Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Create a Monthly Media Enterprise License for the Distribution of Nasdaq Basic to the General Investing Public for Display Usage, 16811-16816 [2022-06187]
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Federal Register / Vol. 87, No. 57 / Thursday, March 24, 2022 / Notices
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
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 on the proposed
rule change.
IV. Solicitation of Comments
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not:
A. Significantly affect the protection
of investors or the public interest;
B. impose any significant burden on
competition; and
C. become operative for 30 days from
the date on which it was filed, or such
shorter time as the Commission may
designate, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 20 and Rule 19b–4(f)(6) 21
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 22 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),23 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest. The Exchange asked that the
Commission waive the 30 day operative
delay so that the proposal may become
operative immediately upon filing.
Extending the Pilot Rules’ effectiveness
to the close of business on April 18,
2022 will extend the protections
provided by the Pilot Rules, which
would otherwise expire in less than 30
days. Waiver of the operative delay
would therefore permit uninterrupted
continuation of the MWCB pilot while
the Commission reviews the NYSE’s
proposed rule change to make the Pilot
Rules permanent. Therefore, the
Commission hereby waives the 30-day
operative delay and designates the
proposed rule change as operative upon
filing.24
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
15 U.S.C. 78s(b)(3)(A).
17 CFR 240.19b–4(f)(6).
22 17 CFR 240.19b–4(f)(6).
23 17 CFR 240.19b–4(f)(6)(iii).
24 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
20
21
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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–
CboeBZX–2022–023 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–CboeBZX–2022–023. 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 website (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 website 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions.
You should submit only information
that you wish to make available
publicly. All submissions should refer
to File Number SR–CboeBZX–2022–023
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16811
and should be submitted on or before
April 14, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.25
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06185 Filed 3–23–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94466; File No. SR–
NASDAQ–2022–024]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Create a
Monthly Media Enterprise License for
the Distribution of Nasdaq Basic to the
General Investing Public for Display
Usage
March 18, 2022.
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 March 9,
2022, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III, below, which Items have been
prepared by 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 amend the
Exchange’s fees to create a monthly
Media Enterprise License for the
distribution of Nasdaq Basic to the
general investing public for Display
Usage.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rules, 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
17 CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
25
1 15
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Federal Register / Vol. 87, No. 57 / Thursday, March 24, 2022 / Notices
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
create a monthly Media Enterprise
License for the distribution of Nasdaq
Basic to the general investing public for
Display Usage.3
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Nasdaq Basic
Nasdaq Basic is a real-time market
data product that offers best bid and
offer and last sale information for all
U.S. exchange-listed securities based on
liquidity within the Nasdaq market
center and trades reported to the
FINRA/Nasdaq Trade Reporting
Facilities at Chicago and Carteret
(‘‘TRFs’’). It is a subset of the core
quotation and last sale data provided by
securities information processors
(‘‘SIPs’’), which distribute consolidated
data pursuant to the CTA/CQ Plan and
the UTP Plan.
Nasdaq Basic is separated into three
components, which may be purchased
individually or in combination: (i)
Nasdaq Basic for Nasdaq, which
contains the best bid and offer on the
Nasdaq Market Center and last sale
transaction reports for Nasdaq and the
FINRA/Nasdaq TRFs for Nasdaq-listed
stocks; (ii) Nasdaq Basic for NYSE,
which covers NYSE-listed stocks, and
(iii) Nasdaq Basic for NYSE American,
which provides data on stocks listed on
NYSE American and other listing
venues that disseminate quotes and
trade reports on Tape B. The specific
data elements available through Nasdaq
Basic are: (i) Nasdaq Basic Quotes
(‘‘QBBO’’), the best bid and offer and
associated size available in the Nasdaq
Market Center, as well as last sale
transaction reports; 4 (ii) Nasdaq
3 The Exchange initially filed the proposed
pricing changes on January 31, 2022 (SR–
NASDAQ–2022–014). On February 14, 2022, the
Exchange withdrew that filing and submitted a new
filing (SR–NASDAQ–2022–016). The second filing
was withdrawn on February 28, 2022, and replaced
with another filing (SR–NASDAQ–2022–018). This
last filing was withdrawn on March 9, 2022, and
replaced with this filing.
