Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Extranet Access Fee, 2157-2160 [2015-00524]

Download as PDF Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any unsolicited written comments from Members or other interested parties. 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) of the Act 15 and paragraph (f) of Rule 19b–4 thereunder.16 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: rljohnson on DSK3VPTVN1PROD with NOTICES 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– EDGA–2014–36 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–EDGA–2014–36. 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 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–EDGA– 2014–36, and should be submitted on or before February 5, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Brent J. Fields, Secretary. [FR Doc. 2015–00527 Filed 1–14–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74022; File No. SR–Phlx– 2015–04] January 9, 2015. 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 January 5, 2015, NASDAQ OMX PHLX LLC (‘‘Phlx’’ 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 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 Substance of the Proposed Rule Change The Exchange proposes to add new Section XIII (Extranet Access Fee) to the NASDAQ OMX PHLX LLC Pricing Schedule (‘‘Pricing Schedule’’), which CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. U.S.C. 78s(b)(3)(A). 16 17 CFR 240.19b–4(f). VerDate Sep<11>2014 14:13 Jan 14, 2015 1 15 Jkt 235001 includes description about the applicability of the Extranet Access Fee. This will conform the Exchange’s Pricing Schedule to that of other markets. The text of the proposed rule change is available on the Exchange’s Web site at https:// nasdaqomxphlx.cchwallstreet.com/, at the principal office of the Exchange, 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 Statutory Basis for, the Proposed Rule Change 1. Purpose Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding the Extranet Access Fee 17 17 15 15 2157 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 The purpose of the proposal is to add new Section XIII (Extranet Access Fee) to the Pricing Schedule, which includes description about the applicability of the Extranet Access Fee. This will conform the Exchange’s Pricing Schedule to that of other markets.3 Specifically, the Exchange proposes to establish the Extranet Access Fee in proposed new Section XIII of the Pricing Schedule and indicate that certain nonExchange Customer Premises Equipment (‘‘CPE’’) Products shall be assessed a monthly access fee of $1,000 per CPE.4 The Exchange also proposes to conform the Extranet Access Fee to that of another market, specifically NASDAQ Rule 7025, by also indicating that if an extranet provider uses 3 The Exchange, NASDAQ OMX BX, Inc. (‘‘BX’’), and The NASDAQ Stock Market (‘‘LLC’’) are selfregulatory organizations (‘‘SROs’’) that are wholly owned subsidiaries of The NASDAQ OMX Group, Inc. (‘‘NASDAQ OMX’’). The Exchange, NOM (a facility of the Exchange [sic]), BX, BX Options (a facility of BX), and PSX (a facility of Phlx) (together with the Exchange known as the ‘‘NASDAQ Markets’’), are independently filing proposals to conform their respective Extranet Access Fee rules to NASDAQ Rule 7025. 4 Proposed Section XIII is listed in the Table of Contents (Preface). E:\FR\FM\15JAN1.SGM 15JAN1 2158 Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices rljohnson on DSK3VPTVN1PROD with NOTICES multiple CPE Configurations 5 to provide market data feeds to any recipient the monthly fee shall apply to each such CPE Configuration; and that no Extranet Access Fee will be charged for connectivity to market data feeds containing only consolidated data. This proposal establishes the Extranet Access Fee in proposed new Section XIII of the Pricing Schedule that is exactly like the equivalent fee in NASDAQ Rule 7025. The Extranet Access Fee was introduced a decade ago on NASDAQ Rule 7025 as an equity fee.6 The Extranet Access Fee was introduced about a year ago on PSX, a facility of the Exchange, in Section VIII of the Pricing Schedule.7 By this proposal, the Exchange not only introduces the Extranet Access Fee on Phlx but also normalizes its cost and structure to that of the equivalent decade-old NASDAQ fee.8 Proposed Section XIII of the Pricing Schedule indicates the same fee as NASDAQ Rule 7025, namely $1,000 per CPE Configuration, and adds verbatim language from NASDAQ Rule 7025 that explains the application of the fee.9 As proposed, Section XIII of the Pricing Schedule will read as follows: ‘‘Extranet providers that establish a connection with Phlx to offer direct access connectivity to market data feeds shall be assessed a monthly access fee of $1,000 per recipient Customer Premises Equipment (‘‘CPE’’) Configuration. If an extranet provider uses multiple CPE 5 As defined in proposed Section XIII of the Pricing Schedule, a ‘‘Customer Premises Equipment Configuration’’ means any line, circuit, router package, or other technical configuration used by an extranet provider to provide a direct access connection to Phlx market data feeds to a recipient’s site. 6 See Securities Exchange Act Release Nos. 50483 (October 1, 2004), 69 FR 60448 (October 8, 2004) (SR–NASD–2004–118) (establishing the Extranet Access Fee on NASDAQ); and 71199 (December 30, 2013), 79 FR 686 (January 6, 2014) (SR–NASD [sic]– 2013–159) (notice of filing and immediate effectiveness increasing the Extranet Access Fee to $1,000). 