[Federal Register: January 23, 2006 (Volume 71, Number 14)]
[Notices]
[Page 3569-3570]
[DOCID:fr23ja06-102]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53116; File No. SR-Amex-2006-002]

Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Odd-Lots in Nasdaq Securities

January 13, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 4, 2006, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Amex. The Exchange filed
the proposal as a ``non-controversial'' rule change pursuant to Section
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which
renders the proposed rule change effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Amex proposes to extend for an additional six-month period through
June 30, 2006, the Exchange's pilot program for odd-lot execution
procedures for Nasdaq securities traded on the Exchange pursuant to
unlisted trading privileges. There is no proposed rule text. Amex is
making no changes to the pilot program as it currently operates, other
than extending it through June 30, 2006.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Amex included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. Amex has prepared summaries, set forth in Sections A, B,
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Commission approved, and the Exchange implemented, a pilot
program for odd-lot order \5\ executions in Nasdaq securities
transacted on the Exchange pursuant to unlisted trading privileges.
Paragraph (j) of Amex Rule 118 (``Trading in Nasdaq National Market
Securities'') describes the Exchange's odd-lot execution procedures for
Nasdaq securities, and Commentary .05 of Amex Rule 205 (``Manner of
Executing Odd-Lot Orders'') references Amex Rule 118(j) odd-lot
procedures. The pilot program was originally approved on August 2, 2002
for a six-month period, was most recently extended on June 30, 2005,
and is due to expire on December 30, 2005.\6\
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    \5\ An odd-lot order is an order for less than 100 shares.
    \6\ The pilot program originally approved on August 2, 2002 was
subsequently extended on July 14, 2003; December 24, 2003; June 14,
2004; December 27, 2004; and July 6, 2005. See Securities Exchange
Act Release Nos. 46304 (August 2, 2002), 67 FR 51903 (August 9,
2002) (SR-Amex-2002-56); 48174 (July 14, 2003), 68 FR 43409 (July
22, 2003) (SR-Amex-2003-56); 48995 (December 24, 2003), 68 FR 75670
(December 31, 2003) (SR-Amex-2003-102); 49855 (June 14, 2004), 69 FR
35399 (June 24, 2004) (SR-Amex-2004-30); 50934 (December 27, 2004),
70 FR 412 (January 4, 2005) (SR-Amex-2004-108); 51975 (July 6,
2005); and 70 FR 40409 (July 13, 2005) (SR-Amex-2005-065).
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    Under the Exchange's current pilot program, after the opening of
trading in Nasdaq securities, odd-lot market orders and executable odd-
lot limit orders are executed at the qualified national best bid or
offer \7\ at the time the order is received at the trading post or
through Amex Order File. Odd-lot market orders and executable odd-lot
limit orders entered before the opening of trading in Nasdaq securities
are executed at the price of the first round-lot or part of round-lot
transaction on the Exchange. Non-executable limit orders, stop orders,
stop limit orders, orders filled after the close and non-regular way
trades are executed in accordance with Amex Rule 205 A(2), A(3), A(4),
C(1), and C(2), respectively. Orders to buy or sell ``at the close''
are filled at the price of the closing round-lot sale on the Exchange.
In a locked market condition, odd-lot market orders and executable odd-
lot limit orders are executed at the locked market price. In a crossed
market condition, odd-lot market orders are executed at the mean of the
bid and offer prices when the displayed national best bid is higher
than the displayed national best offer by $.05 or less. When the
displayed national best bid is higher than the displayed national best
offer by more than $.05, odd-lot market orders are executed when the
crossed market condition no longer exists. In addition, in a crossed
market condition, executable odd-lot limit orders are executed at the
crossed market bid price (in the case of an order to sell) or at the
crossed market offer price (in the case of an order to buy). For
example, if the bid and offer are 20.10 and 20.00, respectively, an
executable odd-lot sell limit order priced at 20.10 or less will be
executed at 20.10 and an executable odd-lot buy limit order priced at
20.00 or higher will be executed at 20.00.
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    \7\ In Amex Rule 118(j), the qualified national best bid and
offer are defined as the highest bid and lowest offer, respectively,
disseminated (A) by the Exchange or (B) by another market center
participating in 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
(``Plan''); provided, however, that the bid and offer in another
such market center will be considered in determining the qualified
national best bid or offer in a stock only if (i) the quotation
conforms to the requirements of Amex Rule 127 (``Minimum Price
Variations''), (ii) the quotation does not result in a locked or
crossed market, (iii) the market center is not experiencing
operational or system problems with respect to the dissemination of
quotation information, and (iv) the bid or offer is ``firm,'' that
is, members of the market center disseminating the bid or offer are
not relieved of their obligations with respect to such bid or offer
under paragraph (b)(2) of Rule 602 pursuant to the ``unusual
market'' exception of paragraph (a)(3)(i) of Rule 602 under the Act.
17 CFR 242.602.
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    The Exchange believes that the existing odd-lot execution
procedures have operated efficiently. Furthermore, the Exchange has
received no complaints from members or the public regarding odd-lot
executions. Therefore, the Exchange seeks an extension to the pilot
program for an additional six-month period through June 30, 2006,
providing the Exchange time to assess

further enhancements to the odd-lot execution procedures.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \8\ in general and furthers the objectives
of Section 6(b)(5) \9\ in particular in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, to protect investors and the
public interest and is not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) \10\ of the Act and Rule 19b-4(f)(6)
thereunder.\11\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6). Rule 19b-4(f)(6)(iii) under the Act
requires the self-regulatory organization to provide the Commission
written notice of its intent to file the proposed rule change at
least five business days (or such shorter time as designated by the
Commission) before doing so. Amex has requested that the Commission
waive the five-day pre-filing notice requirement. The Commission
granted Amex's request.
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    Amex requests that the Commission waive the 30-day operative delay,
as specified in Rule 19b-4(f)(6)(iii),\12\ and designate the proposed
rule change to become operative immediately. The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest because such waiver
would allow the pilot program to continue operating through June 30,
2006 without interruption.\13\
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the operative delay for this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File No. SR-Amex-2006-002 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-Amex-2006-002. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of Amex.
    All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-Amex-2006-002
and should be submitted on or before February 13, 2006.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
Nancy M. Morris,
Secretary.
[FR Doc. E6-698 Filed 1-20-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 87, Number 73 (Friday, April 15, 2022)]
[Notices]
[Page 22543]
[FR Doc No: 2022-08138]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Docket ID FEMA-2022-0002; Internal Agency Docket No. FEMA-B-2204]

Proposed Flood Hazard Determinations for Chesterfield County,
Virginia (All Jurisdictions)

AGENCY: Federal Emergency Management Agency, Department of Homeland
Security.

