Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change as Modified by Amendments No. 2 and 3 Thereto To Modify the Fee for Connecting to a Nasdaq Data Center Over the Internet, 19247-19248 [E9-9555]
Download as PDF
<![CDATA[
Federal Register / Vol. 74, No. 80 / Tuesday, April 28, 2009 / Notices
activities of the Company during that
fiscal year.
6. If any purchase or sale is made by
a Company from or to an entity
affiliated with the Company by reason
of an officer, director or employee of a
WB Entity (a) serving as an officer,
director, general partner or investment
adviser to the entity, or (b) having a 5%
or more interest in the entity, such
individual will not participate in the
Manager’s determination of whether or
not to effect the purchase or sale.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9–9576 Filed 4–27–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59795; File No. SR–
NASDAQ–2006–064]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving Proposed Rule Change as
Modified by Amendments No. 2 and 3
Thereto To Modify the Fee for
Connecting to a Nasdaq Data Center
Over the Internet
April 20, 2009.
On December 22, 2006, The NASDAQ
Stock Market LLC (‘‘Nasdaq’’ or
‘‘Exchange’’) 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
modify the fee for connecting to a
Nasdaq data center over the Internet. On
January 19, 2007, Nasdaq filed
Amendment No. 1 to the proposed rule
change. On February 22, 2007, Nasdaq
filed Amendment No. 2 to the proposed
rule change.3 The proposed rule change,
as amended, was published for
comment in the Federal Register on
March 21, 2007.4 On April 6, 2009,
Nasdaq filed Amendment No. 3 to the
proposed rule change.5 The Commission
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 2 replaced and superseded the
original filing and Amendment No. 1 in their
entirety.
4 See Securities Exchange Act Release No. 55457
(March 13, 2007), 72 FR 13328 (‘‘Notice’’).
5 In Amendment No. 3, Nasdaq made certain
technical changes to the filing to reflect changes to
the Nasdaq rules since filing Amendment No. 2. In
addition, Nasdaq clarified that the only market data
product currently delivered via Internet ports is its
TotalView ITCH data product. This technical
erowe on PROD1PC64 with NOTICES
2 17
VerDate Nov<24>2008
15:33 Apr 27, 2009
Jkt 217001
received no comment letters on the
proposal. This order approves the
proposed rule change as modified by
Amendments No. 2 and 3.
Nasdaq proposes to increase its fees
for Internet ports that deliver market
data. Following the consolidation of
Nasdaq’s three order books and
corresponding matching engines—INET,
Brut, and SuperMontage—into a single
book (‘‘SingleBook’’) within the Nasdaq
Market Center (‘‘NMC’’), Nasdaq users
retained the ability to connect with the
NMC using the legacy access protocols
of all three systems. Access to the NMC
via secure Internet connectivity is one of
several options available to INET
protocol users for entering orders and
receiving market data. Other NMC
connectivity options include extranet
connectivity, where a user contracts
directly with a third-party extranet
provider, and private line connectivity,
where a user leases a circuit directly
from a third-party provider.
Currently, Nasdaq charges INET
protocol users an additional $200 (in
addition to the established charges for
port pairs) for each port used to connect
to a Nasdaq data center over the Internet
because making such ports available
requires Nasdaq to procure and
maintain appropriate
telecommunications circuits connecting
its data centers to the points-of-presence
of an Internet service provider. By
contrast, in the case of extranet and
private circuit connections, Nasdaq is
not responsible for the outside
telecommunications circuits.
In the Notice, Nasdaq stated that since
the introduction of SingleBook, the
volume of market data delivered from
Nasdaq to subscribers increased from a
peak of approximately 5Mbs at the end
of October of 2006 to a peak of
approximately 25Mbs as of the date of
filing of the proposal. Nasdaq stated that
in order to continue to adequately
support Internet market data
connections, Nasdaq expanded its
available Internet bandwidth. In light of
the expanded Internet bandwidth
requirements, Nasdaq proposes to
increase its Internet port fee from $200
to $600 per Internet port that is used to
deliver market data. The additional
Internet port fee with respect to Internet
ports used for order entry will remain at
the current $200 level.
The Commission has reviewed
carefully the proposed rule change 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
amendment did not require notice and comment, as
it did not affect the substance of the rule filing.
