Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Fees Under Rule 7030(d) for Use of the Carteret Testing Facility Test Environment, 76344-76347 [2013-29891]
Download as PDF
<![CDATA[
76344
Federal Register / Vol. 78, No. 242 / Tuesday, December 17, 2013 / Notices
and the requirements set forth in the
NMS Adopting Release, which require
FINRA to submit a proposed rule
change upon the addition of a new ADF
participant. This rule change is also
consistent with the Act in that it sets
forth the fees, policies and procedures
governing access to protected quotations
FLOW may display on the ADF, which
were identified by the Commission as
central concerns surrounding the
adoption of Rule 610.
As set forth above, FINRA believes
that the policies, procedures and
standards governing access to protected
quotations displayed on the ADF by
FLOW are reasonably designed to
provide market participants with fair
and efficient access, and are not unfairly
discriminatory such that they would
prevent a market participant from
obtaining efficient access to such
quotations. FINRA also believes, as set
forth above, that the proposed level and
cost of access is, in relative terms,
substantially equivalent to the level and
cost of access provided by SRO trading
facilities.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
FINRA 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. FINRA notes
that the purpose of this filing is to
provide for the opportunity for public
notice and comment on the addition of
a new ADF entrant as required by SEC
Rule 610 and the NMS Adopting
Release, along with that new entrant’s
proposed fees and policies and
procedures for accessing protected
quotations that it may display on the
ADF. As such, FINRA believes that this
filing may in fact promote competition
by providing information about the level
of access provided, and fees assessed, by
a new ADF entrant.
wreier-aviles on DSK5TPTVN1PROD 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
Within 45 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 the self-regulatory
VerDate Mar<15>2010
14:45 Dec 16, 2013
Jkt 232001
2013–052 and should be submitted on
or before January 7, 2014.
organization consents, the Commission
will:
(A) by order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.26
Kevin M. O’Neill,
Deputy Secretary.
IV. Solicitation of Comments
[FR Doc. 2013–29897 Filed 12–16–13; 8:45 am]
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–
FINRA–2013–052 on the subject line.
• 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–FINRA–2013–052. 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
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of FINRA. 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 Number SR–FINRA–
Frm 00076
Fmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71035; File No. SR–BX–
2013–058]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Establish
Fees Under Rule 7030(d) for Use of the
Carteret Testing Facility Test
Environment
December 11, 2013.
Paper Comments
PO 00000
BILLING CODE 8011–01–P
Sfmt 4703
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 November
27, 2013, NASDAQ OMX BX, Inc. (‘‘BX’’
or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a 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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes to establish
fees under Rule 7030(d) for use of the
Testing Facility (‘‘NTF’’) test
environment located in Carteret, New
Jersey, which will provide a virtual
trading environment for testing. The
Exchange will begin assessing the fees
immediately; however, the installation
fee will be waived for subscriptions
ordered through March 31, 2014.
The text of the proposed rule change
is below. Proposed new language is
italicized.
*
*
*
*
*
7030. Other Services
(a)–(c) No change.
(d) Testing Facilit[y]ies
The Exchange operates two test
environments. One is located in
Ashburn, Virginia and the other in
Carteret, New Jersey. Unless otherwise
26 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
E:\FR\FM\17DEN1.SGM
17DEN1
Federal Register / Vol. 78, No. 242 / Tuesday, December 17, 2013 / Notices
noted, reference to the ‘‘Testing
Facility’’ applies to both environments.
(1)–(3) No change.
(4) Subscribers to the Testing Facility
located in Carteret, New Jersey shall pay
a fee of $1,000 per hand-off, per month
for connection to the Testing Facility.
The hand-off fee includes either a 1Gb
or 10Gb switch port and a cross connect
to the Testing Facility. Subscribers shall
also pay a one-time installation fee of
$1,000 per hand-off, which is waived for
all installations ordered prior to March
31, 2014.
The connectivity provided under this
rule also provides connectivity to the
other testing environments of The
NASDAQ Stock Market LLC and
NASDAQ OMX PHLX LLC.
*
*
*
*
*
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 received on the
proposed rule change. The text of those
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 parts of such
statements.
wreier-aviles on DSK5TPTVN1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to amend
Rule 7030(d) to establish fees for
connection to a test environment.
