Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Amend NASD Rule 7001B To Increase the Percentage of Market Data Revenue Shared With NASD/Nasdaq TRF Participants, 27586-27587 [E8-10569]
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27586
Federal Register / Vol. 73, No. 93 / Tuesday, May 13, 2008 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change
establishes or changes a due, fee, or
other charge imposed by the Exchange,
it has become effective pursuant to
Section 19(b)(3)(A) of the Act 11 and
subparagraph (f)(2) of Rule 19b–4 12
thereunder. At any time within 60 days
of the filing of the proposed rule change,
the Commission may summarily
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
rwilkins on PROD1PC63 with NOTICES
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-CBOE–2008–52 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington DC
20549–1090.
All submissions should refer to File
Number SR-CBOE–2008–52. 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
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
11 15
12 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
VerDate Aug<31>2005
16:14 May 12, 2008
Jkt 214001
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 am and 3 pm.
Copies of such 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 No. SRCBOE–2008–52 and should be
submitted on or before June 3, 2008.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Nancy M. Morris,
Secretary.
[FR Doc. E8–10620 Filed 5–12–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57765; File No. SR–FINRA–
2007–041]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change To Amend
NASD Rule 7001B To Increase the
Percentage of Market Data Revenue
Shared With NASD/Nasdaq TRF
Participants
May 1, 2008.
I. Introduction
On December 21, 2007, Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’), filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to adjust the
percentage of market data revenue
shared with participants in the NASD/
Nasdaq Trade Reporting Facility
(‘‘NASD/Nasdaq TRF’’). The proposed
rule change was published for comment
in the Federal Register on January 24,
2008.3 The Commission received one
comment letter regarding the proposal.4
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 57164
(January 17, 2008), 73 FR 4295.
4 See letter from Christopher Gilkerson and
Gregory Babyak, Co-Chairs, Market Data
Subcommittee of the SIFMA Technology and
Regulation Committee, to Nancy M. Morris,
Secretary, Commission, dated February 14, 2008
(‘‘SIFMA letter’’).
On March 27, 2008, FINRA submitted
its response to the comment letter.5
This order approves the proposed rule
change.
II. Description of the Proposed Rule
Change
FINRA proposes to amend NASD Rule
7001B (Securities Transaction Credit) to
modify the percentage of market data
revenue that is shared with FINRA
members that report trades to the
NASD/Nasdaq TRF for transactions on
the New York Stock Exchange (‘‘Tape
A’’), American Stock Exchange and
regional exchanges (‘‘Tape B’’), and
Nasdaq Exchange (‘‘Tape C’’). At
present, FINRA members that report
trades in Tape A, Tape B, and Tape C
securities to the NASD/Nasdaq TRF
receive a 50% pro rata credit on market
data revenue that is earned by the
NASD/Nasdaq TRF.6
The proposed rule change establishes
a tiered rebate schedule whereby a
participant in the NASD/Nasdaq TRF
will receive from 0% to 100% of
attributable market data revenue,
depending upon the tape and the
participant’s market share. For example,
a participant will receive 100% of the
attributable market data revenue for
trades in Tape A-listed stocks if its trade
reports for those stocks are greater than
or equal to 0.25% of the total
consolidated volume of those stocks. In
contrast, a participant will receive 100%
of the attributable market data revenue
for trades in Tape C-listed stocks if its
trade reports for those stocks are greater
than or equal to 0.75% of the total
consolidated volume of those stocks.
Similarly, a participant will receive
80% of the attributable market data
revenue for trades in Tape A-listed
stocks if its trade reports for those stocks
are less than 0.25%, but greater than or
equal to 0.15%, of the total consolidated
volume of those stocks. A participant
will receive 80% of the attributable
market data revenue for trades in Tape
C-listed stocks if its trade reports for
those stocks are less than 0.75%, but
greater than or equal to 0.25% of the
total consolidated volume of those
stocks.
In its filing with the Commission,
FINRA stated that according to Nasdaq,
it based the percentage of revenue that
13 17
1 15
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
5 See letter from Lisa C. Horrigan, Associate
General Counsel, FINRA, to Nancy M. Morris,
Secretary, Commission, dated March 27, 2008
(‘‘FINRA letter’’).
6 The market data revenue consists of the revenue
received by the NASD/Nasdaq TRF from the
Consolidated Tape Association or the Nasdaq
Securities Information Processor minus any charge
for capacity usage. The proposed rule eliminates the
deduction for capacity usage.