4 Last sale transaction reports are available from
both Nasdaq Last Sale and Nasdaq Last Sale Plus.
See Equity 7, Section 139(e) (‘‘NLS Plus may be
received by itself or in combination with Nasdaq
Basic.’’). The customer that purchases Nasdaq Basic
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opening and closing prices, as well as
IPO and trading halt cross prices; and
(iii) general exchange information,
including systems status reports, trading
halt information, and a stock directory.
Proposed Changes
Media Enterprise License
Nasdaq proposes to introduce a Media
Enterprise License that will allow any
External Distributor 5 to disseminate
Nasdaq Basic, or any subset thereof,6 to
the general investing public for Display
Usage 7 for a monthly fee of $100,000.8
Information may be distributed via
television, websites, mobile devices, or
any other unrestricted means of
transmission to an unlimited number of
Users.9 A Hosted Display Solution 10
may be used to distribute data under
this license, provided that the External
Distributor purchases a separate Media
Enterprise License for each such Hosted
Display Solution.
Distribution of Nasdaq Basic through
the Media Enterprise License will be
subject to two primary restrictions.
First, distribution of Derived Data 11 is
will also receive Nasdaq Last Sale because it is a
component of Nasdaq Basic.
5 The term ‘‘Distributor’’ refers to any entity that
receives Nasdaq Basic data directly from Nasdaq or
indirectly through another entity and then
distributes it to one or more Subscribers. Equity 7,
Section 147(d)(1). ‘‘External Distributors’’ are
Distributors that receive Nasdaq Basic data and then
distribute that data to one or more Subscribers
outside the Distributor’s own entity. Equity 7,
Section 147(d)(1)(B).
6 The Exchange expects most purchasers of the
proposed license to distribute last sale transaction
reports and best bid and offer information. Firms
will have the discretion, however, to distribute less
than the full set of information available—for
example, some firms may distribute last sale
information only—or to distribute all of the
information available on Nasdaq Basic.
7 ‘‘Display Usage’’ means any method of accessing
Nasdaq Basic data that involves the display of such
data on a screen or other visualization mechanism
for access or use by a natural person or persons.
Equity 7, Section 147(d)(2).
8 The proposed license will not cover the
Distributor Fee for Nasdaq Basic set forth in Equity
7, Section 147(c)(1).
9 The Exchange proposes to define a ‘‘User’’ as ‘‘a
natural person who has access to Exchange
information.’’ Equity 7, Section 147(d)(7).
10 A ‘‘Hosted Display Solution’’ is a product,
solution or capability provided by a Distributor in
which the Distributor makes available Nasdaq data
or Derived Data to an application branded or cobranded with the third-party brand for use by
external subscribers of the third-party entity or
Distributor. The Distributor maintains control of the
data, entitlements and display of the product,
solution or capability. Hosted Display Solutions
include, but are not limited to: (1) ‘‘Widgets’’ (such
as an iframe, applet, or other solution), in which the
Hosted Display Solution is a part or a subset of a
website or platform hosted or maintained by the
third-party entity; and (2) ‘‘White Labels,’’ in which
the Distributor hosts or maintains the website or
platform on behalf of the third-party entity. Equity
7, Section 147(d)(5).
11 ‘‘Derived Data’’ is pricing data or other
information that is created in whole or in part from
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not permitted. The purpose of the
license is to disseminate accurate
market information to the general
investing public. Derived Data—which
cannot be reverse engineered to recreate
Nasdaq information, or be used to create
other data that is recognizable as a
reasonable substitute for Nasdaq
information—does not serve that
purpose.
Second, data may only be used for
informational and non-trading purposes.
Nasdaq Basic information may only be
distributed on platforms pre-approved
by the Exchange as providing a
reasonable basis to conclude that all
Users of such Information are either
Non-Professionals 12 or Professionals 13
whom the Distributor has no reason to
believe are using Nasdaq Basic in their
professional capacity. A Distributor has
‘‘no reason to believe’’ that Nasdaq
Basic is being used in a professional
capacity when, for example, the data is
made available to the general investing
public in a format that would be
‘‘unlikely to be of significant use to
Professionals acting in a professional
capacity.’’ 14
The proposed Media Enterprise
License does not cover the Distributor
Fee for Nasdaq Basic set forth in
subparagraph (c)(1).