Specifically, the Exchange proposes a
one-time, per hand-off installation fee
and a per hand-off monthly fee assessed
for direct connectivity to the Testing
Facility 3 test environment located in
Carteret, New Jersey (‘‘Carteret’’), which
is also the location of the Exchange’s
primary trading System.4 The Testing
Facility provides subscribers with a
virtual Exchange System test
environment that closely approximates
the production environment and on
which they may test their automated
systems that integrate with the
Exchange. For example, the Testing
Facility provides subscribers a virtual
System environment for testing
3 See https://www.nasdaqtrader.com/
Trader.aspx?id=TestingFacility for a description of
the Testing Facility.
4 As defined by Rule 4751(a). The Exchange’s
System is mirrored at other locations as well.
VerDate Mar<15>2010
14:45 Dec 16, 2013
Jkt 232001
upcoming Exchange releases and
product enhancements, as well as
testing firm software prior to
implementation.
The Testing Facility is currently
housed solely in the Exchange’s
Ashburn, Virginia facility (‘‘Ashburn’’).
In addition to housing the Testing
Facility, Ashburn is also an Exchange
disaster recovery facility and, as such,
some member firms connect to Ashburn
for disaster recovery purposes in
addition to trading system testing. The
Exchange currently assesses fees on
members for physical connectivity to
Ashburn.5 In addition, member firms
pay fees to third party connectivity
providers to provide connection from
the member firm to Ashburn. The
relatively large distance to between the
Ashburn Testing Facility and the
majority of NASDAQ OMX firms results
in expensive connectivity costs for
customers that connect via
telecommunication providers. As a
consequence, a large majority of
member firms do not connect to
Ashburn for Testing Facility
connectivity. In an effort to improve the
utility of the Testing Facility, the
Exchange is developing a test
environment located in Carteret that
will provide the same functionality as
the trading testing functionality of
Ashburn, yet more closely approximate
the live trading environment due to its
proximity to the System and upgraded
hardware. In particular, the Carteret test
environment will take advantage of
technology upgrades the Exchange is
making to its trading-related systems.
Unlike the Ashburn test environment,
the Carteret test environment will
provide dedicated connectivity to the
facility via a cross-connection to either
a member firm’s direct connection
router in Carteret or its co-location
cabinet.6 This connectivity will also
provide connectivity to the trading
testing environments of BX’s sister
exchanges, The NASDAQ Stock Market
LLC and NASDAQ OMX PHLX LLC,
also located in Carteret, New Jersey.7
The Exchange will ultimately sunset the
trading testing functionality at Ashburn,
yet retain post trade reporting and ACES
functionality at that location.8
5 The Exchange assesses fees for direct connection
to Ashburn and fees for co-location connectivity.
See Rules 7051 and 7034(b), respectively.
6 Member firms currently use their connectivity to
the Ashburn test environment for both testing and
disaster recovery purposes.
7 Similar to colocation connectivity under Rule
7034(b), firm that is a member of multiple NASDAQ
OMX exchanges may access the testing
environments of the exchanges of which it is a
member through a single connectivity subscription.
8 The Exchange is not upgrading the hardware
used for post trade reporting and ACES testing at
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
76345
The Exchange notes that, because the
Carteret facility also houses the System,
subscribers to the Carteret test
environment will no longer need to pay
for third party connectivity to Ashburn
if the sole purpose for connecting to
Ashburn is for trading testing. Such
member firms may use an existing
connection to Carteret to access the
Testing Facility through the use of a
dedicated switch port and cross connect
within the facility. The Exchange is
proposing to assess a fee for connection
to the test environment within the
Carteret facility. Specifically, the
Exchange proposes assessing a $1,000
per hand-off, per month fee assessed for
connectivity to the Carteret test
environment for either 1Gb or 10Gb, and
a one-time per hand-off installation fee
of $1,000, which will cover the
Exchange’s costs incurred in setting up
a subscriber in the Carteret facility. The
Exchange is proposing to waive the
installation fee through March 31, 2014,
after which the Exchange will begin
phasing out trading testing at the
Ashburn test environment.