E:\FR\FM\13MYN1.SGM
13MYN1
Federal Register / Vol. 73, No. 93 / Tuesday, May 13, 2008 / Notices
it would share on different levels of
market share because of the extent to
which members use the NASD/Nasdaq
TRF to report trades in different stocks.
For example, FINRA stated that
members report higher volumes of
trades in Tape C stocks than in Tape A
or Tape B stocks, justifying a higher
level of market share for Tape C
transactions.
FINRA will calculate a participant’s
market share separately for each tape.
To calculate a participant’s market
share, FINRA will divide the total
number of shares represented by trades
reported by members to the NASD/
Nasdaq TRF during a calendar quarter
by the total number of shares
represented by all trades reported to the
Consolidated Tape Association or
Securities Information Processor during
that quarter.
III. Summary of Comments
The Commission received one
comment letter in response to the
proposed rule change.7 The commenter
stated that the proposed rebate
demonstrated that market data fees are
excessive, and do not have a fair and
reasonable basis.8 The commenter noted
that, in its capacity as the ‘‘SRO
Member,’’ FINRA allocates and deducts
costs before passing market data
revenue to each TRF. According to the
commenter, this ability to allocate costs
in the context of a TRF rebuts earlier
arguments, made by the exchanges, that
costs of collection and distribution of
market data cannot be allocated, and
should thus not be a basis for
determining the reasonableness of
market data fees.9 The commenter also
asserted that the proposed rule change
did not address the competitive impact
of the filing, and that any short-term
benefits from the market data revenue
rebates could be diminished by the
long-term impact of less competition.10
Finally, the commenter said that the
proposal addresses issues that are also
present in the NetCoalition Petition.11
FINRA responded that the arguments
made by the commenter were not
germane to the proposed rule change.
For example, FINRA stated that the
issue of the reasonableness of market
data fees and the purported lack of
transparency regarding the cost of
collecting market data are at issue in the
NetCoalition Petition and need not be
resolved in connection with this
filing.12 FINRA also stated that the costs
of collecting and distributing market
data are not necessarily determinative of
the reasonableness of the proposed
rebate.13 Finally, FINRA stated that the
proposed rebate does not constitute an
undue burden on competition that is not
in furtherance of the Act.14
IV. Discussion and Commission
Findings
The Commission has carefully
reviewed the proposed rule change, the
comment letter, and FINRA’s response
to the comment letter, and finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
association 15 and, in particular, the
requirements of Section 15A(b)(5) of the
Act,16 which requires that FINRA rules
provide for the equitable allocation of
reasonable dues, fees, and other charges
among its members and issuers and
other persons using its facilities.
The Commission believes that it is
reasonable for FINRA to amend Rule
7001B to adjust the percentage of market
data revenue shared with NASD/Nasdaq
TRF participants, effective retroactively
to January 1, 2008. FINRA seeks to
modify the rebate of market data
revenue to NASD/Nasdaq TRF
participants. Neither the costs incurred
in collecting that market data, nor the
calculation of market data fees is
directly at issue in this filing. The fact
that Nasdaq, as the Business Member,
has determined to adjust its rebate
schedule such that participants may
receive a greater percentage of market
data revenue does not establish that the
fees are excessive. The SIFMA letter
does not raise any other issue that
would preclude approval of the FINRA
proposal.
V. Conclusion
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and, in
particular, Section 15A of the Act and
the rules and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,17 that the
proposed rule change (SR–FINRA–
2007–041) be, and hereby is, approved.
12 See
rwilkins on PROD1PC63 with NOTICES
7 Supra
note 4.
8 SIFMA letter at 1.
9 Id. at 2.
10 Id. at 3.
11 SIFMA letter at 1. See Securities Exchange Act
Release No. 55011 (December 27, 2006) (order
granting petition for review of SR–NYSEArca–
2006–21).
VerDate Aug<31>2005
16:14 May 12, 2008
Jkt 214001
FINRA letter at 2.
13 Id.
14 Id.
15 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
16 15 U.S.C. 78o-3(b)(5).
17 15 U.S.C. 78s(b)(2).
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
27587
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8–10569 Filed 5–12–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–57784; File No. SR–FINRA–
2007–039]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Order Approving
Proposed Rule Change as Modified by
Amendment Nos. 1 and 2 Thereto To
Establish an Exemption for Certain
Regulation NMS-Compliant Intermarket
Sweep Orders from the Requirements
in IM–2110–2 (Trading Ahead of
Customer Limit Order) and Rule 2111
(Trading Ahead of Customer Market
Orders)
May 6, 2008.