ACTION: Notice; withdrawal.

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SUMMARY: The Federal Emergency Management Agency (FEMA) is withdrawing
its proposed notice concerning proposed flood hazard determinations,
which may include the addition or modification of any Base Flood
Elevation, base flood depth, Special Flood Hazard Area boundary or zone
designation, or regulatory floodway (herein after referred to as
proposed flood hazard determinations) on the Flood Insurance Rate Maps
and, where applicable, in the supporting Flood Insurance Study reports
for Chesterfield County, Virginia (All Jurisdictions).

DATES: This withdrawal is effective April 15, 2022.

ADDRESSES: You may submit comments, identified by Docket No. FEMA-B-
2204 to Rick Sacbibit, Chief, Engineering Services Branch, Federal
Insurance and Mitigation Administration, FEMA, 400 C Street SW,
Washington, DC 20472,<PHONE_NUMBER>, or (email)
[email protected].

FOR FURTHER INFORMATION CONTACT: Rick Sacbibit, Chief, Engineering
Services Branch, Federal Insurance and Mitigation Administration, FEMA,
400 C Street SW, Washington, DC 20472,<PHONE_NUMBER>, or (email)
[email protected].

SUPPLEMENTARY INFORMATION: On January 27, 2022, FEMA published a
proposed notice at 87 FR 4273, proposing flood hazard determinations
for Chesterfield County, Virginia (All Jurisdictions). FEMA is
withdrawing the proposed notice.
    Authority: 42 U.S.C. 4104; 44 CFR 67.4.

Michael M. Grimm,
Assistant Administrator for Risk Management, Department of Homeland
Security, Federal Emergency Management Agency.
[FR Doc. 2022-08138 Filed 4-14-22; 8:45 am]
BILLING CODE 911-12-P


[Federal Register Volume 78, Number 123 (Wednesday, June 26, 2013)]
[Notices]
[Pages 38424-38429]
[FR Doc No: 2013-15226]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69806; File No. SR-ISE-2013-39]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Establish a Managed Data Access Service, on a Pilot Basis,
for the Sale of a Number of Market Data Products Currently Offered by
the Exchange