The Exchange is also making a minor
clarifying change to the rule in light of
the operation of dual Testing Facility
test environments.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 9 in general, and with
Sections 6(b)(4) and 6(b)(5) of the Act,10
in particular. The Exchange believes
that proposal is with Section 6(b)(4) of
the Act 11 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 new fees are
equitably allocated because all member
firms receive connectivity to the
Carteret test environment for the same
fee. The Exchange believes that offering
subscribers the option to subscribe to
either 1Gb or 10Gb for the same fee is
an equitable allocation because, unlike
the live trading environment, there is no
competitive advantage to possessing a
higher capacity switch port in the test
environment. The test environment is
designed to closely mirror the live
trading environment for participants,
including matching the capacity of each
participant’s live environment switch
this time, but may do so in the future. As noted,
the new hardware implemented in the Carteret test
environment is part of the larger technology
upgrade to the System’s hardware also located in
Carteret.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
11 15 U.S.C. 78f(b)(4).
E:\FR\FM\17DEN1.SGM
17DEN1
wreier-aviles on DSK5TPTVN1PROD with NOTICES
76346
Federal Register / Vol. 78, No. 242 / Tuesday, December 17, 2013 / Notices
port. In the absence of any competitive
advantage, charging a uniform fee for
both 1Gb and 10Gb switch ports is an
equitable allocation of fees. The
Exchange believes that charging a
uniform fee rather than mirroring the
fees for the live trading environment 12
will encourage member firms to
subscribe to Carteret, and further
encourage those that subscribe to use
the same hardware as is used by them
for connectivity to the live trading
environment. The Exchange also
believes that waiver of the installation
fee for all installations ordered prior to
March 31, 2014 is an equitable
allocation as it is available to all
member firms during the time frame;
thus any member firm may avail itself
of the free period if it so chooses.
The new fees are reasonable because
they are designed to cover the costs the
Exchange has incurred in developing
and offering the new test environment.
The proposed fee should allow the
Exchange to recoup these costs and
make a profit, while providing member
firms with a superior test environment
that more closely mirrors that of the live
trading environment on the Exchange.
The Exchange believes that offering both
1Gb and 10Gb connectivity for the same
fee is reasonable as the increased
incremental cost it incurs by offering the
10Gb switch port at the lower fee is
outweighed by the benefit all
subscribers will receive if Carteret
participants use hardware identical to
what they use in the live trading
environment, hence furthering the goal
of creating a test environment that
closely mirrors the live trading
environment. Waiver of the installation
fee for a limited period is reasonable
because the Exchange believes such a
waiver will attract new users to the test
environment, thus ensuring a certain
minimum level of monthly revenue to
support the facility initially.
The Exchange also believes the
proposal furthers the objectives of
Section 6(b)(5) of the Act 13 in that it is
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general to protect investors and the
public interest and is not designed to
permit unfair discrimination between
customer, issuers, brokers and dealers.
The Exchange does not believe that the
proposed fees are unfairly
discriminatory to subscribers to 10Gb
12 Members are assessed a monthly fee of $5,000
for 10 Gb and $1,000 for 1 Gb direct connectivity
to BX. See Rule 7051.
13 15 U.S.C. 78f(b)(5).
VerDate Mar<15>2010
14:45 Dec 16, 2013
Jkt 232001
live trading environment connectivity
because, unlike the live trading
environment where the capacity of
connectivity to the Exchange may confer
a competitive advantage to a market
participant and therefore price
differentiation is appropriate for the
benefit conferred, there is no such
benefit conferred in the trade test
environment. The Exchange does not
believe that the proposed fees are
unfairly discriminatory among
subscribers to the Carteret test facility
because all member firms that subscribe
to the service will be assessed the same
fees. Because the proposed fees do not
discriminate between 1Gb and 10Gb
connectivity options, member firms are
able to subscribe to Carteret without
regard to the cost of their switch port
capacity election. The Exchange
believes that by not discriminating on
this basis it will encourage participants
to connect to the Carteret test
environment in the same manner as
they do to the live trading environment,
and thereby help Carteret more closely
mirror the live test environment, as
discussed above. Providing a more
useful and accurate test environment
will serve to improve live trading on the
Exchange and the national market
system by permitting member firms the
ability to accurately test changes prior to
implementing them in the live trading
environment, thereby reducing the
likelihood of a potentially disruptive
system failure in the live trading
environment, which has the potential to
affect all market participants. Last, the
Exchange does not believe that waiver
of the installation fee is unfairly
discriminatory as it is uniformly applied
for a limited time, during which any
member firm may subscribe.
