Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 7015(g)(1) and 7034, 21921-21924 [2016-08425]

Download as PDF Federal Register / Vol. 81, No. 71 / Wednesday, April 13, 2016 / Notices securities benchmark index (as defined in Form N–1A). This approval order is based on all of the Exchange’s representations, including those set forth above and in the Amendment No. 1. The Commission notes that the Fund and the Shares must comply with the requirements of NYSE Arca Equities Rule 8.600 to be initially and continuously listed and traded on the Exchange. IV. Solicitation of Comments on Amendment No. 1 Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether Amendment No. 1 to the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: asabaliauskas on DSK3SPTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–NYSEArca–2016–14 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–NYSEArca–2016–14. 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 VerDate Sep<11>2014 17:41 Apr 12, 2016 Jkt 238001 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–2016–14 and should be submitted on or before May 4, 2016. V. Accelerated Approval of the Proposed Rule Change, as Modified by Amendment No. 1 The Commission finds good cause to approve the proposed rule change, as modified by Amendment No. 1, prior to the thirtieth day after the date of publication of Amendment No. 1 in the Federal Register. The additional information in Amendment No. 1, among other things, helped the Commission to evaluate the Shares’ susceptibility to manipulation and the Exchange’s ability to investigate possible manipulative activity. Accordingly, the Commission finds good cause for approving the proposed rule change, as modified by Amendment No. 1, on an accelerated basis, pursuant to Section 19(b)(2) of the Act.39 VI. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,40 that the proposed rule change (SR– NYSEArca–2016–14), as modified by Amendment No. 1 thereto, be, and it hereby is, approved on an accelerated basis. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.41 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–08422 Filed 4–12–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77552; File No. SR– NASDAQ–2016–053] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rules 7015(g)(1) and 7034 April 7, 2016. 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 April 6, 2016, The NASDAQ Stock Market LLC 39 15 U.S.C. 78s(b)(2). 40 15 U.S.C. 78s(b)(2). 41 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 21921 (‘‘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 the Substance of the Proposed Rule Change The Exchange proposes to amend Access Services fees at Rule 7015(g)(1) to reduce the fee assessed for MITCH Wave Ports located at Mahwah, NJ. The Exchange is also proposing to amend Rule 7034 to: (i) Reduce monthly fees assessed for NYSE Equities market data connectivity; and (ii) make technical changes to the description of market data connectivity options under the rule. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on April 1, 2016.3 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. 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 proposed rule change is to reduce certain fees under Rules 7015 and 7034, and to make technical changes to the description of market data connectivity options under Rule 7034. 3 The Commission notes that the substance of this filing is identical to the substance of SR–NASDAQ– 2016–047, which was filed March 29, 2016, and withdrawn on April 6, 2016. This filing replaced SR–NASDAQ–2016–047, thus, the fee changes were effective upon filing but have been operative since April 1, 2016. E:\FR\FM\13APN1.SGM 13APN1 21922 Federal Register / Vol. 81, No. 71 / Wednesday, April 13, 2016 / Notices Rule 7015 Changes The Exchange is proposing to reduce the fee assessed for MITCH Wave Port at Mahwah, NJ monthly subscriptions. The Exchange provides Multi-cast ITCH (‘‘MITCH’’) Wave Ports to clients colocated at other third-party data centers, including the New York Stock Exchange‘s (‘‘NYSE’’) data center located in Mahwah, NJ, through which the Exchange’s TotalView ITCH market data is distributed after delivery to those data centers via a wireless network. The wirelessly-delivered TotalView ITCH market data arrives at Exchangeowned cabinets located at these thirdparty data centers, to which the colocation clients may cross-connect to the MITCH Wave Ports in those data centers to receive TotalView ITCH.4 The wireless network that the Exchange uses to connect its data center with thirdparty data centers is provided and maintained by third-party vendors. The Exchange incurs costs in leasing towers and equipment to connect to third-party data centers, such as Mahwah, NJ, through its third party vendors and the Exchange recoups these costs through the fees it assesses. The Exchange has recently reduced such vendor cost for connectivity to Mahwah, NJ by switching to an alternative vendor that assesses the Exchange a lower fee for such connectivity and is accordingly proposing to reduce the monthly charge assessed to subscribers for a MITCH Wave Port at Mahwah, NJ from $12,500 per month to $10,000 per month. Rule 7034 Changes asabaliauskas on DSK3SPTVN1PROD with NOTICES The Exchange