Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Establish NASDAQ Last Sale Data Feeds, 7100-7104 [E7-2532]

Download as PDF 7100 Federal Register / Vol. 72, No. 30 / Wednesday, February 14, 2007 / Notices believes that adopting a waiver for the first 15,000 contracts that a member transacts on behalf of its customers in a month is reasonable in that it furthers the Exchange’s goal of deterring customers from acting as broker-dealers. The Exchange believes that customer orders that inadvertently interact with Complex Orders resident on the complex order book will never exceed 15,000 contracts in a month while customer orders of a member that intentionally engage in the business of taking liquidity from the complex order book are likely to exceed 15,000 contracts in a month. 2. Statutory Basis The basis under the Act for this proposed rule change is the requirement under Section 6(b)(4) of the Act 7 that an exchange have an equitable allocation of reasonable dues, fees and other charges among exchange members and other persons using its facilities. B. Self-Regulatory Organization’s Statement on Burden on Competition The proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others 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. ycherry on PROD1PC64 with PRELIMS 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 8 and Rule 19b– 4(f)(2) thereunder,9 because it establishes or changes a due, fee, or other charge imposed by the selfregulatory organization. At any time within 60 days of the filing of such 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–ISE–2007–03 on the subject line. Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Establish NASDAQ Last Sale Data Feeds February 8, 2007. 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 December 19, 2006, The NASDAQ Stock Market LLC (‘‘NASDAQ’’) filed with the Paper Comments Securities and Exchange Commission • Send paper comments in triplicate (‘‘Commission’’) the proposed rule to Nancy M. Morris, Secretary, change as described in Items I, II, and Securities and Exchange Commission, III below, which Items have been 100 F Street, NE., Washington, DC, substantially prepared by NASDAQ. On 20549–1090. January 26, 2007, NASDAQ submitted All submissions should refer to File Amendment No. 1 to the proposed rule Number SR–ISE–2007–03. This file change. The Commission is publishing number should be included on the this notice to solicit comments on the subject line if e-mail is used. To help the proposed rule change, as amended, from Commission process and review your interested persons. comments more efficiently, please use only one method. The Commission will I. Self-Regulatory Organization’s post all comments on the Commission’s Statement of the Terms of Substance of the Proposed Rule Change Internet Web site (https://www.sec.gov/ NASDAQ proposes to create the rules/sro.shtml). Copies of the ‘‘NASDAQ Last Sale For NASDAQ’’ and submission, all subsequent ‘‘NASDAQ Last Sale For NYSE/Amex’’ amendments, all written statements data feeds containing last sale activity in with respect to the proposed rule U.S. equities within the NASDAQ change that are filed with the Market Center and reported to the Commission, and all written jointly-operated NASDAQ/NASD Trade communications relating to the Reporting Facility (‘‘NASDAQ TRF’’). proposed rule change between the Commission and any person, other than The text of the proposed rule change is below. Proposed new language is in those that may be withheld from the italics. public in accordance with the provisions of 5 U.S.C. 552, will be 7039. NASDAQ Last Sale Data Feeds available for inspection and copying in (a) NASDAQ shall offer two the Commission’s Public Reference Room. Copies of such filing also will be proprietary data feeds containing realtime last sale information for trades available for inspection and copying at executed on NASDAQ or reported to the the principal office of the ISE. All Nasdaq/NASD Trade Reporting Facility. comments received will be posted (1) ‘‘NASDAQ Last Sale for Nasdaq’’ without change; the Commission does shall contain all transaction reports for not edit personal identifying Nasdaq-listed stocks; and information from submissions. You (2) ‘‘NASDAQ Last Sale for NYSE/ should submit only information that you wish to make available publicly. All Amex’’ shall contain all such transaction reports for NYSE- and submissions should refer to File Number SR–ISE–2007–03 and should be Amex-listed stocks. (b) Distributors of the NASDAQ Last submitted on or before March 7, 2007. Sale Data Feeds may elect between two For the Commission, by the Division of alternate fee schedules, depending upon Market Regulation, pursuant to delegated the ability of distributors to maintain authority.10 either a username/ password Florence E. Harmon, entitlement system or a quote counting Deputy Secretary. mechanism or both. All fees for the [FR Doc. E7–2530 Filed 2–13–07; 8:45 am] NASDAQ Last Sale Data Products are U.S.C. 78f(b)(4). U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 240.19b–4(f)(2). 8 15 17:27 Feb 13, 2007 [Release No. 34–55255; File No. SR– NASDAQ–2006–060] BILLING CODE 8010–01–P 7 15 VerDate Aug<31>2005 SECURITIES AND EXCHANGE COMMISSION 1 15 10 17 Jkt 211001 PO 00000 CFR 200.30–3(a)(12). Frm 00095 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\14FEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 14FEN1 7101 Federal Register / Vol. 72, No. 30 / Wednesday, February 14, 2007 / Notices ‘‘stair-stepped’’ in that the fees are reduced for distributors with more users but the lower rates apply only to users in excess of the specified thresholds rather than applying to all users once a threshold is met. In addition, there shall be a maximum fee of $100,000 per month for NASDAQ Last Sale for NASDAQ and $50,000 per month for NASDAQ Last Sale for NYSE/Amex. (1) Firms that have the ability to maintain either a username/password entitlement system or quote counting mechanism or both shall elect between paying a fee for each user or a fee for each query. A firm that elects to pay for each query may cap its payment at the monthly rate per user. Firms shall pay the following fees: (A) NASDAQ Last Sale for NASDAQ Users/mo Price 1–9,999 ...................................................................... 