June 20, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 6, 2013, the International Securities Exchange, LLC (the
``Exchange'' or the ``ISE'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The ISE proposes to amend its Schedule of Fees to establish a
pricing structure, on a pilot basis, called Managed Data Access Service
for the sale of a number of real-time market data products currently
offered by the Exchange. The text of the proposed rule change is
available on the Exchange's Web site (http://www.ise.com), at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections A, B, and C below, of the
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    ISE proposes to amend its Schedule of Fees to establish a pricing
structure for a new data distribution model called Managed Data Access
Service for the sale of a number of real-time market data products
currently offered by the Exchange. With this proposed rule change, the
Exchange proposes to establish Managed Data Access Service for the
following real-time market data feeds, each of which is currently
offered by the Exchange on a subscription basis: The ISE Real-time
Depth of Market Raw Data Feed,\3\ the ISE Order Feed,\4\ the ISE Top
Quote Feed and the ISE Spread Feed \5\ (the ``ISE Data Feeds'').
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    \3\ See Securities Exchange Act Release Nos. 59949 (May 20,
2009), 74 FR 25593 (May 28, 2009) (SR-ISE-2007-97); and 63324
(November 17, 2010), 75 FR 71475 (November 23, 2010) (SR-ISE-2010-
103).
    \4\ See Securities Exchange Act Release No. 62399 (June 28,
2010), 75 FR 38587 (July 2, 2010) (SR-ISE-2010-34).
    \5\ See Securities Exchange Act Release No. 65002 (August 1,
2011), 76 FR 47630 (August 5, 2011) (SR-ISE-2011-50).
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    With this proposed rule change, the Exchange seeks to further the
distribution of the ISE Data Feeds.\6\ The proposed new pricing and
administrative option is in response to industry demand, as well as due
to improvements in the contractual administration and the technology
used to distribute market data. The Exchange already offers the ISE
Data Feeds on a subscription basis and has determined to implement
Managed Data Access Service for the ISE Data Feeds on a pilot basis,
until November 30, 2013, to gauge the level of interest in this new
pricing and distribution model. The Exchange will submit a proposed
rule change at the end of the pilot period to either continue this new
offering or to terminate it.
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    \6\ The Exchange notes that a managed data solution is not a
novel distribution model. ISE currently offers Managed Data Access
Service for the ISE Implied Volatility and Greeks Feed, a real-time
market data offering. See Securities Exchange Act Release No. 65678
(November 3, 2011), 76 FR 70178 (November 10, 2011) (SR-ISE-2011-
67). A number of other exchanges have adopted Managed Data Access
Service to distribute their proprietary market data. See e.g.
Securities Exchange Act Release Nos. 63276 (November 8, 2010), 75 FR
69717 (November 15, 2010) (SR-NASDAQ-2010-138); and 69182 (March 19,
2013), 78 FR 18378 (March 26, 2013) (SR-PHLX-2013-28).
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    Managed Data Access Service provides an alternative delivery option
for the ISE Data Feeds. Managed Data Access Service is any
retransmission of the ISE Data Feeds by a Managed Data Access
Distributor \7\ where the Managed Data Access Distributor manages and
monitors, but does not necessarily control, the information. Managed
Data Access Service is a pricing and administrative option that will
assess fees to Managed Data Access Distributors. Under this
distribution model, Managed Data Access Distributors are required to
monitor the delivery of the data in the Managed Data Access Service to
their clients, the Managed Data Access Recipients.\8\ The Managed Data
Access Distributor must also agree to reformat, redisplay and/or alter
the ISE Data Feeds prior to retransmission without affecting the
integrity of the ISE Data Feeds and without rendering any of the feeds
inaccurate, unfair, uninformative, fictitious, misleading, or
discriminatory.
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    \7\ A Managed Data Access Distributor redistributes the ISE Data
Feeds that permits [sic] access to the information in the ISE Data
Feeds through a controlled device. A Managed Data Access Distributor
can also redistribute a data feed solution to specific IP addresses,
including an Application Programming Interface (API) or similar
automated delivery solutions, with only limited entitlement controls
(e.g., usernames and/or passwords) to a recipient of the
information.
    \8\ A Managed Data Access Recipient is a subscriber to the
Managed Data Access Distributor who receives a reformatted data feed
in a controlled device or at a specific IP address.
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    In the past, retransmissions were considered to be an uncontrolled
data product if the Managed Data Access Distributor did not control
both the entitlements and the display of the information. Over the last
several years, Managed Data Access Distributors have improved the
technical delivery and monitoring capabilities of data therefore
Managed Data Access Service is a response to an industry need to
administer new types of technical deliveries and pricing options.
    ISE notes that some Managed Data Access Distributors believe that
Managed Data Access Service is a better controlled data feed product
and as such should not be subject to the same rates as a data feed.
However, Managed Data Access Distributors may only have contractual
control over the data and may not be able to verify how Managed Data
Access Recipients are actually using the data, at least without
involvement of the Managed Data Access Recipient. The Exchange's
proposal to offer Managed Data Access Service to Managed Data Access
Distributors would assist in the management of the uncontrolled data
product on behalf of their Managed Data Recipients by contractually
restricting the data flow and monitoring the delivery. The Exchange
will maintain contracts with Managed Data Access Recipients, who may be
liable for any unauthorized use under the Managed Data Access Service.
The proposed Managed Data Access Service for the ISE Data Feeds would
allow Managed Data Access Distributors to deliver Managed Data Access
Service to their clients and would allow Professional and Non-
Professional \9\ users to use the ISE Data Feeds for their own use.
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    \9\ In differentiating between Professional and Non-Professional
subscribers, the Exchange proposes to apply the same criteria for
qualification as a Non-Professional subscriber as the Consolidated
Tape Association (``CTA'') Plan and Consolidated Quotation System
Plan Participants use. Accordingly, a ``Non-Professional
Subscriber'' is an authorized end-user of the ISE Data Feeds who is
a natural person and who is neither: (a) Registered or qualified
with the Securities and Exchange Commission, the Commodities Futures
Trading Commission, any state securities agency, any securities
exchange or association, or any commodities or futures contract
market or association; (b) engaged as an ``investment advisor'' as
that term is defined Section 202(a)(11) of the Investment Advisers
Act of 1940 (whether or not registered or qualified under that act);
nor (c) employed by a bank or other organization exempt from
registration under Federal and/or state securities laws to perform
functions that would require him/her to be so registered or
qualified if he/she were to perform such functions for an
organization not so exempt. A ``Professional Subscriber'' is an
authorized end-user of the ISE Data Feeds that has not qualified as
a Non- Professional Subscriber.
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    The Exchange proposes to charge for Managed Data Access Service for
the ISE Data Feeds, as follows:
     For the ISE Real-time Depth of Market Raw Data Feed:
    [cir] $2,500 per month per Managed Data Access Distributor.
    [cir] $750 per month per IP address for redistribution by a Managed
Data Access Distributor to a Managed Data Access Recipient, who may be
a Professional or Non-Professional user. This fee is charged per IP
address, which covers both primary and back-up IP addresses, at a
Managed Data Access Recipient.
    [cir] $50 per month per controlled device for redistribution by a
Managed Data Access Distributor to a Managed Data Access Recipient who
is a Professional user.
    [cir] $5 per month per controlled device for redistribution by a
Managed Data Access Distributor to a Managed Data Access Recipient who
is a Non-Professional use [sic].
    A Managed Data Access Distributor for the ISE Real-time Depth of
Market Raw Data Feed is subject to a minimum fee of $5,000 per month.
     For the ISE Top Quote Feed:
    [cir] $1,500 per month per Managed Data Access Distributor.
    [cir] $500 per month per IP address for redistribution by a Managed
Data Access Distributor to a Managed Data

