[Federal Register Volume 84, Number 95 (Thursday, May 16, 2019)]
[Notices]
[Pages 22214-22221]
[FR Doc No: 2019-10116]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85837; File No. SR-PEARL-2019-17]

Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing
and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX
PEARL Fee Schedule

May 10, 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 April 30, 2019, MIAX PEARL, LLC (``MIAX PEARL'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
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 Substance
of the Proposed Rule Change

    The Exchange is filing a proposal to amend the MIAX PEARL Fee
Schedule (the ``Fee Schedule'') to modify certain of the Exchange's
system connectivity fees.
    The Exchange initially filed the proposal on March 1, 2019 (SR-
PEARL-2019-08). That filing has been withdrawn and replaced with the
current filing (SR-PEARL-2019-17).
    The text of the proposed rule change is available on the Exchange's
website at http://www.miaxoptions.com/rule-filings/pearl at MIAX
PEARL's principal office, 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 proposes to amend the Fee Schedule regarding
connectivity to the Exchange. Specifically, the Exchange proposes to
amend Sections 5a) and b) of the Fee Schedule to increase the network
connectivity fees for the 1 Gigabit (``Gb'') fiber connection, the 10Gb
fiber connection, and the 10Gb ultra-low latency (``ULL'') fiber
connection, which are charged to both Members \3\ and non-Members of
the Exchange for connectivity to the Exchange's primary/secondary
facility. The Exchange also proposes to increase the network
connectivity fees for the 1Gb and 10Gb fiber connections for
connectivity to the Exchange's disaster recovery facility. Each of
these connections are shared connections, and thus can be utilized to
access both the Exchange and the Exchange's affiliate, Miami
International Securities Exchange, LLC (``MIAX''). These proposed fee
increases are collectively referred to herein as the ``Proposed Fee
Increases.''
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    \3\ The term ``Member'' means an individual or organization that
is registered with the Exchange pursuant to Chapter II of the
Exchange's Rules for purposes of trading on the Exchange as an
``Electronic Exchange Member'' or ``Market Maker.'' Members are
deemed ``members'' under the Exchange Act. See Exchange Rule 100.
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    The Exchange initially filed the Proposed Fee Increases on July 31,
2018, designating the Proposed Fee Increases effective August 1,
2018.\4\ The First Proposed Rule Change was published for comment in
the Federal Register on August 13, 2018.\5\ The Commission received one
comment letter on the proposal.\6\ The Proposed Fee Increases remained
in effect until they were temporarily suspended pursuant to a
suspension order (the ``Suspension Order'') issued by the Commission on
September 17, 2018.\7\ The Suspension Order also instituted proceedings
to determine whether to approve or disapprove the proposed rule
change.\8\
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    \4\ See Securities Exchange Act Release No. 83785 (August 7,
2018), 83 FR 40101 (August 13, 2018) (SR-PEARL-2018-16). (The
``First Proposed Rule Change'').
    \5\ Id.
    \6\ See Letter from Tyler Gellasch, Executive Director, The
Healthy Markets Association, to Brent J. Fields, Secretary,
Commission, dated September 4, 2018 (``Healthy Markets Letter'').
    \7\ See Securities Exchange Act Release No. 34-84177 (September
17, 2018).
    \8\ Id.
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    The Healthy Markets Letter argued that the Exchange did not provide
sufficient information in its filing to support a finding that the
proposal is consistent with the Act. Specifically, the Healthy Markets
Letter objected to the Exchange's reliance on the fees of other
exchanges to demonstrate that its fee increases are consistent with the
Act. In addition, the Healthy Markets Letter argued that the Exchange
did not offer any details to support its basis for asserting that the
Proposed Fee Increases are consistent with the Act.
    On October 5, 2018, the Exchange withdrew the First Proposed Rule
Change.\9\ The Exchange refiled the Proposed Fee Increases on September
18, 2018, designating the Proposed Fee Increases immediately
effective.\10\ The Second Proposed Rule Change was published for
comment in the Federal Register on October 10, 2018.\11\ The Commission
received one comment letter on the proposal.\12\ The Proposed Fee
Increases remained in effect until they were temporarily suspended
pursuant to a suspension order (the ``Second Suspension Order'') issued
by the Commission on October 3, 2018.\13\ The Second Suspension Order
also instituted proceedings to determine whether to approve or
disapprove the Second Proposed Rule Change.\14\
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    \9\ See Securities Exchange Act Release No. 84397 (October 10,
2018), 83 FR 52272 (October 16, 2018) (SR-PEARL-2018-16).
    \10\ See Securities Exchange Act Release No. 84358 (October 3,
2018), 83 FR 51022 (October 10, 2018) (SR-PEARL-2018-19). (The
``Second Proposed Rule Change'').
    \11\ Id.
    \12\ See Letter from Theodore R. Lazo, Managing Director and
Associate General Counsel, and Ellen Greene, Managing Director
Financial Services Operations, The Securities Industry and Financial
Markets Association (``SIFMA''), to Brent J. Fields, Secretary,
Commission, dated October 15, 2018 (``SIFMA Letter'').
    \13\ See supra note 10.
    \14\ Id.
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    The SIFMA Letter argued that the Exchange did not provide
sufficient information in its filing to support a finding that the
proposal should be approved by the Commission after further review of
the proposed fee increases. Specifically, the SIFMA Letter objected to
the Exchange's reliance on the fees of other exchanges to justify its
own fee increases. In addition, the SIFMA Letter argued that the
Exchange did not offer any details to support its basis for asserting
that the Proposed Fee Increases are reasonable. On November 23, 2018,
the Exchange withdrew the Second Proposed Rule Change.\15\
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    \15\ See Securities Exchange Act Release No. 84651 (November 26,
2018), 83 FR 61687 (November 30, 2018) (SR-PEARL-2018-19).
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    The Exchange refiled the Proposed Fee Increases on March 1, 2019,
designating the Proposed Fee Increases immediately effective.\16\ The
Third Proposed Rule Change was published for comment in the Federal
Register on March 20, 2019.\17\ The Third Proposed Rule Change provided
new information, including additional detail about the market
participants impacted by the Proposed Fee Increases, as well as the
additional costs incurred by the Exchange associated with providing the
connectivity alternatives, in order to provide more transparency and
support relating to the Exchange's belief that the Proposed Fee
Increases are reasonable, equitable, and non-discriminatory, and to
provide sufficient information for the Commission to determine that the
Proposed Fee Increases are consistent with the Act.
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    \16\ See Securities Exchange Act Release No. 85318 (March 14,
2019), 84 FR 10363 (March 20, 2019) (SR-MIAX-2019-10) (the ``Third
Proposed Rule Change'') (Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule).
    \17\ Id.
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    On March 29, 2019, the Commission issued its Order Disapproving
Proposed Rule Changes to Amend the Fee Schedule on the BOX Market LLC
Options Facility to Establish BOX Connectivity Fees for Participants
and Non-Participants Who Connect to the BOX Network (the ``BOX
Order'').\18\ In the BOX Order, the Commission highlighted a number of
deficiencies it found in three separate rule filings by BOX Exchange
LLC (``BOX'') to increase BOX's connectivity fees that prevented the
Commission from finding that BOX's proposed connectivity fees were
consistent with the Act. These deficiencies relate to topics that the
Commission believes should be discussed in a connectivity fee filing.
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    \18\ See Securities Exchange Act Release No. 85459 (March 29,
2019), 84 FR 13363 (April 4, 2019) (SR-BOX-2018-24, SR-BOX-2018-37,
and SR-BOX-2019-04).
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    After the BOX Order was issued, the Commission received four
comment letters on the Third Proposed Rule Change.\19\
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    \19\ See Letter from Joseph W. Ferraro III, SVP & Deputy General
Counsel, MIAX, to Vanessa Countryman, Acting Secretary, Commission,
dated April 5, 2019 (``MIAX Letter''); Letter from Theodore R. Lazo,
Managing Director and Associate General Counsel, SIFMA, to Vanessa
Countryman, Acting Secretary, Commission, dated April 10, 2019
(``Second SIFMA Letter''); Letter from John Ramsay, Chief Market
Policy Officer, Investors Exchange LLC, to Vanessa Countryman,
Acting Secretary, Commission, dated April 10, 2019 (``IEX Letter'');
and Letter from Tyler Gellasch, Executive Director, Healthy Markets,
to Brent J. Fields, Secretary, Commission, dated April 18, 2019
(``Second Healthy Markets Letter'').
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    The Second SIFMA Letter argued that the Exchange did not provide
sufficient information in its Third Proposed Rule Change to support a
finding that the