is proposing to amend Rule 7034 to: (i) Reduce monthly fees assessed for NYSE Equities market data connectivity; and (ii) make technical changes to the description of market data connectivity options under the rule. Rule 7034 provides the charges assessed by the Exchange for co-location services. Rule 7034(b) provides the various connectivity options for colocation services. The Exchange offers multicast Market Data feeds that are delivered to the Exchange’s data center located in Carteret, NJ via a wireless network.5 The Exchange offers connectivity to data feeds provided by NYSE, BATS (including Direct Edge), 4 Subscription to MITCH Wave Ports is entirely optional. Co-location clients that opt to subscribe to MITCH Wave Ports will continue to be fee liable for the applicable market data fees as described in Rules 7019, 7023, and 7026. 5 Subscription to the connectivity options under Rule 7034(b) is entirely optional. To receive a particular data feed, a participant must subscribe to the connectivity under Rule 7034(b) and also have a subscription to the data feed with the applicable exchange. VerDate Sep<11>2014 17:41 Apr 12, 2016 Jkt 238001 and CME, which are delivered wirelessly by third party vendors from those market’s [sic] data centers to the Exchange’s Carteret, NJ data center. Specifically, the NYSE Equities data feeds under Rule 7034(b) are wirelessly delivered to Carteret, NJ from NYSE’s Mahwah, NJ data center, the BATS and Direct Edge data feeds are wirelessly delivered to Carteret, NJ from BATS’s Secaucus, NJ data center, and the CME data feeds are wirelessly delivered to Carteret, NJ from CME’s Aurora, IL data center. The first change the Exchange proposes is to reduce the recurring monthly fee assessed for connectivity to NYSE Equities data feeds, which are transmitted from the Mahwah, NJ data center to the Exchange’s data center in Carteret, NJ. As discussed above, the Exchange recently reduced its vendor costs by switching to an alternative vendor that assesses the Exchange a lower fee for such connectivity. Because of the reduced vendor costs realized for connectivity to Mahwah, NJ, the Exchange is able to reduce the charges assessed for services that require wireless connectivity to Mahwah, NJ. Currently, the Exchange assesses a recurring monthly fee of $12,500 for connectivity to NYSE Equities Arca Integrated feed and the for the NYSE Equities Open Book feed. As a consequence of the reduced vendor costs, the Exchange is proposing to reduce the charge it assesses as a recurring monthly fee for each of these services from $12,500 to $10,000. The second change the Exchange proposes is to make technical corrections to the rule text under Rule 7034(b) concerning NYSE Equities Open Book connectivity and BATS Multicast PITCH connectivity. NYSE recently combined Open Book data with NYSE BBO, NYSE Trades, and NYSE Order Imbalances data to form the ‘‘NYSE Integrated’’ data feed,6 which the Exchange began to offer on November 16, 2015. Accordingly, the Exchange is [sic] updated the rule text under Rule 7034(b) to accurately reflect this change. The Exchange is also correcting rule text concerning BATS Multicast PITCH connectivity that was inadvertently introduced when the rule text was adopted.7 Specifically, the Exchange is correcting the spelling of ‘‘Multicast’’ in the rule and is correcting the name of 6 See Securities Exchange Act Release No. 76485 (November 20, 2015), 80 FR 74158 (November 27, 2015) (SR–NYSE–2015–57). 7 See Securities Exchange Act Release No. 73562 (January 25, 2013), 78 FR 6842 (January 31, 2013) (SR–NASDAQ–2012–119) PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 the BATS BZX exchange, which is currently spelled ‘‘BZY.’’ 8 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,9 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,10 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, and is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, 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 are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 11 Likewise, in NetCoalition v. Securities and Exchange Commission 12 (‘‘NetCoalition’’) the DC Circuit upheld the Commission’s use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a costbased approach.13 As the court emphasized, the Commission ‘‘intended in Regulation NMS that ‘market forces, rather than regulatory requirements’ play a role in determining the market 8 For a description of Bats Global Markets, Inc.’s exchanges, see https://www.batstrading.com/about/. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(4) and (5). 11 See Securities Exchange Act Release No. 51808 at 37499 (June 9, 2005) (‘‘Regulation NMS Adopting Release’’). 12 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). 13 See NetCoalition, at 534. E:\FR\FM\13APN1.SGM 13APN1 Federal Register / Vol. 81, No. 71 / Wednesday, April 13, 2016 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES data . . . to be made available to investors and at what cost.’’ 14 Further, ‘‘[n]o one disputes that competition for order flow is ‘fierce.’ . . . As the SEC explained, ‘[i]n the U.S. national market system, buyers and sellers of securities, and the brokerdealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution’; [and] ‘no exchange can afford to take its market share percentages for granted’ because ‘no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers’. . . .’’ 