchange
withdrew that filing and submitted this filing.
---------------------------------------------------------------------------

Nasdaq Last Sale
    NLS provides real-time last sale information for executions
occurring within the Nasdaq Market Center and trades reported to the
jointly-operated FINRA/Nasdaq Trade Reporting Facility (``TRF'').\4\
The NLS data feed, which provides price, volume and time of execution
data for last sale transactions, includes transaction information for
Nasdaq-listed stocks (``NLS for Nasdaq'') and for stocks listed on
NYSE, NYSE American, and other Tape B listing venues (``NLS for NYSE/
NYSE American'').\5\ NLS is a ``non-core'' product that provides a
subset of the ``core'' last sale data provided by securities
information processors (``SIPs'') under the CTA Plan and the Nasdaq UTP
Plan.\6\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 57965 (June 16,
2008), 73 FR 35178 (June 20, 2008) (SR-NASDAQ-2006-060) (proposing
NLS); see also Securities Exchange Act Release No. 57965 (June 16,
2008), 73 FR 35178 (June 20, 2008) (SR-NASDAQ-2006-060) (approving
SR-NASDAQ-2006-060, as amended by Amendment Nos. 1 and 2, to
implement NLS on a pilot basis).
    \5\ See Securities Exchange Act Release No. 57965 (June 16,
2008), 73 FR 35178 (June 20, 2008) (SR-NASDAQ-2006-060).
    \6\ See Securities Exchange Act Release No. 34-82723 (February
15, 2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010).
---------------------------------------------------------------------------

    NLS was designed to enable market-data distributors ``to provide
free access to [ ] data to millions of individual investors via the
internet and television'' and was expected to ``increase[ ] the
availability of N[asdaq] proprietary market data to individual
investors.'' \7\ As Nasdaq explained when proposing to change NLS from
a pilot to a permanent program, ``the program has vastly increased the
availability of N[asdaq] proprietary market data to individual
investors. Based upon data from NLS Distributors, N[asdaq] believes
that since its launch in July 2008, the NLS data has been viewed by
millions of investors on websites operated by Google, Interactive Data,
and Dow Jones, among others.'' \8\
---------------------------------------------------------------------------

    \7\ See SR-NASDAQ-2006-060 (Amendment No. 2, June 10, 2008), at
3, available at http://nasdaq.cchwallstreet.com/NASDAQ/pdf/nasdaq-filings/2006/SR-NASDAQ-2006-060_Amendment_2.pdf.
    \8\ See Securities Exchange Act Release No. 71351 (January 17,
2014), 79 FR 4200 (January 24, 2014) (SR-NASDAQ-2014-006).
---------------------------------------------------------------------------

    NLS is offered through two fee schedules: One for the general
investing public, and another for specialized usage.\9\ Distribution to
the general investing public is available under three stair-stepped
\10\ fee models: Per User,\11\ Per Query,\12\ and Per Device.\13\
---------------------------------------------------------------------------

    \9\ See Equity 7, Section 139(b) (General Investing Public) and
139(c) (Specialized Usage).
    \10\ Pricing is ``stair-stepped'' in that the tiered fees are
effective for the incremental Users in the new tier. See Securities
Exchange Act Release No. 57965 (June 16, 2008), 73 FR 35178 (June
20, 2008) (SR-NASDAQ-2006-060).
    \11\ See Equity 7, Section 139(b)(1).
    \12\ See Equity 7, Section 139(b)(2).
    \13\ See Equity 7, Section 139(b)(3).
---------------------------------------------------------------------------

    The Per User model measures usage through a username/password
entitlement system. To adopt the Per User model, a Distributor \14\
must distribute NLS solely to Users \15\ for Display Usage; \16\ all
such Users must be either Non-Professionals \17\ or Professionals \18\
whom the Distributor has no reason to believe are using NLS in their
professional capacity, and the Distributor must restrict and track
access to NLS using a username/password logon or comparable method of
regulating access approved by Nasdaq. While many of the Recipients \19\
of data under such a model would be Non-Professionals, the model does
not require a Distributor to limit distribution to Non-Professionals.
Occasional, incidental use by a

Professional in connection with professional activities would not
affect the Distributor's eligibility for the Per User fee, as long as
the Distributor, in establishing the connection to the Professional
User, did not have reason to believe that professional usage would
occur.\20\
---------------------------------------------------------------------------

