Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Instituting Proceedings To Determine Whether To Disapprove a Proposed Rule Change Relating to Proposed Changes To Remove From the Exchange Rules Fee Provisions Regarding Re-Transmission of “Third-Party Data”, 43808-43809 [2014-17640]

Download as PDF 43808 Federal Register / Vol. 79, No. 144 / Monday, July 28, 2014 / Notices 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 such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEArca–2014–79, and should be submitted on or before August 18, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–17639 Filed 7–25–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72654; File No. SR– NASDAQ–2014–034] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Instituting Proceedings To Determine Whether To Disapprove a Proposed Rule Change Relating to Proposed Changes To Remove From the Exchange Rules Fee Provisions Regarding Re-Transmission of ‘‘ThirdParty Data’’ July 22, 2014. mstockstill on DSK4VPTVN1PROD with NOTICES I. Introduction On April 7, 2014, The NASDAQ Stock Market LLC (‘‘NASDAQ’’ or the ‘‘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 remove from its rules all provisions relating to the market data feeds that NASDAQ receives from other registered exchanges and other non-NASDAQ sources and then re-transmits to its colocated firms, including the provisions setting fees for providing this market data to its co-located firms. The proposed rule change was published for comment in the Federal Register on 24 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 17:53 Jul 25, 2014 Jkt 232001 April 28, 2014.3 The Commission received no comments on the proposal. On June 5, 2014, the Commission extended the time to act on the proposal until July 25, 2014. This order institutes proceedings under Section 19(b)(2)(B) of the Act 4 to determine whether to disapprove the proposed rule change. II. Description of the Proposal NASDAQ offers co-location services for clients at its co-location facility. NASDAQ Rule 7034 lists the services and the fees provided under its colocation program, which include cabinet space, electric power, installation and use of cables, and connectivity to various affiliated market centers. NASDAQ Rule 7034 also offers colocated clients connectivity to market data feeds from a variety of sources and lists the fees for these market data feeds. The current proposal would remove from NASDAQ’s rules the provisions relating to all third-party market data feeds (i.e., all market data feeds other than NASDAQ’s own market data feeds) that NASDAQ makes available to colocated member firms. NASDAQ does not propose to cease offering third-party data feeds to its co-located clients or to cease assessing the associated fees; it simply proposes to eliminate these offerings and fees from the NASDAQ rulebook. NASDAQ argues that this proposed change is consistent with the Act because third-party data feeds are not a ‘‘facility’’ of the Exchange.5 As described in the Notice,6 NASDAQ argues that the third-party data it provides to its co-located member firms are facilities of the exchanges that originally produce the data, not a facility of an exchange that receives and distributes the data as a voluntary service to its member firms. III. Proceedings To Determine Whether To Disapprove SR–NASDAQ–2014–034 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act 7 to determine whether the proposal should be disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposals. Institution of disapproval proceedings does not 3 See Securities Exchange Act Release No. 71990 (Apr. 22, 2014), 79 FR 23389 (‘‘Notice’’). 4 15 U.S.C. 78s(b)(2)(B). 5 See Section 3(a)(2) of the Act, 15 U.S.C. 78c(a)(2) (defining the term ‘‘facility’’ as applied to an exchange). 6 See, supra, n.3. 7 15 U.S.C. 78s(b)(2)(B). PO 00000 Frm 00103 Fmt 4703 Sfmt 4703 indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described in greater detail below, the Commission seeks and encourages interested persons to provide additional comment on the proposal. Pursuant to Section 19(b)(2)(B),8 the Commission is providing notice of the grounds for disapproval under consideration. NASDAQ’s proposal, if approved, would allow a national securities exchange to offer third-party market data (e.g., the proprietary data feeds of other exchanges in the National Market System) to member firms that are co-located on the exchange’s premises at its trading facilities, and to charge fees for that market data, without Commission oversight through the proposed rule change process. An exchange’s provision of third-party market data feeds to co-located clients appears to be an integral feature of its co-location program, and co-location programs are subject to the rule filing process. The Commission believes that permitting exchanges to provide thirdparty data feeds to co-located clients without subjecting the offerings and associated fees to review through the Rule 19b–4 process presents a novel issue that warrants further consideration. Accordingly, the Commission is instituting proceedings to allow for additional analysis of, and input from commenters with respect to, the proposed rule change’s consistency with Section 3(a)(2) of the Act, which defines the term ‘‘facility’’ when used with respect to an exchange to include its premises, tangible or intangible property whether on the premises