[Federal Register Volume 83, Number 61 (Thursday, March 29, 2018)]
[Notices]
[Pages 13542-13544]
[FR Doc No: 2018-06267]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82938; File No. S7-24-89]

Joint Industry Plan; Notice of Filing and Immediate Effectiveness
of the Forty-Second Amendment to the Joint Self-Regulatory Organization
Plan Governing the Collection, Consolidation and Dissemination of
Quotation and Transaction Information for Nasdaq-Listed Securities
Traded on Exchanges on an Unlisted Trading Privileges Basis

March 23, 2018.
    Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that
on March 5, 2018, the Participants \3\ 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 (``NASDAQ/UTP Plan'' or ``Plan'') filed with the Securities and
Exchange Commission (``Commission'') a proposal to amend the NASDAQ/UTP
Plan.\4\ The amendment is the 42nd amendment to the NASDAQ/UTP Plan
(``Amendment'').\5\ The Amendment proposes to amend the text of the fee
schedule of the Plan to adopt changes to the Nonprofessional Subscriber
Enterprise Cap and Per Query Fees.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ The Participants are: Cboe BYX Exchange, Inc.; Cboe BZX
Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.;
Cboe Exchange, Inc.; Chicago Stock Exchange, Inc.; Financial
Industry Regulatory Authority, Inc.; Investors Exchange LLC; Nasdaq
BX, Inc.; Nasdaq ISE, LLC; Nasdaq PHLX LLC; The Nasdaq Stock Market
LLC; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE American
LLC; and NYSE National, Inc. (collectively, the ``Participants'').
    \4\ The Plan governs the collection, processing, and
dissemination on a consolidated basis of quotation information and
transaction reports in Eligible Securities for its Participants.
This consolidated information informs investors of the current
quotation and recent trade prices of Nasdaq securities. It enables
investors to ascertain from one data source the current prices in
all the markets trading Nasdaq securities. The Plan serves as the
required transaction reporting plan for its Participants, which is a
prerequisite for their trading Eligible Securities. See Securities
Exchange Act Release No. 55647 (April 19, 2007), 72 FR 20891 (April
26, 2007).
    \5\ See Letter from Emily Kasparov to Brent J. Fields,
Secretary, Commission, dated March 1, 2018.
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    The Participants are proposing to increase the Nonprofessional
Subscriber Enterprise Cap (``Enterprise Cap'') from $648,000 to
$1,260,000. The Participants state that the Enterprise Cap was
established to provide incentives to entities to make market data
available to large Nonprofessional Subscriber bases. Due to what they
describe as ongoing industry consolidation, however, the Participants
are proposing to increase the Enterprise Cap in order to account for
the sudden and substantial increase of Nonprofessional Subscribers at
entities using the Enterprise Cap.
    To make the increase of the Enterprise Cap revenue neutral (from an
overall Plan perspective) and fee neutral (from an individual entity
\6\ perspective), the Participants are proposing to decrease the Per
Query Fees for those broker-dealers with 500,000 or more
Nonprofessional Subscribers. According to the Participants, the
increase in fees as a result of the increase of the Enterprise Cap will
be offset by a decrease in Per Query Fees for those entities that would
most likely be affected by the raising of the cap, i.e., those with a
large Nonprofessional Subscriber base.
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    \6\ As described below, the Plan does not require an entity that
is registered as a broker-dealer under the Act to pay more than the
Enterprise Cap for any month for each entitlement system offering
UTP Level 1 Service to Nonprofessional Subscribers.
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    Pursuant to Rule 608(b)(3)(i) under Regulation NMS,\7\ the
Participants designate the Amendment as establishing or changing a fee
or other charge collected on behalf of the Participants in connection
with access to, or use of, any facility contemplated by the Nasdaq/UTP
Plan. As a result, the Amendment is effective upon filing with the
Commission.
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    \7\ 17 CFR 242.608(b)(3)(i).
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    The Commission is publishing this notice to solicit comments from
interested persons on the Amendment. Set forth in Sections I and II is
the statement of the purpose and summary of the Amendment, along with
the information required by Rules 608(a) and 601(a) under the Act,
prepared and submitted by the Participants to the Commission.