proposal should be approved by the Commission after further review of
the proposed fee increases. Specifically, the Second SIFMA Letter
argued that the Exchange's market data fees and connectivity fees were
not constrained by competitive forces, the Exchange's filing lacked
sufficient information regarding cost and competition, and that the
Commission should establish a framework for determining whether fees
for exchange products and services are reasonable when those products
and services are not constrained by significant competitive forces.
    The IEX Letter argued that the Exchange did not provide sufficient
information in its Third Proposed Rule Change to support a finding that
the proposal should be approved by the Commission and that the
Commission should extend the time for public comment on the Third
Proposed Rule Change. Despite the objection to the Proposed Fee
Increases, the IEX Letter did find that ``MIAX has provided more
transparency and analysis in these filings than other exchanges have
sought to do for their own fee increases.'' \20\ The IEX Letter
specifically argued that the Proposed Fee Increases were not
constrained by competition, the Exchange should provide data on the
Exchange's actual costs and how those costs relate to the product or
service in question, and whether and how MIAX considered changes to
transaction fees as an alternative to offsetting exchange costs.
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    \20\ See IEX Letter, pg. 1.
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    The Second Healthy Markets Letter did not object to the Third
Proposed Rule Change and the information provided by the Exchange in
support of the Proposed Fee Increases. Specifically, the Second Healthy
Markets Letter stated that the Third Proposed Rule Change was
``remarkably different,'' and went on to further state as follows:

    The instant MIAX filings--along with their April 5th
supplement--provide much greater detail regarding users of
connectivity, the market for connectivity, and costs than the
Initial MIAX Filings. They also appear to address many of the issues
raised by the Commission staff's BOX disapproval order. This third
round of MIAX filings suggests that MIAX is operating in good faith
to provide what the Commission and staff seek.\21\ On April 29,
2019, the Exchange withdrew the Third Proposed Rule Change.\22\
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    \21\ See Second Healthy Markets Letter, pg. 2.
    \22\ See SR-PEARL-2019-08).

    The Exchange is now re-filing the Proposed Fee Increases to
squarely and comprehensively address each and every topic raised for
discussion in the BOX Order, the IEX Letter and the Second SIFMA Letter
to ensure that the Proposed Fee Increases are reasonable, equitable,
and non-discriminatory, and that the Commission should find that the
Proposed Fee Increases are consistent with the Act. The proposed rule
change is immediately effective upon filing with the Commission
pursuant to Section 19(b)(3)(A) of the Act.
    The Exchange currently offers various bandwidth alternatives for
connectivity to the Exchange to its primary and secondary facilities,
consisting of a 1Gb fiber connection, a 10Gb fiber connection, and a
10Gb ULL fiber connection. The 10Gb ULL offering uses an ultra-low
latency switch, which provides faster processing of messages sent to it
in comparison to the switch used for the other types of connectivity.
The Exchange currently assesses the following monthly network
connectivity fees to both Members and non-Members for connectivity to
the Exchange's primary/secondary facility: (a) $1,100 for the 1Gb
connection; (b) $5,500 for the 10Gb connection; and (c) $8,500 for the
10Gb ULL connection. The Exchange also assesses to both Members and
non-Members a monthly per connection network connectivity fee of $500
for each 1Gb connection to the disaster recovery facility and a monthly
per connection network connectivity fee of $2,500 for each 10Gb
connection to the disaster recovery facility.
    The Exchange's MIAX Express Network Interconnect (``MENI'') can be
configured to provide Members and non-Members of the Exchange network
connectivity to the trading platforms, market data systems, test
systems, and disaster recovery facilities of both the Exchange and its
affiliate, MIAX, via a single, shared connection. Members and non-
Members utilizing the MENI to connect to the trading platforms, market
data systems, test systems and disaster recovery facilities of the
Exchange and MIAX via a single, shared connection are assessed only one
monthly network connectivity fee per connection, regardless of the
trading platforms, market data systems, test systems, and disaster
recovery facilities accessed via such connection.
    The Exchange proposes to increase the monthly network connectivity
fees for such connections for both Members and non-Members. The network
connectivity fees for connectivity to the Exchange's primary/secondary
facility will be increased as follows: (a) From $1,100 to $1,400 for
the 1Gb connection; (b) from $5,500 to $6,100 for the 10Gb connection;
and (c) from $8,500 to $9,300 for the 10Gb ULL connection. The network
connectivity fees for connectivity to the Exchange's disaster recovery
facility will be increased as follows: (a) From $500 to $550 for the
1Gb connection; and (b) from $2,500 to $2,750 for the 10Gb connection.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Fee Schedule
is consistent with Section 6(b) of the Act \23\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \24\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among Exchange Members and
issuers and other persons using any facility or system which the
Exchange operates or controls. The Exchange also believes the proposal
furthers the objectives of Section 6(b)(5) of the Act \25\ 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 and is not designed to permit unfair
discrimination between customer, issuers, brokers and dealers.
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    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(4).
    \25\ 15 U.S.C. 78f(b)(5).
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    First, the Exchange believes that its proposal is consistent with
Section 6(b)(4) of the Act, in that the Proposed Fee Changes are fair,
equitable and not unreasonably discriminatory, because the fees for the
connectivity alternatives available on the Exchange, as proposed to be
increased, are competitive and market-driven. The U.S. options markets
are highly competitive (there are currently 16 options markets) and a
reliance on competitive markets is an appropriate means to ensure
equitable and reasonable prices.
    The Exchange acknowledges that there is no regulatory requirement
that any market participant connect to the Exchange, or that any
participant connect at any specific connection speed. The rule
structure for options exchanges are, in fact, fundamentally different
from those of equities exchanges. In particular, options market
participants are not forced to connect to (and purchase market data
from) all options exchanges, as shown by the number of Members of MIAX
PEARL as compared to the much greater number of members at other
options exchanges (as further detailed below). Not only does MIAX PEARL
have less than half the number of members as certain other options
exchanges, but there are also a number of the Exchange's Members that
do not connect directly to MIAX

