[Federal Register: November 14, 2007 (Volume 72, Number 219)]
[Notices]
[Page 64099-64101]
[DOCID:fr14no07-87]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56752; File No. SR-NASD-2007-043]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.
(``FINRA''); Notice of Filing of Proposed Rule Change and Amendment No.
1 Thereto To Amend NASD Rule 7001C To Increase Percentage of Market
Data Revenue Shared With NASD/NSX TRF Participants

November 6, 2007.
    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 June 29, 2007, the National Association of Securities Dealers,
Inc. (``NASD'') 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 NASD. On October 29,
2007, Financial Industry Regulatory Authority, Inc. (``FINRA'') filed
Amendment No. 1 to the proposed rule change.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Effective July 30, 2007, FINRA was formed through the
consolidation of NASD and the member regulatory functions of NYSE
Regulation. See Securities Exchange Act Release No. 56146 (July 26,
2007), 72 FR 42190 (August 1, 2007). Accordingly, the NASD/NSX TRF
is now doing business as the FINRA/NSX TRF. The formal name change
of each of FINRA's Trade Reporting Facilities is pending and once
completed, FINRA will file a separate proposed rule change to
reflect those changes in the Manual. In Amendment No. 1, FINRA made
certain changes to the original proposed rule change of June 29,
2007, including to: (i) Propose to share 75%, rather than 100% as
proposed in the original filing, of market data revenue with NASD/
NSX TRF participants, and (ii) revise the Self-Regulatory
Organization's Statement on Burden on Competition.
---------------------------------------------------------------------------

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

    FINRA proposes to amend NASD Rule 7001C (Securities Transaction
Credit) to increase the percentage of New York Stock Exchange (``Tape
A''), American Stock Exchange (``Tape B'') and Nasdaq Exchange (``Tape
C'') revenue shared with FINRA members reporting trades to the NASD/NSX
Trade Reporting Facility (``NASD/NSX TRF''). The text of the proposed
rule change is available at FINRA, http://www.finra.org, and 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, FINRA included statements
concerning the purpose of and basis for the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA 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
Background
    On November 6, 2006, the Commission approved the establishment of
the NASD/NSX TRF,\4\ and the NASD/NSX TRF commenced operation on
November 27, 2006. The NASD/NSX TRF provides FINRA members another
mechanism for reporting locked-in transactions in exchange-listed
securities effected otherwise than on an exchange. In connection with
the establishment of the NASD/NSX TRF, FINRA and National Stock
Exchange, Inc. (``NSX'') entered into the Limited Liability Company
Agreement of NASD/NSX Trade Reporting Facility LLC (``Agreement'').
Under the Agreement, FINRA, the ``SRO Member,'' has sole regulatory
responsibility for the NASD/NSX TRF. NSX, the ``Business Member,'' is
primarily responsible for the management of the NASD/NSX TRF's business
affairs to the extent those activities are not inconsistent with the
regulatory and oversight functions of FINRA. Additionally, the Business
Member is obligated to pay the cost of regulation and is entitled to
the profits and losses, if any, derived from the operation of the NASD/
NSX TRF.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 54715 (November 6,
2006), 71 FR 66354 (November 14, 2006) (SR-NASD-2006-108) (approval
order).
---------------------------------------------------------------------------

    Pursuant to NASD Rule 7001C, FINRA members reporting trades in Tape
A, Tape B and Tape C securities to the NASD/NSX TRF currently receive a
50% pro rata credit on gross market data revenue earned by the NASD/NSX
TRF. ``Gross revenue'' is the revenue received by the NASD/NSX TRF from
the three tape associations after the tape associations deduct
allocated support costs and unincorporated business costs.
Proposal To Increase Securities Transaction Credit
    FINRA proposes to amend Rule 7001C to increase from 50% to 75% the
percentage of market data revenue shared with members under the
securities transaction credit program. Thus, FINRA members reporting
trades in Tape A, Tape B and Tape C stocks to the NASD/NSX TRF will
receive a 75% pro rata credit on gross market data revenue earned by
the NASD/NSX TRF.
    NSX, as the Business Member under the Agreement, has determined
that the proposed increase in the percentage of market data revenue
shared with NASD/NSX TRF participants is necessary for competitive
reasons. NSX believes that, particularly in light of the fact that
FINRA has filed a proposed rule change whereby the NASD/NYSE Trade
Reporting Facility (``NASD/NYSE TRF'') would share 100% of market data
revenue with its participants,\5\ competitive pricing is crucial to the
NASD/NSX TRF's business. NSX has indicated that because there are
currently no fees for reporting trades to the NASD/NSX TRF, NSX will
fund regulatory costs associated with the NASD/NSX TRF from NSX general
revenues.
---------------------------------------------------------------------------

    \5\ See SR-NASD-2007-031 at http://www.finra.org/RulesRegulation/RuleFilings/2007RuleFilings/P019027
.

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

    FINRA is proposing that the effective date of the proposed rule
change shall be retroactive to April 1, 2007, the start of the second
calendar quarter of 2007.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of section 15A of the Act,\6\ in general, and with section
15A(b)(5) of the Act,\7\ in particular, which requires, among other
things, that FINRA rules provide for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system that FINRA operates or
controls. FINRA believes that the proposed rule change is a reasonable
and equitable credit structure in that it will be applied uniformly
among members that participate in the NASD/NSX TRF and NSX has
indicated that all regulatory costs owed by NSX as the Business Member
related to the NASD/NSX TRF will be funded by NSX general revenues.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78o-3.
    \7\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

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

    FINRA 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.