or not, any right to the use of such premises or property or any service thereof for the purpose of effecting or reporting a transaction on an exchange (including, among other things, any system of communication to or from the exchange, by ticker or otherwise, maintained by or with the consent of the exchange), and any right of the exchange to the use of any property or service; Section 6(b)(1) of the Act, which requires that a national securities exchange be so organized and have the capacity to be able to carry out the purposes of the Act; Section 6(b)(4) of the Act, which requires that the rules of an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities; Section 6(b)(5) of the Act, which requires that the rules of an exchange be designed to prevent fraudulent and manipulative 8 See E:\FR\FM\28JYN1.SGM id. 28JYN1 Federal Register / Vol. 79, No. 144 / Monday, July 28, 2014 / Notices acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market system, and in general to protect investors and the public interest; and Section 6(b)(8), which requires that the rules of an exchange not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. IV. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the concerns identified above, as well as any others they may have with the proposed rule change. In particular, the Commission invites the written views of interested persons concerning whether the proposed rule change is inconsistent with Sections 3(a)(2), 6(b)(1), 6(b)(4), 6(b)(5), and 6(b)(8) of the Act or any other provision of the Act, or the rules and regulation thereunder. Although there do not appear to be any issues relevant to approval or disapproval which would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.9 Interested persons are invited to submit written data, views, and arguments regarding whether the proposed rule changes should be [approved or] disapproved by August 18, 2014. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by September 2, 2014. 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–2014–034 on the subject line. mstockstill on DSK4VPTVN1PROD with NOTICES Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange 9 Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). VerDate Mar<15>2010 17:53 Jul 25, 2014 Jkt 232001 Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2014–034. 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. 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–2014–034 and should be submitted on or before August 18, 2014. Rebuttal comments should be submitted by September 2, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–17640 Filed 7–25–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72649; File No. SR–FINRA– 2014–020] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Adopt FINRA Rule 2081, Prohibited Conditions Relating to Expungement of Customer Dispute Information July 22, 2014. I. Introduction On April 14, 2014, the Financial Industry Regulatory Authority, Inc. PO 00000 10 17 CFR 200.30–3(a)(57). Frm 00104 Fmt 4703 Sfmt 4703 43809 (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt Rule 2081 to prohibit member firms and associated persons from conditioning or seeking to condition settlement of a dispute with a customer on, or to otherwise compensate the customer for, the customer’s agreement to consent to, or not to oppose, the firm’s or associated person’s request to expunge the customer dispute information which was the subject of the settlement from the Central Registration Depository (CRD®). The proposal was published for comment in the Federal Register on April 23, 2014.3 The Commission received 15 comments on the proposal.4 The Commission also received a letter from FINRA responding to commenters.5 This order approves the proposed rule change. II. Description of the Proposal A. Background The CRD is the central licensing and registration system for the securities industry. In general, information in the CRD is provided by broker-dealers, associated persons, and regulatory authorities in response to questions on the uniform registration forms.6 These forms require the disclosure of administrative and disciplinary information about registered personnel, including customer complaints, arbitration claims, and court filings made by customers, and the arbitration awards or court judgments that may result from those claims or filings (‘‘customer dispute information’’).7 FINRA, state regulators, and other regulators use this information in connection with their licensing and regulatory activities. Firms also use the information when making hiring decisions. In addition, the information that FINRA releases to the public through BrokerCheck® is a subset of the information in the CRD. Thus, any 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 71959 (April 17, 2014), 79 FR 22734 (SR–FINRA–2014– 020) (‘‘Notice’’). 4 See Exhibit A for a list of comment letters. 5 See Letter to Kevin O’Neill, Deputy Secretary, Commission, from Victoria Crane, Associate General Counsel, FINRA, dated July 18, 2014 (‘‘FINRA Response Letter’’). 6 Form U4 (Uniform Application for Securities Industry Registration or Transfer), Form U5 (Uniform Termination Notice for Securities Industry Registration), and Form U6 (Uniform Disciplinary Action Reporting Form). 7 See Notice to Members (‘‘NTM’’) 04–16 (March 2004). See also Section 15A(i) of the Act. 2 17 E:\FR\FM\28JYN1.SGM 28JYN1

