[Federal Register Volume 79, Number 194 (Tuesday, October 7, 2014)]
[Notices]
[Pages 60522-60536]
[FR Doc No: 2014-23838]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73279; File No. S7-24-89]

Joint Industry Plan; Notice of Filing and Immediate Effectiveness
of Amendment No. 33 to the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation and Dissemination of Quotation
and Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privileges Basis Submitted by the BATS
Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options Exchange,
Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX
Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
International Securities Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ OMX
PHLX LLC, Nasdaq Stock Market LLC, National Stock Exchange, Inc., New
York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.

October 1, 2014.
    Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that
on September 12, 2014, the operating committee (``Operating Committee''
or ``Committee'') \3\ of the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation, and Dissemination of Quotation
and Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privilege Basis (``Nasdaq/UTP Plan''
or ``Plan'') filed with the Securities and Exchange Commission
(``Commission'') an amendment to the Plan.\4\ This

amendment represents Amendment No. 33 (``Amendment No. 33'') to the
Plan and modifies the Plan's fee schedule without the expectation of
incremental revenue to the Participants. The Participants voted in
accordance with the requirements of the Plan \5\ to make the following
changes to the Plan's fee schedule: (1) Decrease the Professional
Subscriber Fee from $23 to $22 per month per interrogation device; (2)
Increase the per-query charge from $0.005 to $0.0075; and (3) Establish
Non-Display fees for three categories of Non-Display use. These ``2015
Fee Changes'' respond to long-term changes in data-usage trends. In
formulating the proposed fee changes, the Participants formed a
subcommittee to study trends among market data users and consulted with
the industry representatives that sit on the Plans' Advisory Committees
and with other industry Participants. The Participants also met with
the Securities Industry and Financial Markets Association (``SIFMA'').
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ The Plan Participants (collectively, ``Participants'') are
the: BATS Exchange, Inc.; BATS Y-Exchange, Inc.; Chicago Board
Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; EDGA
Exchange, Inc.; EDGX Exchange, Inc.; Financial Industry Regulatory
Authority, Inc.; International Securities Exchange LLC; NASDAQ OMX
BX, Inc.; NASDAQ OMX PHLX LLC; Nasdaq Stock Market LLC; National
Stock Exchange, Inc.; New York Stock Exchange LLC; NYSE MKT LLC; and
NYSE Arca, Inc.
    \4\ The Plan governs the collection, processing, and
dissemination on a consolidated basis of quotation information and
transaction reports in Eligible Securities for each of its
Participants. This consolidated information informs investors of the
current quotation and recent trade prices of Nasdaq securities. It
enables investors to ascertain from one data source the current
prices in all the markets trading Nasdaq securities. The Plan serves
as the required transaction reporting plan for its Participants,
which is a prerequisite for their trading Eligible Securities. See
Securities Exchange Act Release No. 55647 (April 19, 2007), 72 FR
20891 (April 26, 2007).
    \5\ Section IV(C)(2) of the Plan provides that ``the affirmative
vote of two-thirds of the Participants entitled to vote shall be
necessary to'' establish new fees or increase existing fees relating
to Quotation Information and Transaction Reports in Eligible
Securities. A unanimous affirmative vote of the Operating Committee
was conducted on August 13, 2014 and recorded in the official
minutes of that meeting.
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    Pursuant to Rule 608(b)(3)(i) under Regulation NMS, the
Participants hereby designate the proposed Amendment 33 as establishing
or changing a fee or other charge collected on their behalf in
connection with access to, or use of, the facilities contemplated by
the Plans. As a result, Amendment 33 becomes effective upon filing with
the Commission. The changes will be implemented on January 1, 2015.
    At any time within 60 days of the filing of Amendment No. 33, the
Commission may summarily abrogate Amendment No. 33 and require that the
Amendment be refiled in accordance with paragraph (a)(1) of Rule 608
and reviewed in accordance with paragraph (b)(2) of Rule 608, if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or the
maintenance of fair and orderly markets, to remove impediments to, and
perfect the mechanisms of, a national market system or otherwise in
furtherance of the purposes of the Act. The Commission is publishing
this notice to solicit comments from interested persons.

I. Rule 608(a)

A. Purpose of the Amendments

(a) Background
    The Participants made several changes to the fee schedule effective
as of January 1, 2014.\6\ Those changes introduced reporting by
redistributors on a ``net'' basis, increased the Professional
Subscriber device fee, the Enterprise Maximum for Nonprofessional
Subscriber usage, and the Direct Access fee, and established Real-Time
and Delayed Redistributor fees (collectively, the ``January 2014 Fee
Changes''). They also complied with industry requests that the
participants in the several national market system plans strive to
harmonize fee structures under those plans. In submitting the January
2014 Fee Changes to the Commission, the Participants identified past
attrition and the expectation of continued attrition in the reporting
and consumption of consolidated market data. They anticipated that the
January 2014 Fee Changes would generate enough revenue to offset the
revenue declines resulting from that attrition. Actual experience with
the January 2014 Fee Changes shows that, for the first six months of
2014, revenues under the Plan rose five percent relative to the second
half of 2013, but not enough to recover from attrition losses over the
past three years.
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    \6\ See Release No. 34-70953; File No. S7-24-89 (December 4,
2013), http://www.gpo.gov/fdsys/pkg/FR-2013-12-04/html/2013-28970.htm.
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    Prior to the January 2014 Fee Changes, the Participants last
increased the Professional Subscriber device fees in 1997. Since then,
significant change has characterized the industry, stemming in large
measure from technological advances, the advent of trading algorithms
and automated trading, new investment patterns, new securities
products, unprecedented levels of trading, decimalization,
internationalization and developments in portfolio analysis and
securities research. Measures of Plan inputs and outputs have expanded
dramatically, including the number of exchange participants, messages
per period, message speed, and total shares and dollar volume of
trading. Related measures of value to the industry have improved and
related industry costs have fallen, including the cost per message, the
cost per trade, and the cost per share and dollar volume traded.
    The 2015 Fee Changes would realign the Plans' fees more closely
with the ways in which Data Feed Recipients consume market data today.
Although Professional Subscriber Display Device fees still account for
a majority of Plan revenues, the industry's use of Professional
Subscriber Display Devices continues to decline and the gap between
Professional Subscriber device rates and Nonprofessional Subscriber
fees remains large. The proposed fee changes would reduce the rates
that Professional Subscribers pay for each of their Display Devices. To
offset the revenue losses attributable to the reduction in Professional
Subscriber device rates, the Participants propose to establish fees for
Non-Display consumption of market data and to raise the fee payable in
respect of per-quote services.
    The 2015 Fee Changes also move in the direction of continuing to
harmonize fee structures under the Plan with fee structures under the
CTA Plan, the CQ Plan and the OPRA Plan. This would further reduce
administrative burdens for broker-dealers and other market data users
and further simplify usage reporting and calculations related to the
unit of count.
    While the 2015 Fee Changes will rebalance the fee schedule, the
Participants anticipate that the proposed 2015 Fee Changes would have
only a small impact on Plan revenues, increasing those revenues by
approximately two to three percent over the prior year. Of course, that
number is hard to estimate, given the uncertainties of Non-Display use
revenues and declining Level 1 Professional populations.
(b) The Proposed Changes
i. Professional Subscriber Fee
    Prior to the January 2014 Fee Changes, the Professional Subscriber
device fee had remained at $20 per month since 1997. The January 2014
Fee Changes raised it to $23 per month. Amendment 33 would reduce the
Professional Subscriber device fee from $23 per month to $22 per month.
At $22 per month, the increase amounts to an increase of one-half of
one percent per year over a 17-year period. During that period, the
amount of market data and the categories of information distributed
through the UTP Level 1 Service have grown dramatically. Since then,
the securities information processor under the Plan (the ``SIP'') has
made hundreds of modifications to the UTP Trade Data Feed and the UTP
Quotation Data Feed (``UQDF'') to keep up with changes in market
structure, regulatory requirements and trading needs. These
modifications have added elements such as new messages, new fields, and
new values within designated fields to the UTP Level 1 Service. These

modifications have caused the UTP Level 1 Service to support such
industry developments as Regulation NMS, decimalization, limit up/limit
down, and many other changes.
    In addition to the many modifications, the number of quotes and
trades that the Participants have reported under the Plan has grown
dramatically. As an example of the growth in quotes distributed over
the UTP Level 1 Service, from the fourth quarter of 2010 to the second
quarter of 2014, UTP UQDF Peak Quotes Per Second has increased by 130%
from 119,347 to 273,996. Over that period, the Average Quotes Per Day
has increased more than 32% to 112,621,874 [www.utpplan.com].