Extension to Broker-Dealer Enterprise
Licenses
Nasdaq also proposes to provide the
Media Enterprise License at no
additional cost to broker-dealers that
purchase either of the following two
enterprise licenses: (i) The license to
distribute Nasdaq Basic to natural
persons in a brokerage relationship with
Nasdaq information; it cannot be reverse engineered
to recreate Nasdaq information, or be used to create
other data that is recognizable as a reasonable
substitute for Nasdaq information. Equity 7, Section
147(d)(6).
12 A ‘‘Non-Professional Subscriber’’ is a natural
person who is not: (A) Registered or qualified in
any capacity with the Securities and Exchange
Commission, the Commodity Futures Trading
Commission, any state securities agency, any
securities exchange or association, or any
commodities or futures contract market or
association; (B) engaged as an ‘investment adviser’
as that term is defined in Section 202(a)(11) of the
Investment Advisers Act of 1940 (whether or not
registered or qualified under that Act); or (C)
employed by a bank or other organization exempt
from registration under federal or state securities
laws to perform functions that would require
registration or qualification if such functions were
performed for an organization not so exempt. Equity
7, Section 147(d)(4)(A).
13 A ‘‘Professional Subscriber’’ is any Subscriber
other than a Non-Professional Subscriber. Equity 7,
Section 147(d)(4)(B).
14 Securities Exchange Act Release No. 34–82723
(February 15, 2018), 83 FR 7812 (February 22, 2018)
(SR–NASDAQ–2018–010) (discussing when a
distributor of NLS has ‘‘no reason to believe’’ that
it is being used by Professionals acting in their
professional capacity).
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the broker-dealer at Equity 7, Section
147(b)(5); or (ii) the Market Data
Enterprise License for Display Usage at
Equity 7, Section 132. All of the terms
and conditions set forth in Equity 7,
Section 147(b)(6) will apply to any
broker-dealer obtaining the license
pursuant to either of these subsections.
The enterprise license at Equity 7,
Section 147(b)(5), allows a broker-dealer
to distribute Nasdaq Basic, or Derived
Data therefrom, through any electronic
system approved by Nasdaq, to an
unlimited number of Professional and
Non-Professional Subscribers who are
natural persons and with whom the
broker-dealer has a brokerage
relationship for a monthly fee of
$100,000.15 That license currently
includes the right to distribute Nasdaq
Last Sale (‘‘NLS’’) 16 data to the general
investing public for Display Usage
without paying the fees set forth in
Equity 7, Section 139(b), subject to all
of the provisions set forth therein,
excluding those related to the payment
of fees.17
Nasdaq proposes to add a reference to
the Media Enterprise License to Equity
7, Section 147(b)(5). If a customer
chooses to continue to distribute NLS it
may do so without change.
The Market Data Enterprise License
for Display Usage at Equity 7, Section
132, allows a Distributor that is also a
broker-dealer or an investment adviser
to distribute, for Display Usage only,
Depth-of-Book data and Nasdaq Basic to
an unlimited number of internal and
external recipients, to be used only in
the context of a brokerage relationship
with a broker-dealer or an engagement
with an Investment Adviser. The license
15 Equity
7 Section 147(b)(5).
provides real-time last sale information for
executions occurring within the Nasdaq market
center and trades reported to the jointly-operated
FINRA/Nasdaq TRFs. The NLS data feed, which
provides price, volume and time of execution data
for last sale transactions, includes transaction
information for Nasdaq-listed stocks (‘‘NLS for
Nasdaq’’) and for stocks listed on NYSE, NYSE
American, and other Tape B listing venues (‘‘NLS
for NYSE/NYSE American’’). It is, like Nasdaq
Basic, a non-core product that provides a subset of
the core data provided by the SIPs under the CTA
and UTP plans. See, e.g., Securities Exchange Act
Release No. 91874 (May 12, 2021), 86 FR 26985
(May 18, 2021) (SR–Nasdaq–2021–036).