    \14\ A ``Distributor'' is ``an entity, as identified in the
Nasdaq Global Data Agreement (or any successor agreement), that
executes such an Agreement and has access to Exchange Information,
together with its affiliates having such access.'' See Equity 7,
Section 139(f)(3).
    \15\ A ``User'' is ``a natural person who has access to Exchange
Information.'' See Equity 7, Section 139(f)(10).
    \16\ ``Display Usage'' refers to ``any method of accessing
Exchange Information that involves the display of such data on a
screen or other mechanism designed for access or use by a natural
person or persons.'' See Equity 7, Section 139(f)(2).
    \17\ ``Non-Professional'' means ``a natural person who is not:
(A) registered or qualified in any capacity with the Securities and
Exchange Commission, the Commodity Futures Trading Commission, any
state securities agency, any securities exchange or association, or
any commodities or futures contract market or association; (B)
engaged as an `investment adviser' as that term is defined in
Section 202(a)(11) of the Investment Advisers Act of 1940 (whether
or not registered or qualified under that Act); or (C) employed by a
bank or other organization exempt from registration under federal or
state securities laws to perform functions that would require
registration or qualification if such functions were performed for
an organization not so exempt.'' See Equity 7, Section 139(f)(6).
    \18\ ``Professional'' means ``any natural person,
proprietorship, corporation, partnership, or other entity whatever
other than a Non-Professional.'' See Equity 7, Section 139(f)(7).
    \19\ ``Recipient'' means ``any natural person, proprietorship,
corporation, partnership, or other entity whatever that has access
to Exchange Information.'' See Equity 7, Section 139(f)(8).
    \20\ See Securities Exchange Act Release No. 34-82723 (February
15, 2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010)
(discussing application of the Per User model).
---------------------------------------------------------------------------

    The Per Query model determines usage based on the number of queries
received. This model is available for Distributors that disseminate NLS
solely to Users for Display Usage and track queries using a method
approved by Nasdaq. In contrast to a Per User model, which makes all
data available in a streaming or a montage format, the Per Query model
supplies only as much data as the User requests on an ad hoc basis.
Because a Per Query model is likely to be of less use to Professionals
acting in a professional capacity, the model does not place limitations
on the persons to whom it is offered (as long as they are natural
persons viewing the data through Display Usage). The model also does
not require the Distributor to limit access through any sort of
entitlement system. As such, Per Query data may be made available
through a publicly accessible website.
    The Per Device model tracks usage according to the number of
Devices \21\ that access NLS. The Per Device model is available to
Distributors that distribute NLS for Display Usage in a manner that
does not restrict access and which track the number of unique Devices
that access NLS during each month using a tracking method approved by
Nasdaq.
---------------------------------------------------------------------------

    \21\ ``Device'' has the same meaning as ``Subscriber,'' which is
``a device, computer terminal, automated service, or unique user
identification and password combination that is not shared and
prohibits simultaneous access, and which is capable of accessing
Exchange Information; `Interrogation Device,' `Device' or `Access'
have the same meaning as Subscriber. For any device, computer
terminal, automated service, or unique user identification and
password combination that is shared or allows simultaneous access,
Subscriber shall mean the number of such simultaneous accesses.''
See Equity 7, Section 139(f)(9).
---------------------------------------------------------------------------

    The current fee schedule sets a maximum fee for any Distributor
using the Per User, Per Query, or Per Device models (or any combination
thereof) of $41,500 per month.\22\
---------------------------------------------------------------------------

    \22\ A Distributor that wishes to distribute Nasdaq Last Sale
via television must pay the maximum fee and may then distribute
Nasdaq Last Sale either solely via television or in combination with
unlimited use of the Per User, Per Query, and/or Per Device model.
See Equity 7, Section 139(b)(4).
---------------------------------------------------------------------------

    A Distributor that is not able to use any of the distribution
models for the general investing public but nevertheless wishes to
distribute NLS will be required to pay fees applicable to a model for
``specialized usage.'' \23\
---------------------------------------------------------------------------

    \23\ See Equity 7, Section 139(c).
---------------------------------------------------------------------------

Proposed Enterprise License
    The Exchange proposes to replace the current maximum fee of $41,500
per month for a Distributor using the Per User, Per Query, or Per
Device models for distribution to the General Investing Public with a
monthly enterprise license for the same amount for any customer that
would otherwise be eligible for the such fees, excluding any
requirement to count or track usage. The proposal will not change any
fee because any Distributor currently paying the maximum fee of $41,500
would continue to pay the same fee for the same data, albeit using an
enterprise license that is easier to administer and allows for more
methods of distribution.\24\ To be eligible for the enterprise license,
NLS must be distributed on platform(s) controlled by the Distributor
\25\ and pre-approved by the Exchange as providing the Distributor with
a reasonable basis to conclude that all Users of such Information are
either Non-Professionals or Professionals whom the Distributor has no
reason to believe are using NLS in their professional capacity.
---------------------------------------------------------------------------