15 Fee Reductions The Exchange believes that proposed reduction in the monthly recurring fees assessed under Rules 7015 and 7034(b) are [sic] reasonable because they [sic] will allow the Exchange to align the fees assessed for the connectivity more closely with the costs incurred by the Exchange in offering the connectivity. As discussed above, the Exchange realized a reduction in its vendor costs. Vendors supply wireless connectivity from the Exchange’s data center to the data centers of other markets. Vendor costs are not the only costs to the Exchange in offering such connectivity; however, the reduced vendor cost for wirelessly connecting to Mahwah, NJ has allowed the Exchange to reduce the monthly fee assessed for connectivity to Mahwah, NJ by $2,500. The Exchange notes that the proposed reduced monthly recurring fees are also reasonable because they are in-line with other fees assessed for similar connectivity, with differences in cost being reflective of the differences in the relative cost of offering the services. For example, the proposed reduced fees assessed under Rule 7034(b) for connectivity to the NYSE Equities feeds, although higher as reflection of the increased costs the Exchange incurs in offering the connectivity, are consistent with BATS Multicast PITCH BZX and BYX data feed connectivity under Rule 7034(b), which has a monthly recurring fee of $7,500. With respect to the costs incurred, the Exchange notes that the distance, and hence the wireless network equipment required, is greater between Mahwah, NJ and Carteret, NJ in contrast to the distance between Secaucus, NJ and Carteret, NJ, which is reflected in the fees that vendors charge the Exchange for such connectivity. The Exchange believes that the proposed reduced fees are an equitable 14 Id. at 537. at 539 (quoting ArcaBook Order, 73 FR at 74782–74783). 15 Id. VerDate Sep<11>2014 17:41 Apr 12, 2016 Jkt 238001 allocation and are not unfairly discriminatory because the Exchange will apply the same fee to all similarly situated co-location clients that voluntarily select these service options. The Exchange also notes that colocation clients will continue to have other connectivity options to receive the underlying data feeds, including fiber optic connectivity. Fee Clarifications The Exchange believes that the proposed clarifying changes to Rule 7034(b) serve to protect investors and the public interest because they remove misspelled and inaccurate rule text, which will serve to avoid investor confusion, and will not alter what is currently provided under the rule. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed changes to the charges assessed co-location clients for wireless connectivity do not impose a burden on competition because the Exchange is reducing the monthly fees assessed for such connectivity as a reflection of the Exchange’s reduced vendor costs. Such a proposal is reflective of healthy competition among markets and may promote other exchanges to likewise reduce their costs and/or reduce the fees that they assess for similar connectivity. Although the Exchange does not believe that the proposed changes will be unattractive to market participants, if they were it is likely that the Exchange will lose subscribers as a result. PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 21923 Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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– NASDAQ–2016–053 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–2016–053. 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 16 15 E:\FR\FM\13APN1.SGM U.S.C. 78s(b)(3)(A)(ii). 13APN1 21924 Federal Register / Vol. 81, No. 71 / Wednesday, April 13, 2016 / Notices 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 available publicly. All submissions should refer to File Number SR– NASDAQ–2016–053, and should be submitted on or before May 4, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–08425 Filed 4–12–16; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–77550; File No. SR–FINRA– 2015–029] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Change To Adopt FINRA Rule 3210 (Accounts at Other Broker-Dealers and Financial Institutions), as Modified by Partial Amendment No. 1 and Partial Amendment No. 2, in the Consolidated FINRA Rulebook asabaliauskas on DSK3SPTVN1PROD with NOTICES April 7, 2016 I. Introduction On July 31, 2015, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt a new, consolidated rule addressing accounts 17 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 17:41 Apr 12, 2016 Jkt 238001 opened or established by associated persons of members at firms other than the firm with which they are associated. The proposed rule change was published for comment in the Federal Register on August 14, 2015.3 The comment period closed on September 4, 2015. On September 22, 2015, FINRA extended the time period in which the Commission must approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to approve or disapprove the proposed rule change to November 12, 2015. The Commission received four comment letters in response to the Notice.4 On November 10, 2015, FINRA responded to the comments and filed Partial Amendment No. 1 to the current proposal.5 On November 12, 2015, the Commission issued an order instituting proceedings pursuant to Exchange Act section 19(b)(2)(B) 6 to determine whether to approve or disapprove the proposed rule change, as modified by Partial Amendment No. 1.7 The Commission received one (1) comment letter in response to the Order Instituting Proceedings.8 On February 10, 2016, the Commission published a notice extending the time period in which the Commission must determine whether to 3 See Exchange Act Rel. No. 75655 (Aug. 10, 2015), 80 FR 48941 (Aug. 14, 2015) (File No. SR– FINRA–2015–029) (‘‘Notice’’). 