Access Recipient, who may be a Professional or Non-Professional user.
This fee is charged per IP address, which covers both primary and back-
up IP addresses, at a Managed Data Access Recipient.
    [cir] $20 per month per controlled device for redistribution by a
Managed Data Access Distributor to a Managed Data Access Recipient who
is a Professional user. There is no controlled device fee for Non-
Professional users.
    A Managed Data Access Distributor for the ISE Top Quote Feed is
subject to a minimum fee of $3,000 per month.
     For the ISE Spread Feed:
    [cir] $1,500 per month per Managed Data Access Distributor.
    [cir] $500 per month per IP address for redistribution by a Managed
Data Access Distributor to a Managed Data Access Recipient, who may be
a Professional or Non-Professional user. This fee is charged per IP
address, which covers both primary and back-up IP addresses, at a
Managed Data Access Recipient.
    [cir] $25 per month per controlled device for redistribution by a
Managed Data Access Distributor to a Managed Data Access Recipient who
is a Professional user. There is no controlled device fee for Non-
Professional users.
    A Managed Data Access Distributor for the ISE Spread Feed is
subject to a minimum fee of $3,000 per month.
     For the ISE Order Feed:
    [cir] $1,000 per month per Managed Data Access Distributor.
    [cir] $350 per month per IP address for redistribution by a Managed
Data Access Distributor to a Managed Data Access Recipient, who may be
a Professional or Non-Professional user. This fee is charged per IP
address, which covers both primary and back-up IP addresses, at a
Managed Data Access Recipient.
    [cir] $10 per month per controlled device for redistribution by a
Managed Data Access Distributor to a Managed Data Access Recipient who
is a Professional user. There is no controlled device fee for Non-
Professional users.
    A Managed Data Access Distributor for the ISE Order Feed is subject
to a minimum fee of $2,000 per month.
    The Exchange also proposes to adopt a multi-product discount for
subscriptions to more than one data feed, much like what the Exchange
currently offers to subscribers of the ISE Data Feeds. Specifically,
subscription fees will be discounted by 10% for customers who subscribe
to two data feeds and by 20% for customers who subscribe to three data
feeds. Customers who subscribe to the ISE Real-time Depth of Market Raw
Data Feed and ISE Top Quote Feed only pay for the ISE Real-time Depth
of Market Raw Data Feed (because the ISE Top Quote Feed is embedded in
the ISE Real-time Depth of Market Raw Data Feed) and such subscription
thus counts as one feed for the purpose of the discount.
    The Exchange notes that while the proposed Managed Data Access
Service will produce inherent latency for customers, this proposed rule
change will also lower the fee for current and potential future
recipients of the ISE Data Feeds. Accordingly, the Exchange believes
that the proposed rule change establishes a program that allows all
Exchange members and Managed Data Access Distributors a practicable
methodology to assess and receive Managed Data Access Service for the
ISE Data Feeds, similar to services offered by other exchanges.
    The Exchange has designated this proposed rule change to be
operative on June 6, 2013.\10\
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    \10\ The same fees were operative on June 1, 2013 under SR-ISE-
2013-35 which the Exchange withdrew and replaced with SR-ISE-2013-39
on June 6, 2013.
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2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'')
for this proposed rule change is the requirement under Section 6(b)(4)
that an exchange have an equitable allocation of reasonable dues, fees
and other charges among its members and other persons using its
facilities. The Exchange believes that the proposed rule change is
consistent with the provisions of Section 6 of the Act,\11\ in general,
and with Sections 6(b)(4) of the Act,\12\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility or system which ISE operates or controls.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is also
consistent with Section 6(b)(8) of the Act \13\ in that it does not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The fees charged would be the
same for all similarly-situated market participants, and therefore do
not unreasonably discriminate among market participants.
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    \13\ 15 U.S.C. 78f(b)(8).
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    In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility of
offer new and unique market data to the public. It was believed that
this authority would expand the amount of data available to consumers,
and also spur innovation and competition for the provision of market
data.
    The Commission concluded that Regulation NMS--by deregulating the
market in proprietary data--would itself further the Act's goals of
facilitating efficiency and competition:

    [E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to
receive (and pay for) such data. The Commission also believes that
efficiency is promoted when broker-dealers may choose to receive
(and pay for) additional market data based on their own internal
analysis of the need for such data.\14\
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).

    By removing ``unnecessary regulatory restrictions'' on the ability
of exchanges to sell their own data, Regulation NMS advanced the goals
of the Act and the principles reflected in its legislative history. If
the free market should determine whether proprietary data is sold to
broker-dealers at all, it follows that the price at which such data is
sold should be set by the market as well.
    On July 21, 2010, President Barak Obama signed into law H.R. 4173,
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(``Dodd-Frank Act''), which amended Section 19 of the Act. Among other
things, Section 916 of the Dodd-Frank Act amended paragraph (A) of
Section 19(b)(3) of the Act by inserting the phrase ``on any person,
whether or not the person is a member of the self-regulatory
organization'' after ``due, fee or other charge imposed by the self-
regulatory organization.'' As a result, all SRO rule proposals
establishing or changing dues, fees, or other charges are immediately
effective upon filing regardless of whether such dues, fees, or other
charges are imposed on members of the SRO, non-members, or both.
Section 916 further amended paragraph (C) of Section 19(b)(3) of the
Act to read, in pertinent part, ``At any time within the 60-day period
beginning on the date of filing of such a proposed rule change in
accordance with the provisions of paragraph (1) [of Section 19(b)], the
Commission summarily may temporarily suspend the change in the rules of
the self-regulatory organization made thereby, if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of this title. If the Commission

takes such action, the Commission shall institute proceedings under
paragraph (2)(B) [of Section 19(b)] to determine whether the proposed
rule should be approved or disapproved.''
    The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010), although reviewing a Commission decision made prior to the
effective date of the Dodd-Frank Act, upheld the Commission's reliance
upon competitive markets to set reasonable and equitably allocated fees
for market data. ``In fact, the legislative history indicates that the
Congress intended that the market system `evolve through the interplay
of competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.' '' \15\
---------------------------------------------------------------------------

    \15\ NetCoalition, at 535 (quoting H.R. Rep. No. 94-229, at 92
(1975), as reprinted in 1975 U.S.C.C.A.N. 321, 323).
---------------------------------------------------------------------------

    ISE believes that the proposed fees are fair and equitable, and not
unreasonably discriminatory. The proposed fees are based on pricing
conventions and distinctions that currently exist at ISE. These
distinctions (e.g. Professional versus Non-Professional, internal
versus external distribution, controlled versus uncontrolled datafeed)
are each based on principles of fairness and equity that have helped
for many years to maintain fair, equitable, and not unreasonably
discriminatory fees, and that apply with equal or greater force to the
current proposal. ISE believes that the Managed Data Access Service
promotes broader distribution of controlled data, although with some
potential added latency while offering a fee reduction in the form of a
pricing option which should result in lower fees for Subscribers. The
Managed Data Access Service proposal is reasonable in that it offers a
methodology to get Managed Data Access Service for the ISE Data Feeds
for less. It is equitable in that it provides an opportunity for all
distributors and subscribers, Professional and Non-Professional, to get
Managed Data Access Service for the ISE Data Feeds without unfairly
discriminating against any. ISE is constrained in pricing the Managed
Data Access Service for the ISE Data Feeds by the availability to
market participants of alternatives to purchasing ISE products. ISE
must consider the extent to which market participants would choose one
or more alternatives instead of purchasing the Exchange's data. Thus,
if ISE has calculated improperly and the market deems the proposed fees
to be unfair, inequitable, or unreasonably discriminatory, firms can
diminish or discontinue the use of their data because the proposed fees
are entirely optional to all parties. Firms are not required to choose
to purchase Managed Data Access Service for the ISE Data Feeds or to
utilize any specific pricing alternative. ISE is not required to make
Managed Data Access Service for the ISE Data Feeds available or to
offer specific pricing alternatives for potential purchases. ISE
continues to establish and revise pricing policies aimed at increasing
fairness and equitable allocation of fees among Subscribers. Finally,
as noted above, the Exchange proposes to adopt this new offering on a
pilot basis, until November 30, 2013, at which time the Exchange will
determine whether or not to continue this offering.