10,000–49,999 ........................................................... 50,000–99,999 ........................................................... 100,000+ .................................................................... $0.60/ usermonth $0.48/ usermonth $0.36/ usermonth $0.30/ usermonth Query Price 0–10M ........................................................................ $0.003/ query 10M–20M ................................................................... $0.0024/ query 20M–30M ................................................................... $0.0018/ query 30M+ ......................................................................... $0.0015/ query (B) NASDAQ Last Sale for NYSE/Amex Users/mo Price 1–9,999 ...................................................................... 10,000–49,999 ........................................................... 50,000–99,999 ........................................................... 100,000+ .................................................................... (2) Firms that lack the ability to maintain either a username/password entitlement system or quote counting mechanism or both may distribute NASDAQ Last Sale Data Products under alternate fee schedules depending upon whether they distribute data via the Internet or via Television: (A) The fee for distribution of NASDAQ Last Sale Data Products via the Internet shall be based upon the number of Unique Visitors to a website receiving such data. The number of Unique Visitors shall be validated by a vendor approved by NASDAQ in NASDAQ’s sole discretion. (i) NASDAQ Last Sale for NASDAQ Unique visitors $0.036/ Unique Visitor $0.03/ Unique Visitor $0.024/ Unique Visitor 100,000–1M .............. 1M+ ........................... ycherry on PROD1PC64 with PRELIMS Unique visitors 100,000–1M .............. 1M+ ........................... (ii) NASDAQ Last Sale for NYSE/ Amex 1–100,000 ................. VerDate Aug<31>2005 10M–20M ................................................................... $0.0012/ query 20M–30M ................................................................... $0.0009/ query 30M+ .......................................................................... $0.000725/ query Monthly fee $0.015/ Unique Visitor $0.012/ Unique Visitor (i) NASDAQ Last Sale for NASDAQ 1–1M ......................... 1M–5M ...................... 5M–10M .................... 10M+ ......................... Monthly fee $0.0096/ Household $0.0084/ Household $0.0072/ Household $0.006/ Household (ii) NASDAQ Last Sale for NYSE/ Amex Households Unique visitors $0.0015/ query (B) Distribution of NASDAQ Last Sale Data Products via Television shall be based upon the number of Households receiving such data. The number of Households to which such data is available shall be validated by a vendor approved by NASDAQ in NASDAQ’s sole discretion. Households Monthly fee Monthly fee $0.018/ Unique Visitor 17:27 Feb 13, 2007 Jkt 211001 1–1M ......................... 1M–5M ...................... 5M–10M .................... PO 00000 Frm 00096 Fmt 4703 Price 0–10M ........................................................................ (ii) NASDAQ Last Sale for NYSE/ Amex—Continued Monthly fee 1–100,000 ................. $0.30/ usermonth $0.24/ usermonth $0.18/ usermonth $0.15/ usermonth Quotes $0.0048/ Household $0.0042/ Household $0.0036/ Household Sfmt 4703 (ii) NASDAQ Last Sale for NYSE/ Amex—Continued Households 10M+ ......................... Monthly fee $0.003/ Household (C) A Distributor that distributes Nasdaq Last Sale Data Products via multiple distribution mechanisms shall pay all fees applicable to each distribution mechanism, provided that there shall be a discount from the applicable Television rate as follows: (i) 10 percent reduction in applicable Television fees when a Distributor reaches the second tier of Users, Queries, or Unique Visitors for its nonTelevision users; (ii) 15 percent reduction in applicable Television fees when a Distributor reaches the third tier of Users, Queries, or Unique Visitors for its non-Television users; and (iii) 20 percent reduction in applicable Television fees when a Distributor reaches the fourth tier of Users, Queries, or Unique Visitors for its non-Television users. (c) All Distributors of a Nasdaq Last Sale Data Feed shall also pay a monthly fee of $1,500. (d) All Distributors of a Nasdaq Last Sale Data Feed shall also have the ability to distribute the Nasdaq Market E:\FR\FM\14FEN1.SGM 14FEN1 7102 Federal Register / Vol. 72, No. 30 / Wednesday, February 14, 2007 / Notices Analytics Data Package set forth in Rule 7036 at no additional distributor fee. * * * * * II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NASDAQ included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it had received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. NASDAQ has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. ycherry on PROD1PC64 with PRELIMS A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Currently, NASDAQ provides realtime last sale information from its market center to the Security Information Processors (‘‘SIPs’’) for the national market