    \24\ Distributors that do not elect to purchase the enterprise
license, but inadvertently exceed $41,500 in Per User, Per Query or
Per Device fees, may purchase the enterprise license for the
month(s) in which fees exceeded $41,500 without pre-approval.
    \25\ Any Distributor able to meet the criteria set forth under
the Per User, Per Query or Per Device models will be able to
demonstrate control over the platform because the applicable
tracking requirements and other limitations necessarily require such
control.
---------------------------------------------------------------------------

    The Exchange expects the proposal to lower administrative costs for
Distributors of NLS to the general investing public by replacing the
counting of users, queries or devices with a ``systems'' approach in
which the Distributor would set forth--and Nasdaq would review and
approve--a system of distribution that provides the Distributor and the
Exchange with a reasonable basis to conclude that all Users of such
Information \26\ are either Non-Professionals or Professionals whom the
Distributor has no reason to believe are using NLS in their
professional capacity. Distributors would not be required to track
access to NLS using a username/password logon for the Per User model,
queries as required by the Per Query model, or the number of unique
Devices that access NLS as required by the Per Device model.
---------------------------------------------------------------------------

    \26\ ``Information'' is defined as ``any data or information
that has been collected, validated, processed and/or recorded by the
Exchange and made available for transmission relating to: (i)
eligible securities or other financial instruments, markets,
products, vehicles, indicators or devices; (ii) activities of the
Exchange; or (iii) other information or data from the Exchange.
Information includes, but is not limited to, any element of
information used or processed in such a way that Exchange
Information or a substitute for such Information can be identified,
recalculated or re-engineered from the processed information.'' See
Equity 7, Section 139(f)(5).
---------------------------------------------------------------------------

    The Exchange would evaluate each system using the same approach
used today to evaluate distribution through the Per User model, which
currently requires that Distributors disseminate data to Users who are
``either Non-Professionals or Professionals whom the Distributor has no
reason to believe are using Nasdaq Last Sale in their professional
capacity.'' \27\ A Distributor has ``no reason to believe'' that NLS is
being used in a professional capacity when, for example, the data is
made available to the general investing public in a format that would
be ``unlikely to be of significant use to Professionals acting in a
professional capacity,'' as in the Per Query model,\28\ or when the
Information is ``made freely available to internet users,'' as in the
Per Device model.\29\ Any Distributor currently eligible to disseminate
NLS under the Per User, Per Query, or Per Device models will be able to
demonstrate that it is disseminating Information to Non-Professionals
or Professionals whom the Distributor has no reason to believe are
using Nasdaq Last Sale in their professional capacity because that test
is already inherent (or explicit) within the eligibility criteria for
each model.\30\
---------------------------------------------------------------------------

    \27\ See Section 139(b)(1).
    \28\ See Securities Exchange Act Release No. 34-82723 (February
15, 2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010).
    \29\ See Securities Exchange Act Release No. 34-82723 (February
15, 2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010).
    \30\ The ``no reason to believe'' test is explicitly part of the
criteria for the Per User model. See Section 139(b)(1). It is
inherent in the Per Query model because, as noted above and in the
filing instituting that fee, this model ``is unlikely to be of
significant use to Professionals acting in a professional capacity .
. .'' See Securities Exchange Act Release No. 34-82723 (February 15,
2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010). It is
also inherent in the Per Device model because that model is designed
to make information ``freely available to internet users,'' and
therefore is unlikely to be of significant use to Professionals
acting in a professional capacity. See Id.
---------------------------------------------------------------------------