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

    ISE does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. Notwithstanding its
determination that the Commission may rely upon competition to
establish fair and equitably allocated fees for market data, the
NetCoaltion [sic] court found that the Commission had not, in that
case, compiled a record that adequately supported its conclusion that
the market for the data at issue in the case was competitive. ISE
believes that a record may readily be established to demonstrate the
competitive nature of the market in question.
    The proposed rule change is, as described below, pro-competitive.
The proposed rule change offers an overall fee reduction, which is, by
its nature, pro-competitive. Moreover, there is intense competition
between trading platforms that provide transaction execution and
routing services and proprietary data products. Transaction execution
and proprietary data products are complementary in that market data is
both an input and a byproduct of the execution service. In fact, market
data and trade execution are a paradigmatic example [sic] of joint
products with joint costs. The decision whether and on which platform
to post an order will depend on the attributes of the platform where
the order can be posted, including the execution fees, data quality and
price and distribution of its data products. Without the prospect of a
taking order seeing and reacting to a posted order on a particular
platform, the posting of the order would accomplish little. Without
orders entered and trades executed, exchange data products cannot
exist. Data products are valuable to many end users only insofar as
they provide information that end users expect will assist them or
their customers in making trading decisions.
    The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. The total return that a
trading platform earns reflects the revenues it receives from both
products and the joint costs it incurs. Moreover, an exchange's
customers view the costs of transaction executions and of data as a
unified cost of doing business with the exchange. A broker-dealer will
direct orders to a particular exchange only if the expected revenues
from executing trades on the exchange exceed net transaction execution
costs and the cost of data that the broker-dealer chooses to buy to
support its trading decisions (or those of its customers). The choice
of data products is, in turn, a product of the value of the products in
making profitable trading decisions. If the cost of the product exceeds
its expected value, the broker-dealer will choose not to buy it.
    Moreover, as a broker-dealer chooses to direct fewer orders to a
particular exchange, the value of the product to that broker-dealer
decrease [sic], for two reasons. First, the product will contain less
information, because executions of the broker-dealer's orders will not
be reflected in it. Second, and perhaps more important, the product
will be less valuable to that broker-dealer because it does not provide
information about the venue to which it is directing its orders. Data
from the competing venue to which the broker-dealer is directing orders
will become correspondingly more valuable. Thus, a super-competitive
increase in the fees charged for either transactions or data has the
potential to impair revenues from both products.
    ``No one disputes that competition for order flow is `fierce'.''
\16\ However, the existence of fierce competition for order flow
implies a high degree of price sensitivity on the part of broker-
dealers with order flow, since they may readily reduce costs by
directing orders toward the lowest-cost trading venues. A

broker-dealer that shifted its order flow from one platform to another
in response to order execution price differentials would both reduce
the value of that platform's market data and reduce its own need to
consume data from the disfavored platform. Similarly, if a platform
increases its market data fees, the change will affect the overall cost
of doing business with the platform, and affected broker-dealers will
assess whether they can lower their trading costs by directing orders
elsewhere and thereby lessening the need for the more expensive data.
---------------------------------------------------------------------------

    \16\ NetCoalition, at 24 [sic].
---------------------------------------------------------------------------

    Analyzing the cost of market data distribution in isolation from
the cost of all of the inputs supporting the creation of market data
will inevitably underestimate the cost of the data. Thus, because it is
impossible to create data without a fast, technologically robust, and
well-regulated execution system, system costs and regulatory costs
affect the price of market data. It would be equally misleading,
however, to attribute all of the exchange's costs to the market data
portion of an exchange's joint product. Rather, all of the exchange's
costs are incurred for the unified purposes of attracting order flow,
executing and/or routing orders, and generating and selling data about
market activity. The total return that an exchange earns reflects the
revenues it receives from the joint products and the total costs of the
joint products.
    Competition among trading platforms can be expected to constrain
the aggregate return each platform earns from the sale of its joint
products, but different platforms may choose from a range of possible,
and equally reasonable, pricing strategies as the means of recovering
total costs. For example, some platform may choose to pay rebates to
attract orders, charge relatively low prices for market information (or
provide information free of charge) and charge relatively high prices
for accessing posted liquidity. Other platforms may choose a strategy
of paying lower rebates (or no rebates) to attract orders, setting
relatively high prices for market information, and setting relatively
low prices for accessing posted liquidity. In this environment, there
is no economic basis for regulating maximum prices for one of the joint
products in an industry in which suppliers face competitive constraints
with regard to the joint offering.
    The market for market data products is competitive and inherently
contestable because there is fierce competition for the inputs
necessary to the creation of proprietary data and strict pricing
discipline for the proprietary products themselves. Numerous exchanges
compete with each other for listings, trades, and market data itself,
providing virtually limitless opportunities for entrepreneurs who wish
to produce and distribute their own market data. This proprietary data
is produced by each individual exchange, as well as other entities, in
a vigorously competitive market.
    Broker-dealers currently have numerous alternative venues for their
order flow, including numerous self-regulatory organization (``SRO'')
markets, as well as internalizing broker-dealers (``BDs'') and various
forms of alternative trading systems (``ATSs''), including dark pools
and electronic communication networks (``ECNs''). Each SRO market
competes to produce transaction reports via trade executions, and two
FINRA-regulated Trade Reporting Facilities (``TRFs'') compete to
attract internalized transaction reports. Competitive markets for order
flow, executions, and transaction reports provide pricing discipline
for the inputs of proprietary data products. The large number of SROs,
TRFs, BDs, and ATSs that currently produce proprietary data or are
currently capable of producing it provides further pricing discipline
for proprietary data products. Each SRO, TRF, ATS, and BD is currently
permitted to produce proprietary data products, and many currently do
or have announced plans to do so, including NASDAQ, NYSE, NYSE Amex
(now NYSE MKT), NYSEArca, DirectEdge and BATS.
    Any ATS or BD can combine with any other ATS, BD, or multiple ATSs
or BDs to produce joint proprietary data products. Additionally, order
routers and market data vendors can facilitate single or multiple
broker-dealers' production of proprietary data products. The potential
sources of proprietary products are virtually limitless. The fact that
proprietary data from ATSs, BDs, and vendors can by-pass SROs is
significant in two respects. First, non-SROs can compete directly with
SROs for the production and sale of proprietary data products, as BATS
and Arca did before registering as exchanges by publishing proprietary
book data on the Internet. Second, because a single order or
transaction report can appear in an SRO proprietary product, a non-SRO
proprietary product, or both, the data available in proprietary
products is exponentially greater than the actual number of orders and
transaction reports that exist in the marketplace.
    Market data vendors provide another form of price discipline for
proprietary data products because they control the primary means of
access to end users. Vendors impose price restraints based upon their
business models. For example, vendors such as Bloomberg and Reuters
that assess a surcharge on data they sell may refuse to offer
proprietary products that end users will not purchase in sufficient
numbers. Internet portals, such as Google, impose a discipline by
providing only data that will enable them to attract ``eyeballs'' that
contribute to their advertising revenue. Retail broker-dealers, such as
Schwab and Fidelity, offer their customers proprietary data only if it
promotes trading and generates sufficient commission revenue. Although
the business models may differ, these vendors' pricing discipline is
the same: they can simply refuse to purchase any proprietary data
product that fails to provide sufficient value. ISE and other producers
of proprietary data products must understand and respond to these
varying business models and pricing disciplines in order to market
proprietary data products successfully.
    In addition to the competition and price discipline described
above, the market for proprietary data products is also highly
contestable because market entry is rapid, inexpensive, and profitable.
The history of electronic trading is replete with examples of entrants
that swiftly grew into some of the largest electronic trading platforms
and proprietary data producers: Archipelago, Bloomberg Tradebook,
Island, RediBook, Attain, TracECN, BATS Trading and Direct Edge. A
proliferation of dark pools and other ATSs operate profitably with
fragmentary shares of consolidated market volume.
    Regulation NMS, by deregulating the market for proprietary data,
has increased the contestability of that market. While broker-dealers
have previously published their proprietary data individually,
Regulation NMS encourages market data vendors and broker-dealers to
produce proprietary products cooperatively in a manner never before
possible. Multiple market data vendors already have the capability to
aggregate data and disseminate it on a profitable scale, including
Bloomberg, and Thomson Reuters.
    Competition among platforms has driven ISE continually to improve
its market data offerings and to cater to customers' data needs. For
example, ISE has developed and maintained multiple delivery mechanisms
that enable customers to receive data in the form and manner they
prefer and at the lowest cost to them. ISE offers front end
applications such as its PrecISE Trade application which helps
customers utilize data. ISE offers data via multiple