PEARL. Further, of the number of Members that connect directly to MIAX
PEARL, many such Members do not purchase market data from MIAX PEARL.
There are a number of large market makers and broker-dealers that are
members of other options exchange but not Members of MIAX PEARL. For
example, the following are not Members of MIAX PEARL: The D.E. Shaw
Group, CTC, XR Trading LLC, Hardcastle Trading AG, Ronin Capital LLC,
Belvedere Trading, LLC, Bluefin Trading, and HAP Capital LLC. In
addition, of the market makers that are connected to MIAX PEARL, it is
the individual needs of the market maker that require whether they need
one connection or multiple connections to the Exchange. The Exchange
has market maker Members that only purchase one connection (10Gb or
10Gb ULL) and the Exchange has market maker Members that purchase
multiple connections. It is all driven by the business needs of the
market maker. Market makers that are consolidators that target resting
order flow tend to purchase more connectivity that market makers that
simply quote all symbols on the Exchange. Even though non-Members
purchase and resell 10Gb and 10Gb ULL connections to both Members and
non-Members, no market makers currently connect to the Exchange
indirectly through such resellers.
    SIFMA's argument that all broker-dealers are required to connect to
all exchanges is not true in the options markets. The options markets
have evolved differently than the equities markets both in terms of
market structure and functionality. For example, there are many order
types that are available in the equities markets that are not utilized
in the options markets, which relate to mid-point pricing and pegged
pricing which require connection to the SIPs and each of the equities
exchanges in order to properly execute those orders in compliance with
best execution obligations. In addition, in the options markets there
is a single SIP (OPRA) versus two SIPs in the equities markets,
resulting in few hops and thus alleviating the need to connect directly
to all the options exchanges. Additionally, in the options markets, the
linkage routing and trade through protection are handled by the
exchanges, not by the individual members. Thus not connecting to an
options exchange or disconnecting from an options exchange does not
potentially subject a broker-dealer to violate order protection
requirements as suggested by SIFMA. Gone are the days when the retail
brokerage firms (the Fidelity's, the Schwab's, the eTrade's) were
members of the options exchanges--they are not members of MIAX PEARL or
its affiliates, MIAX and MIAX Emerald, they do not purchase
connectivity to MIAX PEARL, and they do not purchase market data from
MIAX PEARL. The Exchange further recognizes that the decision of
whether to connect to the Exchange is separate and distinct from the
decision of whether and how to trade on the Exchange. The Exchange
acknowledges that many firms may choose to connect to the Exchange, but
ultimately not trade on it, based on their particular business needs.
    To assist prospective Members or firms considering connecting to
MIAX PEARL, the Exchange provides information about the Exchange's
available connectivity alternatives.\26\ The decision of which type of
connectivity to purchase, or whether to purchase connectivity at all
for a particular exchange, is based on the business needs of the firm.
For example, if the firm wants to receive the top-of-market data feed
product or depth data feed product, due to the amount/size of data
contained in those feeds, such firm would need to purchase either the
10Gb or 10Gb ULL connection. The 1Gb connection is too small to support
those data feed products. MIAX PEARL notes that there are twelve (12)
Members that only purchase the 1Gb connectivity alternative. Thus,
while there is a meaningful percentage of purchasers of only 1Gb
connections (12 of 33), by definition, those twelve (12) members
purchase connectivity that cannot support the top-of-market data feed
product or depth data feed product and thus they do not purchase such
data feed products. Accordingly, purchasing market data is a business
decision/choice, and thus the pricing for it is constrained by
competition.
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    \26\ See the MIAX Connectivity Guide at https://www.miaxoptions.com/sites/default/files/page-files/MIAX_Connectivity_Guide_v3.6_01142019.pdf.
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    Contrary to SIFMA's argument, there is competition for connectivity
to MIAX PEARL and its affiliates. MIAX PEARL competes with nine (9)
non-Members who resell MIAX PEARL connectivity. Those non-Members
resell that connectivity to multiple market participants over that same
connection, including both Members and non-Members of MIAX PEARL
(typically extranets and service bureaus). When connectivity is re-sold
by a third-party, MIAX PEARL does not receive any connectivity revenue
from that sale. It is entirely between the third-party and the
purchaser, thus constraining the ability of MIAX PEARL to set its
connectivity pricing as indirect connectivity is a substitute for
direct connectivity. There are currently nine (9) non-Members that
purchase connectivity to MIAX PEARL and/or MIAX. Those non-Members
resell that connectivity to eleven (11) customers, some of whom are
agency broker-dealers that have tens of customers of their own. Some of
those eleven (11) customers also purchase connectivity directly from
MIAX PEARL and/or MIAX. Accordingly, indirect connectivity is a viable
alternative that is already being used by non-Members of MIAX PEARL,
constraining the price that MIAX PEARL is able to charge for
connectivity to its Exchange.
    The Exchange \27\ and MIAX \28\ are comprised of 41 distinct
Members between the two exchanges, excluding any additional affiliates
of such Members that are also Members of MIAX PEARL, MIAX, or both. Of
those 41 distinct Members, 33 Members have purchased the 1Gb, 10Gb,
10Gb ULL connections or some combination of multiple various
connections. Furthermore, every Member who has purchased at least one
connection also trades on the Exchange, MIAX, or both, with the
exception of one new Member who is currently in the on-boarding
process. The 8 remaining Members who have not purchased any
connectivity to the Exchange are still able to trade on the Exchange
indirectly through other Members or non-Member service bureaus that are
connected. These 8 Members who have not purchased connectivity are not
forced or compelled to purchase connectivity, and they retain all of
the other benefits of Membership with the Exchange. Accordingly,
Members have the choice to purchase connectivity and are not compelled
to do so in any way.
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    \27\ MIAX PEARL has 36 distinct Members, excluding affiliated
entities. See MIAX PEARL Exchange Member Directory, available at
https://www.miaxoptions.com/exchange-members/pearl.
    \28\ MIAX has 38 distinct Members, excluding affiliated
entities. See MIAXExchange [sic] Member Directory, available at
https://www.miaxoptions.com/exchange-members.
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    The Exchange believes that the Proposed Fee Changes are fair,
equitable and not unreasonably discriminatory because the connectivity
pricing is associated with relative usage of the various market
participants and does not impose a barrier to entry to smaller
participants. Accordingly, the Exchange offers three direct
connectivity alternatives and various indirect connectivity (via third-
party) alternatives, as described above. MIAX

PEARL recognizes that there are various business models and varying
sizes of market participants conducting business on the Exchange. The
1Gb direct connectivity alternative is 1/10th the size of the 10Gb
direct connectivity alternative. Approximately just less than half of
MIAX PEARL and MIAX Members that connect (14 out of 33) purchase 1Gb
connections. The 1Gb direct connection can support the sending of
orders and the consumption of all market data feed products, other than
the top-of-market data feed product or depth data feed product (which
require a 10Gb connection). The 1Gb direct connection is generally
purchased by market participants that utilize less bandwidth. The
market participants that purchase 10Gb ULL direct connections utilize
the most bandwidth, and those are the participants that consume the
most resources from the network. Accordingly, the Exchange believes the
allocation of the Proposed Fee Increases ($9,300 for a 10Gb ULL
connection versus $1,400 for a 1Gb connection) are reasonable based on
the network resources consumed by the market participants--lowest
bandwidth consuming members pay the least, and highest bandwidth
consuming members pays the most, particularly since higher bandwidth
consumption translates to higher costs to the Exchange. The 10Gb ULL
connection offers optimized connectivity for latency sensitive
participants and is approximately single digit microseconds faster in
round trip time for connection oriented traffic to the Exchange than
the 10Gb connection. This lower latency is achieved through more
advanced network equipment, such as advanced hardware and switching
components, which translates to increased costs to the Exchange. Market
participants that are less latency sensitive can purchase 10Gb direct
connections and quote in all products on the Exchange and consume all
market data feeds, and such 10Gb direct connections are priced lower
than the 10Gb ULL direct connections, offering smaller sized market
makers a lower cost alternative.
    With respect to options trading, the Exchange had only 4.82% market
share of the U.S. options industry in Equity/ETF classes according to
the OCC in 2018.\29\ For all of 2018, the Exchange's affiliate, MIAX
had only 4.39% market share of the U.S. options industry in Equity/ETF
classes according to the OCC.\30\ The Exchange is aware of no evidence
that a combined market share of less than 10% provides the Exchange
with anti-competitive pricing power. This, in addition to the fact that
not all broker-dealers are required to connect to all options
exchanges, supports the Exchange's conclusion that its pricing is
constrained by competition.
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    \29\ See Exchange Market Share of Equity Products--2018, The
Options Clearing Corporation, available at https://www.theocc.com/webapps/exchange-volume.
    \30\ Id.
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    Separately, the Exchange is not aware of any reason why market
participants could not simply drop their connections and cease being
Members of the Exchange if the Exchange were to establish unreasonable
and uncompetitive price increases for its connectivity alternatives.
Market participants choose to connect to a particular exchange and
because it is a choice, MIAX PEARL must set reasonable connectivity
pricing, otherwise prospective members would not connect and existing
members would disconnect or connect through a third-party reseller of
connectivity. No options market participant is required by rule,
regulation, or competitive forces to be a Member of the Exchange.
Several market participants choose not to be Members of the Exchange
and choose not to access the Exchange, and several market participants
also access the Exchange indirectly through another market participant.
To illustrate, the Exchange has only 41 Members (including all such
Members' affiliate Members). However, Cboe Exchange, Inc. (``Cboe'')
has over 200 members,\31\ Nasdaq ISE, LLC has approximately 100
members,\32\ and NYSE American LLC has over 80 members.\33\ If all
market participants were required to be Members of the Exchange and
connect directly to the Exchange, the Exchange would have over 200
Members, in line with Cboe's total membership. But it does not. The
Exchange only has 41 Members (inclusive of Members' affiliates).
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    \31\ See Form 1/A, filed August 30, 2018 (https://www.sec.gov/Archives/edgar/vprr/1800/18002831.pdf); Form 1/A, filed August 30,
2018 (https://www.sec.gov/Archives/edgar/vprr/1800/18002833.pdf);
Form 1/A, filed July 24, 2018 (https://www.sec.gov/Archives/edgar/vprr/1800/18002781.pdf); Form 1/A, filed August 30, 2018 (https://www.sec.gov/Archives/edgar/data/1473845/999999999718007832/9999999997-18-007832-index.htm).
    \32\ See Form 1/A, filed July 1, 2016 (https://www.sec.gov/Archives/edgar/vprr/1601/16019243.pdf).
    \33\ See https://www.nyse.com/markets/american-options/membership#directory.
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    The Exchange finds it compelling that all of the Exchange's
existing Members continued to purchase the Exchange's connectivity
services during the period for which the Proposed Fee Increases took
effect in August 2018. In particular, the Exchange believes that the
Proposed Fee Increases are reasonable because the Exchange did not lose
any Members (or the number of connections each Member purchased) or
non-Member connections due to the Exchange increasing its connectivity
fees through the First Proposed Rule Change, which fee increase became
effective August 1, 2018. For example, in July 2018, fourteen (14)
Members purchased 1Gb connections, ten (10) Members purchased 10Gb
connections, and fifteen (15) Members purchased 10Gb ULL connections.
(The Exchange notes that 1Gb connections are purchased primarily by EEM
Members; 10Gb ULL connections are purchased primarily by higher volume
Market Makers quoting all products across both MIAX PEARL and MIAX; and
10Gb connections are purchased by higher volume EEMs and lower volume
Market Makers.) The vast majority of those Members purchased multiple
such connections with the actual number of connections depending on the
Member's throughput requirements based on the volume of their quote/
order traffic and market data needs associated with their business
model. After the fee increase, beginning August 1, 2018, the same
number of Members purchased the same number of connections.\34\
Furthermore, the total number of connections did not decrease from July
to August 2018, and in fact one Member even purchased two (2)
additional 10Gb ULL connections in August 2018, after the fee increase.
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    \34\ The Exchange notes that one Member downgraded one
connection in July of 2018, however such downgrade was done well
ahead of notice of the Proposed Fee Increase and was the result of a
change to the Member's business operation that was completely
independent of, and unrelated to, the Proposed Fee Increases.
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    Also, in July 2018, four (4) non-Members purchased 1Gb connections,
two (2) non-Members purchased 10Gb connections, and one (1) non-Member
purchased 10Gb ULL connections. After the fee increase, beginning
August 1, 2018, the same non-Members purchased the same number of
connections across all available alternatives and two (2) additional
non-Members purchased three (3) more connections after the fee
increase. These non-Members freely purchased their connectivity with
the Exchange in order to offer trading services to other firms and
customers, as well as access to the market data services that their
connections to the Exchange provide them, but they are not required or
compelled to purchase any of the Exchange's connectivity options. MIAX
PEARL did not experience any noticeable change (increase or decrease)

