Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify Certain External and Inter-Cabinet Connectivity Fees, 12096-12098 [2012-4686]
Download as PDF
<![CDATA[
12096
Federal Register / Vol. 77, No. 39 / Tuesday, February 28, 2012 / Notices
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
Moreover, the Exchange believes that its
changes with respect to fees for the 1Gb
connectivity will not burden
competition because the applicable fees
remain competitive with those charged
by other venues.
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
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.10 At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
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. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or 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:
tkelley on DSK3SPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–BX–2012–010 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BX–2012–010. This file
10 15
U.S.C. 78s(b)(3)(a)(ii) [sic].
VerDate Mar<15>2010
20:10 Feb 27, 2012
Jkt 226001
number should be included on the
subject line if email is used.
To help the Commission process and
review your comments more efficiently,
please use only one method. The
Commission will post all comments on
the Commission’s 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 Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of 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
publicly available. All submissions
should refer to File Number SR–BX–
2012–010, and should be submitted on
or before March 20, 2012.
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Kevin M. O’Neill,
Deputy Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2012–4687 Filed 2–27–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66439; File No. SR–
NASDAQ–2012–025]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Modify
Certain External and Inter-Cabinet
Connectivity Fees
February 22, 2012.
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 February
14, 2012, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
11 17
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to modify
certain external and inter-cabinet
connectivity fees. The text of the
proposed rule change is available at
https://nasdaq.cchwallstreet.com/, at the
Exchange’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant aspects of such
statements.
1. Purpose
The Exchange proposes to amend
Rule 7034(b) to reduce fees for low
latency connectivity to Toronto and
Chicago venues; and to increase certain
fees for other forms of connectivity.
Low Latency Connectivity
On December 20, 2011, the
Commission approved the Exchange’s
offering of low latency point-to-point
telecommunications connectivity from
the Exchange’s co-location facility to
select financial trading and co-location
venues in the metropolitan New York/
New Jersey area, Toronto, and Chicago.3
The enhanced point-to-point
connectivity provides the Exchange’s
co-location customers the opportunity
to obtain low latency network
connectivity with greater ease and at a
competitive price.4
3 See Securities Exchange Act Release No. 66013
(December 20, 2011), 76 FR 80992 (December 27,
2011) (SR–NASDAQ–2011–146).
4 Id. at 80992.
E:\FR\FM\28FEN1.SGM
28FEN1
Federal Register / Vol. 77, No. 39 / Tuesday, February 28, 2012 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
The Exchange now proposes a passthrough reduction in the fees for
connectivity to Toronto and Chicago
venues as follows: (1) For 100MB
connectivity to the Toronto area, a
reduction of the installation fee from
$5,150 to $4,850, and a reduction of the
per-month connectivity fee from $4,350
to $4,100; (2) for 1G connectivity to the
Toronto area, a reduction of the
installation fee from $8,200 to $7,700,
and a reduction of the per-month
connectivity fee from $10,450 to $9,850;
(3) for 10G connectivity to the Toronto
area, a reduction of the installation fee
from $15,150 to $14,200, and a
reduction of the per-month connectivity
fee from $32,400 to $28,400; (4) for
100MB connectivity to the Chicago area,
a reduction of the installation fee from
$4,850 to $3,500, and a reduction of the
per-month connectivity fee from $8,350
to $7,350; (5) for 1G connectivity to the
Chicago area, a reduction of the
installation fee from $5,900 to $4,900,
and a reduction of the per-month
connectivity fee from $16,400 to
$12,800; (6) for 10G connectivity to the
Chicago area, a reduction of the
installation fee from of [sic] $12,050 to
$10,650, and a reduction of the permonth connectivity fee from $39,750 to
$26,900.
The reductions in fees are the result
of the Exchange obtaining a reduction in
the fees charged to the Exchange by the
Toronto and Chicago low latency
telecommunication carriers. The
Exchange is passing along the entire
savings of the reduction in fees to the
subscribers of the Toronto and Chicago
low latency connectivity service.
Increasing the 1Gb Connectivity Fees to
NASDAQ
The Exchange further proposes to
raise the per-month 1Gb fiber
connectivity fee to the NASDAQ data
center from $500 to $1,000. The
Exchange also proposes to raise the onetime installation fee for the 1Gb copper
connectivity to the NASDAQ data center
from $100 to $1,000, and the per-month
connectivity fee from $250 to $1,000.