4 See Letters from Eric Arnold and Clifford Kirsch, Sutherland Asbill & Brennan LLP (for the Committee of Annuity Insurers), dated September 4, 2015 (‘‘Sutherland Letter’’); Michael J. Hogan, President and Chief Executive Officer, FOLIOfn Investments, Inc., dated September 4, 2015 (‘‘FOLIOfn Letter’’); Joseph C. Peiffer, President, Public Investors Arbitration Bar Association (‘‘PIABA’’), dated September 3, 2015 (‘‘PIABA Letter’’); and Kevin Zambrowicz, Associate General Counsel & Managing Director, and Stephen Vogt, Assistant Vice President & Assistant General Counsel, Securities Industry and Financial Markets Association (‘‘SIFMA’’), dated September 3, 2015 (‘‘SIFMA Letter’’). Comment letters are available at www.sec.gov. The Commission discussed these comments in the Order Instituting Proceedings. See infra note 7. 5 See Letter from Patrice Gliniecki, Senior Vice President and Deputy General Counsel, FINRA, to the Commission, dated November 10, 2015 (‘‘FINRA Response Letter’’). The FINRA Response Letter and the text of Partial Amendment No. 1 are available on FINRA’s Web site at https:// www.finra.org, at the principal office of FINRA, at the Commission’s Web site at https://www.sec.gov/ rules/sro/finra/2015/34-75655.pdf, and at the Commission’s Public Reference Room. 6 15 U.S.C. 78s(b)(2)(B). 7 See Exchange Act Release No. 76430 (Nov. 12, 2015), 80 FR 72118 (Nov. 18, 2015) (Order Instituting Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Change to Adopt FINRA Rule 3210 (Accounts at Other BrokerDealers and Financial Institutions), as Modified by Partial Amendment No. 1) (‘‘Order Instituting Proceedings’’)). The comment period closed on December 9, 2015. 8 See Letter from Laura Crosby-Brown, dated November 13, 2015 (‘‘Crosby-Brown Letter’’). PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 approve or disapprove the proposed rule change to April 8, 2016.9 On March 2, 2016, FINRA responded to the comment letter received in response to the Order Instituting Proceedings and filed Partial Amendment No. 2.10 This order approves the proposed rule change, as modified by Partial Amendment No. 1 and Partial Amendment No. 2 (collectively, the ‘‘Amendments’’).11 II. Description of the Proposed Rule Change 12 As part of the process of developing a new consolidated rulebook (‘‘Consolidated FINRA Rulebook’’),13 FINRA is proposing to adopt new FINRA Rule 3210 (Accounts at Other Broker-Dealers and Financial Institutions) in the Consolidated FINRA Rulebook, and to delete NASD Rule 3050, Incorporated New York Stock Exchange (‘‘NYSE’’) Rules 407 and 407A, and Incorporated NYSE Rule Interpretations 407/01 and 407/02.14 A. Current NASD Rule 3050 Current NASD Rule 3050 provides a means to inform member firms about transactions effected by their associated persons in accounts established outside the firm. This information gives members an opportunity to weigh the effect these accounts may have on the firm and its customers.15 The rule imposes specified obligations on 9 See Exchange Act Release No. 77103 (Feb. 10, 2016), 81 FR 8109 (Feb. 17, 2016) (Notice of Designation of a Longer Period for Commission Action on Proceedings to Determine Whether to Approve or Disapprove a Proposed Rule Change to Adopt FINRA Rule 3210 (Accounts at Other BrokerDealers and Financial Institutions), as Modified by Partial Amendment No. 1, in the Consolidated FINRA Rulebook). 10 See Letter from Patrice Gliniecki, Senior Vice President and Deputy General Counsel, FINRA, to the Commission, dated March 2, 2016 (‘‘FINRA’s Second Letter’’). FINRA’s Second Letter and the text of Partial Amendment No. 2 are available on FINRA’s Web site at https://www.finra.org, at the principal office of FINRA, and at the Commission’s Public Reference Room. 11 The text of the proposed rule changes is available at the principal office of FINRA, on FINRA’s Web site at https://www.finra.org, and at the Commission’s Public Reference Room. In addition, you may also find a more detailed description of the original proposed rule change, as amended by Amendment No. 1, in the Notice, and Order Instituting Proceedings. 12 The proposed rule change, as described in this Item II, is excerpted, in part, from the Notice, which was substantially prepared by FINRA. See Notice. 13 The current FINRA rulebook consists of: (1) FINRA Rules; (2) NASD Rules; and (3) rules incorporated from NYSE (‘‘Incorporated NYSE Rules’’). See id. 14 For convenience, the Incorporated NYSE Rules are referred to as the ‘‘NYSE Rules.’’ 15 See Exchange Act Release No. 4924 (Aug. 21, 1953). E:\FR\FM\13APN1.SGM 13APN1