in order flow sent by its market participants as a result of the fee
increase.
    Of those Members and non-Members that bought multiple connections,
no firm dropped any connections beginning August 1, 2018, when the
Exchange increased its fees. Nor did the Exchange lose any Members.
Furthermore, the Exchange did not receive any comment letters or
official complaints from any Member or non-Member purchaser of
connectivity regarding the increased fees regarding how the fee
increase was unreasonable, unduly burdensome, or would negatively
impact their competitiveness amongst other market participants. These
facts, coupled with the discussion above, showing that it is not
necessary to join and/or connect to all options exchanges, demonstrate
that the Exchange's fees are constrained by competition and are
reasonable and not contrary to the Law of Demand as SIFMA suggests.
Therefore, the Exchange believes that the Proposed Fee Increases are
fair, equitable, and non-discriminatory, as the fees are competitive.
    The Exchange believes that the Proposed Fee Increases are equitably
allocated among Members and non-Members, as evidenced by the fact that
the fee increases are allocated across all connectivity alternatives,
and there is not a disproportionate number of Members purchasing any
alternative--fourteen (14) Members purchased 1Gb connections, ten (10)
Members purchased 10Gb connections, fifteen (15) Members purchased 10Gb
ULL connections, four (4) non-Members purchased 1Gb connections, two
(2) non-Members purchased 10Gb connections, and one (1) non-Member
purchased 10Gb ULL connections. The Exchange recognizes that the
relative fee increases are 27% for the 1Gb connection, 10.9% for the
10Gb connection, and 9.4% for the 10Gb ULL connection, but the Exchange
believes that percentage increase differentiation is appropriate, given
the different levels of service provided and the largest percentage
increase being associated with the lowest cost connection. Further, the
Exchange believes that the fees are reasonably allocated as the users
of the higher bandwidth connections consume the most resources of the
Exchange's network. It is these firms that account that also account
for the vast majority of the Exchange's trading volume. The purchasers
of the 10Gb ULL connectivity account for approximately 80% of the
volume on the Exchange. For example, in April of 2019, to date,
approximately 12 million contracts of the approximately 14.5 million
contracts executed were done by the top market making firms of the
Exchange's total volume. The Exchange considered whether to increase
transaction fees and other fees in order to offset its costs as an
alternative to increasing connectivity fees, however, the Exchange
determined that increasing its connectivity fees was the only viable
alternative. This is because the increased costs are more closely
associated with connectivity, as well as the intense level of
competition among the options exchanges for order flow through
transaction fees.
    Second, the Exchange believes that its proposal is consistent with
Section 6(b)(4) of the Act because the Proposed Fee Increases allow the
Exchange to recover a portion (less than all) of the increased costs
incurred by the Exchange associated with providing and maintaining the
necessary hardware and other network infrastructure to support this
technology since Exchange launched operations in February 2017. Put
simply, the costs of the Exchange to provide these services have
increased considerably over this time, as more fully-detailed and
quantified below. The Exchange believes that it is reasonable and
appropriate to increase its fees charged for use of its connectivity to
partially offset the increased costs the Exchange incurred during this
time associated with maintaining and enhancing a state-of-the-art
exchange network infrastructure in the U.S. options industry.
    In particular, the Exchange's increased costs associated with
supporting its network are due to several factors, including increased
costs associated with maintaining and expanding a team of highly-
skilled network engineers (the Exchange also hired additional network
engineering staff in 2017 and 2018), increasing fees charged by the
Exchange's third-party data center operator, and costs associated with
projects and initiatives designed to improve overall network
performance and stability, through the Exchange's research and
development (``R&D'') efforts.
    In order to provide more detail and to quantify the Exchange's
increased costs, the Exchange notes that increased costs are associated
with the infrastructure and increased headcount to fully-support the
advances in infrastructure and expansion of network level services,
including customer monitoring, alerting and reporting. Additional
technology expenses were incurred related to the expanding its
Information Security services, network monitoring and customer
reporting, as well as Regulation SCI mandated processes associated with
network technology. All of these additional expenses have been incurred
by the Exchange since became operational in February 2017.
Additionally, while some of the expense is fixed, much of the expense
is not fixed, and thus increases as the number of connections increase.
For example, new 1Gb, 10Gb, and 10Gb ULL connections require the
purchase of additional hardware to support those connections as well as
enhanced monitoring and reporting of customer performance that MIAX
PEARL and its affiliates provide. And 10Gb ULL connections require the
purchase of specialized, more costly hardware. Further, as the total
number of all connections increase, MIAX PEARL and its affiliates need
to increase their data center footprint and consume more power,
resulting in increased costs charged by their third-party data center
provider. Accordingly, cost to MIAX PEARL and its affiliates is not
entirely fixed. Just the initial fixed cost buildout of the network
infrastructure of MIAX PEARL and its affiliates, including both
primary/secondary sites and disaster recovery, was over $30 million.
The current annual operational expense (which relates 100% to the
network infrastructure, associated data center processing equipment
required to support various connections, network monitoring systems and
associated software required to support the various forms of
connectivity) is approximately $8.5 million. This does not include
additional indirect expenses that the Exchange incurs that are
allocated to the support of network infrastructure of the Exchange.
These costs have increased over 10% since the Exchange became
operational in February 2017. As these operational expenses increase,
MIAX PEARL and its affiliates look to offset those costs through
increased connectivity fees.
    A more detailed breakdown of the operational expense increases
include an approximate 70% increase in technology-related personnel
costs in infrastructure, due to expansion of services/support (increase
of approximately $800,000); an approximate 10% increase in datacenter
costs due to price increases and footprint expansion (increase of
approximately $500,000); an approximate 5% increase in vendor-supplied
dark fiber due to price increases and expanded capabilities (increase
of approximately $25,000); and a 30% increase in market data
connectivity fees (increase of approximately $200,000). Of note,