Due to the Exchange’s continued efforts
to upgrade its networks, the cost to
maintain the 1G network connections
and infrastructure continues to grow.
The increased fees serve to cover the
increased costs associated with
maintaining the 1Gb connections and
the related infrastructure.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,5
5 15
U.S.C. 78f.
VerDate Mar<15>2010
20:10 Feb 27, 2012
Jkt 226001
in general, and with Section 6(b)(4) of
the Act,6 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility or system
which the Exchange operates or
controls. The Exchange believes the
proposed fees are reasonable and
equitable for the reasons below.
Low Latency Connectivity
In SR–NASDAQ–2011–146,7 the
Commission determined that the
original fees established for low latency
connectivity were reasonable, equitable,
and not unfairly discriminatory because
the connectivity options are uniformly
available to all members that opt to pay
for them, because they enable the
Exchange to cover its costs, because
they are comparable to fees charged by
other trading venues for comparable
services, and because they are designed
to promote competition by offering
members additional service options.
These determinations apply with equal
weight to the reduced fees, which
enhance the reasonableness and
competitiveness of the service by
passing on the reduction in low latency
connectivity fees to the Toronto and
Chicago venues to the members that opt
to receive the connectivity options in
question.
Increasing the 1Gb Connectivity Fee
The Exchange believes the proposal to
increase the 1Gb connectivity to
NASDAQ is reasonable because the
costs are associated with the Exchange’s
continued efforts to upgrade its
networks by maintaining the 1Gb
network connections and infrastructure
as the need for such connections
continues to grow. The costs associated
with operating a co-location facility, like
the costs of operating the electronic
trading facility with which the colocation facility is associated, are
primarily fixed costs, and in the case of
co-location are primarily the costs of
renting or owning data center space and
retaining a staff of technical personnel.
Accordingly, the Exchange establishes a
range of co-location fees with the goal
of covering these fixed costs, covering
less significant marginal costs, such as
the cost of electricity, and providing the
Exchange a profit to the extent the costs
are covered. In this instance, the current
fees charged for the 1Gb network
connections does [sic] not cover the
costs of maintaining the connections,
6 15
U.S.C. 78f(b)(4).
Exchange Act Release No. 66013
(December 20, 2011), 76 FR 80992 (December 27,
2011) (SR–NASDAQ–2011–146).
7 Securities
PO 00000
Frm 00097
Fmt 4703
Sfmt 4703
12097
resulting in a loss for the Exchange on
this service. The Exchange is proposing
to raise the fees for the 1Gb network
connections to cover its costs, and to the
extent the costs are covered, allow the
Exchange to earn a profit.
More specifically, the Exchange
proposes to raise the per-month 1Gb
fiber connectivity fee to the NASDAQ
data center from $500 to $1,000 to cover
the increasing cost to continually
improve this lower bandwidth network,
which includes continuous
improvements in reducing latency,
upgrading equipment, and adding
functionality to this network. The cost
to maintain this lower bandwidth
network also continues to rise as the
network gets older, equipment must be
replaced and resources must be
dedicated to monitor and ensure any
issues are dealt with quickly and do not
cause any client outages or connectivity
issues. Due to the continuous growth of
the size of consolidated and proprietary
market data feeds that can be provided
over these 1G network connections, as
per client request, additional NASDAQ
network resources are required to
monitor and interface with clients when
data spikes and data gapping issues
occur. The Exchange has not increased
the fees for these services in over six
years, while the costs have continued to
rise.
The Exchange also proposes to raise
the one-time installation fee for the 1Gb
copper connectivity to the NASDAQ
data center from $100 to $1,000 to cover
the increasing costs to install
connections to this lower bandwidth
network. The copper installation
requires the same amount of resources,
tools, and time to install, enable data
and test connectivity as the fiber
installation which is already priced at
$1,000. While the costs have increased,
the Exchange has not adjusted the price
on this connection for more than six
years.