Agencies

[Federal Register Volume 81, Number 71 (Wednesday, April 13, 2016)]
[Notices]
[Pages 21921-21924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08425]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77552; File No. SR-NASDAQ-2016-053]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rules 7015(g)(1) and 7034

April 7, 2016.
    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 April 6, 2016, The NASDAQ Stock Market LLC (``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Access Services fees at Rule 
7015(g)(1) to reduce the fee assessed for MITCH Wave Ports located at 
Mahwah, NJ. The Exchange is also proposing to amend Rule 7034 to: (i) 
Reduce monthly fees assessed for NYSE Equities market data 
connectivity; and (ii) make technical changes to the description of 
market data connectivity options under the rule. While these amendments 
are effective upon filing, the Exchange has designated the proposed 
amendments to be operative on April 1, 2016.\3\
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    \3\ The Commission notes that the substance of this filing is 
identical to the substance of SR-NASDAQ-2016-047, which was filed 
March 29, 2016, and withdrawn on April 6, 2016. This filing replaced 
SR-NASDAQ-2016-047, thus, the fee changes were effective upon filing 
but have been operative since April 1, 2016.
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    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.

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 proposed rule change is to reduce certain fees 
under Rules 7015 and 7034, and to make technical changes to the 
description of market data connectivity options under Rule 7034.

[[Page 21922]]

Rule 7015 Changes
    The Exchange is proposing to reduce the fee assessed for MITCH Wave 
Port at Mahwah, NJ monthly subscriptions. The Exchange provides Multi-
cast ITCH (``MITCH'') Wave Ports to clients co-located at other third-
party data centers, including the New York Stock Exchange`s (``NYSE'') 
data center located in Mahwah, NJ, through which the Exchange's 
TotalView ITCH market data is distributed after delivery to those data 
centers via a wireless network.
    The wirelessly-delivered TotalView ITCH market data arrives at 
Exchange-owned cabinets located at these third-party data centers, to 
which the co-location clients may cross-connect to the MITCH Wave Ports 
in those data centers to receive TotalView ITCH.\4\ The wireless 
network that the Exchange uses to connect its data center with third-
party data centers is provided and maintained by third-party vendors.
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    \4\ Subscription to MITCH Wave Ports is entirely optional. Co-
location clients that opt to subscribe to MITCH Wave Ports will 
continue to be fee liable for the applicable market data fees as 
described in Rules 7019, 7023, and 7026.
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    The Exchange incurs costs in leasing towers and equipment to 
connect to third-party data centers, such as Mahwah, NJ, through its 
third party vendors and the Exchange recoups these costs through the 
fees it assesses. The Exchange has recently reduced such vendor cost 
for connectivity to Mahwah, NJ by switching to an alternative vendor 
that assesses the Exchange a lower fee for such connectivity and is 
accordingly proposing to reduce the monthly charge assessed to 
subscribers for a MITCH Wave Port at Mahwah, NJ from $12,500 per month 
to $10,000 per month.
Rule 7034 Changes
    The Exchange is proposing to amend Rule 7034 to: (i) Reduce monthly 
fees assessed for NYSE Equities market data connectivity; and (ii) make 
technical changes to the description of market data connectivity 
options under the rule. Rule 7034 provides the charges assessed by the 
Exchange for co-location services. Rule 7034(b) provides the various 
connectivity options for co-location services. The Exchange offers 
multicast Market Data feeds that are delivered to the Exchange's data 
center located in Carteret, NJ via a wireless network.\5\ The Exchange 
offers connectivity to data feeds provided by NYSE, BATS (including 
Direct Edge), and CME, which are delivered wirelessly by third party 
vendors from those market's [sic] data centers to the Exchange's 
Carteret, NJ data center. Specifically, the NYSE Equities data feeds 
under Rule 7034(b) are wirelessly delivered to Carteret, NJ from NYSE's 
Mahwah, NJ data center, the BATS and Direct Edge data feeds are 
wirelessly delivered to Carteret, NJ from BATS's Secaucus, NJ data 
center, and the CME data feeds are wirelessly delivered to Carteret, NJ 
from CME's Aurora, IL data center.
---------------------------------------------------------------------------