extranet providers, thereby helping to reduce network and total cost
for its data products. Despite these enhancements and a dramatic
increase in message traffic, ISE's fees for market data have, for the
most part, remained flat. Moreover, platform competition has
intensified as new entrants have emerged, constraining prices for both
executions and for data.
    The vigor of competition for market data is significant and the
Exchange believes that this proposal clearly evidences such
competition. ISE is offering a new pricing model in order to keep pace
with changes in the industry and evolving customer needs. This pricing
option is entirely optional and is geared towards attracting new
customers, as well as retaining existing customers.
    The Exchange has witnessed competitors creating new products and
innovative pricing in this space over the course of the past year. ISE
continues to see firms challenge its pricing on the basis of the
Exchange's explicit fees being higher than the zero-priced fees from
other competitors such as BATS. In all cases, firms make decisions on
how much and what types of data to consume on the basis of the total
cost of interacting with ISE or other exchanges. Of course, the
explicit data fees are but one factor in a total platform analysis.
Some competitors have lower transactions fees and higher data fees, and
others are vice versa. The market for the proposed data is highly
competitive and continually evolves as products develop and change.

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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \17\ and Rule 19b-4(f)(2) thereunder,\18\
because it establishes a due, fee, or other charge imposed by ISE.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \18\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-ISE-2013-39 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2013-39. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of ISE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2013-39 and should be
submitted on or before July 17, 2013.

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

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15226 Filed 6-25-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 17 (Friday, January 27, 2017)]
[Notices]
[Pages 8632-8636]
[FR Doc No: 2017-01833]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79863; File No. SR-NASDAQ-2017-004]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Exchange's Data Fees at Rule 7023

January 23, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 10, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend the Exchange's data fees at Rule
7023 to: (i) Increase the monthly Nasdaq Level 2 Non-Professional
Subscriber fee (``Level 2 Non-Professional Fee'') from $9 to $14; and
(ii) increase the monthly Nasdaq Level 2 Professional Subscriber fee
(``Level 2 Professional Fee'') from