I. Rule 608(a)

A. Purpose of the Amendment

1. Background
Nonprofessional Subscriber Enterprise Cap
    The Plan requires an entity that is registered as a broker-dealer
under the Act to pay no more than the Enterprise Cap for any month for
each entitlement system offering UTP Level 1 Service to Nonprofessional
Subscribers. The Enterprise Cap equals the aggregate amount of fees
payable for distribution of UTP Level 1 Service to Nonprofessional
Subscribers that are brokerage account customers of the broker-dealer.
The Participants adopted the Enterprise Cap in 2010 and set it at
$600,000 per month. In 2014, the Participants increased the amount of
the Enterprise Cap to $624,000.\8\
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    \8\ See Securities Exchange Act Release No. 70953 (Nov. 27,
2013), 78 FR 72932 (Dec. 4, 2013) (effective Jan. 1, 2014) (``2014
Filing'').
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    In the 2014 Filing, the Participants changed the mechanism for
increasing the Enterprise Cap. The Enterprise Cap was previously
increased based on the percentage increase in the annual composite
share volume for the preceding calendar year, subject to an annual
maximum increase of five percent. In 2014, the Participants permitted
such annual increases in the monthly Enterprise Cap as to which they
agreed by a majority vote, subject to a maximum increase in any
calendar year of four percent. At that time, the Participants believed
that this provision permitted an annual increase by a two-thirds vote
of the Participants without requiring a corresponding rule filing with
the Securities and Exchange Commission. Nevertheless, the Participants
have not increased the Enterprise Cap since this change was adopted in
2014.\9\ This filing proposes to remove that provision.
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    \9\ As described below, the Participants believe that this
provision should be deleted and that any changes to the Enterprise
Cap should be submitted to the Commission for review and public
comment.
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Per Query Fee
    As an alternative to monthly Professional Subscriber and
Nonprofessional Subscriber fees, a vendor may respond to end-user
queries for quote and trade information and pay a fee for each such
response. The Participants first established Per Query Fees in 1992 as
a pilot at $0.015 per query.\10\ In 1995, it was noted that the UTP Per
Query Fees were three times that of the Network A and Network B
counterparts. Subsequently, the UTP Per Query Fees was [sic] made a
permanent part of the fee schedule and was lowered to $0.01 per query
to be more in line with Networks A and B. In April 1999, a pilot at a
reduced rate of $.005 per query was filed and in April 2001, it was
approved as the permanent fee

structure. In 2014, the Participants increased the fee to $0.0075 per
query to offset the revenue loss resulting from decreases in the
Professional Subscriber device fee.
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    \10\ See Securities Exchange Act Release No. 73279 (Oct. 1,
2014), 79 FR 60522 (Oct. 7, 2014) (describing the history of the Per
Query Fees).
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2. Amendment to Enterprise Cap
    The Participants are proposing to increase the Enterprise Cap from
$624,000 to $1,260,000. As a result of industry consolidation, the
Nonprofessional Subscriber base for entities subject to the cap may
suddenly increase, and where before two entities may have slightly
benefited from the Enterprise Cap, a combined entity could find a
substantial decrease in fees by using the Enterprise Cap. Consequently,
the increase of the Enterprise Cap is designed to maintain the status
quo and should not, in conjunction with the Per Query fee change
described below, result in an increase of revenue to the Plan or fees
for any particular entity.\11\
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    \11\ The Participants note that a very small number of entities
take advantage of the Enterprise Cap.
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    Additionally, the Participants are proposing to remove a provision
related to an annual increase of the Enterprise Cap after a two-thirds
vote of the Participants. In the 2014 Filing, the Participants amended
the mechanism by which the Enterprise Cap would increase, from an
automatic increase based on volume to an affirmative vote requirement
by the Participants. Since 2014, the Enterprise Cap has not been
increased using this mechanism, and the Participants believe that any
future changes to the Enterprise Cap should be submitted via a filing
with the Securities and Exchange Commission and subject to public
comment. Consequently, the Participants are proposing to delete this
particular provision.
3. Per Query Fee Change to Remain Revenue Neutral
    Because of the increase in the Enterprise Cap, there is a small
subset of broker-dealers that use the Enterprise Cap that, without a
corresponding offset, could face an increase in fees. To offset this
potential fee increase, the Participants are proposing a decrease in
the Per Query fee for Nonprofessional Subscribers where a broker-dealer
has 500,000 or more Nonprofessional Subscribers. For such entities, the
Per Query fee for Non-Professional Subscribers would be decreased from
$.0075 to $.0025; the Per Query fee for Professional Subscribers would
remain at the $.0075 rate. By implementing a tiered structure for Per
Query fees, the proposal is designed to provide an offset to those
firms most likely affected by the Enterprise Cap increase (i.e., those
with a large Nonprofessional Subscriber base).
    Additionally, the proposal will align Network C with a similar
tiered structure being proposed for Network A and Network B.

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of the Amendment

    Pursuant to Rule 608(b)(3)(i) under Regulation NMS, the
Participants have designated the proposed amendment as establishing or
changing fees and are submitting the amendment for immediate
effectiveness.