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.
Because the new test environment more
closely approximates the live trading
environment, subscribing member firms
will be able to more accurately test their
trading systems and avoid potentially
disruptive system failures in the live
trading environment.
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.
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing change has become
effective pursuant to Section 19(b)(3)(A)
of the Act,14 and paragraph (f) 15 of Rule
19b–4, thereunder.
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.
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–
BX–2013–058 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–2013–058. 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 on official business
days between the hours of 10:00 a.m.
and 3:00 p.m. Copies of such filing also
14 15
15 17
E:\FR\FM\17DEN1.SGM
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
17DEN1
Federal Register / Vol. 78, No. 242 / Tuesday, December 17, 2013 / Notices
will be available for inspection and
copying at the principal offices 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 Number SR–BX–
2013–058, and should be submitted on
or before January 7, 2014.
For the Commission, by the Division
of Trading and Markets, pursuant to
delegated authority.16
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. 2013–29891 Filed 12–16–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71044; File No. SR–
NASDAQ–2013–150]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Make
Modifications to Fees and Credits
Under Rules 7014 and 7018
December 11, 2013.
wreier-aviles on DSK5TPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’), 1 and Rule 19b–4 2 thereunder,
notice is hereby given that on November
29, 2013, The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) 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 prepared by NASDAQ. 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
NASDAQ proposes to make changes
to its schedule of fees and credits
applicable to execution of orders under
Rule 7018, and related changes in Rule
7014. NASDAQ proposes to implement
the proposed rule change on December
2, 2013. The text of the proposed rule
change is available on the Exchange’s
Web site at https://
nasdaq.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
14:45 Dec 16, 2013
1. Purpose
In November 2013, NASDAQ
introduced a rebate tier under which it
provides a credit of $0.0029 per share
executed for displayed orders that
provide liquidity if a member (i) has
shares of liquidity provided in all
securities during the month
representing more than 0.10% of
Consolidated Volume during the month,
through one or more of its NASDAQ
Market Center MPIDs, and (ii) adds
Total NASDAQ Options Market
(‘‘NOM’’) Market Maker Volume, as
defined in Chapter XV, Section 2 of the
NOM rules, of 90,000 or more contracts
per day executed during the month
through one or more of its NOM
MPIDs.3 NASDAQ is amending the tier
by reducing the requirement for Total
NOM Market Maker Volume to 80,000
or more contracts per day. Pricing tiers
that require participation in both the
NASDAQ Market Center and NOM
recognize the prevalence of trading in
which members simultaneously trade
different asset classes within the same
strategy. Because cash equities and
options markets are linked, with
liquidity and trading patterns on one
market affecting those on the other,
NASDAQ believes that pricing
incentives that encourage market
participant activity in NOM also
support price discovery and liquidity
provision in the NASDAQ Market
Center. The change enhances these
incentives by reducing the requirement
for participation in this tier.
Second, NASDAQ is amending Rule
7018(e), which governs fees for orders
that execute in the NASDAQ Opening
Cross (the ‘‘Cross’’), to eliminate an
3 Securities Exchange Act Release No. 70860
(November 13, 2013), 78 FR 69512 (November 19,
2013) (SR–NASDAQ–2013–138).
1 15
VerDate Mar<15>2010
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 received on the
proposed rule change. The text of those
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 parts of such
statements.
Jkt 232001
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
76347
erroneous reference to a potential
$0.0005 per share executed charge for
‘‘Day’’ orders (i.e., orders designated to
have a time-in-force under which they
remain in effect until executed or the
end of either regular market hours at
4:00 p.m. or the end of the System hours
at 8:00 p.m.) that execute in the Cross.
Charging Day orders that participate in
the Cross would mean that virtually all
orders in the Cross would be subject to
a fee, which is not consistent with
NASDAQ’s intention or past practice.