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

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule
change should be 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 e-mail to<EMAIL_ADDRESS>Please include

File No. SR-ASD-2007-043 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 20549-1090.

All submissions should refer to File Number SR-NASD-2007-043. 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 on official business days between the hours of 10 a.m.
and 3 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of FINRA. 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-NASD-2007-043 and should be submitted on
or before December 5, 2007.
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-22162 Filed 11-13-07; 8:45 am]

BILLING CODE 8011-01-P


[Federal Register Volume 75, Number 5 (Friday, January 8, 2010)]
[Notices]
[Pages 1109-1110]
[FR Doc No: X10-840108]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61260; File No. SR-BATS-2009-032]

Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of
Filing of Proposed Rule Change To Amend BATS Fee Schedule To Impose
Fees for Physical Ports Used To Connect to BATS Exchange

December 30, 2009.
    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 December 18, 2009, BATS Exchange, Inc. (``BATS'' or the
``Exchange'') 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.
---------------------------------------------------------------------------

    \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 has filed a proposed rule change to amend the fee
schedule applicable to Members \3\ and non-members of the Exchange
pursuant to BATS Rules 15.1(a) and (c). Pursuant to the proposed rule
change the Exchange will commence charging fees to Members and non-
members for certain physical ports used to connect to the Exchange's
systems. The Exchange will implement the proposed rule change on the
first day of the month immediately following Commission approval (or on
the date of approval, if on the first business day of a month).
---------------------------------------------------------------------------

    \3\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's
Web site at http://www.batstrading.com, on the Commission's Web site
(http://www.sec.gov), at the Exchange's principal office, and at the
Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of those 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 parts 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 begin charging a
monthly fee for physical ports used to connect to the Exchange's system
for order entry and receipt of data from the Exchange. The Exchange
recently began charging for ``logical'' ports used for order entry or
receipt of Exchange data,\4\ but does not currently charge for the
``physical'' ports needed to connect to the Exchange's system. A
logical port is also commonly referred to as a TCP/IP port, and
represents a port established by the Exchange within the Exchange's
system for trading and billing purposes. Each logical port established
is specific to a Member or non-member and grants that Member or non-
member the ability to operate a specific application, such as FIX order
entry or PITCH data receipt. In contrast, a physical port is the port
that is used by a Member or non-member to literally plug into the
Exchange at the data centers where the Exchange's servers are located
(i.e., either a cross-connection or a private line Ethernet connection
to the Exchange's network within the data center). Multiple logical
ports can be created for a single physical port.
---------------------------------------------------------------------------

    \4\ See Release No. 34-60364 (July 22, 2009), 74 FR 37285 (July
28, 2009) (File No. SR-BATS-2009-026).
---------------------------------------------------------------------------

    The Exchange proposes to provide four (4) pairs \5\ of physical
ports without charge to any Member or non-member that has been approved
to connect to the Exchange. Due to the infrastructure costs associated
with providing physical ports, the Exchange proposes to charge $2,000
for each additional single physical port provided by the Exchange to
any Member or non-member in any data center. Under the Exchange's
current policy all physical ports are provided free of charge but
Members and non-members are only permitted to establish up to 4 such
physical port pairs. The Exchange's proposal is intended to permit
those Members and non-members that wish to establish additional
physical ports to do so if such constituent is willing to pay for such
ports. Based on the proposal, the change applies to all Exchange
constituents with physical connections, including Members that obtain
ports for direct access to the Exchange, non-member service bureaus
that act as a conduit for orders entered by Exchange Members that are
their customers, Sponsored Participants, and market data recipients.
Very few Members or other non-members require four physical ports for
their operations related to the Exchange or would utilize more than
four physical ports, and thus, the proposal should not affect many of
the Exchange's constituents. However, the Exchange believes that
Members and non-members that wish to pay for additional physical ports
outside of those provided for free should have the ability to do so.
---------------------------------------------------------------------------

    \5\ A ``pair'' of ports refers to one port at the site of the
Exchange's primary data center (including the expansion space
located adjacent to such data center) and one port at the site of
the Exchange's secondary data center.
---------------------------------------------------------------------------

2. Statutory Basis
    The rule change proposed in this submission is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\6\ Specifically, the
Exchange believes that the proposed change is consistent with Section
6(b)(4) of the Act,\7\ because it provides an equitable allocation of
reasonable dues, fees, and other charges among its members and other
persons using its facilities. The Exchange believes that its proposed
physical port fees are reasonable in light of the benefits to Exchange
Users of direct market access and receipt of data, which access and
data can be accomplished without charge through the four physical port
pairs provided free of charge or through other means of access not
requiring physical ports (e.g., access through a virtual private
network, or ``VPN'', connection). In addition, the Exchange believes
that its fees are equitably allocated among its constituents as they
are uniform in application to all Members and non-Members. The Exchange
believes that fees for each single physical port over and above four
free physical port pairs will enable it to cover its infrastructure
costs associated with allowing constituents to establish additional
physical ports to connect to the Exchange's systems.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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

    The Exchange 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. Market participants
will not be affected by the proposal unless such participants'
technological needs are such that they wish to establish more than four
physical connections to the Exchange. In addition, the Exchange
believes that the proposed physical port fees are reasonable,
especially in light of the 4 pairs of physical ports provided by the
Exchange for free.

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 written comments From members or other interested parties.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be 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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-BATS-2009-032 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-BATS-2009-032. 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, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 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-BATS-2009-032 and should be
submitted on or before January 29, 2010.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-70 Filed 1-7-10; 8:45 am]
BILLING CODE 8011-01-P