D. Development and Implementation Phases

    See Item I.C. above.

E. Analysis of Impact on Competition

    The proposed amendments do not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Securities Exchange Act of 1934. The proposed increase in the
Enterprise Cap is designed to account for industry consolidation.
Without this adjustment, the Plan's revenue will suddenly decrease due
to a broker-dealer increasing its Nonprofessional Subscriber base
through a merger with another broker-dealer. As detailed further below,
while the Enterprise Cap is being increased, the Plan's revenue and
fees collected from entities will be maintained at their current
levels. The potential fee increase for broker-dealers taking advantage
of the Enterprise Cap will be offset by a decrease in the Per Query fee
for broker-dealers with large Nonprofessional Subscriber bases. This
offset will ensure that the fee changes proposed herein remain revenue
neutral.
    The Participants therefore believe that the proposed fee changes
are carefully calibrated to maintain the status quo and, as a result,
do not impose any burden on competition that is not necessary or
appropriate.

F. Written Understanding or Agreements Relating to Interpretation of,
or articipation in, Plan

    Not applicable.

G. Approval by Sponsors in Accordance With Plan

    In accordance with Section IV(C)(2) of the Plan, more than two-
thirds of the Participants have approved the fee change proposed
herein.

H. Description of Operation of Facility Contemplated by the Proposed
Amendment

    Not applicable.

I. Terms and Conditions of Access

    Not applicable.

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

    The Participants are proposing to increase the Enterprise Cap by an
amount to ensure that industry consolidation would not result in a
sudden decrease in Plan revenue, thereby avoiding any single entity
from getting a disproportionate benefit from the Enterprise Cap. The
Participants propose to decrease the Per Query fee for Nonprofessional
Subscribers for broker- dealers with a large Nonprofessional Subscriber
base. The amount of the proposed decrease is specifically tailored to
ensure that the increase in fees as a result of raising the Enterprise
Cap would be offset and that the proposed amendment would remain
revenue neutral.
    Because the Participants have data showing the current benefit of
the Enterprise Cap and the number of queries of those potentially
affected by the change in the Enterprise Cap, the Participants were
able to calibrate the Per Query fee in order to make the changes
proposed herein revenue neutral. As previously stated, the proposed
change will not only maintain the status quo on an overall Plan revenue
basis, but also maintain the status quo with respect to the fees
charged to individual entities.
    The proposed fee changes were distributed to and discussed with
members of the Plan's Advisory Committee, and were discussed and voted
on during the General Session of the Operating Committee in the
presence of the Advisory Committee.

K. Method and Frequency of Processor Evaluation

    Not applicable.

L. Dispute Resolution

    Not applicable.

II. Rule 601(a)

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

    Not applicable.

B. Reporting Requirements

    Not applicable.

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

    Not applicable.

D. Manner of Consolidation

    Not applicable.

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

    Not applicable.

F. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination

    Not applicable.

G. Terms of Access to Transaction Reports

    Not applicable.

H. Identification of Marketplace of Execution

    Not applicable.

III. Solicitation of Comments

    The Commission seeks comment on the Amendments. In particular, the
Commission seeks comment on the following: (1) Is the anticipated
impact on revenue to the Plans consistent with the Participants'
representations; (2) is the anticipated impact on costs to consumers of
market data, including broker-dealers and their non-professional
customers, consistent with the Participants' representations; (3) is
there supporting data to illustrate that the proposed changes are
``revenue neutral'' as asserted by the Participants; (4) could the fee
changes have a disproportionate impact on particular data recipients;
(5) what, if any, supporting data could inform whether the changes
would maintain the status quo and therefore do not impose any burden on
competition that is not necessary or appropriate as asserted by the
Participants; and (6) whether the impact of potential industry
consolidation on the revenue of the Plans is consistent with the
representations of the Participants? Interested persons are invited to
submit written data, views, and arguments concerning the foregoing,
including whether the proposed Amendment is consistent with the Act.
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number S7-24-89 on the subject line.

Paper Comments

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

All submissions should refer to File Number File No. S7-24-89. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's website (http://www.sec.gov/rules/sro.shtml). Copies
of the submission, all written statements with respect to the proposed
Amendment that are filed with the Commission, and all written
communications relating to the proposed Amendment between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room on official business days between the hours of 10:00
a.m. and 3:00 p.m. Copies of the Amendment also will be available for
website viewing and printing at the principal office of the Plan. All
comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number S7-24-89 and should be
submitted on or before April 19, 2018.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2018-06267 Filed 3-28-18; 8:45 am]
 BILLING CODE 8011-01-P