    \5\ Subscription to the connectivity options under Rule 7034(b) 
is entirely optional. To receive a particular data feed, a 
participant must subscribe to the connectivity under Rule 7034(b) 
and also have a subscription to the data feed with the applicable 
exchange.
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    The first change the Exchange proposes is to reduce the recurring 
monthly fee assessed for connectivity to NYSE Equities data feeds, 
which are transmitted from the Mahwah, NJ data center to the Exchange's 
data center in Carteret, NJ. As discussed above, the Exchange recently 
reduced its vendor costs by switching to an alternative vendor that 
assesses the Exchange a lower fee for such connectivity. Because of the 
reduced vendor costs realized for connectivity to Mahwah, NJ, the 
Exchange is able to reduce the charges assessed for services that 
require wireless connectivity to Mahwah, NJ.
    Currently, the Exchange assesses a recurring monthly fee of $12,500 
for connectivity to NYSE Equities Arca Integrated feed and the for the 
NYSE Equities Open Book feed. As a consequence of the reduced vendor 
costs, the Exchange is proposing to reduce the charge it assesses as a 
recurring monthly fee for each of these services from $12,500 to 
$10,000.
    The second change the Exchange proposes is to make technical 
corrections to the rule text under Rule 7034(b) concerning NYSE 
Equities Open Book connectivity and BATS Multicast PITCH connectivity. 
NYSE recently combined Open Book data with NYSE BBO, NYSE Trades, and 
NYSE Order Imbalances data to form the ``NYSE Integrated'' data 
feed,\6\ which the Exchange began to offer on November 16, 2015. 
Accordingly, the Exchange is [sic] updated the rule text under Rule 
7034(b) to accurately reflect this change.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 76485 (November 20, 
2015), 80 FR 74158 (November 27, 2015) (SR-NYSE-2015-57).
---------------------------------------------------------------------------

    The Exchange is also correcting rule text concerning BATS Multicast 
PITCH connectivity that was inadvertently introduced when the rule text 
was adopted.\7\ Specifically, the Exchange is correcting the spelling 
of ``Multicast'' in the rule and is correcting the name of the BATS BZX 
exchange, which is currently spelled ``BZY.'' \8\
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    \7\ See Securities Exchange Act Release No. 73562 (January 25, 
2013), 78 FR 6842 (January 31, 2013) (SR-NASDAQ-2012-119)
    \8\ For a description of Bats Global Markets, Inc.'s exchanges, 
see https://www.batstrading.com/about/.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\9\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\10\ 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, and is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, 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 are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \11\ Likewise, in 
NetCoalition v. Securities and Exchange Commission \12\ 
(``NetCoalition'') the DC Circuit upheld the Commission's use of a 
market-based approach in evaluating the fairness of market data fees 
against a challenge claiming that Congress mandated a cost-based 
approach.\13\ As the court emphasized, the Commission ``intended in 
Regulation NMS that `market forces, rather than regulatory 
requirements' play a role in determining the market