7 See Securities Exchange Act Release No. 71236 (January 6, 2014), 79 FR 1906 (January 10, 2014) (SR–Phlx–2014–01) (notice of filing and immediate effectiveness establishing the Extranet Access Fee on PSX, and describing that no fee is charged at the time of the filing). The Extranet Access Fee was also established on BX. See Securities Exchange Act Release Nos. 59615 (March 20, 2009), 74 FR 14604 (March 31, 2009) (SR–BX–2009–005) (establishing the Extranet Access Fee on BX); and 71841 (April 1, 2014), 79 FR 19129 (April 7, 2014) (SR–BX– 2014–015) (notice of filing and immediate effectiveness and describing that the Extranet Access Fee is $750). 8 As noted, Phlx and other NASDAQ Markets are independently filing proposals to conform their respective Extranet Access Fee. 9 However, the proposed Section XIII language does not, because it deals with options, indicate that consolidated data includes data disseminated by the UTP SIP (as noted in NASDAQ Rule 7025). VerDate Sep<11>2014 14:13 Jan 14, 2015 Jkt 235001 Configurations to provide market data feeds to any recipient, the monthly fee shall apply to each such CPE Configuration. For purposes of this Section XIII, the term ‘‘Customer Premises Equipment Configuration’’ shall mean any line, circuit, router package, or other technical configuration used by an extranet provider to provide a direct access connection to Phlx market data feeds to a recipient’s site. No extranet access fee will be charged for connectivity to market data feeds containing only consolidated data. Extranet providers that establish a connection with Phlx pursuant to this Section XIII of the Pricing Schedule as well as a connection with PSX pursuant to Section VIII of the Pricing Schedule shall be assessed a total monthly access fee of $1,000 per recipient CPE Configuration.’’ The proposal conforms Section XIII of the Pricing Schedule to NASDAQ Rule 7025, and makes them substantively identical.10 The proposal also makes it clear that if an extranet provider establishes an Extranet connection on PSX as well as on Phlx, the extranet provider will not need to pay a double $1,000 monthly access fee per CPE, but rather only one total monthly access fee of $1,000 per CPE. In addition, as discussed, there is an equity market and an options market under the Phlx SRO license. This proposal currently applies the Extranet Access Fee located in Section VIII of the Pricing Schedule to members transacting an equity business (PSX) and would also apply to members transacting an options business as proposed in Section XIII of the Pricing Schedule, conforming these rules with NASDAQ Rule 7025.11 The proposed Extranet Access Fee will, as on NASDAQ, be used to help recoup the Exchange’s costs associated with maintaining multiple extranet connections with multiple providers. These costs include those associated with overhead and technology infrastructure, administrative, maintenance and operational costs. Since the inception of Extranet Access there have been numerous network infrastructure improvements and administrative controls enacted. 10 The Exchange notes that while Section XIII of the Pricing Schedule and NASDAQ Rule 7025 each contain some language particular to the relevant exchange, with this proposal the language of the two rules is substantively identical. The Exchange notes that the statement that Extranet providers shall be assessed a total monthly access fee of $1,000 per recipient CPE Configuration is not in NASDAQ Rule 7025. 11 The Exchange is filing to assess the $1,000 Extranet Access Fee on PSX, which is currently free. PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 Additionally, the Exchange has implemented automated retransmission facilities for most of its data clients that benefit extranet clients by reducing operational costs associated with retransmissions. Also, the Exchange is currently undergoing a technology refresh of the its options trading system, which will deploy state-of-the-art hardware and software architecture to achieve a more efficient and more robust infrastructure in support of the growing needs of our customers. As the number of extranets has increased, the management of the downstream customers has expanded and the Exchange has had to ensure appropriate reporting and review processes, which has resulted in a greater cost burden on the Exchange over time. The proposed fee will also help to ensure that the Exchange is better able to closely review reports and uncover reporting errors via audits thus minimizing reporting issues.12 The network infrastructure has increased in order to keep pace with the increased number of products, which, in turn, has caused an increased administrative burden and higher operational costs associated with delivery via extranets. Thus, subsequent to the proposal extranet providers that establish a connection with the Exchange to offer direct access connectivity to market data feeds shall be assessed a monthly access fee of $1,000 per CPE Configuration. If, as discussed below, an extranet provider uses multiple CPE Configurations to provide market data feeds to any recipient, the monthly fee shall apply to each such CPE Configuration. The Exchange proposes two new descriptions to conform the language of Section XIII of the Pricing Schedule to that of NASDAQ Rule 7025. Specifically, the Exchange proposes to indicate that if an extranet provider uses multiple CPE Configurations to provide market data feeds to any recipient, the monthly fee shall apply to each such CPE Configuration; and that no extranet access fee will be charged for connectivity to market data feeds containing only consolidated data. These proposed descriptions should serve to reduce any confusion as to the applicability of the Extranet Access Fee. Moreover, the descriptions would make the Exchange’s Extranet Access Fee in Section XIII work the same as the equivalent fee in NASDAQ Rule 7025, and complete the effort to conform the two rules. 