17 The Nasdaq Basic enterprise license also
includes a number of other provisions and
restrictions, including but not limited to: (i) A
limitation that the use of the data by a Professional
Subscriber shall be limited to the brokerage
relationship, except that Nasdaq Basic data may be
made available for up to 4,500 internal Subscribers
without incurring additional fees; (ii) a requirement
for a separate enterprise license for each discrete
electronic system; (iii) a requirement that the
broker-dealer pay distributor fees under paragraph
(c)(1); and (iv) a requirement that the broker-dealer
report the number of Subscribers receiving Nasdaq
Basic under this license. Equity 7, Section 147(b)(5).
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16 NLS
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currently allows unlimited external
distribution of NLS and NLS Plus
through one of the mechanisms for the
general investing public identified at
Equity 7, Section 139(b), provided that
platforms distributing such information
are pre-approved by the Exchange as
reasonably designed to meet the
requirements with respect to each of the
products identified. This license may be
purchased for a monthly fee of
$600,000, or the Distributor may
purchase a full twelve months of the
license in advance for a monthly fee of
$500,000.
The Exchange proposes to add a
reference to Nasdaq Basic for the Market
Data Enterprise License. If the purchaser
wishes to continue to distribute NLS
after the Proposal, it may do so without
change.
Extension to Short Interest Report
Nasdaq distributes a Short Interest
Report under a fee schedule set forth at
Equity 7, Section 122(c). Distributors
that currently purchase enterprise
licenses at Equity 7, Section 123(c)(3) or
Equity 7, Section 147(b)(5), or that
expend $5,000 or more on any product
offered at Equity 7, Section 139 in a
particular month, excluding distributor
fees at Equity 7, Section 139(c), may
distribute the Short Interest Report to an
unlimited number of external
Subscribers, or on an open website, for
$1,500 per month. The Exchange
proposes to add the Media Enterprise
License at Equity 7, Section 147(b)(6) to
the list of licenses which will allow
distribution of the Short Interest Report
to an unlimited number of external
Subscribers or on an open website for
$1,500 per month.18
Discussion
This Proposal is a response to
customer requests. A number of firms,
including financial media firms, mobile
application vendors, and data vendors,
have informed Nasdaq that they have
observed an increase in demand for bid
and offer information from the general
investing public, and requested that
Nasdaq create the proposed enterprise
license. These potential customers
compared Nasdaq’s market data fee
schedule to that of one of its
competitors, which already allows
general news websites to distribute realtime quote and trade information on
open public websites and
18 In addition, Nasdaq proposes to correct current
references to ‘‘NYSE MKT,’’ which no longer exists,
to ‘‘NYSE American,’’ and revise numbering to
accommodate the addition of new Subsection
147(b)(6).
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16813
applications,19 and concluded that
overall market transparency would be
improved if Nasdaq Basic Quotes were
distributed on open public websites and
applications as well.
Upon consideration of these requests,
Nasdaq has determined that distribution
of best bid and offer information is in
the best interest of our customers and
the market as a whole. When NLS was
introduced in 2007, it was a significant
leap forward for Retail Investors. NLS
allowed, for the first time, a costeffective method for the retail audience
to gain insights into the real time price
movements of US securities on open
websites. The release of pre-trade
information on a similar basis is the
next step in expanding the availability
and accessibility of accurate and reliable
trading information, increasing overall
transparency.
Nasdaq believes that there is little risk
that the proposed license will change
the way that Professionals use pre-trade
data. Although the new license may
occasionally result in incidental
professional use, data that is generally
available to online customers via
television, open websites, mobile
devices, or any other unrestricted means
of transmission is unlikely to have the
breadth or depth of information, or
desktop applications, used by
professionals. Information for
professional use is typically distributed
through firewall-protected websites,
intranet sites, secured terminals, or is
otherwise protected from widespread
dissemination.20 As an additional
safeguard, Nasdaq proposes that any
platform used to distribute data under
this license contain sufficient controls
to ensure that the feeds cannot be
modified into a data feed or otherwise
made suitable for professional use.