PO 00000
Frm 00055
Fmt 4703
Sfmt 4703
19247
securities exchange 6 and, in particular,
Section 6(b)(4) of the Act,7 which
requires, among other things, that
Nasdaq’s rules provide for the equitable
allocation of reasonable dues, fees and
other charges among members and
issuers and other persons using any
facility or system which Nasdaq
operates or controls. The Commission
also finds that the proposed rule change
is consistent with Section 6(b)(5) of the
Act,8 which requires, among other
things, that Nasdaq’s rules are not
designed to unfairly discriminate
between customers, issuers, brokers or
dealers.
Nasdaq proposes to increase its
Internet port fee from $200 to $600 per
Internet port that is used to deliver noncore market data. The proposed fee will
apply equally to all market participants
that use an Internet port to receive
market data from Nasdaq.
The Commission believes that the
proposal meets the criteria, formulated
by the Commission 9 in connection with
the petition filed by NetCoalition,10 for
approval of proposed rule changes
concerning the distribution of non-core
market data.11 In its order issued in
connection with the NetCoalition
petition, the Commission stated that
‘‘reliance on competitive forces is the
most appropriate and effective means to
assess whether the terms for the
distribution of non-core data are
equitable, fair and reasonable, and not
unreasonably discriminatory.’’12 As
such, the ‘‘existence of significant
competition provides a substantial basis
for finding that the terms of an
exchange’s fee proposal are equitable,
fair, reasonable, and not unreasonably
or unfairly discriminatory.’’13 If an
exchange ‘‘was subject to significant
competitive forces in setting the terms
of a proposal,’’ the proposal will be
approved unless the Commission
determines that ‘‘there is a substantial
countervailing basis to find that the
6 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).
7 15 U.S.C. 78f(b)(4).
8 15 U.S.C. 78f(b)(5).
9 See Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (SR–NYSEArca-2006–21).
10 See Securities Exchange Act Release No. 55011
(December 27, 2006) (order granting petition for
review of SR–NYSEArca-2006–21).
11 The Commission’s order distinguishes between
core market data, which is defined as ‘‘the bestpriced quotations and last sale information of all
markets in U.S.-listed equities that Commission
rules require to be consolidated and distributed to
the public by a single central processor,’’ and noncore market data. See 73 FR at 74771.
12 Id. at 74781.
13 Id. at 74781–82.
E:\FR\FM\28APN1.SGM
28APN1
19248
Federal Register / Vol. 74, No. 80 / Tuesday, April 28, 2009 / Notices
terms nevertheless fail to meet an
applicable requirement of the Exchange
Act or the rules thereunder.’’14
In its order approving NYSEArca2006–21, the Commission also stated
that the terms of a proposed rule change
to distribute market data for which the
exchange is the exclusive processor
must provide for an equitable allocation
of fees under Section 6(b)(4) of the
Act,15 not be designed to permit unfair
discrimination under Section 6(b)(5) of
the Act,16 be fair and reasonable under
Rule 603(a)(1),17 and not be
unreasonably discriminatory under Rule
603(a)(2).18 If the proposal involves
non-core market data, an analysis of
competitive forces may be used, and
that analysis will apply to findings
under Section 6 of the Act, and to
findings under Rule 603.19
In formulating the terms of the
proposal, Nasdaq was subject to
significant competitive forces—
specifically, the availability to market
participants of alternatives to
purchasing Nasdaq market data.
Because the proposal involves the
distribution of non-core market data,
and significant competitive forces are
present, the proposal is thus consistent
with both Section 6(b)(4) 20 and Section
6(b)(5) of the Act,21 and with Rule
603(a).22 There is not a substantial
countervailing basis that would render
the proposal inconsistent with the Act
or the rules thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,23 that the
proposed rule change (SR–NASDAQ–
2006–064) as modified by Amendments
No. 2 and 3 be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–9555 Filed 4–27–09; 8:45 am]
erowe on PROD1PC64 with NOTICES
BILLING CODE 8010–01–P
14 Id. at 74781. In approving NYSEArca-2006–21,
the Commission found that the proposed rule
change was consistent with Section 6(b)(4) of the
Act, 15 U.S.C. 78f(b)(4). See 73 FR at 74779. The
Commission also found that the proposal was
consistent with Section 6(b)(5) of the Act, 15 U.S.C.
78f(b)(5), Section 6(b)(8) of the Act, 15 U.S.C.
78f(b)(8), and Rule 603(a) of Regulation NMS, 17
CFR 242.603(a). See 73 FR at 74779. The
Commission noted that the presence of competitive
forces guided its analysis under both Section 6 of
the Act and Rule 603 of Regulation NMS. Id.