Agencies

[Federal Register Volume 79, Number 144 (Monday, July 28, 2014)]
[Notices]
[Pages 43808-43809]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-17640]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72654; File No. SR-NASDAQ-2014-034]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Instituting Proceedings To Determine Whether To Disapprove a Proposed 
Rule Change Relating to Proposed Changes To Remove From the Exchange 
Rules Fee Provisions Regarding Re-Transmission of ``Third-Party Data''

July 22, 2014.

I. Introduction

    On April 7, 2014, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``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 remove from its rules all provisions relating 
to the market data feeds that NASDAQ receives from other registered 
exchanges and other non-NASDAQ sources and then re-transmits to its co-
located firms, including the provisions setting fees for providing this 
market data to its co-located firms. The proposed rule change was 
published for comment in the Federal Register on April 28, 2014.\3\ The 
Commission received no comments on the proposal. On June 5, 2014, the 
Commission extended the time to act on the proposal until July 25, 
2014. This order institutes proceedings under Section 19(b)(2)(B) of 
the Act \4\ to determine whether to disapprove the proposed rule 
change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 71990 (Apr. 22, 
2014), 79 FR 23389 (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

II. Description of the Proposal

    NASDAQ offers co-location services for clients at its co-location 
facility. NASDAQ Rule 7034 lists the services and the fees provided 
under its co-location program, which include cabinet space, electric 
power, installation and use of cables, and connectivity to various 
affiliated market centers. NASDAQ Rule 7034 also offers co-located 
clients connectivity to market data feeds from a variety of sources and 
lists the fees for these market data feeds.
    The current proposal would remove from NASDAQ's rules the 
provisions relating to all third-party market data feeds (i.e., all 
market data feeds other than NASDAQ's own market data feeds) that 
NASDAQ makes available to co-located member firms. NASDAQ does not 
propose to cease offering third-party data feeds to its co-located 
clients or to cease assessing the associated fees; it simply proposes 
to eliminate these offerings and fees from the NASDAQ rulebook.
    NASDAQ argues that this proposed change is consistent with the Act 
because third-party data feeds are not a ``facility'' of the 
Exchange.\5\ As described in the Notice,\6\ NASDAQ argues that the 
third-party data it provides to its co-located member firms are 
facilities of the exchanges that originally produce the data, not a 
facility of an exchange that receives and distributes the data as a 
voluntary service to its member firms.
---------------------------------------------------------------------------

    \5\ See Section 3(a)(2) of the Act, 15 U.S.C. 78c(a)(2) 
(defining the term ``facility'' as applied to an exchange).
    \6\ See, supra, n.3.
---------------------------------------------------------------------------

III. Proceedings To Determine Whether To Disapprove SR-NASDAQ-2014-034 
and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \7\ to determine whether the proposal should be 
disapproved. Institution of such proceedings is appropriate at this 
time in view of the legal and policy issues raised by the proposals. 
Institution of disapproval proceedings does not indicate that the 
Commission has reached any conclusions with respect to any of the 
issues involved. Rather, as described in greater detail below, the 
Commission seeks and encourages interested persons to provide 
additional comment on the proposal.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B),\8\ the Commission is providing 
notice of the grounds for disapproval under consideration. NASDAQ's 
proposal, if approved, would allow a national securities exchange to 
offer third-party market data (e.g., the proprietary data feeds of 
other exchanges in the National Market System) to member firms that are 
co-located on the exchange's premises at its trading facilities, and to 
charge fees for that market data, without Commission oversight through 
the proposed rule change process. An exchange's provision of third-
party market data feeds to co-located clients appears to be an integral 
feature of its co-location program, and co-location programs are 
subject to the rule filing process. The Commission believes that 
permitting exchanges to provide third-party data feeds to co-located 
clients without subjecting the offerings and associated fees to review 
through the Rule 19b-4 process presents a novel issue that warrants 
further consideration.
---------------------------------------------------------------------------

    \8\ See id.
---------------------------------------------------------------------------

    Accordingly, the Commission is instituting proceedings to allow for 
additional analysis of, and input from commenters with respect to, the 
proposed rule change's consistency with Section 3(a)(2) of the Act, 
which defines the term ``facility'' when used with respect to an 
exchange to include its premises, tangible or intangible property 
whether on the premises or not, any right to the use of such premises 
or property or any service thereof for the purpose of effecting or 
reporting a transaction on an exchange (including, among other things, 
any system of communication to or from the exchange, by ticker or 
otherwise, maintained by or with the consent of the exchange), and any 
right of the exchange to the use of any property or service; Section 
6(b)(1) of the Act, which requires that a national securities exchange 
be so organized and have the capacity to be able to carry out the 
purposes of the Act; Section 6(b)(4) of the Act, which requires that 
the rules of an exchange provide for the equitable allocation of 
reasonable dues, fees, and other charges among its members and issuers 
and other persons using its facilities; Section 6(b)(5) of the Act, 
which requires that the rules of an exchange be designed to prevent 
fraudulent and manipulative

[[Page 43809]]

acts and practices, to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market system, and in general to protect investors and the public 
interest; and Section 6(b)(8), which requires that the rules of an 
exchange not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
concerns identified above, as well as any others they may have with the 
proposed rule change. In particular, the Commission invites the written 
views of interested persons concerning whether the proposed rule change 
is inconsistent with Sections 3(a)(2), 6(b)(1), 6(b)(4), 6(b)(5), and 
6(b)(8) of the Act or any other provision of the Act, or the rules and 
regulation thereunder. Although there do not appear to be any issues 
relevant to approval or disapproval which would be facilitated by an 
oral presentation of views, data, and arguments, the Commission will 
consider, pursuant to Rule 19b-4, any request for an opportunity to 
make an oral presentation.\9\
---------------------------------------------------------------------------

    \9\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposed rule changes should be 
[approved or] disapproved by August 18, 2014. Any person who wishes to 
file a rebuttal to any other person's submission must file that 
rebuttal by September 2, 2014.
    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-2014-034 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2014-034. 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. 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-2014-034 and should be submitted on or before August 18, 
2014. Rebuttal comments should be submitted by September 2, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-17640 Filed 7-25-14; 8:45 am]
BILLING CODE 8011-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.