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                                                                                Difference
                      Tape C quote metrics                            Q2 2014         Q4 2010        (percent)
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Peak Quotes Per Second..........................................         273,996         119,347             130
Avg. Quotes Per Day.............................................     112,621,874      85,402,614              32
Avg. Quote Latency (ms).........................................            0.59             4.5             -87
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    As an example of the growth in trades distributed over the UTP
Level 1 Service, from the fourth quarter of 2010 to the second quarter
of 2014, UTP UTDF Peak Trades Per Second has increased by a 221% from
30,292 to 97,232. Over that period, the Average Trades Per Day has
increased more than 76% to 11,027,210 [www.utpplan.com].

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                                                                                Difference
                      Tape C trade metrics                            Q2 2014         Q4 2010        (percent)
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Peak Trades Per Second..........................................          97,232          30,292             221
Avg. Trades Per Day.............................................      11,027,210       6,251,074              76
Avg. Quote Latency (ms).........................................            0.72               6             -88
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    At the same time, Professional Subscribers' usage of Level 1 data
has been declining:
[GRAPHIC] [TIFF OMITTED] TN07OC14.023

    Professional Subscriber fees collected have declined as well. For
example, as of September 30, 2011, the Plan's 382,862 Professional
Subscribers paid $7,657,240 per month.\7\ As of September 30, 2012, the
Plan's 351,106 Professional Subscribers paid $7,022,120. As of
September 30, 2013, the Plan's 295,192 Professional Subscribers paid
$5,903,890. As of June, 2014, the Plan's 259,728 Professional
Subscribers paid only $5,973,744 (which reflects the rate increase
established in the January 2014 Fee Changes). In sum, monthly revenues
from Professional Subscriber device fees for June 2014 remain more than
$1,683,486 below the level of Professional usage fees collected in
September 2011, notwithstanding the rate increase established in the
January 2014 Fee Changes.
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    \7\ Professional Subscriber counts are calculated and published
quarterly and posted on utpplan.org. The latest quarterly figures
reflect a 15 percent annual decline in Professional Subscribers. See
http://www.utpplan.com/.
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    Fees for UTP Level 1 compare favorably to fees for comparable
Network A and B data. Under the CT/CQ Network A tiered structure, a
firm reports how many Display Devices the Professional Subscriber
employs; that number then is used to determine the tier within which
the firm falls. Until last September, the Network A fees for
Professional Subscribers ranged from $18.75 per device for firms
employing Professional Subscribers who use more than 10,000 devices to
$127.25 per device for an individual Professional Subscriber. In June
of 2013, Network A lowered that range to $20 to $50 per device. The
Participants understand that Network A intends to lower that range in
the near future to $19 to $45.\8\ Also

in June of 2013, Network B combined the fees payable for a Professional
Subscriber's receipt of quotation information and last sale price
information and set the combined monthly fee at $24 per month. The
combined $24 rate reduced costs for most Professional Subscribers, with
the exception of a small number of Data Feed Recipients who receive
last sale or quotation information, but not both. The Participants
understand that Network B intends to lower that rate in the near future
from $24 to $23. Under the OPRA Plan, the device fee is currently $27
per month.
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    \8\ Specifically, the Network A monthly fees for Professional
Subscriber devices would become $45 per month for users with 1 or 2
devices, $27 per month for users with 3 to 999 devices, $23 per
month for users with 1,000 to 9,999 devices, and $19 per month for
users with 10,000 or more devices.
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    The Participants anticipate that the revenue losses that would
result from the reduction in Professional Subscriber device rate from
$23 to $22 would be offset by the other proposed amendments to the fee
schedule and that, in the aggregate, the 2015 Fee Changes would not
result in a material change in overall revenues under the Plans.
ii. Per-Query Fee
    As an alternative to monthly professional subscriber and
nonprofessional subscriber fees, a vendor may respond to end-user
queries for quote and trade information and pay a fee for each such
response. The Participants first established the per-query fee in 1992
as a pilot at $0.015 per query. In 1995, it was noted that the Nasdaq/
UTP per-query fee was three times that of the Network A and Network B
counterparts. Subsequently, the Nasdaq/UTP per-query fee was made a
permanent part of the fee schedule and was lowered to $0.01 per query
to be more in line with Networks A and B. In April 1999, a pilot at a
reduced rate of $.005 per query was filed and in April 2001, it was
approved as the permanent fee structure. The fee has remained at $0.005
per query ever since. The Participants are now proposing to increase
the fee to $0.0075 per query. This increase would help to offset the
revenue loss that will result from the decrease in the Professional
Subscriber device fee.
    Effective June 1, 2013, the Participants in the OPRA Plan increased
their per-query fee to $0.0075.\9\ In addition, the Participants
understand that the Network A Participants and the Network B
Participants are contemplating similar increases to $0.0075 per query
under the CTA Plan and the CQ Plan.
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    \9\ See Release No. 34-69448; File No. SR-OPRA-2013-01 (April
25, 2013), http://www.sec.gov/rules/sro/nms/2013/34-69448.pdf.
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    The Participants note that increasing the per-query fee to $0.0075
would continue to harmonize the per-query fee structure under the
national market system plans and would contribute toward restoring a
more appropriate balance of fees in recognition of the declining
significance of revenues derived from Professional Subscriber device
fees. The increase in revenues resulting from the proposed increase in
the per-query fees would represent an appropriate contribution for that
service to covering the overall costs of the Participants in
collecting, processing and distributing market data under the Plans.
iii. Non-Display Fees
    A. Background. Changes in regulation and advances in technology
have had an impact on market data usage in recent years. Automated and
algorithmic trading has proliferated, the numbers of quotes and trades
have increased significantly and Data Feeds have become exponentially
faster. Today, Non-Display Devices consume large amounts of data, and
can process the data far more quickly than any human being looking at a
terminal. Today, such devices are responsible for a majority of
trading. Many firms incorporate Non-Display data into trading
applications, without the need for their employees to have widespread
access to the data. It enables them to generate considerable profits.
    These changes in market data consumption patterns show that Non-
Display use now constitutes a significant portion of the industry's
consumption of market data and that market data adds considerable value
to many firms' business model.
    As a result, the Participants have determined that the
establishment of fees for Non-Display uses of data, along with a
reduction in the Professional Subscriber device fee and the increase in
the per-query fee, would provide an equitable allocation of fees to the
industry, would facilitate the administration of Non-Display uses of
market data and would equitably reflect the value of Non-Display and
display data usage. The Participants believe that the proposed fees
reflect the value of the data provided and note that Non-Display fees
have become commonplace in the industry. Several exchanges impose Non-
Display fees for their proprietary data products, as does the OPRA
Plan. In addition, the Participants understand that the Network A
Participants and the Network B Participants are also contemplating the
establishment of fees for Non-Display uses of data.
    B. Definition of Non-Display Use. For purposes of the proposed
fees, Non-Display use refers to accessing, processing or consuming
data, whether received via direct and/or redistributor Data Feeds, for
a purpose other than solely facilitating the delivery of the data to
the Data Feed Recipient's display or for the purpose of further
internally or externally redistributing the data. Further
redistribution of the data refers to the transportation or
dissemination to another server, location or device. In instances where
the Data Feed Recipient is using the data in Non-Display to create
derived data and use the derived data for the purposes of solely
displaying the derived data, then the Non-Display fee schedule does not
apply, but the data may be fee liable under the regular fee schedule.
    C. Categories of Non-Display Use. The Participants recognize three
types of Non-Display Uses as follows:
    (a) The Non-Display fee for Electronic Trading Systems applies when
a datafeed recipient makes a Non-Display of data in an electronic
trading system, whether the system trades on the datafeed recipient's
own behalf or on behalf of its customers. This fee includes, but is not
limited to, use of data in any trading platform(s), such as exchanges,
alternative trading systems (``ATS's''), broker crossing networks,
broker crossing systems not filed as ATS's, dark pools, multilateral
trading facilities, and systematic internalization systems.
    An organization that uses data in electronic trading systems must
count each platform that uses data on a non-display basis. For example,
an organization that uses quotation information for the purposes of
operating an ATS and also for operating a broker crossing system not
registered as an ATS would be required to pay two Electronic Trading
System fees.
    (b) Non-Display Enterprise Licenses. The Participants recognize two
types of Non-Display Licenses as follows:
    (i) The Non-Display fee for Internal Use applies when a datafeed
recipient's Non-Display usage is on its own behalf (other than for
purposes of an electronic trading system).
    (ii) The Non-Display fee for External Use applies when a datafeed
recipient's Non-Display usage is on behalf of its customers (other than
for purposes of an electronic trading system).
    The two types of Non-Display Enterprise Licenses include, but are
not limited to, use of data for automated order or quote generation
and/or order

pegging, price referencing for algorithmic trading, price referencing
for smart order routing, operations control programs, investment
analysis, order verification, surveillance programs, risk management,
compliance or portfolio valuation.
    D. Examples of Non-Display Uses of Market Data. Examples of the
Non-Display Electronic Trading System Fee include, but are not limited
to:

 Any trading in any asset class
 Exchanges
 Alternative trading systems (ATSs)
 Broker crossing networks
 Broker crossing systems not filed as ATSs
 Dark pools
 Multilateral trading facilities
 Systematic internalization systems
    Examples of Non-Display Use for Non-Display fee for Internal Use
and Non-Display fee for External Use include, but are not limited to:

 Automated order or quote generation and/or order pegging
 Price referencing for algorithmic trading
 Price referencing for smart order routing
 Operations control programs
 Investment analysis
 Order verification
 Surveillance programs
 Risk management
 Compliance
 Portfolio valuation
    E. Non-Display Fee. For each of type of fee, the Participants
propose to impose a monthly fee of $3500 for the Non-Display use of the
combined last sale price information and quotation information.
    By way of comparison, the Participants understand that Network A
intends to establish separate monthly Non-Display Fees of $2,000 for
last sale prices plus $2,000 for quotation information and that Network
B intends to establish monthly Non-Display Fees of $1,000 for last sale
prices plus $1,000 for quotation information.
    In addition, the Non-Display fee for Electronic Trading Systems
applies once to each Data Feed Recipient's account for each of the
firm's electronic trading systems. If a firm uses quotes solely to
operate a dark pool for its customers' orders and makes no other Non-
Display use of market data, it would pay the Non-Display fee for
Electronic Trading Systems (and not the other Non-Display Licenses). If
that firm also uses quotes to operate an ATS, but still makes no other
Non-Display uses of market data, it would pay two Non-Display fees for
Electronic Trading Systems fees (and no other Non-Display Licenses).
    The fees for Non-Display Enterprise Licenses are enterprise
licenses for the Non-Display uses that fall within either Internal or
External usage. Only one Non-Display Enterprise License fee applies to
each Data Feed Recipient's account regardless of the number of Non-
Display uses of data the firm makes within that category (either
Intenral or External). For instance, if a firm makes Non-Display uses
of data to analyze investments for its own portfolio, to value that
portfolio, to verify the firm's proprietary orders and to run
compliance programs for the firm, the firm would pay only one Non-
Display fee for Internal Use fee. Similarly, if a firm makes Non-
Display uses of data to analyze investments for customers, to verify
customer orders, to surveil the market it conducts for customers, to
provide risk management services to customers and to value its
customers' portfolios, the firm would pay only one Non-Display fee for
External Use fee. Finally, if a firm makes Non-Display uses of data to
analyze investments for its own portfolio and to analyze investments
for customers, the firm would pay both the Non-Display fee for Internal
Use and the Non-Display fee for External Use fee.
    The fees apply to each of a Data Feed Recipient's accounts that
uses market data for Non-Display purposes. The Participants would only
invoice Data Feed Recipients that make Non-Display uses of real-time
market data on a monthly basis.
    A firm may use data for each of Non-Display fees and thereby
subject itself to the Non-Display fee for each category. For example,
if a broker-dealer operates an ATS (Non-Display fee for Electronic
Trading Systems), operates a trading desk to trade with its own capital
(Non-Display fee for Internal Use), and operates a separate trading
desk to trade on behalf of its clients (Non-Display fee for External
Use), then the Non-Display fee would apply in respect of all three
categories. If, in addition to the ATS, the firm also operates a broker
crossing system not registered as an ATS, then two Non-Display fees for
Electronic Trading Systems would apply in respect of each market data
product. That is, a firm must count each electronic trading system that
uses data for payment of the Non-Display fee for Electronic Trading
Systems.
    F. Administrative Requirements for Non-Display Uses. In response to
feedback received from SIFMA, the Participants seek to minimize the
administrative burden attendant to Non-Display fees and, therefore,
have determined not to impose a monthly reporting requirement. Instead,
the Participants would require each recipient of a real-time Data Feed
to make an annual declaration of its Non-Display use to the
Participants. They would require each Data Feed Recipient to complete
and submit the declaration upon its initial receipt of a Data Feed
under the UTP Plan. In addition, if a Data Feed Recipient's use of data
changes at any time after the Data Feed Recipient submits its
declaration or annual confirmation or update, the Participants would
require the Data Feed Recipient to update its declaration at the time
of the change to reflect the change of use.
    The Participants believe that use of the declaration would keep
administrative burdens at a minimum, as SIFMA requested.
    The Participants reserve the rights:
    (a) To audit Data Feed Recipients' Non-Display use of market data
in accordance with the terms of their market data agreements with
vendors and others; and
    (b) charge Non-Display fees to Data Feed Recipients that do not
report any display activity, and do not return a completed declaration
in accordance with the requirements specified above.

B. Impact of the Proposed Fee Changes

    As with any rebalancing of fees, these 2015 Fee Changes may result
in some Data Feed Recipients paying higher total market data fees and
in others paying lower total market data fees. The Participants
anticipate that the 2015 Fee Changes will not generate enough revenue
to offset past and future attrition in reported consolidated market
data activity data. That attrition (``Attrition'') takes two primary
forms.
    First, the reduction in Professional Subscriber device fees will
reduce revenues under the Plan. They estimate that the percentage of
total Plan revenues derived from Professional Subscriber device fees
will fall as a result of the reduction in the fee from 59 percent to 54
percent.
    Second, several customer-usage trends have declined year-over-year
since 2008, particularly declines in Professional Subscriber's
consumption of consolidated market data. (More information on these
declines can be found in the Participants' Consolidated Data Quarterly
Operating Metrics Reports. Those reports can be found at http://www.utpplan.com). The decline in Professional Subscriber data usage has
resulted from a challenging financial environment, and corporate
downsizing, as well as a liberalization of the SEC's Vendor Display
Rule that has permitted substitution of lower-cost and

lower-value proprietary data product offerings.
    As a result of these declines, revenues generated under the Plans
have declined significantly. Since 2008, CTA/UTP market data revenue
has declined 16 percent from approximately $463 million in 2008 to $388
million annualized through March of 2014. The Participants will review
the impact of the 2015 Fee Changes on an on-going basis and reserve the
right to further amend fees in the future, subject to filing any such
amended fees with the Commission in accordance with Regulation NMS.
    Because the Non-Display fee would be new, it is difficult to
estimate the impact they would have on revenues. A best guess is that
they would account for approximately 5 percent of revenues. If current
usage levels remain the same, the increase in the per-query fee would
raise revenues by approximately 1 percent. The decline in the
Professional fee would decrease revenues by 5 percent, assuming there
was no additional attrition.
    Most firms would be impacted only slightly by the 2015 Fee Changes,
though a small number of firms would see a more significant impact.
Some of the largest firms would realize sizable savings or a large
increase in costs.
    The Participants estimate that the changes would increase Plan
revenues by approximately two to three percent over the prior year,
though that number is hard to estimate, given the uncertainties of Non-
Display use revenues and declining Level 1 Professional populations.
    The Participants note that the 2015 Fee Changes would contribute to
stemming the significant loss of revenues under the Plans in recent
years as a result of large multi-year declines in Display Devices that
Professional Subscribers use. Furthermore, the rise in off-exchange
trading has meant that a smaller portion of those revenues have been
allocated to exchanges. Thus, the Participants believe that the 2015
Fee Changes would not result in a material increase in overall revenues
under the Plans, but would help to stem the tide of declining revenues
caused by trends in the use of Display Devices by Professional
Subscribers.

C. Governing or Constituent Documents

    Not applicable.

D. Implementation of the Amendments

    Rule 608(b)(3)(i) of Regulation NMS (the ``Rule'') permits the
Participants to designate a proposed plan amendment as establishing or
changing fees and other charges, and to place such an amendment into
effect upon filing with the Commission. As mentioned above, the
Participants have made that designation. The Rule does not place any
limitations on which particular fee changes qualify for immediate
effectiveness. Rather, if the Commission believes that a longer comment
period is appropriate for a particular filing, it may extend the
comment period or abrogate the filing. Ample precedents exist for the
filing of multiple or even complex fee changes to NMS Plans on an
immediately effective basis over the past thirty years.\10\
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    \10\ See, e.g., Fifth Charges Amendment to the First Restatement
of the CTA Plan, File No. S7-433, Release No. 34-19342, 47 FR 57369
(December 23, 1982); Fourteenth Charges Amendment to the First
Restatement of the CTA Plan and Fifth Charges Amendment to the
original CQ Plan, File No. S7-30-91, Release No. 34-29863, 56 FR
56429 (November 4, 1991); Second Charges Amendment to the CTA Plan
and First Charges Amendment to the CQ Plan, SR-CTA/CQ-97-2, Release
No. 34-39235, 62 FR 54886 (October 14, 1997); OPRA Plan amendment
SR-OPRA-2004-01, Release No. 34-49382, 69 FR 12377 (March 16, 2004);
OPRA Plan amendment SR-OPRA-2007-04, Release No. 34-56950, 72 FR
71722 (December 18, 2007); OPRA Plan amendment SR-OPRA-2012-02,
Release No. 34-66564, 77 FR 15833 (March 16, 2012).
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    Pursuant to the Rule, the Participants have designated Amendment 33
as establishing or changing fees, and will have notified the industry
of the proposed Fee Changes well in advance of Amendment 33's effective
date. The Participants anticipate implementing the proposed 2015 Fee
Changes on January 1, 2015, and intend to give further notice to Data
Feed Recipients and end-users of the 2015 Fee Changes.