regarding market data connectivity fee increased cost, this is the cost
associated with MIAX PEARL consuming connectivity/content from the
equities markets in order to operate the Exchange, causing MIAX PEARL
to effectively pay its competitors for this connectivity. The Exchange
also incurred significant capital expenditures over this same period to
upgrade and enhance the underlying technology components, as more
fully-detailed below.
    Further, because the costs of operating a data center are
significant and not economically feasible for the Exchange, the
Exchange does not operate its own data centers, and instead contracts
with a third-party data center provider. The Exchange notes that
larger, dominant exchange operators own/operate their data centers,
which offers them greater control over their data center costs. Because
those exchanges own and operate their data centers as profit centers,
the Exchange is subject to additional costs. As a result, the Exchange
is subject to fee increases from its data center provider, which the
Exchange experienced in 2017 and 2018 of approximately 10%, as cited
above. Connectivity fees, which are charged for accessing the
Exchange's data center network infrastructure, are directly related to
the network and offset such costs.
    Further, the Exchange invests significant resources in network R&D,
which are not included in direct operational expenses to improve the
overall performance and stability of its network. For example, the
Exchange has a number of network monitoring tools (some of which were
developed in-house, and some of which are licensed from third-parties),
that continually monitor, detect, and report network performance, many
of which serve as significant value-adds to the Exchange's Members and
enable the Exchange to provide a high level of customer service. These
tools detect and report performance issues, and thus enable the
Exchange to proactively notify a Member (and the SIPs) when the
Exchange detects a problem with a Member's connectivity. The costs
associated with the maintenance and improvement of existing tools and
the development of new tools resulted in significant increased cost to
the Exchange since February 2017.
    Certain recently developed network aggregation and monitoring tools
provide the Exchange with the ability to measure network traffic with a
much more granular level of variability. This is important as Exchange
Members demand a higher level of network determinism and the ability to
measure variability in terms of single digit nanoseconds. Also, the
Exchange routinely conducts R&D projects to improve the performance of
the network's hardware infrastructure. As an example, in the last year,
the Exchange's R&D efforts resulted in a performance improvement,
requiring the purchase of new equipment to support that improvement,
and thus resulting in increased costs in the hundreds of thousands of
dollars range. In sum, the costs associated with maintaining and
enhancing a state-of-the-art exchange network infrastructure in the
U.S. options industry is a significant expense for the Exchange that
continues to increase, and thus the Exchange believes that it is
reasonable to offset a portion of those increased costs by increasing
its network connectivity fees, as proposed herein. The Exchange invests
in and offers a superior network infrastructure as part of its overall
options exchange services offering, resulting in significant costs
associated with maintaining this network infrastructure, which are
directly tied to the amount of the connectivity fees that must be
charged to access it, in order to recover those costs.
    The Exchange notes that other exchanges have similar connectivity
alternatives for their participants, including similar low-latency
connectivity. For example, Nasdaq PHLX LLC (``Phlx''), NYSE Arca, Inc.
(``Arca''), NYSE American LLC (``NYSE American'') and Nasdaq ISE, LLC
(``ISE'') all offer a 1Gb, 10Gb and 10Gb low latency ethernet
connectivity alternatives to each of their participants.\35\ The
Exchange further notes that Phlx, ISE, Arca and NYSE American each
charge higher rates for such similar connectivity to primary and
secondary facilities.\36\ While MIAX PEARL's proposed connectivity fees
are substantially lower than the fees charged by Phlx, ISE, Arca and
NYSE American, MIAX PEARL believes that it offers significant value to
Members over other exchanges in terms of network monitoring and
reporting, which MIAX PEARL believes is a competitive advantage, and
differentiates its connectivity versus connectivity to other exchanges.
Additionally, the Exchange's proposed connectivity fees to its disaster
recovery facility are within the range of the fees charged by other
exchanges for similar connectivity alternatives.\37\
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    \35\ See Phlx and ISE Rules, General Equity and Options Rules,
General 8, Section 1(b). Phlx and ISE each charge a monthly fee of
$2,500 for each 1Gb connection, $10,000 for each 10Gb connection and
$15,000 for each 10Gb Ultra connection, which the equivalent of the
Exchange's 10Gb ULL connection. See also NYSE American Fee Schedule,
Section V.B, and Arca Fees and Charges, Co-Location Fees. NYSE
American and Arca each charge a monthly fee of $5,000 for each 1Gb
circuit, $14,000 for each 10Gb circuit and $22,000 for each 10Gb LX
circuit, which the equivalent of the Exchange's 10Gb ULL connection.
    \36\ Id.
    \37\ See Nasdaq ISE, Options Rules, Options 7, Pricing Schedule,
Section 11.D. (charging $3,000 for disaster recovery testing &
relocation services); see also Cboe Exchange, Inc. (``Cboe'') Fees
Schedule, p. 14, Cboe Command Connectivity Charges (charging a
monthly fee of $2,000 for a 1Gb disaster recovery network access
port and a monthly fee of $6,000 for a 10Gb disaster recovery
network access port).
---------------------------------------------------------------------------

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

    MIAX PEARL does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In particular, the Exchange has
received no official complaints from Members or others who connect to
it that its fees or the Proposed Fee Increases are negatively impacting
or would negatively impact their abilities to compete with other market
participants. Further, the Exchange is unaware of any assertion that
its existing fee levels or the Proposed Fee Increases would somehow
unduly impair its competition with other options exchanges. To the
contrary, if the fees charged are deemed too high by market
participants, they can simply disconnect.
    While the Exchange recognizes the distinction between connecting to
an exchange and trading at the exchange, the Exchange notes that it
operates in a highly competitive options market in which market
participants can readily connect and trade with venues they desire. In
such an environment, the Exchange must continually adjust its fees to
remain competitive with other exchanges. The Exchange believes that the
proposed changes reflect this competitive environment.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\38\ and Rule

19b-4(f)(2) \39\ thereunder. At any time within 60 days of the filing
of the proposed rule change, the Commission summarily may temporarily
suspend such rule change if it appears to the Commission that such
action is necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the purposes of
the Act. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \39\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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_ADDRESS>Please include
File Number SR-PEARL-2019-17 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-PEARL-2019-17. 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-PEARL-2019-17 and should be submitted on
or before June 6, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\40\
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    \40\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10116 Filed 5-15-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 228 (Wednesday, November 29, 2017)]
[Rules and Regulations]
[Pages 56566-56568]
[FR Doc No: 2017-25749]

=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG-2017-0935]
RIN 1625-AA00

Safety Zone; Delaware River, Marcus Hook, PA

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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SUMMARY: The Coast Guard is establishing a temporary safety zone on the
waters of the Delaware River between Marcus Hook Range and Tinicum
Range. The safety zone will temporarily restrict vessel traffic from
transiting or anchoring in portions of the Delaware River while rock
blasting, dredging, and rock removal operations are being conducted to
facilitate the Main Channel Deepening project for the Delaware River.
The safety zone is needed to protect personnel, vessels, and the marine
environment from hazards created by rock blasting, dredging, and rock
removal operations. Entry of vessels or persons into this zone is
prohibited unless specifically authorized by the COTP or his designated
representatives.

DATES: This rule is effective from November 30, 2017 through March 15,
2018.

ADDRESSES: To view documents mentioned in this preamble as being
available in the docket, go to http://www.regulations.gov, type USCG-
2017-0935 in the ``SEARCH'' box and click ``SEARCH.'' Click on Open
Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT: If you have questions about this
rulemaking, call or email Petty Officer Amanda Boone, Waterways
Management Branch, U.S. Coast Guard Sector Delaware Bay; telephone
(215) 271-4889, email [email protected].

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations

CFR Code of Federal Regulations
COTP Captain of the Port
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
Sec.  Section
U.S.C. United States Code

II. Background Information and Regulatory History

    The Army Corps of Engineers notified the Coast Guard that Great
Lakes Dredging and Dock Company will be conducting rock blasting,
dredging, and rock removal operations, beginning November 30, 2017
through March 15, 2018, to facilitate the deepening of the main
navigational channel to the new project depth of 45 feet. The Captain
of the Port (COTP) has determined that potential hazards associated
with rock blasting, dredging, and rock removal operations will be a
safety concern for anyone within 500 yards of the drill boat APACHE or
dredges TEXAS and NEW YORK. In response, on November 14, 2017, the
Coast Guard published a notice of proposed rulemaking (NPRM) titled
Safety Zone; Delaware River, Marcus Hook, PA (82 FR 52680.) There we
stated why we issued the NPRM, and invited comments on our proposed
regulatory action related to this safety

zone. During the comment period that ended November 21, 2017, we
received one comment.
    Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause
exists for making this rule effective less than 30 days after
publication in the Federal Register. Delaying the effective date of
this rule would be impracticable because immediate action is needed to
respond to the potential safety hazards associated with rock blasting
and dredging operations in the Delaware River.