system plans governing trading in NASDAQ, New York Stock Exchange LLC (‘‘NYSE’’), and American Stock Exchange LLC (‘‘Amex’’) listed securities. The SIPs then consolidate NASDAQ’s last sale information with similar information from other market centers, and disseminate the consolidated last sale data to market data vendors. These consolidated products are known within the securities industry as ‘‘Level 1’’ products. NASDAQ proposes to create two separate ‘‘Level 1’’ products containing last sale activity within the NASDAQ market and reported to the NASDAQ TRF. First, the ‘‘NASDAQ Last Sale for NASDAQ Data Product,’’ a real-time data feed that provides real-time last sale information including execution price, volume, and time for executions occurring within the NASDAQ system as well as those reported to the NASDAQ TRF. Second, NASDAQ will also create the ‘‘NASDAQ Last Sale for NYSE/Amex Data Product’’ that provides real-time last sale information including execution price, volume, and time for NYSE and Amex securities executions occurring within the NASDAQ system as well as those reported to the NASDAQ TRF. Both products would also include access to the NASDAQ Market Velocity and NASDAQ Market Forces information for their respective classes of securities, data which is currently available only VerDate Aug<31>2005 17:27 Feb 13, 2007 Jkt 211001 via a separate, stand-alone data feed product. NASDAQ developed these product proposals in consultation with industry members and also market data vendors and purchasers. These products are designed to meet the needs of current and prospective subscribers that do not need or are unwilling to pay for the consolidated data provided by the SIP Level 1 products. NASDAQ also proposes to ease the administrative burden of market data vendors that are receiving and using data in new ways, particularly those that provide the data via the Internet and various Television media. Providing investors with new options for receiving market data, as NASDAQ proposes, was a primary goal of the market data amendments adopted in Regulation NMS. NASDAQ proposes two different pricing models, one for clients that are able to maintain username/password entitlement systems and/or quote counting mechanisms to account for usage, and a second for those that are not. Firms with the ability to maintain username/password entitlement systems and/or quote counting mechanisms will be eligible for a specified fee schedule for the NASDAQ Last Sale For NASDAQ Product and a separate fee schedule for the NASDAQ Last Sale for NYSE/Amex Product. The pricing will be ‘‘stairstepped,’’ meaning that the tiered fees would be effective for the incremental users in the new tier. For example, a distributor of the NASDAQ Last Sale for NASDAQ Product with 20,000 users would pay $0.60 for the first 10,000 users and $0.48 for the next 10,000 users. Distributors may instead elect to pay per query for their users if, for example, a substantial portion of their users request a relatively small number of queries each month. As with consolidated Level 1 data products, firms will be permitted to ‘‘cap’’ their payments for individual queries at the corresponding monthly user rate. NASDAQ believes this allows firms to manage their market data costs better. Firms that are unable to maintain username/password entitlement systems and/or quote counting mechanisms will also have multiple options for purchasing the NASDAQ Last Sale data. These firms will choose between a ‘‘Unique Visitor’’ model for Internet delivery or a ‘‘Household’’ model for Television delivery. Unique Visitor and Household populations must be reported monthly and must be validated by a third party vendor or ratings agency approved by NASDAQ at NASDAQ’s sole discretion. The proposed pricing is stair-stepped, meaning that the tiered fees would be PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 effective for the incremental users in the new tier. For example, a distributor of NASDAQ Last Sale for NASDAQ that reports 600,000 Unique Visitors would pay $0.036 for the first 100,000 visitors and $0.03 for the next 500,000 visitors. A Distributor that reports 3,000,000 households reached would pay $0.0096 for the first 1,000,000 households and $0.0084 for the next 2,000,000 households. Industry members have noted to NASDAQ that these Internet and Television media types are converging, and that these two price schedules should therefore be blended. To reflect the growing confluence between these media outlets, NASDAQ proposes to offer a reduction in fees when a single Distributor distributes NASDAQ Last Sale Data Products via multiple distribution mechanisms. Specifically, NASDAQ will discount the applicable fees for distribution of NASDAQ Last Sale Data Products via Television for Distributors that also distribute those products via the Internet and have achieved a new pricing tier for Unique Visitors, Users, or Queries. This acknowledges distributors’ perception that as Web sites grow, they may gain overlapping Web site users and Television viewers. NASDAQ proposes that there be a 10% discount to a firm’s Television fees when they reach the second tier in Unique Visitors, Users, or Queries, a 15% discount when they reach the third tier, and a 20% discount when they reach the fourth tier. In addition, NASDAQ proposes to establish a cap of $100,000 per month for NASDAQ Last Sale for NASDAQ and $50,000 per month for NASDAQ Last Sale for NYSE/Amex. NASDAQ believes that it is reasonable and appropriate to benefit small and medium-sized vendors by proposing a progressive fee schedule and to benefit large vendors by proposing to cap the monthly fees. As with the distribution of other NASDAQ proprietary products, all