E. Development and Implementation Phases

    See Item I(C) above.

F. Analysis of Impact on Competition

    The proposed amendments do not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Exchange Act. The proposed fee changes reflect the Participants'
views that it is appropriate to rebalance the allocation of market data
fees and to better track the changing trends in the ways in which the
industry uses market data. The proposed fee changes comport with the
proliferation of the use of data for dark pools and other Non-Display
trading applications. They recognize industry changes that have evolved
as a result of numerous technological advances, the advent of trading
algorithms and automated trading, different investment patterns, a
plethora of new securities products, unprecedented levels of trading,
and developments in portfolio analysis and securities research.
    In addition, the 2015 Fee Changes would simplify firms'
administrative burdens by harmonizing the Plans' fee structures with
those under the CTA Plan, the CQ Plan and the OPRA Plan. The use of an
annual declaration for Non-Display Use reporting purposes would
alleviate the burden of counting devices used for non-trading purposes.
    The Participants note that the list of exchanges that have
previously implemented Non-Display fees includes the London Stock
Exchange, Nasdaq BX, Nasdaq PSX, Nasdaq, NYSE, NYSE MKT LLC and NYSE
Arca. They note that the OPRA Plan imposes Non-Display fees and that
they understand that the Participants in the CTA Plan and the CQ Plan
anticipate doing so shortly.
    The Participants hope that the reductions in the Professional
Subscriber Display Device rate will foster the widespread availability
of real-time market data. At the same time, the new fees for Non-
Display uses of market data would cause firms making Non-Display use of
data to make appropriate contributions to the costs of collecting,
processing and redistributing the data.
    In addition, the proposed fee changes would cause the Plan's fees
to sync more closely with fee structures under the CTA Plan, the CQ
Plan and the OPRA Plan. The proposed reductions in the Professional
Subscriber device fee would allow that fee to compare even more
favorably with the Professional Subscriber device fees payable under
those other Plans and with the Professional Subscriber device fees
charged for market data by the largest stock exchanges around the
world. The proposed Non-Display fees compare favorably with the
comparable fees that the Participants understand the Participants in
the CTA Plan and the CQ Plan intend to establish and with the Non-
Display fees that individual exchanges charge for their proprietary
products. The proposed increase in the per-query fees would harmonize
those fees with the per-query fees paid under the OPRA Plan and the
comparable fee that the Participants understand the Participants in the
CTA Plan and the CQ Plan intend to set.
    As a result, the 2015 Fee Amendments would promote consistency in
fee structures among the national market system plans, as well as
consistency with the preponderance of other market data providers. This
would make market data fees easier to administer for Data Feed
Recipients.

    In the Participants' view, the proposed fee schedule would result
in each category of Data Feed Recipient and data user contributing an
appropriate amount for their receipt and use of market data under the
Plan. The proposed fee schedule would provide for an equitable
allocation of dues, fees, and other charges among broker-dealers,
vendors, end-users and others receiving and using market data made
available under the Plan by recalibrating the fees to more closely
correspond to the different benefits different categories of users
derive from their different uses of the market data made available
under the Plan.
    The Participants propose to apply the revised fee schedule
uniformly to all constituents (including members of the Participant
markets and non-members). The Participants do not believe that the
proposed fee changes introduce terms that are unreasonably
discriminatory.
    The Participants note that fees under the CTA and CQ Plan compare
very favorably with the fees that individual exchanges charge for their
proprietary data products.

G. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plan

    Not applicable.

H. Approval by Sponsors in Accordance With Plan

    In accordance with Section IV(C)(2) of the Plan, more than two-
thirds of the Participants have approved the 2015 Fee Change.

I. Description of Operation of Facility Contemplated by the Proposed
Amendments

    Not applicable.

J. Terms and Conditions of Access

    See Item I(A) above.

K. Method of Determination and Imposition, and Amount of, Fees and
Charges

1. In General
    The Participants took a number of factors into account in deciding
to propose the 2015 Fee Changes. To begin, the Participants' market
data staff communicates on an on-going basis with all sectors of the
Participants' constituencies and assesses and analyzes the different
broker/dealer and investor business models. The staff has expertise in
the information needs of the Participants' constituents and used their
experience and judgment to form recommendations regarding the 2015 Fee
Changes, vetted those recommendations with constituents and revised
those recommendations based on the vetting process.
    Most significantly, the Participants went back and carefully
listened to the recommendations of their Advisory Committee. The Plan
requires the Advisory Committee to include, at a minimum, a broker-
dealer with a substantial retail investor customer base, a broker-
dealer with a substantial institutional investor customer base, an
alternative trading system, a data vendor, and an investor. Advisory
Committee members attend and participate in meetings of the
Participants and receive meeting materials. Members of the Advisory
Committee gave valuable input that the Participants used in crafting
the proposed 2015 Fee Changes. At several meetings of the Plan's
Operating Committee, Advisory Committee members gave valuable input
into the formulation of the 2014 Fee Amendments.
    In reassessing and rebalancing market data fees as proposed in the
amendments, the Participants took a number of factors into account in
addition to the views of its constituents, including:
    (a) Examining the impact that they expect attrition to have on
revenues;
    (b) crafting fee changes that will not have a significant impact on
total revenues generated under the Plans;
    (c) setting fees that compare favorably with fees that the biggest
exchanges around the globe and the CT/CQ Plan and the OPRA Plan charge
for similar services;
    (d) setting fees that require each category of market Data Feed
Recipient and end-user to contribute market data revenues that the
Participants believe are appropriate for that category;
    (e) crafting fee changes that appropriately differentiate between
constituents in today's environment (e.g., Non-Display firms vs.
registered representative firms; large firms vs. small firms;
redistributors vs. end-users); and
    (f) crafting fees that reduce administrative burdens of Data Feed
Recipients and, in the case of the new Non-Display Use fees, minimizes
administrative requirements.
2. An Overview of the Fairness and Reasonableness of Market Data Fees
and Revenues Under the Plans
a. The Fee Changes Will Have No Impact on Most Individual Investors
    The vast majority of Nonprofessional Subscribers (i.e., individual
investors) receive market data from their brokers and vendors. The
Participants impose Nonprofessional Subscriber fees on the brokers and
vendors (rather than the investors) and set those fees so low that most
brokers and vendors tend to absorb the fees, meaning that the vast
majority of individual investors do not pay for market data. The
Participants anticipate that the changes to the per-query fee would not
have a significant impact on the willingness of broker-dealers to
continue to pay the fee on behalf of their customers. The 2015 Fee
Changes, including the proposed increase in the per-query fee, will
thus have almost no impact on Nonprofessional investors.
b. The Fee Changes Respond to Customer Wishes
    The Fee Changes are fair and reasonable because they offer a
resolution to the call by industry participants for a simplified,
updated fee schedule that harmonizes with fee schedules under other
national market system plans and reduces administrative burdens, a
resolution that industry representatives on the Plans' Advisory
Committee have warmly embraced.
c. Long-Term Trend of Rate Reduction
    The existing constraints on fees for core market data under the
Plan have generally succeeded in reducing market data rates over time.
For example, when the effects of inflation are taken into account, the
average monthly rate payable for Professional Subscriber device has
consistently and dramatically fallen in real terms over the past 16
years. When inflation is taken into account, the real monthly cost of a
Professional Subscriber device was $20 in 1997; $17.84 in 2002; $15.48
in 2007 and $13.98 in 2012. Put differently, had price increases kept
pace with inflation, the cost of Professional usage of Level 1 data
would have increased from $20 in 1997 to $21.94 in 2001; $23.94 in
2005; $27.86 in 2009; and $29.80 in 2014.\11\
---------------------------------------------------------------------------

    \11\ Based on COLA changes, as found at www.ssa.gov.
---------------------------------------------------------------------------

d. Explosion of Data
    Although the device fees have fallen after taking inflation into
account, the amount of data message traffic that end-users receive by
subscribing has skyrocketed, as has the speed at which the data is
transmitted.
i. New Data Added to Consolidated Feeds
    The Participants have continually enhanced the consolidated feeds.
The enhancements provide significant value. They are critical to the
industry in that

they permit end-users to do such things as view new markets and
implement new regulation. Below is a list of the more significant
recent enhancements, including the addition of new Participants, new
indicators, new sale conditions, new reason codes and dedicated test
symbols.