$60 to $70, and to make conforming changes.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to: (i) Increase the
monthly Level 2 Non-Professional Fee from $9 to $14; and (ii) increase
the monthly Level 2 Professional Fee from $60 to $70 for any Display
Usage, or for Non-Display Usage based upon Indirect Access. The fee
increases will set the Level 2 Non-Professional Fee equal to the
TotalView fee for Non-Professional Subscribers under Rule
7023(b)(2)(A), and will set the Level 2 Professional Fee equal to the
TotalView fee for Professional Subscribers set forth under Rule
7023(b)(2)(B).
    The proposed change will equate the price of Level 2 with TotalView
in anticipation of retiring Level 2 as a separate product, which will
occur on a date to be determined by Nasdaq, based on an analysis of
customer demand. Until Level 2 is retired, Nasdaq will continue to
support this legacy product in tandem with its full-depth product,
TotalView.
Level 2 and Depth-of-Book Data
    Nasdaq Level 2 provides best-price orders and quotes from each
market participant in the Nasdaq Market Center for Nasdaq-listed
securities. It was introduced in 1983 as the Nasdaq Quotation
Dissemination Service, and was the first product to provide best-price
orders and quotes for Nasdaq market participants. Level 2, like all of
Nasdaq's depth-of-book data products, is entirely optional.
    As part of Nasdaq's continuing efforts to augment its depth-of-book
products, Nasdaq created TotalView, a premier product designed to
substantially enhance the amount of data available to the investor.
TotalView provides all orders and quotes from all Nasdaq members
displayed in the Nasdaq Market Center for Nasdaq-listed securities.
This allows the user to view approximately 20 times more information
about market liquidity than Level 2, which provides only the best-price
orders and quotes for each market participant. In addition to a deeper
view of orders and quotes, TotalView also provides other information
not available on Level 2, such as the Net Order Imbalance Indicator,
which supplies data on the daily auctions that take place at the open
and close of the market.
    Along with Level 2 and TotalView, Nasdaq also offers OpenView,
which provides the depth-of-book information available in TotalView,
except that OpenView provides information for securities not listed on
Nasdaq. OpenView is typically purchased as an add-on to TotalView or
Level 2.
Proposed Changes
    Nasdaq intends to offer TotalView as its main depth-of-book
product. The purpose of the proposed change is to equate the prices of
Level 2 and TotalView in anticipation of retiring Level 2. In response
to feedback from Distributors, the Exchange will continue to offer
Level 2 for those Distributors that require time to transition their
systems from Level 2 to TotalView, rather than retire Level 2 abruptly.
The price increase will compensate Nasdaq for offering both the Level 2
and TotalView data feeds during this transition period.
    Nasdaq anticipates retiring Level 2 for three reasons.
    First, demand for Level 2 has fallen over the last two years.
Nasdaq incurs a cost to support multiple depth-of-book products, and
maintaining such an expenditure is not viable in view of falling
demand.
    Second, Level 2 has become less viable as a stand-alone product as
industry standards have changed. While there was a market for Level 2
when it was first introduced, the market has moved toward either high-
level products such as Nasdaq Basic (which offers best bid and offer
and last sale information), or full depth-of-book data similar to
TotalView. The market niche for intermediate products such as Level 2
is disappearing.
    Third, the usefulness of Level 2 will continue to decrease over
time as full depth-of-book products continue to add more features, such
as the Net Order Imbalance Indicator in TotalView. Nasdaq plans to
continue enhancing TotalView with additional features, which will
further widen the gap in functionality between TotalView and Level 2.
    Level 2 will not be retired immediately. There may be customers
who, because of special circumstances, continue to use Level 2 for the
time being. Nasdaq will monitor customer demand to identify an
appropriate retirement date. Until Level 2 is retired, Nasdaq will
continue to support this legacy product in tandem with its full-depth
product, TotalView.
    Because of the price increase for Level 2, the Exchange proposes
three conforming changes to market data rules that reference Level 2.
    First, under Rule 7023(c)(1), a Distributor that is also a broker-
dealer may pay a monthly fee of $25,000 for the right to provide Nasdaq
TotalView and Nasdaq OpenView for Display Usage for Internal
Distribution, or for External Distribution to Non-Professional
Subscribers with whom the firm has a brokerage relationship. Payment of
this optional enterprise license fee allows the purchaser to obtain
TotalView and OpenView at the previous Level 2 rate because, under Rule
7023(c)(1), the Enterprise License shall not apply to relevant Level 1
and Nasdaq Level 2 fees.\3\ In other words, because Distributors
receiving TotalView also receive the information contained in Nasdaq
Level 2, those Distributors must also pay per-subscriber fees at the
same level as the Level 2 fees, in addition to the Enterprise License
fee.
---------------------------------------------------------------------------

    \3\ The language regarding Level 1 has no effect because Level 1
has never been a product owned by Nasdaq. Level 1 is distributed
under the UTP Plan.
---------------------------------------------------------------------------

    Because the proposed language equates Level 2 fees with the price
of TotalView, Distributors that purchase the $25,000 Enterprise License
would be required to pay the monthly per-subscriber fees at the new,
higher rate, unless the language is adjusted. To maintain the current
price structure, the Exchange proposes to delete the reference to Level
1 and Level 2 fees, and replace it with a set fee that reflects the
current fee for Level 2. The proposal would require Distributors to pay
a monthly fee of $9 for each Non-Professional Subscriber and a monthly
fee of $60 for each Professional Subscriber for Display Usage based
upon Direct or Indirect Access, in addition to the $25,000 monthly

enterprise license. This change preserves the current per-subscriber
fees associated with the $25,000 enterprise license. Deleting the
reference to Level 1 has no effect because Level 1 is not a Nasdaq
product.
    Second, under Rule 7023(c)(2), a Distributor that is also a broker-
dealer may pay a monthly fee of $100,000 for the right to provide
Nasdaq TotalView and Nasdaq OpenView for Display Usage for Internal
Distribution, or for External Distribution to both Professional and
Non-Professional Subscribers with whom the firm has a brokerage
relationship. Payment of this optional enterprise license fee allows
the purchaser to obtain TotalView and OpenView at the previous Level 2
rate because, under Rule 7023(c)(2), the Enterprise License shall not
apply to relevant Level 1 and Nasdaq Level 2 fees.
    As was the case for the $25,000 Enterprise License under Rule
7023(c)(1), the proposed increase in the price of Level 2 would require
Distributors that purchase the $100,000 Enterprise License to pay the
monthly per-subscriber fees at the new, higher rate, unless the
language is adjusted. To maintain the prior price structure, the
Exchange proposes to delete the reference to Level 1 and Level 2, and
replace it with a set fee for Professional and Non-Professional
Subscribers. The proposal would require Distributors to pay a monthly
fee of $9 for each Non-Professional Subscriber and a monthly fee of $60
for each Professional Subscriber for Display Usage based upon Direct or
Indirect Access, in addition to the $100,000 monthly enterprise
license. This change preserves the current per-subscriber fees
associated with the $100,000 enterprise license. As previously noted,
deleting the reference to Level 1 has no effect because it is not a
Nasdaq product.
    Third, the Exchange proposes to remove a sentence from Rule 7023(e)
that has been rendered meaningless. That rule currently provides a 30-
day fee waiver for a trial offer of TotalView, provided that the waiver
does not include incremental fees for the Nasdaq Level 2-only service.
Because the proposal removes the price differential between Level 2 and
TotalView, no incremental fees will exist, and the Exchange therefore
proposes deleting that sentence.
    The Level 2 Professional and Non-Professional fees are entirely
optional, in that they apply only to Subscribers that opt to purchase
Level 2. They do not impact or raise the cost of any other Nasdaq
product, except for those subscribers who opt to purchase OpenView
together with Level 2, for whom the price of the combined product will
rise by the same amount as Level 2.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\4\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\5\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \6\
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    \6\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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    Likewise, in NetCoalition v. Securities and Exchange Commission \7\
(``NetCoalition'') the D.C. Circuit upheld the Commission's use of a
market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\8\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \9\
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    \7\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \8\ See NetCoalition, at 534-535.
    \9\ Id. at 537.
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    Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \10\
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    \10\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
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    The Exchange believes that the proposals to increase the monthly
Level 2 Non-Professional Fee and the Level 2 Professional Fee--which
will be implemented in anticipation of retiring Level 2 as a separate
product--are reasonable. The Exchange is providing time for
Distributors to transition from Level 2 to TotalView feeds, and the
price increase compensates Nasdaq for providing both feeds during that
transition period. The fees for Level 2, like all proprietary data
fees, are constrained by the Exchange's need to compete for order flow,
and are subject to competition from other products and among broker-
dealers for customers. If Nasdaq is incorrect in its assessment of the
Level 2 market, there are no barriers to entry for competitors with
substantially similar products.
    The Exchange believes that the proposed fee changes are an
equitable allocation and not unfairly discriminatory because the
Exchange will apply the same fee to all similarly-situated subscribers.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
    The proposed fees will: (i) Increase the monthly Level 2 Non-
Professional Fee from $9 to $14; and (ii) increase the monthly Level 2
Professional Fee from $60 to $70. If the changes proposed herein are
unattractive to market

participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
    Specifically, market forces constrain fees for Level 2 in three
respects. First, all fees related to Level 2 are constrained by
competition among exchanges and other entities attracting order flow.
Firms make decisions regarding Level 2 and other proprietary data based
on the total cost of interacting with the Exchange, and order flow
would be harmed by the supracompetitive pricing of any proprietary data
product. Second, the price of Level 2 is constrained by the existence
of substitutes that are offered, or may be offered, by entities that
offer proprietary data. Third, competition among Distributors for
customers will further constrain the cost of Level 2. An example of the
impact of market forces on the price of proprietary data is the
decrease in the Nasdaq Basic enterprise license fee for broker-dealers
distributing such information to subscribers in the context of a
brokerage relationship, which was recently decreased from $350,000 to
$100,000.
Competition for Order Flow
    Fees related to Level 2 are constrained by competition among
exchanges and other entities seeking to attract order flow. Order flow
is the ``life blood'' of the exchanges. Broker-dealers currently have
numerous alternative venues for their order flow, including self-
regulatory organization (``SRO'') markets, as well as internalizing
broker-dealers (``BDs'') and various forms of alternative trading
systems (``ATSs''), including dark pools and electronic communication
networks (``ECNs''). Each SRO market competes to produce transaction
reports via trade executions, and two FINRA-regulated Trade Reporting
Facilities (``TRFs'') compete to attract internalized transaction
reports. The existence of fierce competition for order flow implies a
high degree of price sensitivity on the part of BDs, which may readily
reduce costs by directing orders toward the lowest-cost trading venues.
    The level of competition and contestability in the market for order
flow is demonstrated by the numerous examples of entrants that swiftly
grew into some of the largest electronic trading platforms and
proprietary data producers: Archipelago, Bloomberg Tradebook, Island,
RediBook, Attain, TracECN, BATS Trading and BATS/Direct Edge. A
proliferation of dark pools and other ATSs operate profitably with
fragmentary shares of consolidated market volume. For a variety of
reasons, competition from new entrants, especially for order execution,
has increased dramatically over the last decade.
    Each SRO, TRF, ATS, and BD that competes for order flow is
permitted to produce proprietary data products. Many currently do or
have announced plans to do so, including NYSE, NYSE Amex, NYSE Arca,
BATS, and IEX. This is because Regulation NMS deregulated the market
for proprietary data. While BDs had previously published their
proprietary data individually, Regulation NMS encourages market data
vendors and BDs to produce proprietary products cooperatively in a
manner never before possible. Order routers and market data vendors can
facilitate production of proprietary data products for single or
multiple BDs. The potential sources of proprietary products are
virtually limitless.
    The markets for order flow and proprietary data are inextricably
linked: A trading platform cannot generate market information unless it
receives trade orders. As a result, the competition for order flow
constrains the prices that platforms can charge for proprietary data
products. Firms make decisions on how much and what types of data to
consume based on the total cost of interacting with Nasdaq and other
exchanges. Data fees are but one factor in a total platform analysis.
If the cost of the product exceeds its expected value, the broker-
dealer will choose not to buy it. A supracompetitive increase in the
fees charged for either transactions or proprietary data has the
potential to impair revenues from both products. In this manner, the
competition for order flow will constrain prices for proprietary data
products.
Substitute Products
    The price of depth-of-book data is constrained by the existence of
competition from other exchanges, such as NYSE and BATS, which sell
proprietary depth-of-book data. While a small number of highly
sophisticated traders purchase depth-of-book products from multiple
exchanges, most customers do not. Because most customers would not pay
an excessive price for Level 2 when substitute data is available from
other proprietary sources, the Exchange is constrained in its pricing
decisions.
Competition Among Distributors
    Competition among Distributors provides another form of price
discipline for proprietary data products. If the price of Level 2 were
set above competitive levels, Distributors purchasing Level 2 would be
at a disadvantage relative to their competitors, and would therefore
either purchase a substitute or forego the product altogether.
    In summary, market forces constrain the price of depth-of-book data
such as Level 2 through competition for order flow, competition from
substitute products, and in the competition among vendors for
customers. For these reasons, the Exchange has provided a substantial
basis demonstrating that the fee is equitable, fair, reasonable, and
not unreasonably discriminatory, and therefore consistent with and in
furtherance of the purposes of the Exchange Act.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\11\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or

     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2017-004 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2017-004. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2017-004 and should
be submitted on or before February 17, 2017.
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    \12\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01833 Filed 1-26-17; 8:45 am]
BILLING CODE 8011-01-P