III. Legal Authority and Need for Rule

    The Coast Guard is issuing this rule under authority in 33 U.S.C.
1231. The COTP has determined that there are potential hazards
associated with the rock blasting and dredging operations. The purpose
of this rulemaking is to ensure the safety of personnel, vessels, and
the marine environment within a 500-yard radius of rock blasting,
dredging, and rock removal operations

IV. Discussion of Comments, Changes, and the Rule

    As noted above, we received one comment on our NPRM published
November 14, 2017. The comment stated that the proposed safety zone
would be helpful to protect personnel while rock blasting is occurring.
The Coast thanks the commenter for their support. There are no changes
in the regulatory text of this rule from the proposed rule in the NPRM,
other than a correction of the beginning of the enforcement date in
paragraph (e). While the preamble of the NPRM correctly stated that
enforcement would begin on November 30, 2017, the draft regulatory text
incorrectly stated that enforcement would begin on December 1, 2017.
    This rule establishes a safety zone from November 30, 2017 through
March 15, 2018. The safety zone covers all navigable waters in the
Delaware River within 500 yards of vessels and machinery being used to
conduct rock blasting, dredging, and rock removal operations between
Marcus Hook Range and Tinicum Range. The safety zone will be enforced
in an area and in a manner that does not conflict with transiting
commercial and recreational traffic, except for the short periods of
time when explosive detonations are being conducted and shortly
thereafter, when the channel is being surveyed to ensure the
navigational channel is clear for vessels to transit. These detonations
will not occur more than three times a day. At all other times, at
least one side of the main navigational channel will be open for
vessels to transit. This rule describes communications for notifying
waterway users of upcoming detonations and provides means for waterway
users to request entry into the safety zone.

V. Regulatory Analyses

    We developed this rule after considering numerous statutes and
Executive orders related to rulemaking. Below we summarize our analyses
based on a number of these statutes and Executive orders, and we
discuss First Amendment rights of protestors.

A. Regulatory Planning and Review

    Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits. Executive Order 13771 directs agencies to control
regulatory costs through a budgeting process. This rule has not been
designated a ``significant regulatory action,'' under Executive Order
12866. Accordingly, this rule has not been reviewed by the Office of
Management and Budget (OMB), and pursuant to OMB guidance it is exempt
from the requirements of Executive Order 13771.
    This regulatory action determination is based on the size,
location, duration, and traffic management of the safety zone. The
Coast Guard does not anticipate a significant economic impact because
the safety zone will be enforced in an area and in a manner that does
not conflict with transiting commercial and recreational traffic,
except for the short periods of time when explosive detonations are
being conducted. The blasting detonations will not occur more than
three times a day. At all other times, at least one side of the main
navigational channel will be open for vessels to transit. Moreover, the
Coast Guard will work in coordination with the pilots to ensure vessel
traffic is limited during the times of detonation and Broadcast Notice
to Mariners are made via VHF-FM marine channel 13 and 16 when blasting
operations will occur.

B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as
amended, requires Federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000. The Coast Guard received no comments from the Small Business
Administration on this rulemaking. The Coast Guard certifies under 5
U.S.C. 605(b) that this rule will not have a significant economic
impact on a substantial number of small entities.
    While some owners or operators of vessels intending to transit the
safety zone may be small entities, for the reasons stated in section
V.A above, this rule will not have a significant economic impact on any
vessel owner or operator.
    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this rule. If the rule would affect your
small business, organization, or governmental jurisdiction and you have
questions concerning its provisions or options for compliance, please
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

C. Collection of Information

    This rule will not call for a new collection of information under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

D. Federalism and Indian Tribal Governments

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this rule under that Order and have
determined that it is consistent with the fundamental federalism
principles and preemption requirements described in Executive Order
13132.
    Also, this rule does not have tribal implications under Executive
Order 13175, Consultation and Coordination

with Indian Tribal Governments, because it does not have a substantial
direct effect on one or more Indian tribes, on the relationship between
the Federal Government and Indian tribes, or on the distribution of
power and responsibilities between the Federal Government and Indian
tribes. If you believe this rule has implications for federalism or
Indian tribes, please contact the person listed in the FOR FURTHER
INFORMATION CONTACT section.

E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this rule will not result in
such an expenditure, we do discuss the effects of this rule elsewhere
in this preamble.

F. Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and Commandant Instruction M16475.lD, which
guide the Coast Guard in complying with the National Environmental
Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that
this action is one of a category of actions that do not individually or
cumulatively have a significant effect on the human environment. This
rule involves a safety zone to protect waterway users that would
prohibit entry within 500 yards of rock blasting, dredging, and rock
removal. It is categorically excluded from further review under
paragraph 34(g) of Figure 2-1 of the Commandant Instruction. A Record
of Environmental Consideration supporting this determination is
available in the docket where indicated under ADDRESSES.

G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters.
Protesters are asked to contact the person listed in the FOR FURTHER
INFORMATION CONTACT section to coordinate protest activities so that
your message can be received without jeopardizing the safety or
security of people, places or vessels.

List of Subjects 33 CFR Part 165

    Harbors, Marine safety, Navigation (water), Reporting and
recordkeeping requirements, Security measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard amends
33 CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

0
1. The authority citation for part 165 continues to read as follows:

    Authority:  33 U.S.C 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1,
6.04-6, and 160.5; Department of Homeland Security Delegation No.
0170.1.

0
2. Add Sec.  165.T05-0935 to read as follows:

Sec.  165.T05-0935   Safety Zone, Delaware River; Marcus Hook, PA.

    (a) Location. The following area is a safety zone: all the
navigable waters of the Delaware River within 500 yards of vessels and
machinery performing rock blasting, rock removal, and dredging
operations, between Marcus Hook Range and Tinicum Range.
    (b) Definitions. As used in this section, designated representative
means any Coast Guard commissioned, warrant, or petty officer who has
been authorized by the Captain of the Port to assist with enforcement
of the safety zone described in paragraph (a) of this section.
    (c) Regulations. (1) Vessels wishing to transit the safety zone in
the main navigational channel may do so if they can make satisfactory
passing arrangements with the drill boat APACHE or the dredges TEXAS
and NEW YORK, as applicable, in accordance with the Navigational Rules
in 33 CFR subchapter E via VHF-FM channel 13 at least 30 minutes prior
to arrival. If vessels are unable to make satisfactory passing
arrangements with the drill boat APACHE or the dredges TEXAS and NEW
YORK, they may request permission from the Captain of the Port, or his
designated representative, on VHF-FM channel 16.
    (2) The operator of any vessel requesting to transit through the
safety zone shall proceed as directed by the drill boat APACHE, the
dredges TEXAS and NEW YORK, or the designated representative of the
Captain of the Port and must operate at the minimum safe speed
necessary to maintain steerage and reduce wake.
    (3) No vessels may transit through the safety zone during times of
explosive detonation. During explosive detonation, vessels will be
required to maintain a 500 yard distance from the drill boat APACHE.
The drill boat APACHE will make broadcasts, via VHF-FM Channel 13 and
16, at 15 minutes, 5 minutes, and 1 minute prior to detonation, as well
as a countdown to detonation on VHF-FM Channel 16.
    (4) After every explosive detonation a survey will be conducted by
the dredging contractor to ensure the navigational channel is clear for
vessels to transit. The drill boat APACHE will broadcast, via VHF-FM
channel 13 and 16, when the survey has been completed and the channel
is clear to transit. Vessels requesting to transit through the safety
zone shall proceed as directed by the Captain of the Port and contact
the drill boat APACHE on VHF-FM channel 13 to make safe passing
arrangements.
    (d) Enforcement. The U.S. Coast Guard may be assisted by federal,
state and local agencies in the patrol and enforcement of the zone.
    (e) Enforcement period. This rule will be enforced from November
30, 2017, through March 15, 2018, unless cancelled earlier by the
Captain of the Port.