I. Introduction
On December 21, 2007, Financial
Industry Regulatory Authority, Inc.
(‘‘FINRA’’) (f/k/a National Association
of Securities Dealers, Inc. (‘‘NASD’’)),
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to establish an exemption for
certain Regulation NMS-compliant
Intermarket Sweep Orders (‘‘ISOs’’)
from the requirements governing trading
ahead of customer limit orders and
customer market orders. On February
11, 2008, FINRA filed Amendment No.
1 to the proposed rule change. The
proposed rule change, as amended, was
published for comment in the Federal
Register on March 5, 2008.3 The
Commission received one comment
letter regarding the proposal.4 FINRA
responded to the comment letter on
March 26, 2008.5 On April 30, 2008,
FINRA filed Amendment No. 2 to the
proposed rule change.6
18 17
CFR 200.30–3(a)(12).
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 57388
(February 27, 2008), 73 FR 11963.
4 See submission via SEC WebForm from Craig
Carlino, Monroe Securities, dated March 13, 2008.
5 See letter from Andrea D. Orr, Assistant General
Counsel, FINRA, to Nancy M. Morris, Secretary,
Commission, dated March 26, 2008 (‘‘FINRA
letter’’).
6 In Amendment No. 2, FINRA deleted definitions
that were either unnecessary or duplicative from
E:\FR\FM\13MYN1.SGM
Continued
13MYN1
]]>Agencies
[Federal Register Volume 73, Number 93 (Tuesday, May 13, 2008)]
[Notices]
[Pages 27586-27587]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-10569]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-57765; File No. SR-FINRA-2007-041]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving Proposed Rule Change To Amend NASD
Rule 7001B To Increase the Percentage of Market Data Revenue Shared
With NASD/Nasdaq TRF Participants
May 1, 2008.
I. Introduction
On December 21, 2007, Financial Industry Regulatory Authority, Inc.
(``FINRA''), filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adjust the percentage of market data revenue
shared with participants in the NASD/Nasdaq Trade Reporting Facility
(``NASD/Nasdaq TRF''). The proposed rule change was published for
comment in the Federal Register on January 24, 2008.\3\ The Commission
received one comment letter regarding the proposal.\4\ On March 27,
2008, FINRA submitted its response to the comment letter.\5\
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 57164 (January 17,
2008), 73 FR 4295.
\4\ See letter from Christopher Gilkerson and Gregory Babyak,
Co-Chairs, Market Data Subcommittee of the SIFMA Technology and
Regulation Committee, to Nancy M. Morris, Secretary, Commission,
dated February 14, 2008 (``SIFMA letter'').
\5\ See letter from Lisa C. Horrigan, Associate General Counsel,
FINRA, to Nancy M. Morris, Secretary, Commission, dated March 27,
2008 (``FINRA letter'').
This order approves the proposed rule change.
II. Description of the Proposed Rule Change
FINRA proposes to amend NASD Rule 7001B (Securities Transaction
Credit) to modify the percentage of market data revenue that is shared
with FINRA members that report trades to the NASD/Nasdaq TRF for
transactions on the New York Stock Exchange (``Tape A''), American
Stock Exchange and regional exchanges (``Tape B''), and Nasdaq Exchange
(``Tape C''). At present, FINRA members that report trades in Tape A,
Tape B, and Tape C securities to the NASD/Nasdaq TRF receive a 50% pro
rata credit on market data revenue that is earned by the NASD/Nasdaq
TRF.\6\
---------------------------------------------------------------------------
\6\ The market data revenue consists of the revenue received by
the NASD/Nasdaq TRF from the Consolidated Tape Association or the
Nasdaq Securities Information Processor minus any charge for
capacity usage. The proposed rule eliminates the deduction for
capacity usage.
---------------------------------------------------------------------------
The proposed rule change establishes a tiered rebate schedule
whereby a participant in the NASD/Nasdaq TRF will receive from 0% to
100% of attributable market data revenue, depending upon the tape and
the participant's market share. For example, a participant will receive
100% of the attributable market data revenue for trades in Tape A-
listed stocks if its trade reports for those stocks are greater than or
equal to 0.25% of the total consolidated volume of those stocks. In
contrast, a participant will receive 100% of the attributable market
data revenue for trades in Tape C-listed stocks if its trade reports
for those stocks are greater than or equal to 0.75% of the total
consolidated volume of those stocks. Similarly, a participant will
receive 80% of the attributable market data revenue for trades in Tape
A-listed stocks if its trade reports for those stocks are less than
0.25%, but greater than or equal to 0.15%, of the total consolidated
volume of those stocks. A participant will receive 80% of the
attributable market data revenue for trades in Tape C-listed stocks if
its trade reports for those stocks are less than 0.75%, but greater
than or equal to 0.25% of the total consolidated volume of those
stocks.