12 The Exchange will inform extranet providers of their reporting responsibilities via its public Web site. This will include, as an example, reporting CPE usage. E:\FR\FM\15JAN1.SGM 15JAN1 Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices rljohnson on DSK3VPTVN1PROD with NOTICES 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,13 in general, and with Section 6(b)(4) of the Act,14 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 that its proposal to add the Extranet Access Fee in Section XIII of the Pricing Schedule, and to describe the applicability of the Extranet Access Fee and thereby conform the fee with the equivalent fee on NASDAQ, is consistent with the Act. All similarly situated extranet providers, including the Exchange operating its own extranet, that establish an extranet connection with the Exchange to access market data feeds from the Exchange are subject to the same fee structure.15 The fee will help the Exchange to offset some of the rising overhead and technology infrastructure, administrative, maintenance and operational costs it incurs in support of the service. If such costs are covered, the service may provide the Exchange with a profit. As such, the Exchange believes that the proposed fee is reasonable and notes that this proposal conforms similarlysituated Extranet Access Fee rules on Phlx options, PSX equities, and NASDAQ. The extranet costs are separate and different from the colocation facility that is able to recoup these fees by charging for servers within the associated data centers. Additionally, the Exchange believes that the proposed change is equitable and not unreasonably discriminatory. The monthly fee is assessed uniformly to all extranet providers that establish a connection with the Exchange to offer direct access connectivity to market data feeds, and is the same for all at $1,000 per recipient CPE Configuration. Thus, any burden arising from the fees is necessary in the interest of promoting the equitable allocation of a reasonable fee. Moreover, firms make decisions on how much and what types of data to consume on the basis of the total cost of interacting with the Exchange or other markets and, of course, the Extranet Access Fee is but one factor in a total platform analysis. 13 15 U.S.C. 78f. U.S.C. 78f(b)(4). 15 For example, NASDAQ Technology Services, a subsidiary of the NASDAQ, pays the applicable fee(s) to the Exchange for services covered under the Extranet Access Fee. 14 15 VerDate Sep<11>2014 14:13 Jan 14, 2015 Jkt 235001 Additionally, proposed Section XIII of the Pricing Schedule contains description stating that if an extranet provider uses multiple CPE Configurations to provide market data feeds to any recipient, the monthly fee shall apply to each such CPE Configuration; and that no Extranet Access Fee will be charged for connectivity to market data feeds containing only consolidated data. This description should serve to reduce any confusion as to the applicability of this fee. The proposal 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, and is consistent with the Act. 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. The proposed fees are applied uniformly among extranet providers, which are not compelled to establish a connection with the Exchange to offer access connectivity to market data feeds. For these reasons, any burden arising from the fees is necessary in the interest of promoting the equitable allocation of a reasonable fee. Additionally, firms make decisions on how much and what types of data to consume on the basis of the total cost of interacting with the Exchange or other exchanges and, of course, the Extranet Access Fee is but one factor in a total platform analysis. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Pursuant to Section 19(b)(3)(A)(ii) of the Act,16 the Exchange has designated this proposal as establishing or changing a due, fee, or other charge imposed by the self-regulatory organization on any person, whether or not the person is a member of the self-regulatory organization, which renders the proposed rule change effective upon filing. At any time within 60 days of the filing of the proposed rule change, the 16 15 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00068 Fmt 4703 Sfmt 4703 2159 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: 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– Phlx–2015–04 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–Phlx–2015–04. 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 such filing also 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 E:\FR\FM\15JAN1.SGM 15JAN1 2160 Federal Register / Vol. 80, No. 10 / Thursday, January 15, 2015 / Notices available publicly. All submissions should refer to File Number SR–Phlx– 2015–04, and should be submitted on or before February 5, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Brent J. Fields, Secretary. [FR Doc. 2015–00524 Filed 1–14–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–74026; File No. SR–ICEEU– 2014–22] Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change Relating to ICE Clear Europe Board Risk Committee January 9, 2015. I. Introduction On November 10, 2014, ICE Clear Europe Limited (‘‘ICE Clear Europe’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change SR–ICEEU–2014– 22 pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder.2 The proposed rule change was published for comment in the Federal Register on November 25, 2014.3 The Commission did not receive comments on the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change. II. Description of the Proposed Rule Change rljohnson on DSK3VPTVN1PROD with NOTICES ICE Clear Europe is proposing this change to establish a risk committee (the ‘‘Board Risk Committee’’), as described in the ICE Clear Europe Board Risk Committee Composition and Terms of Reference (‘‘Terms of Reference’’), which will advise the ICE Clear Europe Board (the ‘‘Board’’) on certain clearing house-wide risk management matters. The establishment of the Board Risk Committee is required under Article 28 of the European Market Infrastructure Regulation (‘‘EMIR’’),4 which will apply 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 Securities Exchange Act Release No. 34–73645 (Nov. 18, 2014), 79 FR 70251 (Nov. 25, 2014) (SR– ICEEU–2014–22). 