------------------------------------------------------------------------
                                                        Milestones
------------------------------------------------------------------------
                                  2014
------------------------------------------------------------------------
January.........................................  Implemented January
                                                   2014 bid rate
                                                   changes:
                                                   Quotes:
                                                   379,500mps
                                                   Trades:
                                                   77,960mps
                                                  Cleaned SAN fiber
                                                   cable ends to resolve
                                                   intermittent
                                                   connectivity issue.
                                                  Reset network
                                                   interface on
                                                   monitoring server to
                                                   resolve connectivity
                                                   issue.
                                                  Implemented socket
                                                   handler fixes and ACE
                                                   library upgrade in
                                                   primary OMDF.
                                                  Backend in primary
                                                   production
                                                   environment.
                                                  Implemented
                                                   miscellaneous bug
                                                   fixes for several
                                                   internal components.
February........................................  Implemented socket
                                                   handler fixes and ACE
                                                   library upgrade in
                                                   secondary OMDF.
                                                  Backend in primary
                                                   production
                                                   environment and
                                                   disaster recovery
                                                   environment.
                                                  Implement bandwidth
                                                   increase for OMDF to
                                                   12,000mps.
                                                  Implemented daily .csv
                                                   file with 100ms peak
                                                   traffic rate data.
                                                  Increased OMDF
                                                   database transaction
                                                   log backup frequency
                                                   from 2 hours to 5
                                                   minutes.
                                                  Replaced faulty LUN
                                                   for SRA 2011
                                                   historical data.
                                                  Implemented load
                                                   balancer upgrade
                                                   (primary production
                                                   site).
                                                  Implemented peak
                                                   traffic statistics
                                                   spreadsheet
                                                   automation.
March...........................................  Implemented FEP
                                                   upgrade (primary
                                                   production site).
April...........................................  Implemented Reference
                                                   Price Calculator fix
                                                   for price band
                                                   clearing.
                                                  Implemented trade FEP
                                                   fix for regional
                                                   reference number
                                                   return.
                                                  Implemented penalty
                                                   report generation fix
                                                   for arithmetic
                                                   overflow.
                                                  Implemented quote FEP
                                                   fix for regional
                                                   reference number
                                                   return.
                                                  Implemented fix for
                                                   internal
                                                   acknowledgement issue
                                                   from April 3.
                                                  Implemented back end
                                                   server tuning
                                                   changes.
May.............................................  Removed CBSX bid rates
                                                   in UQ/UT resulting
                                                   from their
                                                   deactivation request.
                                                  Implemented database
                                                   server tuning
                                                   changes.
                                                  Extended Limit Up/
                                                   Limit Down price band
                                                   publication to market
                                                   close.
                                                  Upgraded firmware on
                                                   server in D/R
                                                   environment to
                                                   resolve reboot
                                                   issues.
June............................................  Implemented disaster
                                                   recovery build-out,
                                                   including F5 load
                                                   balancer and
                                                   automatic quote
                                                   wipeout on D/R
                                                   failover.
                                                  Upgraded firmware on
                                                   server in primary
                                                   production
                                                   environment to
                                                   resolve reboot
                                                   issues.
                                                  Upgraded BLU and Back
                                                   End components in
                                                   primary production
                                                   environment with D/R
                                                   build-out software
                                                   versions.
                                                  Upgraded FEP
                                                   components in primary
                                                   production
                                                   environment with D/R
                                                   build-out software
                                                   versions.
                                                  Implemented UQDF and
                                                   UTDF bandwidth
                                                   upgrade
                                                  Implemented
                                                   Republisher server
                                                   tuning changes.
July............................................  Implemented July 2014
                                                   bid rate changes:
                                                   Quotes:
                                                   483,400mps
                                                   Trades:
                                                   117,000mps
                                                  Implemented penalty
                                                   software using 100ms
                                                   measurement interval.
                                                  Implemented new
                                                   Supervisory Console
                                                   page.
                                                  Implemented
                                                   retransmission
                                                   handling fix for all
                                                   primary UQDF and UTDF
                                                   dissemination
                                                   components.
------------------------------------------------------------------------
                                  2013
------------------------------------------------------------------------
January.........................................  Implemented January
                                                   2013 bid rate
                                                   changes:
                                                   Quotes:
                                                   227,701mps
                                                   Trades:
                                                   38,300mps
                                                  Reconfigured UQDF,
                                                   UTDF, and OMDF
                                                   servers to restore
                                                   network switch
                                                   diversity for primary
                                                   and backup services.
                                                  Implemented Limit Up/
                                                   Limit Down Software
                                                   (no stocks eligible).
                                                  Implemented secure FTP
                                                   server for SRA.
                                                  Implemented UTP Data
                                                   Feed bandwidth
                                                   increase:
                                                   UQDF 256Mb--
                                                   400,000 MPS
                                                   UTDF 101 Mb--
                                                   150,000 MPS
                                                   OMDF 2 MB--
                                                   2,800 MPS
February........................................  Implemented reference
                                                   price calculator/
                                                   price band
                                                   dissemination.
                                                  Enabled test stocks
                                                   for limit up/limit
                                                   down.
March...........................................  Implemented reference
                                                   price calculator
                                                   changes.
                                                  Implemented software
                                                   fix for rejected `A4'
                                                   quote inputs.
                                                  Submitted as-of trade
                                                   reports for January
                                                   3rd issue.
                                                  Implemented new front
                                                   end software version
                                                   (fixes &
                                                   enhancements).
                                                  Implemented enhanced
                                                   reference price
                                                   calculator module.
                                                  Implemented patch for
                                                   memory growth issue
                                                   on one server.
                                                  Implemented patch for
                                                   memory growth issue
                                                   on three servers.
                                                  Implemented new front
                                                   end software version
                                                   (memory growth
                                                   issue).
                                                  Implemented fix for
                                                   LULD indicator value
                                                   during trading pause.
                                                  Changed UTP feed start
                                                   of day time from
                                                   4:00am to 3:58am.