    Dated: November 22, 2017.
Scott E. Anderson,
Captain, U.S. Coast Guard, Captain of the Port, Delaware Bay.
[FR Doc. 2017-25749 Filed 11-28-17; 8:45 am]
 BILLING CODE 9110-04-P


[Federal Register: March 5, 2007 (Volume 72, Number 42)]
[Notices]
[Page 9799-9801]
[DOCID:fr05mr07-87]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55344; File No. SR-NASDAQ-2006-057]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Order Granting Accelerated Approval of Proposed
Rule Change as Modified by Amendment No. 2 Thereto To Trade Certain
CurrencyShares Trusts Pursuant to Unlisted Trading Privileges

February 23, 2007.
    Pursuant to Section l9(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 12, 2006, The NASDAQ Stock Market LLC (``Nasdaq'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been substantially prepared by Nasdaq. On January 29, 2007,
Nasdaq filed Amendment No. 1 to the proposed rule change. On February
16, 2007, Nasdaq filed Amendment No. 2 to the proposed rule change.\3\
This order provides notice of the proposed rule change, as amended, and
approves the proposal on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 2 superceded the original filing and Amendment
No. 1.
---------------------------------------------------------------------------

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

    Nasdaq seeks to continue trading pursuant to unlisted trading
privileges (``UTP'') certain securities whose value is linked to the
value of one or more non-U.S. currencies (``Currency Trust Shares'').
The securities consist of shares (``Shares'') in the following currency
trusts (``Trusts''):
     CurrencySharesTM Australian Dollar Trust, which
issues Australian Dollar Shares;
     CurrencySharesTM British Pound Sterling Trust,
which issues British Pound Sterling Shares;
     CurrencySharesTM Canadian Dollar Trust, which
issues Canadian Dollar Shares;
     CurrencySharesTM Euro Trust, which issues Euro
Shares;
     CurrencySharesTM Japanese Yen Trust, which
issues Japanese Yen Shares;
     CurrencySharesTM Mexican Peso Trust, which
issues Mexican Peso Shares;
     CurrencySharesTM Swedish Krona Trust, which
issues Swedish Krona Shares; and
     CurrencySharesTM Swiss Franc Trust, which
issues Swiss Franc Shares.
    The text of the proposed rule change is available on Nasdaq's Web
site at http://nasdaq.complinet.com, at Nasdaq's principal office, 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, Nasdaq 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 III below. Nasdaq 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
    Nasdaq is proposing to trade the Shares on a UTP basis. Nasdaq is
submitting this filing because its current listing standards do not
extend to Currency Trust Shares. However, systems operated by Nasdaq
and its affiliates currently trade the Shares on an over-the-counter
basis as facilities of NASD. The filing will allow Nasdaq to continue
trading the Shares as an exchange.
    The Commission previously approved the original listing and trading
of the Shares on the New York Stock Exchange (``NYSE'').\4\
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    \4\ Securities Exchange Act Release No. 55268 (February 9,
2007), 72 FR 7793 (February 20, 2007) (SR-NYSE-2007-03) (approving
listing and trading of Japanese Yen Shares); Securities Exchange Act
Release No. 52843 (November 28, 2005), 70 FR 72486 (December 5,
2005) (SR-NYSE-2005-65) (approving listing and trading of Euro
Shares); Securities Exchange Act Release No. 54020 (June 20, 2006),
71 FR 36579 (June 27, 2006) (SR-NYSE-2006-35) (approving listing and
trading of the six additional CurrencyShares Trusts).
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    The Australian Dollar Shares represent units of fractional
undivided beneficial interest in and ownership of the Australian Dollar
Trust. The investment objective of the Australian Dollar Trust is for
the Australian Dollar Shares to reflect the price of the Australian
dollar.
    The British Pound Sterling Shares represent units of fractional
undivided beneficial interest in and ownership of the British Pound
Sterling Trust. The investment objective of the British Pound Sterling
Trust is for the British Pound Sterling Shares to reflect the price of
the British pound.
    The Canadian Dollar Shares represent units of fractional undivided
beneficial interest in and ownership of the Canadian Dollar Trust. The
investment objective of the Canadian Dollar Trust is for the Canadian
Dollar Shares to reflect the price of the Canadian dollar.
    The Euro Shares represent units of fractional undivided beneficial
interest in and ownership of the Euro Trust. The investment objective
of the Euro Trust is for the Euro Shares to reflect the price of the
euro.
    The Japanese Yen Shares represent units of fractional undivided
beneficial interest in and ownership of the Japanese Yen Trust. The
investment objective of the Japanese Yen Trust is for the Japanese Yen
Shares to reflect the price of the Japanese yen.
    The Mexican Peso Shares represent units of fractional undivided
beneficial interest in and ownership of the Mexican Peso Trust. The
investment objective of the Mexican Peso Trust is for the Mexican Peso
Shares to reflect the price of the Mexican peso.
    The Swedish Krona Shares represent units of fractional undivided
beneficial interest in and ownership of the Swedish Krona Trust. The
investment objective of the Swedish Krona Trust is for the Swedish
Krona Shares to reflect the price of the Swedish krona.
    The Swiss Franc Shares represent units of fractional undivided
beneficial interest in and ownership of the Swiss Franc Trust. The
investment objective of the Swiss Franc Trust is for the Swiss Franc
Shares to reflect the price of the Swiss franc.
    The Trusts are not registered investment companies under the
Investment Company Act of 1940. Nasdaq deems the Shares to be equity
securities, thus rendering trading in the Shares subject to Nasdaq's
existing rules governing the trading of equity securities, including
Nasdaq Rule 4630.\5\ The primary trading hours for the Shares on Nasdaq
would be 9:30 a.m. to 4:15 p.m. (EST). The Shares may also be traded in
a pre-market session from 7 a.m. to 9:30 a.m. (EST) and a post-

market session from 4:15 p.m. to 8 p.m. (EST).
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    \5\ On November 16, 2006, the Commission approved a rule filing
by Nasdaq to adopt Rule 4630, a new rule governing the trading of
and surveillance procedures applicable to Commodity-Based Trust
Shares. See Securities Exchange Act Release No. 54765 (November 16,
2006), 71 FR 67668 (November 22, 2006) (SR-NASDAQ-2006-009). Because
foreign currency is included within the rule's definition of a
commodity, Rule 4630 is applicable to Currency Trust Shares.
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    Quotations for and last sale information regarding the Shares is
disseminated through the Consolidated Tape System. The net asset value
(``NAV'') and NAV per Share for each Trust are calculated by The Bank
of New York as the Trustee for each Trust. To calculate the NAV, the
Trustee adds the total value of Trust assets, including accrued
receivables, and then subtracts Trust liabilities, including accrued
expenses. The Trustee determines the NAV per Share by dividing the NAV
of a Trust by the number of outstanding Shares. The NAV per Share is
published on the Trusts' Web site at http://www.currencyshares.com (to which Nasdaq would provide a link from its http://www.nasdaq.com Web

site). The Trusts' Web site is publicly accessible at no charge and
also contains the spot price for each applicable foreign currency,
including the bid and offer and the midpoint between the bid and offer
for the foreign currency spot price, updated at least every 15 seconds;
an intraday indicative value (``IIV'') \6\ per Share calculated by
multiplying the indicative spot price of the currency by the quantity
of the currency backing each Share, at least every 15 seconds, and for
certain Shares on a five-to ten-second delayed basis; and other
pertinent information about the value of a Share.\7\
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    \6\ The IIV of the Shares is analogous to the intraday optimized
portfolio value (sometimes referred to as the IOPV), indicative
portfolio value, or IIV associated with the trading of exchange-
traded funds.
    \7\ The Trusts' Web site's foreign currency spot price is
provided by FactSet Research Systems (http://www.factset.com).