4 Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories. 1 15 VerDate Sep<11>2014 14:13 Jan 14, 2015 Jkt 235001 to ICE Clear Europe as an authorized central counterparty. Pursuant to the Terms of Reference, the role of the Board Risk Committee, which will meet at least quarterly and report directly to the Board, will be to advise the Board so the Board can ensure that ICE Clear Europe (i) implements and maintains agreed risk management procedures, processes, and controls, (ii) provides appropriate access to its clearing services, and (iii) appropriately considers the interests of non-clearing members, including with respect to account segregation and collateral protection. ICE Clear Europe states that the Board Risk Committee’s activities will relate to all product categories cleared at ICE Clear Europe, and that they are in addition to ICE Clear Europe’s existing product-specific risk committees (F&O, CDS and FX). Pursuant to its Terms of Reference, the Board Risk Committee’s responsibilities will include receiving and reviewing all recommendations from each of the product-specific risk committees, reviewing business risk mitigation procedures and controls at least annually, and overseeing all risks facing ICE Clear Europe, including counterparty credit risk and noncounterparty credit risks, such as operational and liquidity risks. In addition, the Terms of Reference provide that the Board Risk Committee will advise the Board regarding any arrangements that may materially impact the risk management of ICE Clear Europe, such as a significant change in its criteria for accepting clearing members, clearing in new markets, or outsourcing of certain functions. In accordance with its Terms of Reference, the Board Risk Committee will be provided with results and analysis of back-testing, sensitivity testing, stress testing, and reverse stress testing for any review of margin models, methodologies, and/or the liquidity risk management framework. The Board Risk Committee’s Terms of Reference also provide that the Board Risk Committee will consider other issues that may be referred to it by the Board and/or executive, including the exercise of discretion regarding recovery arrangements under the Rules. Further, the Terms of Reference provide that the Board Risk Committee may obtain external legal or other independent advice and secure the attendance of third parties with relevant experience and expertise. The Terms of Reference, however, clarify that the Board Risk Committee’s advice is not required for the daily operations of ICE Clear Europe. PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 The Terms of Reference provide that the Board Risk Committee will be composed of at least two, and up to four, Clearing Member representatives and at least two, and up to four, customer representatives, in each case appointed by the Board Risk Committee Chairman following consideration by the ICE Clear Europe Nominations Committee. Pursuant to the Board Risk Committee composition requirements as described in the Terms of Reference, the Board Risk Committee Chairman will be an independent non-executive director of ICE Clear Europe appointed by the Board and will be a full voting member of the committee. In addition, the Terms of Reference provide that any member of the Board Risk Committee may be removed by the Board without cause, and that the Board Risk Committee composition will be reviewed annually to determine whether the committee has appropriate representation of Clearing Members, customers and independent non-executive directors, and appropriate representation of expertise and experience in relevant risk disciplines, including market, credit and operational risk. Based on this review, the Chairman may, pursuant to the Terms of Reference, request the resignation of one or more committee members and/or appoint one or more committee members to achieve such appropriate representation. Pursuant to the Terms of Reference, ICE Clear Europe’s Chief Risk Officer, President, and other appropriate staff members will attend Board Risk Committee meetings in a non-voting capacity. Additionally, the Terms of Reference provide that the chairs of any groups or committees involved in developing risk policies and a representative from each of the markets cleared by ICE Clear Europe will have a right to attend, but not vote, at Board Risk Committee meetings, and that the Board Risk Committee may invite external independent experts to attend meetings in a non-voting capacity. The Terms of Reference requires that a quorum will be a minimum of four members, one of whom must be a customer representative and one of whom must be a Clearing Member representative, and that the Board Risk Committee Chairman will count toward the quorum. The Terms of Reference stipulates that each Board Risk Committee member will have one vote and Board Risk Committee decisions will be made by a simple majority, provided that if the committee is evenly divided, the Chairman may cast a deciding vote (in addition to the E:\FR\FM\15JAN1.SGM 15JAN1