    The proposed license will allow Distributors to disseminate NLS
data to the general investing public in a manner that is not readily
tracked using the Per User, Per Query, or Per Device models. An example
of the type of distribution model intended to benefit from the proposed
license is a spreadsheet program that allows the User to refresh

a stock price using an in-program command without copying data. Such
usage is analogous to the Per Query model, which supplies only as much
data as the User requests on an ad hoc basis, but is less susceptible
to counting because the request is done using a command embedded within
another program.
    Since the launch of NLS in July 2008, the Exchange has strived to
make last sale data available to individual investors using the latest
available technology, such as television and the internet. The proposed
enterprise license continues in that tradition, making NLS data
available to the general investing public using mechanisms in which the
traditional methods of counting usage--Per Query, Per User and Per
Device--are unavailable or impractical, while at the same time lowering
administrative costs for distributors by eliminating the need to count
users, queries and devices.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\31\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\32\ 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.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78f(b).
    \32\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The fees established under Equity 7, Section 139, reflect Nasdaq's
expectation, in creating NLS, that it would be used by market data
Distributors to allow widespread dissemination of last sale information
to individual investors by various means, including websites and
television. The statutory basis for Nasdaq's current fees for NLS has
already been described in prior filings,\33\ and Nasdaq is not
modifying these long-established fees except to add an enterprise
license, for no additional fee, that would lower the cost of
distributing last sale data and expand its availability to the general
investing public by: (i) Eliminating certain counting requirements for
distributors and (ii) expanding the available mechanisms for the
delivery of last sale data to the public. The proposed change is an
equitable allocation of reasonable dues, fees and other charges because
it expands the availability of last sale data while also lowering the
cost of distribution for an already established fee. The proposed
enterprise license is furthermore consistent with an equitable
allocation of reasonable dues, fees and other charges because it
alleviates the administrative costs and burdens associated with
tracking usage of the product by allowing the Distributor to purchase a
license without counting actual usage. The change is reasonable and not
unfairly discriminatory because it will allow for the distribution of
NLS data to all Distributors and Users that currently have access to
such data using a wider variety of delivery formats such as, for
example, distributing NLS data through a spreadsheet program that
includes a command for in-program updates of NLS data.
---------------------------------------------------------------------------

    \33\ See, e.g., Securities Exchange Act Release No. 34-82723
(February 15, 2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-
010).
---------------------------------------------------------------------------

    The Act does not prohibit all distinctions among customers, but
rather discrimination that is unfair. As the Commission has recognized,
``[i]f competitive forces are operative, the self-interest of the
exchanges themselves will work powerfully to constrain unreasonable or
unfair behavior.'' \34\ Accordingly, ``the existence of significant
competition provides a substantial basis for finding that the terms of
an exchange's fee proposal are equitable, fair, reasonable, and not
unreasonably or unfairly discriminatory.'' \35\
---------------------------------------------------------------------------

    \34\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
    \35\ Id.
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers increased authority and
flexibility to offer new and unique market data to the public. It was
believed that this authority would expand the amount of data available
to consumers, and also spur innovation and competition for the
provision of market data. The Commission concluded that Regulation
NMS--by deregulating the market in proprietary data--would itself
further the Act's goals of facilitating efficiency and competition:

[E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to
receive (and pay for) such data. The Commission also believes that
efficiency is promoted when broker-dealers may choose to receive
(and pay for) additional market data based on their own internal
analysis of the need for such data.\36\
---------------------------------------------------------------------------

    \36\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005) (``Regulation NMS Adopting
Release'').

    The Commission was speaking to the question of whether broker-
dealers should be subject to a regulatory requirement to purchase data,
such as depth-of-book data, that is in excess of the data provided
through the consolidated tape feeds, and the Commission concluded that
the choice should be left to them. Accordingly, Regulation NMS removed
unnecessary regulatory restrictions on the ability of exchanges to sell
their own data, thereby advancing the goals of the Act and the
principles reflected in its legislative history. If the free market
should determine whether proprietary data is sold to broker-dealers at
all, it follows that the price at which such data is sold should be set
by the market as well.
    Products such as NLS provide additional choices to broker-dealers
and other data consumers, in that they provide less than the quantum of
data provided through the consolidated tape feeds but at a lower price.
Thus, they provide broker-dealers and others with an option to use a
lesser amount of data in circumstances where SEC Rule 603(c) does not
require a broker-dealer to provide a consolidated display.\37\ They are
all, however, voluntary products for which market participants can
readily substitute the consolidated data feeds. Accordingly, Nasdaq is
constrained from pricing the product in a manner that would be
inequitable or unfairly discriminatory. Moreover, the fees for these
products, like all proprietary data fees, are constrained by the
Exchange's need to compete for order flow.\38\
---------------------------------------------------------------------------

    \37\ 17 CFR 242.603(c).
    \38\ See NetCoalition v. SEC, 615 F.3d 525, 539 (DC Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)). (``No 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'. . . .).
---------------------------------------------------------------------------