Nasdaq would provide a link to the Trusts' Web site. The NYSE has
stated that FactSet Research Systems is not affiliated with the
Trusts, their Trustee, their sponsor, other entities involved in
distributing or holding deposits associated with the Trusts, or the
NYSE. In the event that the Trusts' Web site should cease to provide
currency spot price information from an unaffiliated source and the
IIV of the Shares, NYSE has stated that it would halt trading in the
Shares and commence delisting proceedings for the Shares. Nasdaq
would also halt trading in the Shares in the event that NYSE halts
trading because the spot price and/or IIV is no longer available, or
if NYSE delists the Shares for other reasons.
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    Nasdaq would halt trading in the Shares of a Trust under the
conditions specified in Nasdaq Rules 4120 and 4121. The conditions for
a halt include a regulatory halt by the listing market. UTP trading in
the Shares also would be governed by provisions of Nasdaq Rule 4120
relating to temporary interruptions in the calculation or wide
dissemination of the IIV.\8\
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    \8\ See Securities Exchange Act Release No. 55269 (February 9,
2007), 72 FR 7490 (February 15, 2007) (SR-NASDAQ-2006-050).
---------------------------------------------------------------------------

    Nasdaq believes that its surveillance procedures are adequate to
address any concerns about the trading of the Shares on Nasdaq. Trading
of the Shares through NASD facilities operated by Nasdaq is currently
subject to NASD's surveillance procedures for equity securities in
general and ETFs in particular. After Nasdaq begins to trade the Shares
as an exchange, NASD, on behalf of Nasdaq, will continue to surveil
Nasdaq's trading of the Shares. Nasdaq's transition to trading the
Shares as an exchange will not result in any change in the surveillance
process with respect to the Shares.\9\
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    \9\ Surveillance of all trading on NASD facilities operated by
Nasdaq, including the trading of Shares, is currently being
conducted by NASD. When Nasdaq begins to trade the Shares as an
exchange, NASD will surveil trading pursuant to a regulatory
services agreement. Nasdaq is responsible for NASD's performance
under this regulatory services agreement.
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    In connection with trading the Shares as an exchange, Nasdaq will
issue an information circular (``Circular'') that will discuss the
following: (1) The special characteristics and risks of trading the
Shares; (2) the procedures for purchases and redemptions of Shares; (3)
applicable Nasdaq rules including suitability rules; (4) how
information regarding the IIV is disseminated; and (5) trading
information. The Circular will also refer members to language in the
Registration Statements regarding prospectus delivery requirements for
the Shares, and note to members their obligations regarding prospectus
delivery. Nasdaq notes that investors purchasing Shares directly from
the Trusts will receive a prospectus. Nasdaq members purchasing Shares
from the Trusts for resale to investors will deliver a prospectus to
such investors.
    In addition, the Circular will reference that the Trusts are
subject to various fees and expenses described in the Registration
Statements. The Circular will explain that if the Trusts are required
to sell currency to pay the Trusts' expenses, the amount of foreign
currency required to create a basket of Shares issued by the Trusts or
to be delivered upon a redemption of a basket of Shares may gradually
decrease over time. If this is done when the price of the currency is
relatively low, the selling of the currency could adversely affect the
value of the Shares. Finally, the Circular will also reference the fact
that there is no regulated source of last-sale information regarding
currency and that the Commission has no jurisdiction over the trading
of currency.
2. Statutory Basis
    Nasdaq believes that the proposal is consistent with the provisions
of Section 6 of the Act,\10\ in general, and with Section 6(b)(5) of
the Act,\11\ in particular, in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to remove impediments to a free and open
market and a national market system, and, in general, to protect
investors and the public interest.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(5).
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    In addition, Nasdaq believes that the proposal is consistent with
Rule 12f-5 under the Act \12\ because it deems the Shares to be equity
securities, thus rendering trading in the Shares subject to Nasdaq's
rules governing the trading of equity securities.
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    \12\ 17 CFR 240.12f-5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change would impose
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

C. Self Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments on the proposal were neither solicited nor
received.

III. 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASDAQ-2006-057 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2006-057. This
file number should be included on the subject line if e-mail 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 inspection and copying in the Commission's Public
Reference Room. Copies of such filing also will be available for
inspection and copying at the principal office of Nasdaq. 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-2006-057 and should
be submitted on or before March 26, 2007.

IV. Commission's Findings and Order Granting Accelerated Approval of
the Proposed Rule Change

    After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\13\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\14\
which requires that an exchange have rules designed, among other
things, 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. The Commission believes that this proposal should
benefit investors by increasing competition among markets that trade
the Shares.
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    \13\ In approving this rule change, the Commission notes that it
has considered the proposal's impact on efficiency, competition, and
capital formation. See 15 U.S.C. 78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
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    In addition, the Commission finds that the proposal is consistent
with Section 12(f) of the Act,\15\ which permits an exchange to trade,
pursuant to UTP, a security that is listed and registered on another
exchange.\16\ The Commission notes that it previously approved the
listing and trading of the Shares on NYSE.\17\ The Commission also
finds that the proposal is consistent with Rule 12f-5 under the
Act,\18\ which provides that an exchange shall not extend UTP to a
security unless the exchange has in effect a rule or rules providing
for transactions in the class or type of security to which the exchange
extends UTP. Nasdaq has represented that it meets this requirement
because it deems the Shares to be equity securities, thus rendering
trading in the Shares subject to the Nasdaq's existing rules governing
the trading of equity securities.
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    \15\ 15 U.S.C. 78l(f).
    \16\ Section 12(a) of the Act, 15 U.S.C. 78l(a), generally
prohibits a broker-dealer from trading a security on a national
securities exchange unless the security is registered on that
exchange pursuant to Section 12 of the Act. Section 12(f) of the Act
excludes from this restriction trading in any security to which an
exchange ``extends UTP.'' When an exchange extends UTP to a
security, it allows its members to trade the security as if it were
listed and registered on the exchange even though it is not so
listed and registered.
    \17\ See supra note 4.
    \18\ 17 CFR 240.12f-5.
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    The Commission further believes that the proposal is consistent
with Section 11A(a)(1)(C)(iii) of the Act,\19\ which sets forth
Congress' finding that it is in the public interest and appropriate for
the protection of investors and the maintenance of fair and orderly
markets to assure the availability to brokers, dealers, and investors
of information with respect to quotations for and transactions in
securities. Quotations for and last sale information regarding the
Shares are disseminated through the facilities of the Consolidated Tape
Association. Furthermore, the Trusts' Web site, which is publicly
accessible at no charge, provides the IIV at least every 15 seconds,
and for certain Shares on a five-second to ten-second delayed basis,
throughout Nasdaq's trading sessions. In addition, Nasdaq has
represented that, if the listing market halts trading when the IIV is
not being calculated or disseminated, Nasdaq would halt trading in the
Shares. Nasdaq would follow the procedures with respect to trading
halts set forth in Nasdaq Rules 4120 and 4122.
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    \19\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    The Commission notes that, if the Shares should be delisted by the
listing exchange, the Nasdaq would no longer have authority to trade
the Shares pursuant to this order.
    In support of this proposal, the Nasdaq has made the following
representations:
    1. Nasdaq's surveillance procedures are adequate to address any
concerns about the trading of the Shares on Nasdaq.
    2. Nasdaq will issue an information circular that will discuss the
special characteristics and risks of trading the Shares, the procedures
for the purchases and redemptions of the Shares, applicable Nasdaq
rules including suitability rules, how information regarding the IIV is
disseminated, and trading information.
    3. In connection with trading the Shares as an exchange, Nasdaq
will issue an information circular that will refer members to the
language in the Registration Statements regarding prospectus delivery
requirements for the Shares and will also note to Nasdaq members their
obligations regarding prospectus delivery. Investors purchasing Shares
directly from the Trusts will receive a prospectus. In addition, Nasdaq
members purchasing Shares from the Trust for resale to investors will
deliver a prospectus to such investors.

This approval order is conditioned on the Nasdaq's adherence to these
representations.

    The Commission finds good cause for approving this proposal before
the thirtieth day after the publication of notice thereof in the
Federal Register. As noted previously, the Commission previously found
that the listing and trading of the Shares on NYSE is consistent with
the Act. The Commission presently is not aware of any regulatory issue
that should cause it to revisit that finding or would preclude the
trading of the Shares on Nasdaq pursuant to UTP. Therefore,
accelerating approval of this proposal should benefit investors by
creating, without undue delay, additional competition in the market for
the Shares.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\20\ that the proposed rule change (SR-NASDAQ-2006-057), as
amended, be and it hereby is, approved on an accelerated basis.
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    \20\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3742 Filed 3-2-07; 8:45 am]

BILLING CODE 8010-01-P