Agencies

[Federal Register Volume 80, Number 10 (Thursday, January 15, 2015)]
[Notices]
[Pages 2157-2160]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-00524]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74022; File No. SR-Phlx-2015-04]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Regarding 
the Extranet Access Fee

January 9, 2015.
    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 January 5, 2015, NASDAQ OMX PHLX LLC (``Phlx'' 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 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to add new Section XIII (Extranet Access Fee) 
to the NASDAQ OMX PHLX LLC Pricing Schedule (``Pricing Schedule''), 
which includes description about the applicability of the Extranet 
Access Fee. This will conform the Exchange's Pricing Schedule to that 
of other markets.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://nasdaqomxphlx.cchwallstreet.com/, at the principal 
office of the Exchange, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposal is to add new Section XIII (Extranet 
Access Fee) to the Pricing Schedule, which includes description about 
the applicability of the Extranet Access Fee. This will conform the 
Exchange's Pricing Schedule to that of other markets.\3\
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    \3\ The Exchange, NASDAQ OMX BX, Inc. (``BX''), and The NASDAQ 
Stock Market (``LLC'') are self-regulatory organizations (``SROs'') 
that are wholly owned subsidiaries of The NASDAQ OMX Group, Inc. 
(``NASDAQ OMX''). The Exchange, NOM (a facility of the Exchange 
[sic]), BX, BX Options (a facility of BX), and PSX (a facility of 
Phlx) (together with the Exchange known as the ``NASDAQ Markets''), 
are independently filing proposals to conform their respective 
Extranet Access Fee rules to NASDAQ Rule 7025.
---------------------------------------------------------------------------