Additionally, the Exchange proposes
to raise the per-month 1Gb copper
connectivity to the NASDAQ data center
from $250 to $1,000 to cover the
increasing costs to improve and
maintain this lower bandwidth network,
which includes continuous
improvements in reducing latency,
upgrading equipment, and adding
functionality to this network. The cost
to maintain this lower bandwidth
network also continues to rise as the
network gets older, equipment must be
replaced and resources must be
dedicated to monitor and ensure any
issues are dealt with quickly and do not
cause any client outages or connectivity
issues. Due to the continuous growth of
the size of consolidated and proprietary
E:\FR\FM\28FEN1.SGM
28FEN1
12098
Federal Register / Vol. 77, No. 39 / Tuesday, February 28, 2012 / Notices
market data feeds that can be provided
over these 1G network connections, as
per client request, additional NASDAQ
network resources are required to
monitor and interface with clients when
data spikes and data gapping issues
occur. The Exchange has not increased
the fees for these services in over six
years, while the costs have continued to
rise. In addition, the copper connections
provide the same services and latency as
the fiber connections. NASDAQ
proposes to standardize the fees for
these connections as it does with the
inter-cabinet connectivity fees of this
rule.
The Exchange further believes that the
proposed fees are reasonable in that
NASDAQ’s proposed fees are less than
those charged by other trading venues
for comparable services.8
The Exchange also believes the
proposed increase in the fees for the
1Gb connectivity to NASDAQ, both
fiber and copper, is equitably allocated
and non-discriminatory in that all
NASDAQ members have the option of
selecting the 1Gb connections to
NASDAQ and there is no differentiation
among members with regard to the fees
charged for such costs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
Moreover, the Exchange believes that its
changes with respect to fees for the 1Gb
connectivity will not burden
competition because the applicable fees
remain competitive with those charged
by other venues.
tkelley on DSK3SPTVN1PROD with NOTICES
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
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.9 At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
8 See Securities Exchange Act Release No. 63275
(November 8, 2010), 75 FR 70048 (November 16,
2010)(SR–NYSEArca–2010–100) at page 70049. The
Exchange’s proposed monthly fee of $1,000 for a
1Gb is less than NYSE’s fee of $5,000 for the same
bandwidth connection to the data center.
9 15 U.S.C. 78s(b)(3)(a)(ii) [sic].
VerDate Mar<15>2010
20:10 Feb 27, 2012
Jkt 226001
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. If the Commission
takes such action, the Commission shall
institute proceedings to determine
whether the proposed rule should be
approved or disapproved.
information that you wish to make
publicly available. All submissions
should refer to File Number SR–
NASDAQ–2012–025, and should be
submitted on or before March 20, 2012.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Kevin M. O’Neill,
Deputy Secretary.
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:
[FR Doc. 2012–4686 Filed 2–27–12; 8:45 am]
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–NASDAQ–2012–025 on the
subject line.
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Filing of
Proposed Rule Change Relating to
Mediator Selection
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2012–025. This
file number should be included on the
subject line if email is used.
To help the Commission process and
review your comments more efficiently,
please use only one method. The
Commission will post all comments on
the Commission’s 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 Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of 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
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66441; File No. SR–FINRA–
2012–011]
February 22, 2012.
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 February
9, 2012, Financial Industry Regulatory
Authority, Inc. (‘‘FINRA’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III below, which Items have been
substantially prepared by FINRA. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FINRA is proposing to amend FINRA
Rule 14107 of the Code of Mediation
Procedure (‘‘Mediation Code’’) to
provide the Director of Mediation
(‘‘Mediation Director’’) with discretion
to determine whether parties to a FINRA
mediation may select a mediator who is
not on FINRA’s mediator roster.
The text of the proposed rule change
is available on FINRA’s Web site at
https://www.finra.org, at the principal
office of FINRA and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FINRA included statements concerning
the purpose of and basis for the
10 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\28FEN1.SGM
28FEN1
]]>Agencies
[Federal Register Volume 77, Number 39 (Tuesday, February 28, 2012)]
[Notices]
[Pages 12096-12098]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4686]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-66439; File No. SR-NASDAQ-2012-025]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify Certain External and Inter-Cabinet Connectivity Fees
February 22, 2012.
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 February 14, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to modify certain external and inter-cabinet
connectivity fees. The text of the proposed rule change is available at
https://nasdaq.cchwallstreet.com/, at the Exchange's principal office,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Rule 7034(b) to reduce fees for low
latency connectivity to Toronto and Chicago venues; and to increase
certain fees for other forms of connectivity.