distributors of the NASDAQ Last Sale for NASDAQ and/or NASDAQ Last Sale for NYSE/Amex products would pay a single $1500/month NASDAQ Last Sale Distributor Fee in addition to any applicable usage fees. The $1,500 monthly fee will apply to all distributors and will not vary based on whether the distributor distributes the data internally or externally or distributes the data via both the Internet and Television. Finally, in order to promote the distribution of the NASDAQ Market Analytics Data Package, described in Rule 7036, NASDAQ proposes that Distributors of the NASDAQ Last Sale Data Products would gain access to the E:\FR\FM\14FEN1.SGM 14FEN1 Federal Register / Vol. 72, No. 30 / Wednesday, February 14, 2007 / Notices ycherry on PROD1PC64 with PRELIMS NASDAQ Market Velocity and NASDAQ Market Forces content from the Market Analytics Package at no additional charge. Market Velocity and Market Forces are measures of market activity that provide unique transparency into NASDAQ trading. Market Velocity is a measure of the frequency and size of orders submitted to the trading system, and is akin to the audible noise and visible activity that traders use on a physical trading floor to detect changes in market direction, momentum, or liquidity. Market Forces uses the same order and share volume information used in Market Velocity, but categorizes the orders by whether they are buys or sells, thereby providing an indication of market direction. NASDAQ has made these data points available for separate purchase on a voluntary basis, and proposes to make them available to those that voluntarily subscribers to NASDAQ Last Sale products. 2. Statutory Basis NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,3 in general, and with Section 6(b)(4) of the Act,4 in particular, in that it is designed to provide an equitable allocation of reasonable fees among users and recipients of NASDAQ data. In adopting Regulation NMS, the Commission granted self-regulatory organizations and broker-dealers increased authority and flexibility to 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 NASDAQ Last Sale market data products proposed here appear to be precisely the sort of market data product that the Commission envisioned when it adopted Regulation NMS. The NASDAQ Last Sale market data products will offer NASDAQ data in a new form not previously available to market data consumers. It will also offer a data product at a new price point not previously available to market data consumers. The product is completely optional in that no consumer is required to purchase it and only those consumers that deem the product to be of sufficient overall value and usefulness will purchase it. To the extent that consumers do purchase NASDAQ Last Sale products, the revenue generated will offset NASDAQ’s high fixed costs of operating 3 15 4 15 U.S.C. 78f. U.S.C. 78f(b)(4). VerDate Aug<31>2005 17:27 Feb 13, 2007 Jkt 211001 and regulating a highly efficient and reliable platform for the trading of U.S. equities. It will also help NASDAQ recapture the significant costs it incurred in developing that platform. B. Self-Regulatory Organization’s Statement on Burden on Competition NASDAQ 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. NASDAQ believes that, as a general matter, the Commission has long held the view that ‘‘competition and innovation are essential to the health of the securities markets. Indeed, competition is one of the hallmarks of the national market system.’’ 5 The Commission has also stated ‘‘that the notion of competition is inextricably tied with the notion of economic efficiency, and the Act seeks to encourage market behavior that promotes such efficiency, lower costs, and better service in the interest of investors and the general public.’’ 6 The Commission goes on to state its belief ‘‘that the appropriate analysis to determine a proposal’s competitive impact is to weigh the proposal’s overall benefits and costs to competition based on the particular facts involved, such as examining whether the proposal would promote economically efficient execution of securities and fair competition between and among exchange markets and other market centers, as well as fair competition between the participants of a particular market.’’ 7 NASDAQ believes that the current proposal is designed to increase transparency and the efficiency of executions by enabling vendors to provide additional market data in a cost efficient manner. NASDAQ believes that there is significant competition for the provision of market data to brokerdealers and other market data consumers, as well as competition for the orders that generate the data. NASDAQ fully expects its competitors to quickly respond to this proposal as they have responded to other NASDAQ data products in the past. Moreover, market forces have shaped the market data fees that NASDAQ has charged for its market data product in the past and will continue to shape those fees in the future. 5 See Securities Exchange Act Release No. 43863 (January 19, 2001), 66 FR 8020 (January 26, 2001). 6 See Securities Exchange Act Release No. 54155 (July 14, 2006), 71 FR 41291, 41298 (July 20, 2006). 7 Id. PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 7103 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 NASDAQ 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2006–060 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–NASDAQ–2006–060. 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 (https://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 E:\FR\FM\14FEN1.SGM 14FEN1 7104 Federal Register / Vol. 72, No. 30 / Wednesday, February 14, 2007 / Notices provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission’s Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of NASDAQ. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number SR–NASDAQ–2006–060 and should be submitted on or before March 7, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.8 Nancy M. Morris, Secretary. [FR Doc. E7–2532 Filed 2–13–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55259; File No. SR–NSCC– 2006–18] Self-Regulatory Organizations; National Securities Clearing Corporation; Order Granting Accelerated Approval of a Proposed Rule Change To Create Service To Facilitate the Exchange of Account Related Information on an Automated Basis Between Members February 8, 2007. I. Introduction On December 21, 2006, the National Securities Clearing Corporation (‘‘NSCC’’) filed with the Securities and Exchange Commission (‘‘Commission’’) and on January 5, 2007, amended 1 proposed rule change SR–NSCC–2006– 18 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’).2 Notice of the proposal was published in the Federal Register on January 18, 2007.3 The Commission received no comment letters. For the reasons discussed below, the Commission is approving the proposed rule change on an accelerated basis. II. Description ycherry on PROD1PC64 with PRELIMS Currently, when a correspondent firm chooses to move its book of business from one NSCC member to another, 8 17 CFR 200.30–3(a)(12). amendment added the number of the new rule inadvertently omitted in the original filing. 2 15 U.S.C. 78s(b)(1). 3 Securities Exchange Act Release No. 55082 (January 10, 2007), 72 FR 2319. 1 The VerDate Aug<31>2005 17:27 Feb 13, 2007 Jkt 211001 there is no standard method for transmitting the detailed customer data between the members. This information is currently exchanged through tapes, CDs, and other means and is dependent on the proprietary data format and values defined by the clearing firm from which the correspondent is moving. The process is time-consuming and prone to incorrect interpretation of data values. It is made more inefficient because clearing firms maintain separate code for each other clearing firm for which they convert data. NSCC is modifying its rules to create the Account Information Transmission Service (‘‘AIT’’) to facilitate the exchange of account related information during the movement of correspondent broker accounts between members or during other material events that result in the bulk movement of accounts between members. AIT will provide members with a standard mechanism to transmit customer data that will reduce the potential for lost and incorrectly interpreted data and will provide members with a secure facility for the exchange of data. The standard data model also will allow for the adoption of a single code base that is applicable for all conversion events. NSCC believes the single standard format could reduce costs, increase accuracy, and accelerate delivery time. NSCC will develop and introduce AIT in two phases. The first phase is to create the mechanism by which members may transmit data between themselves. NSCC will implement the first phase on Monday, February 12, 2007. The second phase will involve the development of standardized data formats. NSCC will notify the Commission of phase two enhancements prior to their implementation. Since AIT is only an information transmission service, NSCC is also amending its rules to clarify that NSCC is not responsible for the accuracy or completeness of any information transmitted through AIT or for any omissions or delays that may occur in the transmission of AIT data. Finally, NSCC is implementing a $200 monthly subscription fee for participation in AIT during phase one. NSCC will reevaluate AIT service fees as subsequent enhancements are completed. III. Discussion Section 19(b) of the Act directs the Commission to approve a proposed rule change of a self-regulatory organization if it finds that such proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to PO 00000 Frm 00099 Fmt 4703 Sfmt 4703 such organization.4 Section 17A(b)(3)(F) of the Act requires that the rules of a clearing agency be designed to promote the prompt and accurate clearance and settlement of securities transactions.5 The Commission finds that NSCC’s rule change is consistent with these requirements because by reducing costs, increasing accuracy, and accelerating delivery time of bulk movement of accounts between members, the proposed rule change should better enable NSCC to promote the prompt and accurate clearance and settlement of securities transactions.6 The Commission believes there is good cause for approving the proposed rule change prior to the thirtieth day after the date of publication of notice of filing because doing such will allow NSCC to implement AIT according to its system implementation schedule. IV. Conclusion On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and in particular Section 17A of the Act and the rules and regulations thereunder. It is therefore ordered, pursuant to Section 19(b)(2) of the Act,7 that the proposed rule change (File No. SR– NSCC–2006–18) be and hereby is approved on an accelerated basis. For the Commission by the Division of Market Regulation, pursuant to delegated authority.8 Nancy M. Morris, Secretary. [FR Doc. E7–2540 Filed 2–13–07; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–55254; File No. SR–Phlx– 2006–88] Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Rule 712, Independent Audit February 8, 2007. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 4 15 U.S.C. 78s(b). U.S.C. 78q–1(b)(3)(F). 6 In approving the proposed rule change, the Commission considered the proposal’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 7 15 U.S.C. 78s(b)(2). 8 17 CFR 200.30–3(a)(12). 5 15 E:\FR\FM\14FEN1.SGM 14FEN1