    Specifically, the Exchange proposes to establish the Extranet 
Access Fee in proposed new Section XIII of the Pricing Schedule and 
indicate that certain non-Exchange Customer Premises Equipment 
(``CPE'') Products shall be assessed a monthly access fee of $1,000 per 
CPE.\4\ The Exchange also proposes to conform the Extranet Access Fee 
to that of another market, specifically NASDAQ Rule 7025, by also 
indicating that if an extranet provider uses

[[Page 2158]]

multiple CPE Configurations \5\ to provide market data feeds to any 
recipient the monthly fee shall apply to each such CPE Configuration; 
and that no Extranet Access Fee will be charged for connectivity to 
market data feeds containing only consolidated data. This proposal 
establishes the Extranet Access Fee in proposed new Section XIII of the 
Pricing Schedule that is exactly like the equivalent fee in NASDAQ Rule 
7025.
---------------------------------------------------------------------------

    \4\ Proposed Section XIII is listed in the Table of Contents 
(Preface).
    \5\ As defined in proposed Section XIII of the Pricing Schedule, 
a ``Customer Premises Equipment Configuration'' means any line, 
circuit, router package, or other technical configuration used by an 
extranet provider to provide a direct access connection to Phlx 
market data feeds to a recipient's site.
---------------------------------------------------------------------------