Rather, the reference appears to have
been included in the rule in error.
Accordingly, NASDAQ is deleting the
reference to make it clear that Day
orders executing in the Cross are not to
be charged.
Finally, NASDAQ is amending the
definition of ‘‘Consolidated Volume’’ in
Rules 7018 and 7014 to exclude
executed orders with a size of less than
one round lot. In addition, NASDAQ is
modifying some of the words used in
both definitions to make them use
consistent terminology (but is not
thereby changing their meanings). The
amended definitions refer to ‘‘the total
consolidated volume reported to all
consolidated transaction reporting plans
by all exchanges and trade reporting
facilities during a month, excluding
executed orders with a size of less than
one round lot.’’ The exclusion for
executed orders of less than a round lot
is necessitated by recent amendments to
the Consolidated Tape Association and
NASDAQ UTP Plans 4 under which odd
lots must be reported to the
consolidated tape. These amendments
are taking effect in December 2013.
When calculating a member’s
percentage, NASDAQ has historically
included odd lots in the member’s own
total volume, but excluded them from
Consolidated Volume, since they have
not historically been included in the
trades reported to consolidated
transaction reporting plans.
Accordingly, including odd lots in the
calculation of a member’s percentage of
Consolidated Volume would make it
more difficult for members to achieve
certain percentages, and thus could
constitute an unintended de facto price
increase. To avoid this result, odd lots
will be excluded from the definitions of
Consolidated Volume for pricing
purposes, but would continue to be
included in the member’s own total
volume.
4 Securities Exchange Act Release No. 70794
(October 31, 2013), 78 FR 66789 (November 6, 2013)
(SR–CTA–2013–05); Securities Exchange Act
Release No. 70793 (October 31, 2013), 78 FR 66788
(November 6, 2013) (File No. S7–24–89).
E:\FR\FM\17DEN1.SGM
17DEN1
]]>Agencies
[Federal Register Volume 78, Number 242 (Tuesday, December 17, 2013)]
[Notices]
[Pages 76344-76347]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29891]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71035; File No. SR-BX-2013-058]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Establish
Fees Under Rule 7030(d) for Use of the Carteret Testing Facility Test
Environment
December 11, 2013.
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 November 27, 2013, NASDAQ OMX BX, Inc. (``BX'' or the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') a
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 establish fees under Rule 7030(d) for use
of the Testing Facility (``NTF'') test environment located in Carteret,
New Jersey, which will provide a virtual trading environment for
testing. The Exchange will begin assessing the fees immediately;
however, the installation fee will be waived for subscriptions ordered
through March 31, 2014.
The text of the proposed rule change is below. Proposed new
language is italicized.
* * * * *
7030. Other Services
(a)-(c) No change.
(d) Testing Facilit[y]ies
The Exchange operates two test environments. One is located in
Ashburn, Virginia and the other in Carteret, New Jersey. Unless
otherwise
[[Page 76345]]
noted, reference to the ``Testing Facility'' applies to both
environments.
(1)-(3) No change.
(4) Subscribers to the Testing Facility located in Carteret, New
Jersey shall pay a fee of $1,000 per hand-off, per month for connection
to the Testing Facility. The hand-off fee includes either a 1Gb or 10Gb
switch port and a cross connect to the Testing Facility. Subscribers
shall also pay a one-time installation fee of $1,000 per hand-off,
which is waived for all installations ordered prior to March 31, 2014.
The connectivity provided under this rule also provides
connectivity to the other testing environments of The NASDAQ Stock
Market LLC and NASDAQ OMX PHLX LLC.
* * * * *
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 received on the proposed rule change. The
text of those 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 parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend Rule 7030(d) to establish fees
for connection to a test environment. Specifically, the Exchange
proposes a one-time, per hand-off installation fee and a per hand-off
monthly fee assessed for direct connectivity to the Testing Facility
\3\ test environment located in Carteret, New Jersey (``Carteret''),
which is also the location of the Exchange's primary trading System.\4\
The Testing Facility provides subscribers with a virtual Exchange
System test environment that closely approximates the production
environment and on which they may test their automated systems that
integrate with the Exchange. For example, the Testing Facility provides
subscribers a virtual System environment for testing upcoming Exchange
releases and product enhancements, as well as testing firm software
prior to implementation.