Agencies

[Federal Register Volume 72, Number 30 (Wednesday, February 14, 2007)]
[Notices]
[Pages 7100-7104]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-2532]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55255; File No. SR-NASDAQ-2006-060]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To 
Establish NASDAQ Last Sale Data Feeds

February 8, 2007.
    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 December 19, 2006, The NASDAQ Stock Market LLC (``NASDAQ'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been substantially prepared by NASDAQ. On January 26, 2007, 
NASDAQ submitted Amendment No. 1 to the proposed rule change. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, 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

    NASDAQ proposes to create the ``NASDAQ Last Sale For NASDAQ'' and 
``NASDAQ Last Sale For NYSE/Amex'' data feeds containing last sale 
activity in U.S. equities within the NASDAQ Market Center and reported 
to the jointly-operated NASDAQ/NASD Trade Reporting Facility (``NASDAQ 
TRF''). The text of the proposed rule change is below. Proposed new 
language is in italics.

7039. NASDAQ Last Sale Data Feeds

    (a) NASDAQ shall offer two proprietary data feeds containing real-
time last sale information for trades executed on NASDAQ or reported to 
the Nasdaq/NASD Trade Reporting Facility.
    (1) ``NASDAQ Last Sale for Nasdaq'' shall contain all transaction 
reports for Nasdaq-listed stocks; and
    (2) ``NASDAQ Last Sale for NYSE/Amex'' shall contain all such 
transaction reports for NYSE- and Amex-listed stocks.
    (b) Distributors of the NASDAQ Last Sale Data Feeds may elect 
between two alternate fee schedules, depending upon the ability of 
distributors to maintain either a username/ password entitlement system 
or a quote counting mechanism or both. All fees for the NASDAQ Last 
Sale Data Products are

[[Page 7101]]

``stair-stepped'' in that the fees are reduced for distributors with 
more users but the lower rates apply only to users in excess of the 
specified thresholds rather than applying to all users once a threshold 
is met. In addition, there shall be a maximum fee of $100,000 per month 
for NASDAQ Last Sale for NASDAQ and $50,000 per month for NASDAQ Last 
Sale for NYSE/Amex.
    (1) Firms that have the ability to maintain either a username/
password entitlement system or quote counting mechanism or both shall 
elect between paying a fee for each user or a fee for each query. A 
firm that elects to pay for each query may cap its payment at the 
monthly rate per user. Firms shall pay the following fees:

                                         (A) NASDAQ Last Sale for NASDAQ
----------------------------------------------------------------------------------------------------------------
             Users/mo                          Price                    Query                    Price
----------------------------------------------------------------------------------------------------------------
1-9,999...........................  $0.60/ usermonth            0-10M................  $0.003/ query
10,000-49,999.....................  $0.48/ usermonth            10M-20M..............  $0.0024/ query
50,000-99,999.....................  $0.36/ usermonth            20M-30M..............  $0.0018/ query
100,000+..........................  $0.30/ usermonth            30M+.................  $0.0015/ query
----------------------------------------------------------------------------------------------------------------


                                       (B) NASDAQ Last Sale for NYSE/Amex
----------------------------------------------------------------------------------------------------------------
             Users/mo                          Price                    Quotes                   Price
----------------------------------------------------------------------------------------------------------------
1-9,999...........................  $0.30/ usermonth            0-10M................  $0.0015/ query
10,000-49,999.....................  $0.24/ usermonth            10M-20M..............  $0.0012/ query
50,000-99,999.....................  $0.18/ usermonth            20M-30M..............  $0.0009/ query
100,000+..........................  $0.15/ usermonth            30M+.................  $0.000725/ query
----------------------------------------------------------------------------------------------------------------

    (2) Firms that lack the ability to maintain either a username/
password entitlement system or quote counting mechanism or both may 
distribute NASDAQ Last Sale Data Products under alternate fee schedules 
depending upon whether they distribute data via the Internet or via 
Television:
    (A) The fee for distribution of NASDAQ Last Sale Data Products via 
the Internet shall be based upon the number of Unique Visitors to a 
website receiving such data. The number of Unique Visitors shall be 
validated by a vendor approved by NASDAQ in NASDAQ's sole discretion.

                     (i) NASDAQ Last Sale for NASDAQ
------------------------------------------------------------------------
              Unique visitors                        Monthly fee
------------------------------------------------------------------------
1-100,000.................................  $0.036/ Unique Visitor
100,000-1M................................  $0.03/ Unique Visitor
1M+.......................................  $0.024/ Unique Visitor
------------------------------------------------------------------------


                   (ii) NASDAQ Last Sale for NYSE/Amex
------------------------------------------------------------------------
              Unique visitors                        Monthly fee
------------------------------------------------------------------------
1-100,000.................................  $0.018/ Unique Visitor
100,000-1M................................  $0.015/ Unique Visitor
1M+.......................................  $0.012/ Unique Visitor
------------------------------------------------------------------------

    (B) Distribution of NASDAQ Last Sale Data Products via Television 
shall be based upon the number of Households receiving such data. The 
number of Households to which such data is available shall be validated 
by a vendor approved by NASDAQ in NASDAQ's sole discretion.

                     (i) NASDAQ Last Sale for NASDAQ
------------------------------------------------------------------------
                Households                           Monthly fee
------------------------------------------------------------------------
1-1M......................................  $0.0096/ Household
1M-5M.....................................  $0.0084/ Household
5M-10M....................................  $0.0072/ Household
10M+......................................  $0.006/ Household
------------------------------------------------------------------------


                   (ii) NASDAQ Last Sale for NYSE/Amex
------------------------------------------------------------------------
                Households                           Monthly fee
------------------------------------------------------------------------
1-1M......................................  $0.0048/ Household
1M-5M.....................................  $0.0042/ Household
5M-10M....................................  $0.0036/ Household
10M+......................................  $0.003/ Household
------------------------------------------------------------------------

    (C) A Distributor that distributes Nasdaq Last Sale Data Products 
via multiple distribution mechanisms shall pay all fees applicable to 
each distribution mechanism, provided that there shall be a discount 
from the applicable Television rate as follows: 
    (i) 10 percent reduction in applicable Television fees when a 
Distributor reaches the second tier of Users, Queries, or Unique 
Visitors for its non-Television users; 
    (ii) 15 percent reduction in applicable Television fees when a 
Distributor reaches the third tier of Users, Queries, or Unique 
Visitors for its non-Television users; and 
    (iii) 20 percent reduction in applicable Television fees when a 
Distributor reaches the fourth tier of Users, Queries, or Unique 
Visitors for its non-Television users. 
    (c) All Distributors of a Nasdaq Last Sale Data Feed shall also pay 
a monthly fee of $1,500. 
    (d) All Distributors of a Nasdaq Last Sale Data Feed shall also 
have the ability to distribute the Nasdaq Market