    The Extranet Access Fee was introduced a decade ago on NASDAQ Rule 
7025 as an equity fee.\6\ The Extranet Access Fee was introduced about 
a year ago on PSX, a facility of the Exchange, in Section VIII of the 
Pricing Schedule.\7\ By this proposal, the Exchange not only introduces 
the Extranet Access Fee on Phlx but also normalizes its cost and 
structure to that of the equivalent decade-old NASDAQ fee.\8\
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release Nos. 50483 (October 1, 
2004), 69 FR 60448 (October 8, 2004) (SR-NASD-2004-118) 
(establishing the Extranet Access Fee on NASDAQ); and 71199 
(December 30, 2013), 79 FR 686 (January 6, 2014) (SR-NASD [sic]-
2013-159) (notice of filing and immediate effectiveness increasing 
the Extranet Access Fee to $1,000).
    \7\ See Securities Exchange Act Release No. 71236 (January 6, 
2014), 79 FR 1906 (January 10, 2014) (SR-Phlx-2014-01) (notice of 
filing and immediate effectiveness establishing the Extranet Access 
Fee on PSX, and describing that no fee is charged at the time of the 
filing). The Extranet Access Fee was also established on BX. See 
Securities Exchange Act Release Nos. 59615 (March 20, 2009), 74 FR 
14604 (March 31, 2009) (SR-BX-2009-005) (establishing the Extranet 
Access Fee on BX); and 71841 (April 1, 2014), 79 FR 19129 (April 7, 
2014) (SR-BX-2014-015) (notice of filing and immediate effectiveness 
and describing that the Extranet Access Fee is $750).
    \8\ As noted, Phlx and other NASDAQ Markets are independently 
filing proposals to conform their respective Extranet Access Fee.
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    Proposed Section XIII of the Pricing Schedule indicates the same 
fee as NASDAQ Rule 7025, namely $1,000 per CPE Configuration, and adds 
verbatim language from NASDAQ Rule 7025 that explains the application 
of the fee.\9\ As proposed, Section XIII of the Pricing Schedule will 
read as follows: ``Extranet providers that establish a connection with 
Phlx to offer direct access connectivity to market data feeds shall be 
assessed a monthly access fee of $1,000 per recipient Customer Premises 
Equipment (``CPE'') Configuration. If an extranet provider uses 
multiple CPE Configurations to provide market data feeds to any 
recipient, the monthly fee shall apply to each such CPE Configuration. 
For purposes of this Section XIII, the term ``Customer Premises 
Equipment Configuration'' shall mean any line, circuit, router package, 
or other technical configuration used by an extranet provider to 
provide a direct access connection to Phlx market data feeds to a 
recipient's site. No extranet access fee will be charged for 
connectivity to market data feeds containing only consolidated data. 
Extranet providers that establish a connection with Phlx pursuant to 
this Section XIII of the Pricing Schedule as well as a connection with 
PSX pursuant to Section VIII of the Pricing Schedule shall be assessed 
a total monthly access fee of $1,000 per recipient CPE Configuration.'' 
The proposal conforms Section XIII of the Pricing Schedule to NASDAQ 
Rule 7025, and makes them substantively identical.\10\ The proposal 
also makes it clear that if an extranet provider establishes an 
Extranet connection on PSX as well as on Phlx, the extranet provider 
will not need to pay a double $1,000 monthly access fee per CPE, but 
rather only one total monthly access fee of $1,000 per CPE. In 
addition, as discussed, there is an equity market and an options market 
under the Phlx SRO license. This proposal currently applies the 
Extranet Access Fee located in Section VIII of the Pricing Schedule to 
members transacting an equity business (PSX) and would also apply to 
members transacting an options business as proposed in Section XIII of 
the Pricing Schedule, conforming these rules with NASDAQ Rule 7025.\11\
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    \9\ However, the proposed Section XIII language does not, 
because it deals with options, indicate that consolidated data 
includes data disseminated by the UTP SIP (as noted in NASDAQ Rule 
7025).
    \10\ The Exchange notes that while Section XIII of the Pricing 
Schedule and NASDAQ Rule 7025 each contain some language particular 
to the relevant exchange, with this proposal the language of the two 
rules is substantively identical. The Exchange notes that the 
statement that Extranet providers shall be assessed a total monthly 
access fee of $1,000 per recipient CPE Configuration is not in 
NASDAQ Rule 7025.
    \11\ The Exchange is filing to assess the $1,000 Extranet Access 
Fee on PSX, which is currently free.
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    The proposed Extranet Access Fee will, as on NASDAQ, be used to 
help recoup the Exchange's costs associated with maintaining multiple 
extranet connections with multiple providers. These costs include those 
associated with overhead and technology infrastructure, administrative, 
maintenance and operational costs. Since the inception of Extranet 
Access there have been numerous network infrastructure improvements and 
administrative controls enacted. Additionally, the Exchange has 
implemented automated retransmission facilities for most of its data 
clients that benefit extranet clients by reducing operational costs 
associated with retransmissions. Also, the Exchange is currently 
undergoing a technology refresh of the its options trading system, 
which will deploy state-of-the-art hardware and software architecture 
to achieve a more efficient and more robust infrastructure in support 
of the growing needs of our customers.
    As the number of extranets has increased, the management of the 
downstream customers has expanded and the Exchange has had to ensure 
appropriate reporting and review processes, which has resulted in a 
greater cost burden on the Exchange over time. The proposed fee will 
also help to ensure that the Exchange is better able to closely review 
reports and uncover reporting errors via audits thus minimizing 
reporting issues.\12\ The network infrastructure has increased in order 
to keep pace with the increased number of products, which, in turn, has 
caused an increased administrative burden and higher operational costs 
associated with delivery via extranets.
---------------------------------------------------------------------------