April...........................................  Implemented Market
                                                   Wide Circuit Breaker
                                                   interface.
                                                  Retired legacy
                                                   Emergency Market
                                                   Conditions Halt/
                                                   Resume functions.
                                                  Enabled limit up/limit
                                                   down for 10 NASDAQ-
                                                   listed tier 1
                                                   securities.
                                                  Submitted additional
                                                   as-of trade reports
                                                   for January 3rd
                                                   issue.
                                                  Enabled limit up/limit
                                                   down for 19 NASDAQ-
                                                   listed tier 1
                                                   securities.
                                                  Implemented
                                                   information security
                                                   recommendations for
                                                   internal browser-
                                                   based applications
                                                   (monitoring and
                                                   console).
                                                  Enabled limit up/limit
                                                   down for 65 NASDAQ-
                                                   listed tier 1
                                                   securities.
                                                  Enabled limit up/limit
                                                   down for 77 NASDAQ-
                                                   listed tier 1
                                                   securities.
May.............................................  Enabled limit up/limit
                                                   down for 97 NASDAQ-
                                                   listed tier 1
                                                   securities.
                                                  Implemented reference
                                                   price calculator
                                                   disaster recovery
                                                   handling.
                                                  Changed time source
                                                   for servers running
                                                   reference price
                                                   calculators.
                                                  Resized ISG column to
                                                   handle full UQDF
                                                   session close recap
                                                   message.
                                                  Disabled ``Auto-run''
                                                   feature on all SIP
                                                   servers.
June............................................  Disabled hyper-
                                                   threading on servers
                                                   running reference
                                                   price calculators.
                                                  Implemented software
                                                   fix for incorrect
                                                   high price
                                                   calculation resulting
                                                   from trade
                                                   correction.
                                                  Manually failed over
                                                   primary UQDF5
                                                   dissemination
                                                   component to its
                                                   backup after market
                                                   close (to service
                                                   pending
                                                   retransmission
                                                   requests).
                                                  Updated multicast port
                                                   restriction range on
                                                   all SIP servers.
                                                  Implemented LULD limit
                                                   state release.
July............................................  Implemented July 2013
                                                   bid rate changes:
                                                   Quotes:
                                                   194,102mps
                                                   Trades:
                                                   36,102mps
                                                  Completed a
                                                   participant
                                                   connectivity request.
                                                  Implemented throttling
                                                   statistics collection
                                                   changes.
August..........................................  Enabled limit up/limit
                                                   down for 50 NASDAQ-
                                                   listed tier 2
                                                   securities.
                                                  Extended the price
                                                   band calculation and
                                                   dissemination period
                                                   (9:30am-3:45pm);
                                                   double-wide bands
                                                   calculated from
                                                   9:30am-9:45am and
                                                   3:35pm-3:45pm.
September.......................................  Rolled out UTDF
                                                   connectivity fix.
                                                  Enabled limit up/limit
                                                   down for 10% of
                                                   NASDAQ-listed tier 2
                                                   securities.
                                                  Enabled limit up/limit
                                                   down for an
                                                   additional 30% of
                                                   NASDAQ-listed
                                                   securities.
                                                  Enabled limit up/limit
                                                   down for all eligible
                                                   NASDAQ-listed
                                                   securities.
                                                  Implemented FEP
                                                   emergency fix on
                                                   quote server `A' in
                                                   primary site.
                                                  Implemented FEP
                                                   emergency fix on
                                                   quote server `C' and
                                                   trade server `A' in
                                                   primary site.
                                                  Replaced DIMM and
                                                   motherboard for
                                                   primary UQDF channel
                                                   5 server.
October.........................................  Implemented FEP
                                                   emergency fix on
                                                   quote server `E' and
                                                   trade server `C' in
                                                   primary site.
November........................................  Implemented FEP
                                                   emergency fix on all
                                                   remaining quote and
                                                   trade servers in
                                                   primary site.
                                                  Implemented FEP
                                                   emergency fix on all
                                                   servers in disaster
                                                   recovery environment.
December........................................  Implemented capacity
                                                   staging release.
                                                  Implemented
                                                   retransmission fix on
                                                   UQDF channel 6 in
                                                   primary site.
                                                  Implemented
                                                   retransmission fix on
                                                   UQDF channels 4 and 5
                                                   in primary site.
                                                  Implemented
                                                   retransmission fix on
                                                   UQDF channels through
                                                   3 in primary site.
                                                  Implemented
                                                   retransmission fix on
                                                   all UQDF channels in
                                                   disaster recovery
                                                   environment.
                                                  Replaced end-of-life
                                                   switch chassis (`A'
                                                   side).
                                                  Replaced failed power
                                                   supply for UTDF 5
                                                   primary server.
                                                  Implemented a browser
                                                   incompatibility fix
                                                   for the SIP
                                                   monitoring
                                                   application.
                                                  Implemented socket
                                                   handler fixes and ACE
                                                   library upgrade in
                                                   all primary quote and
                                                   trade BLUs in the
                                                   primary production
                                                   environment.
                                                  Upgraded power supply
                                                   and added a module to
                                                   `B' side switch.
                                                  Implemented socket
                                                   handler fixes and ACE
                                                   library upgrade in
                                                   all secondary quote
                                                   BLUs in the primary
                                                   production
                                                   environment.
                                                  Implemented socket
                                                   handler fixes and ACE
                                                   library upgrade in
                                                   all secondary trade
                                                   BLUs in the primary
                                                   production
                                                   environment.
                                                  Implemented socket
                                                   handler fixes and ACE
                                                   library upgrade in
                                                   all quote and trade
                                                   BLUs in the disaster
                                                   recovery environment.
                                                  Implemented trade
                                                   reporting
                                                   enhancements (odd
                                                   lots).
------------------------------------------------------------------------
                                  2012
------------------------------------------------------------------------
February........................................  Implemented UQDF
                                                   bandwidth increase to
                                                   175 Mbps.
                                                  Implemented a
                                                   connectivity request
                                                   for BATS and BATS-Y.
April...........................................  Implemented UTDF
                                                   Capacity Phase III
                                                   changes on UTDF
                                                   channel 1.
                                                  Implemented a
                                                   connectivity request
                                                   for NASDAQ.
May.............................................  Implemented UTDF
                                                   Capacity Phase III
                                                   changes on UTDF
                                                   channels 2-6.
October.........................................  Implemented
                                                   significant UQDF,
                                                   UTDF, and OMDF
                                                   message format
                                                   changes in
                                                   preparation for the
                                                   Limit Up/Limit Down
                                                   and Market-Wide
                                                   Circuit Breaker
                                                   initiatives.
                                                  Implemented support
                                                   for participants'
                                                   Retail Liquidity
                                                   programs.
------------------------------------------------------------------------
                                  2011
------------------------------------------------------------------------
January.........................................  UQDF bandwidth
                                                   increased to 96 Mbps,
                                                   approximately 175,000
                                                   messages per second
                                                   (MPS).
                                                  UTDF bandwidth
                                                   increased to 33.5
                                                   Mbps, approximately
                                                   60,000 mps.
May.............................................  Installed quote
                                                   processing
                                                   improvements for UQDF
                                                   channel 1.
June............................................  Installed quote
                                                   processing
                                                   improvements for UQDF
                                                   channel 2-6.