---------------------------------------------------------------------------
\3\ See https://www.nasdaqtrader.com/Trader.aspx?id=TestingFacility for a description of the Testing
Facility.
\4\ As defined by Rule 4751(a). The Exchange's System is
mirrored at other locations as well.
---------------------------------------------------------------------------
The Testing Facility is currently housed solely in the Exchange's
Ashburn, Virginia facility (``Ashburn''). In addition to housing the
Testing Facility, Ashburn is also an Exchange disaster recovery
facility and, as such, some member firms connect to Ashburn for
disaster recovery purposes in addition to trading system testing. The
Exchange currently assesses fees on members for physical connectivity
to Ashburn.\5\ In addition, member firms pay fees to third party
connectivity providers to provide connection from the member firm to
Ashburn. The relatively large distance to between the Ashburn Testing
Facility and the majority of NASDAQ OMX firms results in expensive
connectivity costs for customers that connect via telecommunication
providers. As a consequence, a large majority of member firms do not
connect to Ashburn for Testing Facility connectivity. In an effort to
improve the utility of the Testing Facility, the Exchange is developing
a test environment located in Carteret that will provide the same
functionality as the trading testing functionality of Ashburn, yet more
closely approximate the live trading environment due to its proximity
to the System and upgraded hardware. In particular, the Carteret test
environment will take advantage of technology upgrades the Exchange is
making to its trading-related systems. Unlike the Ashburn test
environment, the Carteret test environment will provide dedicated
connectivity to the facility via a cross-connection to either a member
firm's direct connection router in Carteret or its co-location
cabinet.\6\ This connectivity will also provide connectivity to the
trading testing environments of BX's sister exchanges, The NASDAQ Stock
Market LLC and NASDAQ OMX PHLX LLC, also located in Carteret, New
Jersey.\7\ The Exchange will ultimately sunset the trading testing
functionality at Ashburn, yet retain post trade reporting and ACES
functionality at that location.\8\
---------------------------------------------------------------------------
\5\ The Exchange assesses fees for direct connection to Ashburn
and fees for co-location connectivity. See Rules 7051 and 7034(b),
respectively.
\6\ Member firms currently use their connectivity to the Ashburn
test environment for both testing and disaster recovery purposes.
\7\ Similar to colocation connectivity under Rule 7034(b), firm
that is a member of multiple NASDAQ OMX exchanges may access the
testing environments of the exchanges of which it is a member
through a single connectivity subscription.
\8\ The Exchange is not upgrading the hardware used for post
trade reporting and ACES testing at this time, but may do so in the
future. As noted, the new hardware implemented in the Carteret test
environment is part of the larger technology upgrade to the System's
hardware also located in Carteret.
---------------------------------------------------------------------------
The Exchange notes that, because the Carteret facility also houses
the System, subscribers to the Carteret test environment will no longer
need to pay for third party connectivity to Ashburn if the sole purpose
for connecting to Ashburn is for trading testing. Such member firms may
use an existing connection to Carteret to access the Testing Facility
through the use of a dedicated switch port and cross connect within the
facility. The Exchange is proposing to assess a fee for connection to
the test environment within the Carteret facility. Specifically, the
Exchange proposes assessing a $1,000 per hand-off, per month fee
assessed for connectivity to the Carteret test environment for either
1Gb or 10Gb, and a one-time per hand-off installation fee of $1,000,
which will cover the Exchange's costs incurred in setting up a
subscriber in the Carteret facility. The Exchange is proposing to waive
the installation fee through March 31, 2014, after which the Exchange
will begin phasing out trading testing at the Ashburn test environment.