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 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, or rebate
opportunities

available at other venues to be more favorable. 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.
    In this instance, the proposed change lowers the administrative
costs for Distributors disseminating NLS data to the general investing
public while expanding the types of delivery mechanisms available for
such data. The proposal will advance competition by promoting
widespread distribution of data to investors without increasing any
current fee.
    The market for data products is extremely competitive and firms may
freely choose alternative venues and data vendors based on the
aggregate fees assessed, the data offered, and the value provided. This
rule proposal does not burden competition, since other SROs and data
vendors continue to offer alternative data products and, like the
Exchange, set fees, but rather reflects the competition between data
feed vendors and will further enhance such competition.
    NLS is part of the existing market for proprietary last sale data
products that is currently competitive and inherently contestable
because there is fierce competition for the inputs necessary to the
creation of proprietary data and strict pricing discipline for the
proprietary products themselves. Numerous exchanges compete with each
other for listings, trades, and market data itself, providing virtually
limitless opportunities for entrepreneurs who wish to produce and
distribute their own market data. This proprietary data is produced by
each individual exchange, as well as other entities, in a vigorously
competitive market.
    Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, market data and trade execution are a
paradigmatic example of joint products with joint costs. The decision
whether and on which platform to post an order will depend on the
attributes of the platform where the order can be posted, including the
execution fees, data quality and price, and distribution of its data
products. Without trade executions, exchange data products cannot
exist. Moreover, data products are valuable to many end users only
insofar as they provide information that end users expect will assist
them or their customers in making trading decisions. The costs of
producing market data include not only the costs of the data
distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. The total return that a
trading platform earns reflects the revenues it receives from both
products and the joint costs it incurs.
    Moreover, the operation of the exchange is characterized by high
fixed costs and low marginal costs. This cost structure is common in
content and content distribution industries such as software, where
developing new software typically requires a large initial investment
(and continuing large investments to upgrade the software), but once
the software is developed, the incremental cost of providing that
software to an additional user is typically small, or even zero (e.g.,
if the software can be downloaded over the internet after being
purchased).\39\
---------------------------------------------------------------------------

    \39\ See William J. Baumol and Daniel G. Swanson, ``The New
Economy and Ubiquitous Competitive Price Discrimination: Identifying
Defensible Criteria of Market Power,'' Antitrust Law Journal, Vol.
70, No. 3 (2003).
---------------------------------------------------------------------------

    In Nasdaq's case, it is costly to build and maintain a trading
platform, but the incremental cost of trading each additional share on
an existing platform, or distributing an additional instance of data,
is very low. Market information and executions are each produced
jointly (in the sense that the activities of trading and placing orders
are the source of the information that is distributed) and are each
subject to significant scale economies. In such cases, marginal cost
pricing is not feasible because, if all sales were priced at the
margin, Nasdaq would be unable to defray its platform costs of
providing joint products. Similarly, data products cannot make use of
TRF trade reports without the raw material of the trade reports
themselves, and therefore necessitate the costs of operating,
regulating, and maintaining a trade reporting system--costs that must
be covered through the fees charged for use of the facility and sales
of associated data. As such, Nasdaq's overall fee structure is designed
to ensure a fair and reasonable use of Exchange resources by allowing
the Exchange to recoup costs while continuing to offer its data
products at competitive rates to firms.
    An exchange's broker-dealer customers view the costs of transaction
executions and of data as a unified cost of doing business with the
exchange. A broker-dealer will disfavor a particular exchange if the
expected revenues from executing trades on the exchange do not exceed
net transaction execution costs and the cost of data that the broker-
dealer chooses to buy to support its trading decisions (or those of its
customers). The choice of data products is, in turn, a product of the
value of the products in making profitable trading decisions. If the
cost of the product exceeds its expected value, the broker-dealer will
choose not to buy it.
    As a broker-dealer chooses to direct fewer orders to a particular
exchange, the value of the product to that broker-dealer decreases, for
two reasons. First, the product will contain less information, because
executions of the broker-dealer's trading activity will not be
reflected in it. Second, and perhaps more important, the product will
be less valuable to that broker-dealer because it does not provide
information about the venue to which it is directing its orders. Data
from the competing venue to which the broker-dealer is directing more
orders will become correspondingly more valuable.
    Products such as NLS can enhance order flow to Nasdaq by providing
more widespread distribution of information about transactions in real
time, thereby encouraging wider participation in the market by
investors with access to the internet or television. Conversely, the
value of such products to Distributors and investors decreases if order
flow falls, because the products contain less content.
    Similarly, in the case of products such as NLS that may be
distributed through market data vendors, the vendors provide price
discipline for proprietary data products because they control the
primary means of access to end users. Vendors impose price restraints
based upon their business models. For example, vendors that assess a
surcharge on data they sell may refuse to offer proprietary products
that end users will not purchase in sufficient numbers. Internet
portals impose a discipline by providing only data that will enable
them to attract ``eyeballs'' that contribute to their advertising
revenue.\40\ Retail broker-dealers offer their retail customers
proprietary data only if it promotes trading and generates