October.........................................  Implemented UQDF
                                                   Capacity Phase III
                                                   changes (throughput
                                                   and latency
                                                   improvements).
                                                  Implemented a network-
                                                   based end-to-end
                                                   latency measurement
                                                   solution.
November........................................  Implemented UQDF and
                                                   UTDF symbol
                                                   redistribution.
------------------------------------------------------------------------
                                  2010
------------------------------------------------------------------------
January.........................................  Updated quote and
                                                   trade capacity
                                                   thresholds based on
                                                   capacity study.
February........................................  Modified As Of trade
                                                   processing for
                                                   instruments trading
                                                   in a round lot of
                                                   less than 100 (e.g.
                                                   preferred stock,
                                                   convertible notes).
March...........................................  Implemented dynamic
                                                   throttling
                                                   communication
                                                   improvements.
                                                  Implemented quote
                                                   Front End
                                                   enhancements to
                                                   reduce CPU usage and
                                                   increased throughput.
                                                  Retired unused
                                                   participant input
                                                   lines.
April...........................................  Facilitated a request
                                                   from NASDAQ OMX PHLX
                                                   for input
                                                   connectivity.
                                                  Facilitated a request
                                                   from Bats-Y for input
                                                   connectivity.
May.............................................  Implemented UTDF
                                                   improvements to
                                                   increase throughput
                                                   and reduce latency.
June............................................  Implemented single-
                                                   stock circuit breaker
                                                   halt reason codes.
                                                  Activated participants
                                                   EDGA Exchange, Inc.
                                                   and EDGX Exchange,
                                                   Inc.
July............................................  Updated quote and
                                                   trade capacity
                                                   thresholds based on
                                                   capacity study.
August..........................................  Implemented short sale
                                                   trading restriction
                                                   messaging.
                                                  Enhanced market center-
                                                   specific non-
                                                   regulatory halts to
                                                   support liquidity
                                                   imbalances.
                                                  Increased UTDF
                                                   bandwidth to 12.5
                                                   Mbps in order to
                                                   accommodate
                                                   approximately 22,500
                                                   peak messages per
                                                   second.
                                                  Implemented daily peak
                                                   traffic rate CSV
                                                   files on SRA FTP
                                                   site.
September.......................................  Implemented daily peak
                                                   traffic rate
                                                   spreadsheet on SRA
                                                   FTP site.
                                                  Upgraded quote input
                                                   servers in the
                                                   primary production
                                                   environment.
October.........................................  Activated BATS-Y
                                                   Exchange.
                                                  Upgraded trade input
                                                   servers in the
                                                   primary production
                                                   environment.
                                                  Upgraded participant
                                                   input servers in the
                                                   disaster recovery
                                                   environment.
November........................................  Implemented
                                                   performance
                                                   improvements in
                                                   preparation for
                                                   bandwidth increases
                                                   in January 2011.
December........................................  Implemented
                                                   ``Consolidator''
                                                   model performance
                                                   improvements for
                                                   UTDF.
------------------------------------------------------------------------
                                  2009
------------------------------------------------------------------------
January.........................................  Expanded bandwidth for
                                                   UQDF to handle 53,600
                                                   messages per second
                                                   and UTDF to handle
                                                   8400 mps.
                                                  Modified quarterly
                                                   statistics report to
                                                   include date and time
                                                   of 5 minute peak
                                                   messaging.
February........................................  Implemented aberrant/
                                                   erroneous trade tool
                                                   to allow the SIP
                                                   operator to cancel or
                                                   error large
                                                   quantities of trades
                                                   at a participant's
                                                   request.
March...........................................  Enabled dynamic
                                                   throttling for
                                                   quotes.
                                                  Started beta phase for
                                                   penalty reports.
May.............................................  Implemented a latency
                                                   reduction enhancement
                                                   for quotes and
                                                   trades.
June............................................  Implemented SRA and
                                                   ISG changes in
                                                   preparation for
                                                   expansion of UQDF and
                                                   UTDF multicast
                                                   channels.
August..........................................  Expanded UQDF and UTDF
                                                   from three to six
                                                   multicast channels.
                                                  Increased UQDF
                                                   bandwidth to 56 Mbps
                                                   in order to
                                                   accommodate
                                                   approximately 100,000
                                                   peak messages per
                                                   second.
                                                  Increased UTDF
                                                   bandwidth to 8 Mbps
                                                   in order to
                                                   accommodate
                                                   approximately 15,000
                                                   peak messages per
                                                   second.
September.......................................  Implemented three new
                                                   participants (EDGA,
                                                   EDGX, and BYX) with
                                                   test quote and trade
                                                   ports.
                                                  Implemented metrics-
                                                   collection software
                                                   to improve
                                                   performance
                                                   monitoring.
October.........................................  Implemented Front End
                                                   performance
                                                   enhancements to
                                                   reduce CPU usage.
November........................................  Facilitated requests
                                                   from EDGA and EDGX
                                                   for input
                                                   connectivity.
December........................................  Implemented further
                                                   performance
                                                   enhancements to
                                                   reduce CPU usage.
                                                  Completed setup of a
                                                   NASDAQ-hosted website
                                                   for the UTP Plan
                                                   Administrator: http://www.utpplan.com/.
------------------------------------------------------------------------
                                  2008
------------------------------------------------------------------------
January.........................................  Support for new stock
                                                   option ``V'' Trade
                                                   modifier.
February........................................  Expanded UQDF
                                                   bandwidth from 7.8 to
                                                   12.5 megabits per
                                                   second (mbps) to
                                                   support approximately
                                                   23,300 messages per
                                                   second (mps).
March...........................................  Increased the field
                                                   size for participant
                                                   inbound sequence
                                                   number from 7 to 8
                                                   digits to support
                                                   increasing messaging
                                                   rates.
April...........................................  Facilitated a request
                                                   from BSX for input
                                                   connectivity.
June............................................  Implemented change to
                                                   support a new
                                                   Emergency Market
                                                   Condition quote
                                                   resume message.
July............................................  Expanded UQDF
                                                   bandwidth from 12.5
                                                   to 28.0 mbps to
                                                   support approximately
                                                   48,000 mps. UTDF
                                                   bandwidth was
                                                   expanded from 3.0 to
                                                   4.0 mbps to support
                                                   approximately 7,200
                                                   mps.
September.......................................  Facilitated a request
                                                   from BATS Exchange
                                                   Inc. for input
                                                   connectivity.
October.........................................  Activation of the BATS
                                                   Exchange as a new
                                                   participant in UQDF
                                                   and UTDF.
November........................................  Implemented a
                                                   participant quote
                                                   throttling mechanism
                                                   to protect the system
                                                   against instability
                                                   and high latency
                                                   during periods of
                                                   heavy traffic, while
                                                   guaranteeing each
                                                   participant full
                                                   access to its
                                                   projected peak rate.
December........................................  Upgraded SQL database
                                                   servers to SQL Server
                                                   2008 to enhance
                                                   database performance.
------------------------------------------------------------------------
                                  2007
------------------------------------------------------------------------
January.........................................  Support one, two, and
                                                   three character stock
                                                   symbols for NASDAQ
                                                   listed issuers, in
                                                   addition to the
                                                   currently used four-
                                                   and five-character
                                                   symbols.

February........................................  Regulation NMS
                                                   compliance for quotes
                                                   and trades--
                                                  Quotes: Replace
                                                   existing NASD quote
                                                   message with new
                                                   message that adds a
                                                   new 1 byte FINRA
                                                   appendage indicator.
                                                   Supports a new
                                                   appendage that
                                                   identifies FINRA best
                                                   bid Market
                                                   Participant ID (MPID)
                                                   and FINRA best offer
                                                   MPID.
                                                  Trades: Support new
                                                   trade through exempt
                                                   flag and new 4 byte
                                                   sale condition field.
                                                   This resulted in new
                                                   message formats for
                                                   long form trade
                                                   reports, trade
                                                   cancellations, and
                                                   trade corrections.
                                                  Introduce new Prior
                                                   Day As-Of Trade
                                                   message to allow
                                                   reporting a trade
                                                   that occurred prior
                                                   to the current
                                                   business day or to
                                                   cancel an erroneously
                                                   reported trade from a
                                                   previous day.
April...........................................  Facilitated a request
                                                   from NSX for input
                                                   connectivity.
June............................................  Facilitated a request
                                                   from NSX for input
                                                   connectivity.
July............................................  Implemented changes to
                                                   allow Cash Settlement
                                                   (C), Next Day (N),
                                                   and Seller Sale Days
                                                   Settlement (R) sale
                                                   conditions for trade
                                                   reports that are not
                                                   exempt from the trade-
                                                   through rule.
August..........................................  Facilitated a request
                                                   from ISE for input
                                                   connectivity.
September.......................................  Support for new Price
                                                   Variation (H) and
                                                   Cross (X) trade
                                                   modifiers.
                                                  Dissemination of the
                                                   bid tick indicator is
                                                   now inhibited.
December........................................  Enhancement to Quote
                                                   Wipeout processing to
                                                   improve processing
                                                   times.
------------------------------------------------------------------------

ii. Significant Improvements in Latency and Capacity
    The Participants have made numerous investments to improve system
speed and capacity, investments that are often overlooked by the
industry. The Participants regularly monitor and review the performance
of their SIP and make performance statistics available publicly on a
quarterly basis. They make investments to upgrade technology, upgrades
that enable the SIP to collect and disseminate the data ever more
quickly, even as the number of quotes and trades continues to rise. The
Participants will make future investments to handle the expected
continued rise in message traffic, and at even faster data
dissemination speeds.
    The information below shows that customers are getting the quote
and trade Data Feeds faster, as the latency of consolidated tape quote
and trade feeds has improved significantly in recent years. Average
quote feed latency declined from over 5 milliseconds at the end of 2009
to 0.520 milliseconds in July 2014 and average trade feed latency
declined from over 6 milliseconds at the end of 2009 to 0.565
milliseconds in July 2014, as shown below. Latency is measured from the
time a message received from a Participant is time-stamped by the
system, to the time that processing the message is completed.

----------------------------------------------------------------------------------------------------------------
                                                                 Average quote latency    Average trade latency
                             Month                                   (milliseconds)           (milliseconds)
----------------------------------------------------------------------------------------------------------------
Dec 2009......................................................                   5.2497                   6.2685
Dec 2010......................................................                   4.3267                   5.6796
Dec 2011......................................................                   2.5378                   7.8491
Dec 2012......................................................                   1.6837                   1.6328
Dec 2013......................................................                   1.1700                   1.2490
Jan 2014......................................................                   1.129                    1.237
Feb 2014......................................................                   1.282                    1.255
Mar 2014......................................................                   1.160                    1.313
Apr 2014......................................................                   0.894                    1.093
May 2014......................................................                   0.564                    0.641
Jun 2014......................................................                   0.589                    0.717
Jul 2014......................................................                   0.520                    0.565
----------------------------------------------------------------------------------------------------------------

iii. Significant Improvements in System Throughput, Measured by
Messages Per Second
    Investments in hardware and software have increased processing
power and enabled the systems to handle increasing throughput levels.
This is measured by peak capacity messages per second and is monitored
by looking at actual peak messages per second. SIP throughput continues
to increase in order to push out the increasing amounts of real-time
quote and trade data.
    Given the constant rise in peak messages, the SIP significantly
increased system capacity. As shown below, the system could handle peak
quotes per second of approximately 175,000 in 2010 and 707,000 in 2014,
an increase of more than 304 percent. The capacity for trades per
second increased from 36,000 in 2010 to 393,000 in 2014, an increase of
more than 990 percent. To better manage the rise in message traffic,
the Participants anticipate that capacity planning will move from
measuring messages per second to measuring messages per millisecond.
BILLING CODE 8011-01-P

[GRAPHIC] [TIFF OMITTED] TN07OC14.024

[GRAPHIC] [TIFF OMITTED] TN07OC14.025

BILLING CODE 8011-01-C
e. Vendor Fees
    Fees imposed by data vendors, whom the Commission does not
regulate, account for a vast majority of the global market data fees
incurred by the financial industry, according to Burton Taylor
Associates, cited in a research study by Atradia.\12\ In addition to
charging monthly subscription fees for end-users, market data vendors
may apply significant administration mark-up fees on top of exchange
market data fees. These mark-ups are not regulated and there is limited
transparency into how the rates are applied. These mark-ups do not
result in any additional revenues for the Participants; the vendors
alone profit from them.
---------------------------------------------------------------------------