15 15 U.S.C. 78f(b)(4).
16 15 U.S.C. 78f(b)(5).
17 17 CFR 242.603(a)(1).
18 17 CFR 242.603(a)(2). See 73 FR at 74782.
19 See 73 FR at 74779.
20 15 U.S.C. 78f(b)(4).
21 15 U.S.C. 78f(b)(5).
22 17 CFR 242.603(a).
23 15 U.S.C. 78s(b)(2).
24 17 CFR 200.30–3(a)(12).
VerDate Nov<24>2008
15:33 Apr 27, 2009
Jkt 217001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59802; File No. SR–FICC–
2009–03]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Granting Approval of a Proposed Rule
Change To Impose a Charge on
Members With a Fail-to-Deliver in
Treasury Securities
April 20, 2009.
I. Introduction
On February 25, 2009, The Fixed
Income Clearing Corporation (‘‘FICC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2009–03 pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’).1 Notice
of the proposal was published in the
Federal Register on March 19, 2009.2
The Commission received two comment
letters.3 For the reasons discussed
below, the Commission is granting
approval of the proposed rule change.
II. Description
The Treasury Markets Practices Group
(‘‘TMPG’’), a group of market
participants that is active in the treasury
securities market and is sponsored by
the Federal Reserve Bank of New York
(‘‘FRBNY’’), has been devising ways to
address the persistent settlement fails in
treasury securities transactions that
have arisen, according to the TMPG, due
to the recent market turbulence and low
short-term interest rates. In order to
encourage market participants to resolve
fails promptly, the TMPG has proposed
for adoption a ‘‘best practice’’ that
would call for the market-wide
assessment of a charge on fail-to-deliver
positions. As part of the implementation
of this ‘‘best practice,’’ the TMPG has
asked the Government Securities
Division (‘‘GSD’’) of FICC to impose a
charge on failed positions involving
treasury securities within FICC.
The charge FICC is adopting will be
equal to the product of net money due
on the failed position and three (3)
percent per annum minus the Target
Fed funds target rate that is effective at
5 p.m. Eastern Standard Time on the
business day prior to the originally
scheduled settlement date and will be
capped at three (3) percent per annum.
The charge will be applied daily and
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 59569
(March 12, 2009), 74 FR 11797.
3 Letters from Leslie Rosenthal, Rosenthal Collins
Group, L.L.C. (March 31, 2009) and Murray
Pozmanter, Managing Director, FICC (April 3,
2009).
2 Securities
PO 00000
Frm 00056
Fmt 4703
Sfmt 4703
will be a debit on a member’s GSD
monthly bill for a fail-to deliver position
and a credit on a member’s GSD
monthly bill for fail-to-receive position.
The following example illustrates the
manner in which the proposed fails
charge would apply.
Member A fails to deliver today on a
$50 million position on which he is
owed $50.1 million. The Target Fed
funds rate yesterday at 5 p.m. was one
(1) percent. The fails charge will be the
product of two (2) percent per annum
applied to the funds amount of $50.1
million, thus equaling a charge of
$2,783.33 for that day. The bill of the
member failing to deliver will reflect a
debit of $2,783.33.
In the event that FICC is the failing
party because, for example, it received
securities too close to the close of the
Fedwire for redelivery, the fail charge
will be distributed pro rata to the
netting members based upon usage of
the GSD’s services, which is the same
methodology that is used when FICC
incurs finance charges.4
The rule change provides that the
Credit and Market Risk Management
Committee of FICC’s Board of Directors
will retain the right to revoke
application of the charge if industry
events or practices warrant such
revocation.
III. Comment Letters
The Commission received two letters,
one from a registered broker-dealer
raising concerns about the ‘‘unintended
consequences’’ of the proposed rule
change and the other from FICC
responding to the commenter’s letter.5
The broker-dealer, a member of FICC,
raised concerns that the pervasive fails
situation that FICC intends to remedy
with the rule change no longer exists
because the market corrected itself
when fails became an issue, and
therefore the instances of fails can be
held to a minimum if the industry
commits to follow best practices.