sufficient commission revenue. Although the business models may differ,
these vendors' pricing discipline is the same: they can simply refuse
to purchase any proprietary data product that fails to provide
sufficient value. Exchanges, TRFs, and other producers of proprietary
data products must understand and respond to these varying business
models and pricing disciplines in order to market proprietary data
products successfully.
---------------------------------------------------------------------------

    \40\ Indeed, the proposed enterprise license itself provides
evidence of such competition as it was designed, in part, to lower
vendor costs.
---------------------------------------------------------------------------

    Competition among trading platforms can be expected to constrain
the aggregate return each platform earns from the sale of its joint
products, but different platforms may choose from a range of possible,
and equally reasonable, pricing strategies as the means of recovering
total costs. Nasdaq pays rebates to attract orders, charges relatively
low prices for market information and charges relatively high prices
for accessing posted liquidity. Other platforms may choose a strategy
of paying lower liquidity rebates to attract orders, setting relatively
low prices for accessing posted liquidity, and setting relatively high
prices for market information. Still others may provide most data free
of charge and rely exclusively on transaction fees to recover their
costs. Finally, some platforms may incentivize use by providing
opportunities for equity ownership, which may allow them to charge
lower direct fees for executions and data.
    In this environment, there is no economic basis for regulating
maximum prices for one of the joint products in an industry in which
suppliers face competitive constraints with regard to the joint
offering. Such regulation is unnecessary because an ``excessive'' price
for one of the joint products will ultimately have to be reflected in
lower prices for other products sold by the firm, or otherwise the firm
will experience a loss in the volume of its sales that will be adverse
to its overall profitability. In other words, an increase in the price
of data will ultimately have to be accompanied by a decrease in the
cost of executions, or the volume of both data and executions will
fall.\41\
---------------------------------------------------------------------------

    \41\ Moreover, the level of competition and contestability in
the market is evident in the numerous alternative venues that
compete for order flow, including SRO markets, internalizing broker-
dealers and various forms of alternative trading systems (``ATSs''),
including dark pools and electronic communication networks
(``ECNs''). Each SRO market competes to produce transaction reports
via trade executions, and two FINRA-regulated TRFs compete to
attract internalized transaction reports. It is common for broker-
dealers to further and exploit this competition by sending their
order flow and transaction reports to multiple markets, rather than
providing them all to a single market. Competitive markets for order
flow, executions, and transaction reports provide pricing discipline
for the inputs of proprietary data products. The large number of
SROs, TRFs, broker-dealers, and ATSs that currently produce
proprietary data or are currently capable of producing it provides
further pricing discipline for proprietary data products. Each SRO,
TRF, ATS, and broker-dealer is currently permitted to produce
proprietary data products, and many currently do or have announced
plans to do so, including Nasdaq, NYSE, NYSE American, NYSE Arca,
IEX, and CBOE.
---------------------------------------------------------------------------

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.\42\
---------------------------------------------------------------------------

    \42\ 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 [email protected]. Please include
File Number SR-NASDAQ-2019-024 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-2019-024. 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-2019-024 and should be submitted
on or before April 30, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
---------------------------------------------------------------------------

    \43\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-06931 Filed 4-8-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 87, Number 28 (Thursday, February 10, 2022)]
[Rules and Regulations]
[Pages 7715-7716]
[FR Doc No: 2022-02750]

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

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2021-0956; Airspace Docket No. 21-ANM-41]
RIN 2120-AA66

Modification of Class E Airspace; Gold Beach Municipal Airport,
OR

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: This action modifies the Class E airspace extending upward
from 700 feet above the surface of the earth, and removes the Class E
airspace extending upward from 1,200 feet above the surface of the
earth at Gold Beach Municipal Airport, Gold Beach, OR. This action
would ensure the safety and management of instrument flight rules (IFR)
operations at the airport.