    \12\ Atradia, The Cost of Access to Real Time Pre and Post Trade
Order Book Data in Europe, August 2010 (available at www.siia.net).
---------------------------------------------------------------------------

f. Declining Unit Purchase Costs for Customers
    Despite consolidated tape investments in new data fields,
additional capacity demands and latency improvements, users' unit
purchase costs for trade and quote data have declined significantly,
increasing the value of the data they receive from their subscriptions.
The amount of quote and trade data messages has increased significantly
while fees have remained unchanged, as shown below for the 2000 to 2013
timeframe.
    The average purchase cost of Plan quotes has steadily declined
since 2000. During that period, the average number of quotes per day
increased over 2,500 percent between 2000 and mid-2014, rising from 4.3
million in 2000 to 112 million in 2014. As a result, the average unit
purchase cost per one million quote messages for a customer incurring a
monthly Professional Subscriber fee of $20 in 2000 or $23 in 2014
declined over 95 percent during this period, falling from $4.61 in 2000
to $0.20 in 2014.
[GRAPHIC] [TIFF OMITTED] TN07OC14.026

    The average cost of last sale transaction reports also declined
over that period. For instance, in 1998, the Plan Processor received
reports for 155 million trades. By 2014, those numbers had increased to
over 11 million per day or over 2.2 billion trades. At the same time,
Professional Subscriber fees remained fairly constant and the
introduction of a Nonprofessional Subscriber fee and an enterprise
maximum reduced fees dramatically for whole categories of users and
expanded data distribution to thousands of other users.
    Of course, these calculations exclude entirely the high indirect
costs of producing consolidated data represented by the costs of each
exchange collecting and contributing data to create the consolidated
feeds. With respect to indirect costs, the Commission has previously
noted that ``any attempt to calculate the precise cost of market
information presents severe practical difficulties.'' \13\ In
commenting on the 1999 Concept Release, NYSE summarized many of the
``severe practical difficulties'' attendant to each Participant's
calculation of its data production and collection costs and we
incorporate that discussion here.\14\ In 1997, the indirect costs of
the Participants would have included the data production and collection
costs of eight national securities exchanges and one national
securities association. In 2014, that calculation would have to include
the data production and collection costs of the 15 Participants,
including 14 national securities exchanges and the Alternative Display
Facility and two Trade Reporting Facilities that FINRA, the lone
national securities association, maintains.
---------------------------------------------------------------------------

    \13\ See SEC 1999 Concept Release on ``Regulation of Market
Information Fees and Revenues'' (the ``1999 Concept Release'')
located at http://www.sec.gov/rules/concept/34-42208.htm.
    \14\ See footnote 11 of letter from James E. Buck, Senior Vice
President and Secretary, NYSE, April 10, 2000, located at http://www.sec.gov/rules/concept/s72899/buck1.htm.>
---------------------------------------------------------------------------

    In addition to those indirect costs, the costs of administering
market data

distribution under the Plan have increased dramatically, as the
administrator has rolled out new and enhanced tracking, data
management, and invoice management systems to accommodate vendors and
the industry and has enhanced its compliance-review capabilities.
3. Adequate Constraints on Fees
    Constituent boards, customer control and regulatory mechanisms
constrain fees for core market data now just as they have since
Congress established the fair-and-reasonable standard in 1975. Under
the Plan, NASDAQ, the listing market, typically takes the lead on
pricing and administrative proposals, vetting new proposals with the
other Participants, various Data Feed and end-users, and trade and
industry groups, and making modifications which improve or reevaluate
the original concept. Proposals are then taken to each Participant for
approval. However, significant market data user and regulatory
requirements constrain the Participant's ability to simply impose fee
changes, as demonstrated by the failed attempts earlier this year.
    The governing body of each Participant consists of representatives
of constituent firms and a large quotient of independent directors. The
Participants' constituent board members have the ultimate say on
whether the UTP Plan Operating Committee should submit fee proposals to
the Commission and whether the costs of operating the markets and the
costs of the market data function are fairly allocated among market
data users. That is, the users of market data and non-industry
representatives who sit on Participant boards get to determine whether
to support market data fee proposals. They also get to determine how
the various types of data users should pay their fair share and they
make decisions about funding technical infrastructure investments
needed to receive, process and safe-store the orders, quotations and
trade reports that give rise to the data. This cost allocation by
consensus is buttressed by Commission review and is superior to cost-
based rate-making.
    Indeed, in recent decades, Congress and federal agencies, including
the Commission, have increasingly moved away from intrusive, cost-based
ratemaking in favor of more market-oriented approaches to pricing. For
example, it was the intent of Congress in creating the national market
system to rely on competitive forces, where possible, to set the price
of market information.\15\ Consistent with this intent, an Advisory
Committee appointed by the Commission in 2001 to review market data
issues concluded that ``the `public utility' cost-based ratemaking
approach is resource-intensive, involves arbitrary judgments on
appropriate costs, and creates distortive economic incentives.'' \16\
In response, and consistent with the purposes of the Exchange Act, the
Commission has increasingly permitted competitive forces to determine
the prices of market data fees.\17\ This conclusion mirrors the
experience of other federal agencies that have come to reject cost-of-
service ratemaking as a cumbersome and impractical process that
stifled, rather than fostered, competition and innovation.\18\
---------------------------------------------------------------------------

    \15\ See Conference Report, H.R. Rep. No. 94-229, 94th Cong.,
1st Sess. 92 (1975), at 92 (``It is the intent of the conferees that
the national market system evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed.'').
    \16\ Report of the Advisory Committee on Market Information: A
Blueprint for Responsible Change, at Sec.  VII.D.3 (SEC Sept. 14,
2001); see also Stephen G. Breyer, Analyzing Regulatory Failure:
Mismatches, Less Restrictive Alternatives, and Reforms, 92 Harv. L.
Rev. 547, 565 (1979) (``[I]nsofar as one advocates price regulation
. . . as a `cure' for market failure, one must believe the market is
working very badly before advocating regulation as a cure. Given the
inability of regulation to reproduce the competitive market's price
signals, only severe market failure would make the regulatory game
worth the candle.'').
    \17\ See generally NetCoalition v. SEC, 615 F.3d 525, 533-35
(D.C. Cir. 2010).
    \18\ See, e.g., Elizabethtown Gas Co. v. FERC, 10 F.3d 866, 870
(D.C. Cir. 1993).
---------------------------------------------------------------------------

    Market forces are plainly adequate to constrain the prices for
market data proposed herein by the Plan and its Participants.
Constituent Board members are the Participants' market data customers.
When a critical mass of them voices a point of view, they can direct
the Participants how to act. This is part of what motivated the
Participants to propose the 2015 Fee Changes. The Commission's process,
including public comment as appropriate and when permitted by the
statutory language, then acts as an additional constraint on pricing.
Also, developments in technology make possible another important
constraint on market data prices for core data: There is nothing to
prevent one or more vendors, broker-dealers or other entities from
gathering prices and quotes across all Participants and creating a
consolidated data stream that would compete with the Plans' data
streams. The technology to consolidate multiple, disparate data streams
is readily available, and multiple markets have already introduced
products that compete with core data.

K. Method and Frequency of Processor Evaluation

    No Change.

L. Dispute Resolution

    No Change.

II. Rule 601(a)

A. Equity Securities for Which Transaction Reports Shall Be Required by
the Plan

    No Change.

B. Reporting Requirements

    No Change.

C. Manner of Collecting, Processing, Sequencing, Making Available and
Disseminating Last Sale Information

    No Change.

D. Manner of Consolidation

    No Change.

E. Standards and Methods Ensuring Promptness, Accuracy and Completeness
of Transaction Reports

    No Change.

F. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination

    No Change.

G. Terms of Access to Transaction Reports

    See Item I(A).

H. Identification of Marketplace of Execution

    No Change.

III. Solicitation of Comments

    The Commission seeks general comments on Amendment No. 32.
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposal 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 S7-24-89 on the subject line.

Paper Comments

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

All submissions should refer to File Number S7-24-89. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of
the submission, all written statements with respect to the proposed
Plan Amendment that are filed with the Commission, and all written
communications relating to the proposed Plan Amendment between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room on official business days between the hours of 10:00
a.m. and 3:00 p.m. Copies of the Amendments 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 S7-24-89 and should be
submitted on or before October 28, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(27).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-23838 Filed 10-6-14; 8:45 am]
BILLING CODE 8011-01-P