Low Latency Connectivity
On December 20, 2011, the Commission approved the Exchange's
offering of low latency point-to-point telecommunications connectivity
from the Exchange's co-location facility to select financial trading
and co-location venues in the metropolitan New York/New Jersey area,
Toronto, and Chicago.\3\ The enhanced point-to-point connectivity
provides the Exchange's co-location customers the opportunity to obtain
low latency network connectivity with greater ease and at a competitive
price.\4\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 66013 (December 20,
2011), 76 FR 80992 (December 27, 2011) (SR-NASDAQ-2011-146).
\4\ Id. at 80992.
---------------------------------------------------------------------------
[[Page 12097]]
The Exchange now proposes a pass-through reduction in the fees for
connectivity to Toronto and Chicago venues as follows: (1) For 100MB
connectivity to the Toronto area, a reduction of the installation fee
from $5,150 to $4,850, and a reduction of the per-month connectivity
fee from $4,350 to $4,100; (2) for 1G connectivity to the Toronto area,
a reduction of the installation fee from $8,200 to $7,700, and a
reduction of the per-month connectivity fee from $10,450 to $9,850; (3)
for 10G connectivity to the Toronto area, a reduction of the
installation fee from $15,150 to $14,200, and a reduction of the per-
month connectivity fee from $32,400 to $28,400; (4) for 100MB
connectivity to the Chicago area, a reduction of the installation fee
from $4,850 to $3,500, and a reduction of the per-month connectivity
fee from $8,350 to $7,350; (5) for 1G connectivity to the Chicago area,
a reduction of the installation fee from $5,900 to $4,900, and a
reduction of the per-month connectivity fee from $16,400 to $12,800;
(6) for 10G connectivity to the Chicago area, a reduction of the
installation fee from of [sic] $12,050 to $10,650, and a reduction of
the per-month connectivity fee from $39,750 to $26,900.
The reductions in fees are the result of the Exchange obtaining a
reduction in the fees charged to the Exchange by the Toronto and
Chicago low latency telecommunication carriers. The Exchange is passing
along the entire savings of the reduction in fees to the subscribers of
the Toronto and Chicago low latency connectivity service.
Increasing the 1Gb Connectivity Fees to NASDAQ
The Exchange further proposes to raise the per-month 1Gb fiber
connectivity fee to the NASDAQ data center from $500 to $1,000. The
Exchange also proposes to raise the one-time installation fee for the
1Gb copper connectivity to the NASDAQ data center from $100 to $1,000,
and the per-month connectivity fee from $250 to $1,000. Due to the
Exchange's continued efforts to upgrade its networks, the cost to
maintain the 1G network connections and infrastructure continues to
grow. The increased fees serve to cover the increased costs associated
with maintaining the 1Gb connections and the related infrastructure.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\5\ in general, and with
Section 6(b)(4) of the Act,\6\ in particular, in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility or
system which the Exchange operates or controls. The Exchange believes
the proposed fees are reasonable and equitable for the reasons below.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
Low Latency Connectivity
In SR-NASDAQ-2011-146,\7\ the Commission determined that the
original fees established for low latency connectivity were reasonable,
equitable, and not unfairly discriminatory because the connectivity
options are uniformly available to all members that opt to pay for
them, because they enable the Exchange to cover its costs, because they
are comparable to fees charged by other trading venues for comparable
services, and because they are designed to promote competition by
offering members additional service options. These determinations apply
with equal weight to the reduced fees, which enhance the reasonableness
and competitiveness of the service by passing on the reduction in low
latency connectivity fees to the Toronto and Chicago venues to the
members that opt to receive the connectivity options in question.
---------------------------------------------------------------------------
\7\ Securities Exchange Act Release No. 66013 (December 20,
2011), 76 FR 80992 (December 27, 2011) (SR-NASDAQ-2011-146).
---------------------------------------------------------------------------
Increasing the 1Gb Connectivity Fee
The Exchange believes the proposal to increase the 1Gb connectivity
to NASDAQ is reasonable because the costs are associated with the
Exchange's continued efforts to upgrade its networks by maintaining the
1Gb network connections and infrastructure as the need for such
connections continues to grow. The costs associated with operating a
co-location facility, like the costs of operating the electronic
trading facility with which the co-location facility is associated, are
primarily fixed costs, and in the case of co-location are primarily the
costs of renting or owning data center space and retaining a staff of
technical personnel. Accordingly, the Exchange establishes a range of
co-location fees with the goal of covering these fixed costs, covering
less significant marginal costs, such as the cost of electricity, and
providing the Exchange a profit to the extent the costs are covered. In
this instance, the current fees charged for the 1Gb network connections
does [sic] not cover the costs of maintaining the connections,
resulting in a loss for the Exchange on this service. The Exchange is
proposing to raise the fees for the 1Gb network connections to cover
its costs, and to the extent the costs are covered, allow the Exchange
to earn a profit.