DATES: Effective 0901 UTC, May 19, 2022. The Director of the Federal
Register approves this incorporation by reference action under 1 CFR
part 51, subject to the annual revision of FAA Order JO 7400.11 and
publication of conforming amendments.

ADDRESSES: FAA Order JO 7400.11F, Airspace Designations and Reporting
Points, and subsequent amendments can be viewed online at https://www.faa.gov/air_traffic/publications/. For further information, you can
contact the Airspace Policy Group, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-
8783. FAA Order JO 7400.11F is also available for inspection at the
National Archives and Records Administration (NARA). For information on
the availability of FAA Order JO 7400.11F at NARA, email
[email protected] or go to https://www.archives.gov/federal-register/cfr/ibr-locations.html.

FOR FURTHER INFORMATION CONTACT: Nathan A. Chaffman, Federal Aviation
Administration, Western Service Center, Operations Support Group, 2200
S 216th Street, Des Moines, WA 98198; telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority. This rulemaking is promulgated under the authority described
in Subtitle VII, Part A, Subpart I, Section 40103. Under that section,
the FAA is charged with prescribing regulations to assign the use of
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority,
as it would amend Class E airspace extending upward from 700 feet above
ground level, and remove the Class E airspace extending upward from
1,200 feet above ground level to support IFR operations at Gold Beach
Municipal Airport, Gold Beach, OR.

History

    The FAA published a notice of proposed rulemaking (NPRM) in the
Federal Register (86 FR 64835; November 19, 2021) for Docket No. FAA-
2021-0956 to modify Class E airspace at Gold Beach Municipal Airport,
Gold Beach, OR. Interested parties were invited to participate in this
rulemaking effort by submitting written comments on the proposal to the
FAA. No comments were received.
    Subsequent to publication of the NPRM, the FAA was notified that it
had inadvertently left out the proposed removal of the Class E airspace
extending upward from 1,200 feet above the surface of the earth from
the Class E airspace legal description. The FAA is removing this
airspace area from the Class E legal description because the area is
contained within the Rogue Valley Class E6 domestic en route airspace
area, and duplication is not necessary. Also subsequent to publication
of the NPRM, the FAA became aware that it had inadvertently left out
the phrase ``[Amended]'' from line one of the proposed legal
description. The FAA is amending the Class E airspace for Gold Beach
Municipal Airport, and the final rule includes this phrase in line one
of the legal description. Lastly, and subsequent to the publication of
the NPRM, the FAA is amending the body of the Class E airspace legal
description for Gold Beach Municipal Airport. The description was
updated to more easily and accurately describe the amended airspace at
the airport, while keeping the design of the airspace the same.
    Class E5 and Class E6 airspace designations are published in
paragraphs 6005 and 6006, respectively, of FAA Order JO 7400.11F, dated
August 10, 2021, and effective September 15, 2021, which is
incorporated by reference in 14 CFR 71.1. The Class E airspace
designations listed in this document will be published subsequently in
FAA Order JO 7400.11.

Availability and Summary of Documents for Incorporation by Reference

    This document amends FAA Order JO 7400.11F, Airspace Designations
and Reporting Points, dated August 10, 2021, and effective September
15, 2021. FAA Order JO 7400.11F is publicly available as listed in the
ADDRESSES section of this document. FAA Order JO 7400.11F lists Class
A, B, C, D, and E airspace areas, air traffic service routes, and
reporting points.

The Rule

    The FAA is amending 14 CFR part 71 by modifying Class E airspace
extending upward from 700 feet above the surface of the earth at Gold
Beach Municipal Airport, Gold Beach, OR.
    This airspace is designed to contain departing IFR aircraft until
reaching 1,200 feet above the surface and arriving IFR aircraft
descending below 1,500 feet above the surface. To properly contain IFR
operations at the airport, the radius of the airspace is increased from
6.3 miles to 7.2 miles and the extension northwest of the airport is
removed. Additionally, terminal IFR operations east of the airport are
not authorized, due to terrain. Because of this limitation, a portion
of the Class E airspace east of the airport is removed. Finally, Class
E airspace extending upward from 1,200 feet above the surface of the
earth within a 15-mile radius of the airport is removed, as the area is
contained within the Rogue Valley Class E6 domestic en route airspace
area, and duplication is not necessary.
    FAA Order JO 7400.11, Airspace Designations and Reporting Points,
is published yearly and effective on September 15.