[[Page 7102]]

Analytics Data Package set forth in Rule 7036 at no additional 
distributor fee.
* * * * *

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

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

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

1. Purpose
    Currently, NASDAQ provides real-time last sale information from its 
market center to the Security Information Processors (``SIPs'') for the 
national market system plans governing trading in NASDAQ, New York 
Stock Exchange LLC (``NYSE''), and American Stock Exchange LLC 
(``Amex'') listed securities. The SIPs then consolidate NASDAQ's last 
sale information with similar information from other market centers, 
and disseminate the consolidated last sale data to market data vendors. 
These consolidated products are known within the securities industry as 
``Level 1'' products.
    NASDAQ proposes to create two separate ``Level 1'' products 
containing last sale activity within the NASDAQ market and reported to 
the NASDAQ TRF. First, the ``NASDAQ Last Sale for NASDAQ Data 
Product,'' a real-time data feed that provides real-time last sale 
information including execution price, volume, and time for executions 
occurring within the NASDAQ system as well as those reported to the 
NASDAQ TRF. Second, NASDAQ will also create the ``NASDAQ Last Sale for 
NYSE/Amex Data Product'' that provides real-time last sale information 
including execution price, volume, and time for NYSE and Amex 
securities executions occurring within the NASDAQ system as well as 
those reported to the NASDAQ TRF. Both products would also include 
access to the NASDAQ Market Velocity and NASDAQ Market Forces 
information for their respective classes of securities, data which is 
currently available only via a separate, stand-alone data feed product.
    NASDAQ developed these product proposals in consultation with 
industry members and also market data vendors and purchasers. These 
products are designed to meet the needs of current and prospective 
subscribers that do not need or are unwilling to pay for the 
consolidated data provided by the SIP Level 1 products. NASDAQ also 
proposes to ease the administrative burden of market data vendors that 
are receiving and using data in new ways, particularly those that 
provide the data via the Internet and various Television media. 
Providing investors with new options for receiving market data, as 
NASDAQ proposes, was a primary goal of the market data amendments 
adopted in Regulation NMS.
    NASDAQ proposes two different pricing models, one for clients that 
are able to maintain username/password entitlement systems and/or quote 
counting mechanisms to account for usage, and a second for those that 
are not. Firms with the ability to maintain username/password 
entitlement systems and/or quote counting mechanisms will be eligible 
for a specified fee schedule for the NASDAQ Last Sale For NASDAQ 
Product and a separate fee schedule for the NASDAQ Last Sale for NYSE/
Amex Product. The pricing will be ``stair-stepped,'' meaning that the 
tiered fees would be effective for the incremental users in the new 
tier. For example, a distributor of the NASDAQ Last Sale for NASDAQ 
Product with 20,000 users would pay $0.60 for the first 10,000 users 
and $0.48 for the next 10,000 users. Distributors may instead elect to 
pay per query for their users if, for example, a substantial portion of 
their users request a relatively small number of queries each month. As 
with consolidated Level 1 data products, firms will be permitted to 
``cap'' their payments for individual queries at the corresponding 
monthly user rate. NASDAQ believes this allows firms to manage their 
market data costs better.
    Firms that are unable to maintain username/password entitlement 
systems and/or quote counting mechanisms will also have multiple 
options for purchasing the NASDAQ Last Sale data. These firms will 
choose between a ``Unique Visitor'' model for Internet delivery or a 
``Household'' model for Television delivery. Unique Visitor and 
Household populations must be reported monthly and must be validated by 
a third party vendor or ratings agency approved by NASDAQ at NASDAQ's 
sole discretion.
    The proposed pricing is stair-stepped, meaning that the tiered fees 
would be effective for the incremental users in the new tier. For 
example, a distributor of NASDAQ Last Sale for NASDAQ that reports 
600,000 Unique Visitors would pay $0.036 for the first 100,000 visitors 
and $0.03 for the next 500,000 visitors. A Distributor that reports 
3,000,000 households reached would pay $0.0096 for the first 1,000,000 
households and $0.0084 for the next 2,000,000 households.
    Industry members have noted to NASDAQ that these Internet and 
Television media types are converging, and that these two price 
schedules should therefore be blended. To reflect the growing 
confluence between these media outlets, NASDAQ proposes to offer a 
reduction in fees when a single Distributor distributes NASDAQ Last 
Sale Data Products via multiple distribution mechanisms. Specifically, 
NASDAQ will discount the applicable fees for distribution of NASDAQ 
Last Sale Data Products via Television for Distributors that also 
distribute those products via the Internet and have achieved a new 
pricing tier for Unique Visitors, Users, or Queries. This acknowledges 
distributors' perception that as Web sites grow, they may gain 
overlapping Web site users and Television viewers. NASDAQ proposes that 
there be a 10% discount to a firm's Television fees when they reach the 
second tier in Unique Visitors, Users, or Queries, a 15% discount when 
they reach the third tier, and a 20% discount when they reach the 
fourth tier.
    In addition, NASDAQ proposes to establish a cap of $100,000 per 
month for NASDAQ Last Sale for NASDAQ and $50,000 per month for NASDAQ 
Last Sale for NYSE/Amex. NASDAQ believes that it is reasonable and 
appropriate to benefit small and medium-sized vendors by proposing a 
progressive fee schedule and to benefit large vendors by proposing to 
cap the monthly fees.
    As with the distribution of other NASDAQ proprietary products, all 
distributors of the NASDAQ Last Sale for NASDAQ and/or NASDAQ Last Sale 
for NYSE/Amex products would pay a single $1500/month NASDAQ Last Sale 
Distributor Fee in addition to any applicable usage fees. The $1,500 
monthly fee will apply to all distributors and will not vary based on 
whether the distributor distributes the data internally or externally 
or distributes the data via both the Internet and Television.
    Finally, in order to promote the distribution of the NASDAQ Market 
Analytics Data Package, described in Rule 7036, NASDAQ proposes that 
Distributors of the NASDAQ Last Sale Data Products would gain access to 
the