The Exchange is also making a minor clarifying change to the rule
in light of the operation of dual Testing Facility test environments.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \9\ in general, and with Sections 6(b)(4) and 6(b)(5)
of the Act,\10\ in particular. The Exchange believes that proposal is
with Section 6(b)(4) of the Act \11\ 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 new fees are equitably
allocated because all member firms receive connectivity to the Carteret
test environment for the same fee. The Exchange believes that offering
subscribers the option to subscribe to either 1Gb or 10Gb for the same
fee is an equitable allocation because, unlike the live trading
environment, there is no competitive advantage to possessing a higher
capacity switch port in the test environment. The test environment is
designed to closely mirror the live trading environment for
participants, including matching the capacity of each participant's
live environment switch
[[Page 76346]]
port. In the absence of any competitive advantage, charging a uniform
fee for both 1Gb and 10Gb switch ports is an equitable allocation of
fees. The Exchange believes that charging a uniform fee rather than
mirroring the fees for the live trading environment \12\ will encourage
member firms to subscribe to Carteret, and further encourage those that
subscribe to use the same hardware as is used by them for connectivity
to the live trading environment. The Exchange also believes that waiver
of the installation fee for all installations ordered prior to March
31, 2014 is an equitable allocation as it is available to all member
firms during the time frame; thus any member firm may avail itself of
the free period if it so chooses.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
\11\ 15 U.S.C. 78f(b)(4).
\12\ Members are assessed a monthly fee of $5,000 for 10 Gb and
$1,000 for 1 Gb direct connectivity to BX. See Rule 7051.
---------------------------------------------------------------------------
The new fees are reasonable because they are designed to cover the
costs the Exchange has incurred in developing and offering the new test
environment. The proposed fee should allow the Exchange to recoup these
costs and make a profit, while providing member firms with a superior
test environment that more closely mirrors that of the live trading
environment on the Exchange. The Exchange believes that offering both
1Gb and 10Gb connectivity for the same fee is reasonable as the
increased incremental cost it incurs by offering the 10Gb switch port
at the lower fee is outweighed by the benefit all subscribers will
receive if Carteret participants use hardware identical to what they
use in the live trading environment, hence furthering the goal of
creating a test environment that closely mirrors the live trading
environment. Waiver of the installation fee for a limited period is
reasonable because the Exchange believes such a waiver will attract new
users to the test environment, thus ensuring a certain minimum level of
monthly revenue to support the facility initially.
The Exchange also believes the proposal furthers the objectives of
Section 6(b)(5) of the Act \13\ in that it is designed to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general to protect investors and the public interest and is not
designed to permit unfair discrimination between customer, issuers,
brokers and dealers. The Exchange does not believe that the proposed
fees are unfairly discriminatory to subscribers to 10Gb live trading
environment connectivity because, unlike the live trading environment
where the capacity of connectivity to the Exchange may confer a
competitive advantage to a market participant and therefore price
differentiation is appropriate for the benefit conferred, there is no
such benefit conferred in the trade test environment. The Exchange does
not believe that the proposed fees are unfairly discriminatory among
subscribers to the Carteret test facility because all member firms that
subscribe to the service will be assessed the same fees. Because the
proposed fees do not discriminate between 1Gb and 10Gb connectivity
options, member firms are able to subscribe to Carteret without regard
to the cost of their switch port capacity election. The Exchange
believes that by not discriminating on this basis it will encourage
participants to connect to the Carteret test environment in the same
manner as they do to the live trading environment, and thereby help
Carteret more closely mirror the live test environment, as discussed
above. Providing a more useful and accurate test environment will serve
to improve live trading on the Exchange and the national market system
by permitting member firms the ability to accurately test changes prior
to implementing them in the live trading environment, thereby reducing
the likelihood of a potentially disruptive system failure in the live
trading environment, which has the potential to affect all market
participants. Last, the Exchange does not believe that waiver of the
installation fee is unfairly discriminatory as it is uniformly applied
for a limited time, during which any member firm may subscribe.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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.
Because the new test environment more closely approximates the live
trading environment, subscribing member firms will be able to more
accurately test their trading systems and avoid potentially disruptive
system failures in the live trading environment.
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 change has become effective pursuant to Section
19(b)(3)(A) of the Act,\14\ and paragraph (f) \15\ of Rule 19b-4,
thereunder.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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.
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-BX-2013-058 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-2013-058. 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 on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of such filing also
[[Page 76347]]
will be available for inspection and copying at the principal offices
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 Number SR-BX-
2013-058, and should be submitted on or before January 7, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------
\16\ 17 CFR 200.30-3(a)(12).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29891 Filed 12-16-13; 8:45 am]
BILLING CODE 8011-01-P