    \12\ The Exchange will inform extranet providers of their 
reporting responsibilities via its public Web site. This will 
include, as an example, reporting CPE usage.
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    Thus, subsequent to the proposal extranet providers that establish 
a connection with the Exchange to offer direct access connectivity to 
market data feeds shall be assessed a monthly access fee of $1,000 per 
CPE Configuration. If, as discussed below, an extranet provider uses 
multiple CPE Configurations to provide market data feeds to any 
recipient, the monthly fee shall apply to each such CPE Configuration.
    The Exchange proposes two new descriptions to conform the language 
of Section XIII of the Pricing Schedule to that of NASDAQ Rule 7025. 
Specifically, the Exchange proposes to indicate that if an extranet 
provider uses multiple CPE Configurations to provide market data feeds 
to any recipient, the monthly fee shall apply to each such CPE 
Configuration; and that no extranet access fee will be charged for 
connectivity to market data feeds containing only consolidated data. 
These proposed descriptions should serve to reduce any confusion as to 
the applicability of the Extranet Access Fee. Moreover, the 
descriptions would make the Exchange's Extranet Access Fee in Section 
XIII work the same as the equivalent fee in NASDAQ Rule 7025, and 
complete the effort to conform the two rules.

[[Page 2159]]

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\13\ in general, and with Section 6(b)(4) 
of the Act,\14\ 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.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that its proposal to add the Extranet Access 
Fee in Section XIII of the Pricing Schedule, and to describe the 
applicability of the Extranet Access Fee and thereby conform the fee 
with the equivalent fee on NASDAQ, is consistent with the Act.
    All similarly situated extranet providers, including the Exchange 
operating its own extranet, that establish an extranet connection with 
the Exchange to access market data feeds from the Exchange are subject 
to the same fee structure.\15\ The fee will help the Exchange to offset 
some of the rising overhead and technology infrastructure, 
administrative, maintenance and operational costs it incurs in support 
of the service.
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    \15\ For example, NASDAQ Technology Services, a subsidiary of 
the NASDAQ, pays the applicable fee(s) to the Exchange for services 
covered under the Extranet Access Fee.
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    If such costs are covered, the service may provide the Exchange 
with a profit. As such, the Exchange believes that the proposed fee is 
reasonable and notes that this proposal conforms similarly-situated 
Extranet Access Fee rules on Phlx options, PSX equities, and NASDAQ. 
The extranet costs are separate and different from the colocation 
facility that is able to recoup these fees by charging for servers 
within the associated data centers. Additionally, the Exchange believes 
that the proposed change is equitable and not unreasonably 
discriminatory. The monthly fee is assessed uniformly to all extranet 
providers that establish a connection with the Exchange to offer direct 
access connectivity to market data feeds, and is the same for all at 
$1,000 per recipient CPE Configuration. Thus, any burden arising from 
the fees is necessary in the interest of promoting the equitable 
allocation of a reasonable fee. Moreover, firms make decisions on how 
much and what types of data to consume on the basis of the total cost 
of interacting with the Exchange or other markets and, of course, the 
Extranet Access Fee is but one factor in a total platform analysis.
    Additionally, proposed Section XIII of the Pricing Schedule 
contains description stating that if an extranet provider uses multiple 
CPE Configurations to provide market data feeds to any recipient, the 
monthly fee shall apply to each such CPE Configuration; and that no 
Extranet Access Fee will be charged for connectivity to market data 
feeds containing only consolidated data. This description should serve 
to reduce any confusion as to the applicability of this fee.
    The proposal 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, and is consistent with the Act.

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.
    The proposed fees are applied uniformly among extranet providers, 
which are not compelled to establish a connection with the Exchange to 
offer access connectivity to market data feeds. For these reasons, any 
burden arising from the fees is necessary in the interest of promoting 
the equitable allocation of a reasonable fee. Additionally, firms make 
decisions on how much and what types of data to consume on the basis of 
the total cost of interacting with the Exchange or other exchanges and, 
of course, the Extranet Access Fee is but one factor in a total 
platform analysis.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\16\ the Exchange 
has designated this proposal as establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization on any person, 
whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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:

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-Phlx-2015-04 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-Phlx-2015-04. 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 such filing also 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

[[Page 2160]]

available publicly. All submissions should refer to File Number SR-
Phlx-2015-04, and should be submitted on or before February 5, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Brent J. Fields,
Secretary.
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    \17\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-00524 Filed 1-14-15; 8:45 am]
BILLING CODE 8011-01-P
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