Further, this broker contends that the
rule may potentially increase
counterparty risk because firms would
shift from clearing through FICC to
clearing through individual
counterparties, where fails are more
easily controlled, in an effort to avoid
the fails penalty. The unintended
consequences of the rule change, the
commenter asserted, may be detrimental
to the global market by reducing market
liquidity caused by the reduction in the
supply of securities, by eroding investor
confidence, by decreasing securities
available for lending, and by
4 FICC
Rules, Section 6 of Rule 12.
note 3.
5 Supra
E:\FR\FM\28APN1.SGM
28APN1
]]>Agencies
[Federal Register Volume 74, Number 80 (Tuesday, April 28, 2009)]
[Notices]
[Pages 19247-19248]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-9555]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59795; File No. SR-NASDAQ-2006-064]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving Proposed Rule Change as Modified by Amendments No. 2 and 3
Thereto To Modify the Fee for Connecting to a Nasdaq Data Center Over
the Internet
April 20, 2009.
On December 22, 2006, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') 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 modify the fee for connecting to a Nasdaq data
center over the Internet. On January 19, 2007, Nasdaq filed Amendment
No. 1 to the proposed rule change. On February 22, 2007, Nasdaq filed
Amendment No. 2 to the proposed rule change.\3\ The proposed rule
change, as amended, was published for comment in the Federal Register
on March 21, 2007.\4\ On April 6, 2009, Nasdaq filed Amendment No. 3 to
the proposed rule change.\5\ The Commission received no comment letters
on the proposal. This order approves the proposed rule change as
modified by Amendments No. 2 and 3.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 2 replaced and superseded the original filing
and Amendment No. 1 in their entirety.
\4\ See Securities Exchange Act Release No. 55457 (March 13,
2007), 72 FR 13328 (``Notice'').
\5\ In Amendment No. 3, Nasdaq made certain technical changes to
the filing to reflect changes to the Nasdaq rules since filing
Amendment No. 2. In addition, Nasdaq clarified that the only market
data product currently delivered via Internet ports is its TotalView
ITCH data product. This technical amendment did not require notice
and comment, as it did not affect the substance of the rule filing.
---------------------------------------------------------------------------
Nasdaq proposes to increase its fees for Internet ports that
deliver market data. Following the consolidation of Nasdaq's three
order books and corresponding matching engines--INET, Brut, and
SuperMontage--into a single book (``SingleBook'') within the Nasdaq
Market Center (``NMC''), Nasdaq users retained the ability to connect
with the NMC using the legacy access protocols of all three systems.
Access to the NMC via secure Internet connectivity is one of several
options available to INET protocol users for entering orders and
receiving market data. Other NMC connectivity options include extranet
connectivity, where a user contracts directly with a third-party
extranet provider, and private line connectivity, where a user leases a
circuit directly from a third-party provider.
Currently, Nasdaq charges INET protocol users an additional $200
(in addition to the established charges for port pairs) for each port
used to connect to a Nasdaq data center over the Internet because
making such ports available requires Nasdaq to procure and maintain
appropriate telecommunications circuits connecting its data centers to
the points-of-presence of an Internet service provider. By contrast, in
the case of extranet and private circuit connections, Nasdaq is not
responsible for the outside telecommunications circuits.
In the Notice, Nasdaq stated that since the introduction of
SingleBook, the volume of market data delivered from Nasdaq to
subscribers increased from a peak of approximately 5Mbs at the end of
October of 2006 to a peak of approximately 25Mbs as of the date of
filing of the proposal. Nasdaq stated that in order to continue to
adequately support Internet market data connections, Nasdaq expanded
its available Internet bandwidth. In light of the expanded Internet
bandwidth requirements, Nasdaq proposes to increase its Internet port
fee from $200 to $600 per Internet port that is used to deliver market
data. The additional Internet port fee with respect to Internet ports
used for order entry will remain at the current $200 level.
The Commission has reviewed carefully the proposed rule change 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 exchange \6\ and, in particular, Section 6(b)(4) of
the Act,\7\ which requires, among other things, that Nasdaq's rules
provide for the equitable allocation of reasonable dues, fees and other
charges among members and issuers and other persons using any facility
or system which Nasdaq operates or controls. The Commission also finds
that the proposed rule change is consistent with Section 6(b)(5) of the
Act,\8\ which requires, among other things, that Nasdaq's rules are not
designed to unfairly discriminate between customers, issuers, brokers
or dealers.
---------------------------------------------------------------------------
\6\ 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).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
Nasdaq proposes to increase its Internet port fee from $200 to $600
per Internet port that is used to deliver non-core market data. The
proposed fee will apply equally to all market participants that use an
Internet port to receive market data from Nasdaq.