[[Page 7103]]

NASDAQ Market Velocity and NASDAQ Market Forces content from the Market 
Analytics Package at no additional charge. Market Velocity and Market 
Forces are measures of market activity that provide unique transparency 
into NASDAQ trading. Market Velocity is a measure of the frequency and 
size of orders submitted to the trading system, and is akin to the 
audible noise and visible activity that traders use on a physical 
trading floor to detect changes in market direction, momentum, or 
liquidity. Market Forces uses the same order and share volume 
information used in Market Velocity, but categorizes the orders by 
whether they are buys or sells, thereby providing an indication of 
market direction. NASDAQ has made these data points available for 
separate purchase on a voluntary basis, and proposes to make them 
available to those that voluntarily subscribers to NASDAQ Last Sale 
products.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\3\ in general, and with Section 
6(b)(4) of the Act,\4\ in particular, in that it is designed to provide 
an equitable allocation of reasonable fees among users and recipients 
of NASDAQ data. In adopting Regulation NMS, the Commission granted 
self-regulatory organizations and broker-dealers increased authority 
and flexibility to 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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The NASDAQ Last Sale market data products proposed here appear to 
be precisely the sort of market data product that the Commission 
envisioned when it adopted Regulation NMS. The NASDAQ Last Sale market 
data products will offer NASDAQ data in a new form not previously 
available to market data consumers. It will also offer a data product 
at a new price point not previously available to market data consumers. 
The product is completely optional in that no consumer is required to 
purchase it and only those consumers that deem the product to be of 
sufficient overall value and usefulness will purchase it.
    To the extent that consumers do purchase NASDAQ Last Sale products, 
the revenue generated will offset NASDAQ's high fixed costs of 
operating and regulating a highly efficient and reliable platform for 
the trading of U.S. equities. It will also help NASDAQ recapture the 
significant costs it incurred in developing that platform.

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

    NASDAQ 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. NASDAQ believes that, as a 
general matter, the Commission has long held the view that 
``competition and innovation are essential to the health of the 
securities markets. Indeed, competition is one of the hallmarks of the 
national market system.'' \5\ The Commission has also stated ``that the 
notion of competition is inextricably tied with the notion of economic 
efficiency, and the Act seeks to encourage market behavior that 
promotes such efficiency, lower costs, and better service in the 
interest of investors and the general public.'' \6\
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 43863 (January 19, 
2001), 66 FR 8020 (January 26, 2001).
    \6\ See Securities Exchange Act Release No. 54155 (July 14, 
2006), 71 FR 41291, 41298 (July 20, 2006).
---------------------------------------------------------------------------

    The Commission goes on to state its belief ``that the appropriate 
analysis to determine a proposal's competitive impact is to weigh the 
proposal's overall benefits and costs to competition based on the 
particular facts involved, such as examining whether the proposal would 
promote economically efficient execution of securities and fair 
competition between and among exchange markets and other market 
centers, as well as fair competition between the participants of a 
particular market.'' \7\
---------------------------------------------------------------------------

    \7\ Id.
---------------------------------------------------------------------------

    NASDAQ believes that the current proposal is designed to increase 
transparency and the efficiency of executions by enabling vendors to 
provide additional market data in a cost efficient manner. NASDAQ 
believes that there is significant competition for the provision of 
market data to broker-dealers and other market data consumers, as well 
as competition for the orders that generate the data. NASDAQ fully 
expects its competitors to quickly respond to this proposal as they 
have responded to other NASDAQ data products in the past. Moreover, 
market forces have shaped the market data fees that NASDAQ has charged 
for its market data product in the past and will continue to shape 
those fees in the future.

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 NASDAQ 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 (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2006-060 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-NASDAQ-2006-060. 
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 (https://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

[[Page 7104]]

provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of NASDAQ. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make publicly available. All submissions should refer to 
File Number SR-NASDAQ-2006-060 and should be submitted on or before 
March 7, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

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

Nancy M. Morris,
Secretary.
[FR Doc. E7-2532 Filed 2-13-07; 8:45 am]
BILLING CODE 8010-01-P
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