In its filing with the Commission, FINRA stated that according to
Nasdaq, it based the percentage of revenue that
[[Page 27587]]
it would share on different levels of market share because of the
extent to which members use the NASD/Nasdaq TRF to report trades in
different stocks. For example, FINRA stated that members report higher
volumes of trades in Tape C stocks than in Tape A or Tape B stocks,
justifying a higher level of market share for Tape C transactions.
FINRA will calculate a participant's market share separately for
each tape. To calculate a participant's market share, FINRA will divide
the total number of shares represented by trades reported by members to
the NASD/Nasdaq TRF during a calendar quarter by the total number of
shares represented by all trades reported to the Consolidated Tape
Association or Securities Information Processor during that quarter.
III. Summary of Comments
The Commission received one comment letter in response to the
proposed rule change.\7\ The commenter stated that the proposed rebate
demonstrated that market data fees are excessive, and do not have a
fair and reasonable basis.\8\ The commenter noted that, in its capacity
as the ``SRO Member,'' FINRA allocates and deducts costs before passing
market data revenue to each TRF. According to the commenter, this
ability to allocate costs in the context of a TRF rebuts earlier
arguments, made by the exchanges, that costs of collection and
distribution of market data cannot be allocated, and should thus not be
a basis for determining the reasonableness of market data fees.\9\ The
commenter also asserted that the proposed rule change did not address
the competitive impact of the filing, and that any short-term benefits
from the market data revenue rebates could be diminished by the long-
term impact of less competition.\10\ Finally, the commenter said that
the proposal addresses issues that are also present in the NetCoalition
Petition.\11\
---------------------------------------------------------------------------
\7\ Supra note 4.
\8\ SIFMA letter at 1.
\9\ Id. at 2.
\10\ Id. at 3.
\11\ SIFMA letter at 1. See Securities Exchange Act Release No.
55011 (December 27, 2006) (order granting petition for review of SR-
NYSEArca-2006-21).
---------------------------------------------------------------------------
FINRA responded that the arguments made by the commenter were not
germane to the proposed rule change. For example, FINRA stated that the
issue of the reasonableness of market data fees and the purported lack
of transparency regarding the cost of collecting market data are at
issue in the NetCoalition Petition and need not be resolved in
connection with this filing.\12\ FINRA also stated that the costs of
collecting and distributing market data are not necessarily
determinative of the reasonableness of the proposed rebate.\13\
Finally, FINRA stated that the proposed rebate does not constitute an
undue burden on competition that is not in furtherance of the Act.\14\
---------------------------------------------------------------------------
\12\ See FINRA letter at 2.
\13\ Id.
\14\ Id.
---------------------------------------------------------------------------
IV. Discussion and Commission Findings
The Commission has carefully reviewed the proposed rule change, the
comment letter, and FINRA's response to the comment letter, and finds
that the proposed rule change is consistent with the requirements of
the Act and the rules and regulations thereunder applicable to a
national securities association \15\ and, in particular, the
requirements of Section 15A(b)(5) of the Act,\16\ which requires that
FINRA rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its members and issuers and other persons
using its facilities.
---------------------------------------------------------------------------
\15\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
\16\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
The Commission believes that it is reasonable for FINRA to amend
Rule 7001B to adjust the percentage of market data revenue shared with
NASD/Nasdaq TRF participants, effective retroactively to January 1,
2008. FINRA seeks to modify the rebate of market data revenue to NASD/
Nasdaq TRF participants. Neither the costs incurred in collecting that
market data, nor the calculation of market data fees is directly at
issue in this filing. The fact that Nasdaq, as the Business Member, has
determined to adjust its rebate schedule such that participants may
receive a greater percentage of market data revenue does not establish
that the fees are excessive. The SIFMA letter does not raise any other
issue that would preclude approval of the FINRA proposal.
V. Conclusion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and, in particular, Section 15A of the
Act and the rules and regulations thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\17\ that the proposed rule change (SR-FINRA-2007-041) be, and
hereby is, approved.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-10569 Filed 5-12-08; 8:45 am]
BILLING CODE 8010-01-P