Regulatory Notices and Analyses

    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current, is
non-controversial, and unlikely to result in adverse or negative
comments. It, therefore: (1) Is not a ``significant regulatory action''
under Executive Order 12866; (2) is not a ``significant rule'' under
DOT Regulatory Policies and Procedures (44 FR 11034; February 26,
1979); and (3) does not warrant preparation of a regulatory evaluation
as the anticipated impact is so minimal. Since this is a routine matter
that will only affect air traffic procedures and air navigation, it

is certified that this rule, when promulgated, would not have a
significant economic impact on a substantial number of small entities
under the criteria of the Regulatory Flexibility Act.

Environmental Review

    The FAA has determined that this action qualifies for categorical
exclusion under the National Environmental Policy Act in accordance
with FAA Order 1050.1F, ``Environmental Impacts: Policies and
Procedures,'' paragraph 5-6.5a. This airspace action is not expected to
cause any potentially significant environmental impacts, and no
extraordinary circumstances exist that warrant the preparation of an
environmental assessment.

List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

Adoption of the Amendment

    In consideration of the foregoing, the Federal Aviation
Administration amends 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for 14 CFR part 71 continues to read as
follows:

    Authority:  49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O.
10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1   [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of FAA Order JO
7400.11F, Airspace Designations and Reporting Points, dated August 10,
2021, and effective September 15, 2021, is amended as follows:

Paragraph 6005 Class E Airspace Areas Extending Upward From 700
Feet or More Above the Surface of the Earth.

* * * * *

ANM OR E5 Gold Beach, OR [Amended]

Gold Beach Municipal Airport, OR
    (Lat. 42[deg]24'55'' N, long. 124[deg]25'30'' W)

    That airspace extending upward from 700 feet above the surface
within an area beginning at a point on the 160[deg] bearing, 7.2
miles from the airport, then clockwise to a point on the 010[deg]
bearing, 7.2 miles from the airport, thence to the point of
beginning southeast of the airport.

    Issued in Des Moines, Washington, on February 4, 2022.
B.G. Chew,
Acting Group Manager, Operations Support Group, Western Service Center.
[FR Doc. 2022-02750 Filed 2-9-22; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register: November 7, 2008 (Volume 73, Number 217)]
[Notices]
[Page 66288-66289]
[DOCID:fr07no08-107]

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

DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

Petition for Waiver of Compliance

    In accordance with Part 211 of Title 49 Code of Federal Regulations
(CFR), notice is hereby given that the Federal Railroad Administration
(FRA) received a request for a waiver of compliance with certain
requirements of its safety standards. The individual petition is
described below, including the party seeking relief, the regulatory
provisions involved, the nature of the relief being requested, and the
petitioner's arguments in favor of relief.

New Jersey Transit Rail

[Docket Number FRA-2008-0109]

    New Jersey Transit Rail (NJTR) seeks a waiver of compliance with
certain requirements of 49 CFR 238.307(c)(7) Passenger Equipment Safety
Standards, as they pertain to inspection and gauging the coupler and
draft gear arraignment during the required periodic mechanical
inspection of passenger cars and unpowered vehicles used in passenger
trains. The periodic mechanical inspection is required to be performed
at 184-day intervals at which time the railroad would be required to
uncouple the car to inspect and gauge the couplers. NJTR's request is
to perform this inspection during an annual inspection and perform a
visual inspection to the extent possible at 180 days.
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested party
desires an opportunity for oral comment, they should notify FRA, in
writing, before the end of the comment period and specify the basis for
their request.
    All communications concerning these proceedings should identify the
appropriate docket number (e.g., Waiver Petition Docket Number FRA-
2008-0109) and may be submitted by any of the following methods:
     Web site: http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue, SE., W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Avenue, SE., Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.
    Communications received within 45 days of the date of this notice
will be considered by FRA before final action is taken. Comments
received after that date will be considered as far as practicable. All
written communications concerning these proceedings are available for
examination during regular business hours (9 a.m.-5 p.m.) at the above
facility. All documents in the public docket are also available for
inspection and copying on the Internet at the docket facility's Web
site at http://www.regulations.gov.
    Anyone is able to search the electronic form of any written
communications and comments received into any of our dockets by the
name of the individual submitting the comment (or signing the comment,
if submitted on behalf of an association, business, labor union, etc.).
You may review DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (Volume 65, Number 70; Pages
19477-78).

    Issued in Washington, DC on November 3, 2008.
Grady C. Cothen, Jr.,
Deputy Associate Administrator for Safety Standards and Program
Development.
[FR Doc. E8-26664 Filed 11-6-08; 8:45 am]

BILLING CODE 4910-06-P