More specifically, the Exchange proposes to raise the per-month 1Gb
fiber connectivity fee to the NASDAQ data center from $500 to $1,000 to
cover the increasing cost to continually improve this lower bandwidth
network, which includes continuous improvements in reducing latency,
upgrading equipment, and adding functionality to this network. The cost
to maintain this lower bandwidth network also continues to rise as the
network gets older, equipment must be replaced and resources must be
dedicated to monitor and ensure any issues are dealt with quickly and
do not cause any client outages or connectivity issues. Due to the
continuous growth of the size of consolidated and proprietary market
data feeds that can be provided over these 1G network connections, as
per client request, additional NASDAQ network resources are required to
monitor and interface with clients when data spikes and data gapping
issues occur. The Exchange has not increased the fees for these
services in over six years, while the costs have continued to rise.
The Exchange also proposes to raise the one-time installation fee
for the 1Gb copper connectivity to the NASDAQ data center from $100 to
$1,000 to cover the increasing costs to install connections to this
lower bandwidth network. The copper installation requires the same
amount of resources, tools, and time to install, enable data and test
connectivity as the fiber installation which is already priced at
$1,000. While the costs have increased, the Exchange has not adjusted
the price on this connection for more than six years.
Additionally, the Exchange proposes to raise the per-month 1Gb
copper connectivity to the NASDAQ data center from $250 to $1,000 to
cover the increasing costs to improve and maintain this lower bandwidth
network, which includes continuous improvements in reducing latency,
upgrading equipment, and adding functionality to this network. The cost
to maintain this lower bandwidth network also continues to rise as the
network gets older, equipment must be replaced and resources must be
dedicated to monitor and ensure any issues are dealt with quickly and
do not cause any client outages or connectivity issues. Due to the
continuous growth of the size of consolidated and proprietary
[[Page 12098]]
market data feeds that can be provided over these 1G network
connections, as per client request, additional NASDAQ network resources
are required to monitor and interface with clients when data spikes and
data gapping issues occur. The Exchange has not increased the fees for
these services in over six years, while the costs have continued to
rise. In addition, the copper connections provide the same services and
latency as the fiber connections. NASDAQ proposes to standardize the
fees for these connections as it does with the inter-cabinet
connectivity fees of this rule.
The Exchange further believes that the proposed fees are reasonable
in that NASDAQ's proposed fees are less than those charged by other
trading venues for comparable services.\8\
---------------------------------------------------------------------------
\8\ See Securities Exchange Act Release No. 63275 (November 8,
2010), 75 FR 70048 (November 16, 2010)(SR-NYSEArca-2010-100) at page
70049. The Exchange's proposed monthly fee of $1,000 for a 1Gb is
less than NYSE's fee of $5,000 for the same bandwidth connection to
the data center.
---------------------------------------------------------------------------
The Exchange also believes the proposed increase in the fees for
the 1Gb connectivity to NASDAQ, both fiber and copper, is equitably
allocated and non-discriminatory in that all NASDAQ members have the
option of selecting the 1Gb connections to NASDAQ and there is no
differentiation among members with regard to the fees charged for such
costs.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.
Moreover, the Exchange believes that its changes with respect to fees
for the 1Gb connectivity will not burden competition because the
applicable fees remain competitive with those charged by other venues.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\9\ At any time within 60 days of the filing
of the proposed rule change, the Commission summarily may temporarily
suspend 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. If the Commission takes such action, the Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(a)(ii) [sic].
---------------------------------------------------------------------------
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 email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2012-025 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2012-025. This
file number should be included on the subject line if email is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's 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 Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street NE., Washington, DC 20549, on official business days between the
hours of 10 a.m. and 3 p.m. Copies of 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
publicly available. All submissions should refer to File Number SR-
NASDAQ-2012-025, and should be submitted on or before March 20, 2012.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
---------------------------------------------------------------------------
\10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-4686 Filed 2-27-12; 8:45 am]
BILLING CODE 8011-01-P