The Commission believes that the proposal meets the criteria,
formulated by the Commission \9\ in connection with the petition filed
by NetCoalition,\10\ for approval of proposed rule changes concerning
the distribution of non-core market data.\11\ In its order issued in
connection with the NetCoalition petition, the Commission stated that
``reliance on competitive forces is the most appropriate and effective
means to assess whether the terms for the distribution of non-core data
are equitable, fair and reasonable, and not unreasonably
discriminatory.''\12\ As such, the ``existence of significant
competition provides a substantial basis for finding that the terms of
an exchange's fee proposal are equitable, fair, reasonable, and not
unreasonably or unfairly discriminatory.''\13\ If an exchange ``was
subject to significant competitive forces in setting the terms of a
proposal,'' the proposal will be approved unless the Commission
determines that ``there is a substantial countervailing basis to find
that the
[[Page 19248]]
terms nevertheless fail to meet an applicable requirement of the
Exchange Act or the rules thereunder.''\14\
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
\10\ See Securities Exchange Act Release No. 55011 (December 27,
2006) (order granting petition for review of SR-NYSEArca-2006-21).
\11\ The Commission's order distinguishes between core market
data, which is defined as ``the best-priced quotations and last sale
information of all markets in U.S.-listed equities that Commission
rules require to be consolidated and distributed to the public by a
single central processor,'' and non-core market data. See 73 FR at
74771.
\12\ Id. at 74781.
\13\ Id. at 74781-82.
\14\ Id. at 74781. In approving NYSEArca-2006-21, the Commission
found that the proposed rule change was consistent with Section
6(b)(4) of the Act, 15 U.S.C. 78f(b)(4). See 73 FR at 74779. The
Commission also found that the proposal was consistent with Section
6(b)(5) of the Act, 15 U.S.C. 78f(b)(5), Section 6(b)(8) of the Act,
15 U.S.C. 78f(b)(8), and Rule 603(a) of Regulation NMS, 17 CFR
242.603(a). See 73 FR at 74779. The Commission noted that the
presence of competitive forces guided its analysis under both
Section 6 of the Act and Rule 603 of Regulation NMS. Id.
---------------------------------------------------------------------------
In its order approving NYSEArca-2006-21, the Commission also stated
that the terms of a proposed rule change to distribute market data for
which the exchange is the exclusive processor must provide for an
equitable allocation of fees under Section 6(b)(4) of the Act,\15\ not
be designed to permit unfair discrimination under Section 6(b)(5) of
the Act,\16\ be fair and reasonable under Rule 603(a)(1),\17\ and not
be unreasonably discriminatory under Rule 603(a)(2).\18\ If the
proposal involves non-core market data, an analysis of competitive
forces may be used, and that analysis will apply to findings under
Section 6 of the Act, and to findings under Rule 603.\19\
---------------------------------------------------------------------------
\15\ 15 U.S.C. 78f(b)(4).
\16\ 15 U.S.C. 78f(b)(5).
\17\ 17 CFR 242.603(a)(1).
\18\ 17 CFR 242.603(a)(2). See 73 FR at 74782.
\19\ See 73 FR at 74779.
---------------------------------------------------------------------------
In formulating the terms of the proposal, Nasdaq was subject to
significant competitive forces--specifically, the availability to
market participants of alternatives to purchasing Nasdaq market data.
Because the proposal involves the distribution of non-core market data,
and significant competitive forces are present, the proposal is thus
consistent with both Section 6(b)(4) \20\ and Section 6(b)(5) of the
Act,\21\ and with Rule 603(a).\22\ There is not a substantial
countervailing basis that would render the proposal inconsistent with
the Act or the rules thereunder.
---------------------------------------------------------------------------
\20\ 15 U.S.C. 78f(b)(4).
\21\ 15 U.S.C. 78f(b)(5).
\22\ 17 CFR 242.603(a).
---------------------------------------------------------------------------
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\23\ that the proposed rule change (SR-NASDAQ-2006-064) as modified
by Amendments No. 2 and 3 be, and hereby is, approved.
---------------------------------------------------------------------------
\23\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
Florence E. Harmon,
Deputy Secretary.
---------------------------------------------------------------------------
\24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
[FR Doc. E9-9555 Filed 4-27-09; 8:45 am]
BILLING CODE 8010-01-P