[[Page 21923]]

data . . . to be made available to investors and at what cost.'' \14\
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    \11\ See Securities Exchange Act Release No. 51808 at 37499 
(June 9, 2005) (``Regulation NMS Adopting Release'').
    \12\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \13\ See NetCoalition, at 534.
    \14\ Id. at 537.
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    Further, ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their order-routing agents, have a wide range of choices of 
where to route orders for execution'; [and] `no exchange can afford to 
take its market share percentages for granted' because `no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers'. . . .'' \15\
---------------------------------------------------------------------------

    \15\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
---------------------------------------------------------------------------

Fee Reductions
    The Exchange believes that proposed reduction in the monthly 
recurring fees assessed under Rules 7015 and 7034(b) are [sic] 
reasonable because they [sic] will allow the Exchange to align the fees 
assessed for the connectivity more closely with the costs incurred by 
the Exchange in offering the connectivity. As discussed above, the 
Exchange realized a reduction in its vendor costs. Vendors supply 
wireless connectivity from the Exchange's data center to the data 
centers of other markets. Vendor costs are not the only costs to the 
Exchange in offering such connectivity; however, the reduced vendor 
cost for wirelessly connecting to Mahwah, NJ has allowed the Exchange 
to reduce the monthly fee assessed for connectivity to Mahwah, NJ by 
$2,500.
    The Exchange notes that the proposed reduced monthly recurring fees 
are also reasonable because they are in-line with other fees assessed 
for similar connectivity, with differences in cost being reflective of 
the differences in the relative cost of offering the services. For 
example, the proposed reduced fees assessed under Rule 7034(b) for 
connectivity to the NYSE Equities feeds, although higher as reflection 
of the increased costs the Exchange incurs in offering the 
connectivity, are consistent with BATS Multicast PITCH BZX and BYX data 
feed connectivity under Rule 7034(b), which has a monthly recurring fee 
of $7,500. With respect to the costs incurred, the Exchange notes that 
the distance, and hence the wireless network equipment required, is 
greater between Mahwah, NJ and Carteret, NJ in contrast to the distance 
between Secaucus, NJ and Carteret, NJ, which is reflected in the fees 
that vendors charge the Exchange for such connectivity.
    The Exchange believes that the proposed reduced fees are an 
equitable allocation and are not unfairly discriminatory because the 
Exchange will apply the same fee to all similarly situated co-location 
clients that voluntarily select these service options. The Exchange 
also notes that co-location clients will continue to have other 
connectivity options to receive the underlying data feeds, including 
fiber optic connectivity.
Fee Clarifications
    The Exchange believes that the proposed clarifying changes to Rule 
7034(b) serve to protect investors and the public interest because they 
remove misspelled and inaccurate rule text, which will serve to avoid 
investor confusion, and will not alter what is currently provided under 
the rule.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. In terms of inter-market 
competition, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily favor 
competing venues if they deem fee levels at a particular venue to be 
excessive, or rebate opportunities available at other venues to be more 
favorable. In such an environment, the Exchange must continually adjust 
its fees to remain competitive with other exchanges and with 
alternative trading systems that have been exempted from compliance 
with the statutory standards applicable to exchanges. Because 
competitors are free to modify their own fees in response, and because 
market participants may readily adjust their order routing practices, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.
    In this instance, the proposed changes to the charges assessed co-
location clients for wireless connectivity do not impose a burden on 
competition because the Exchange is reducing the monthly fees assessed 
for such connectivity as a reflection of the Exchange's reduced vendor 
costs. Such a proposal is reflective of healthy competition among 
markets and may promote other exchanges to likewise reduce their costs 
and/or reduce the fees that they assess for similar connectivity.
    Although the Exchange does not believe that the proposed changes 
will be unattractive to market participants, if they were it is likely 
that the Exchange will lose subscribers as a result. Accordingly, the 
Exchange does not believe that the proposed changes will impair the 
ability of members or competing order execution venues to maintain 
their competitive standing in the financial markets.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\16\
---------------------------------------------------------------------------

    \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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-NASDAQ-2016-053 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-2016-053. 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

[[Page 21924]]

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 available publicly. All submissions should refer to 
File Number SR-NASDAQ-2016-053, and should be submitted on or before 
May 4, 2016.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-08425 Filed 4-12-16; 8:45 am]
 BILLING CODE 8011-01-P
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