The Exchange expects the new license
to be attractive to financial media
outlets, search engines and firms
engaged in the development and sale of
new financial applications. Based on
Nasdaq’s familiarity with the market, it
19 See, e.g., Securities Exchange Act Release No.
79699 (December 28, 2016), 82 FR 892 (January 4,
2017) (SR–BatsEDGA–2016–32) (introducing the
digital media license for Bats EDGA); see also Cboe
One Feed, Digital Media License, available at
https://www.cboe.com/us/equities/market_data_
services/cboe_one/(allowing general news websites
to distribute real-time quote and trade information
on open public websites and applications;
information may be distributed via television,
websites and mobile devices for informational and
non-trading purposes only).
20 Professionals are also subject to regulatory
requirements not applicable to the general investing
public that require different sets of information to
be displayed. SEC Rule 603(c), for example,
requires Professionals to provide consolidated
information, rather than proprietary data, under
certain circumstances. See 17 CFR 242.603(c).
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Federal Register / Vol. 87, No. 57 / Thursday, March 24, 2022 / Notices
also believes that broker-dealers that
currently distribute last sale transaction
reports to the general investing public
would similarly be interested in
distributing QBBO information on their
open websites to generate traffic and
attract customers.
Any firm that is interested in
distributing Nasdaq Basic to the general
investing public under the conditions
set forth in the proposed rule would be
able to do so. The Exchange expects
financial media firms, firms engaged in
the development and sale of new
financial applications, broker-dealers,
and data vendors in particular to benefit
from the proposed license. The Proposal
will promote competition as it is similar
to a media license already offered by
another exchange.21
2. Statutory Basis
The Exchange believes that its
Proposal is consistent with Section 6(b)
of the Act,22 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,23 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, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
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The Proposal Is an Equitable Allocation
of Reasonable Dues, Fees and Other
Charges
As the Commission and courts 24 have
recognized, ‘‘[i]f competitive forces are
21 See Cboe One Feed, Digital Media License,
available at https://www.cboe.com/us/equities/
market_data_services/cboe_one/ (allowing general
news websites to distribute real-time quote and
trade information on open public websites and
applications; information may be distributed via
television, websites and mobile devices for
informational and non-trading purposes only).
22 See 15 U.S.C. 78f(b).
23 See 15 U.S.C. 78f(b)(4) and (5).
24 The decision of the United States Court of
Appeals for the District of Columbia Circuit in
NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010)
upheld the Commission’s reliance upon
competitive markets to set reasonable and equitably
allocated fees for market data. ‘‘In fact, the
legislative history indicates that the Congress
intended that the market system evolve through the
interplay of competitive forces as unnecessary
regulatory restrictions are removed and that the SEC
wield its regulatory power in those situations where
competition may not be sufficient, such as in the
creation of a consolidated transactional reporting
system.’’ NetCoalition I, at 535 (quoting H.R. Rep.
No. 94–229, at 92 (1975), as reprinted in 1975
U.S.C.C.A.N. 321, 323) (internal quotation marks
omitted). The court agreed with the Commission’s
conclusion that ‘‘Congress intended that
competitive forces should dictate the services and
practices that constitute the U.S. national market
system for trading equity securities.’’ Id. (quoting
Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770, 74,771 (December
9, 2008) (SR–NYSEArca–2006–21)).
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operative, the self-interest of the
exchanges themselves will work
powerfully to constrain unreasonable or
unfair behavior.’’ 25 Accordingly, ‘‘the
existence of significant competition
provides a substantial basis for finding
that the terms of an exchange’s fee
proposal are equitable, fair, reasonable,
and not unreasonably or unfairly
discriminatory.’’ 26 Competition among
exchanges in the sale of top-of-book data
is a powerful competitive force that
constrains the price of top-of-book data
products.
Nasdaq Basic provides choices to
broker-dealers and other data consumers
by offering less than the quantum of
data provided through the consolidated
tape feeds, but at a lower price. All of
the top-of-book proprietary products
offered by the exchanges are readily
substitutable for each other.
Top-of-book data can be used for
many purposes—from a retail investor
casually surveying the market to
sophisticated market participants using
it for a variety of applications, such as
investment analysis, risk management,
or portfolio valuation.
All major exchange groups compete to
sell top-of-book data. Nasdaq Basic
provides data derived from liquidity
within the Nasdaq market center and
trades reported to the FINRA/Nasdaq
TRFs. The NYSE BQT feed disseminates
top-of-book information from the NYSE,
NYSE American, NYSE Arca, NYSE
National and NYSE Chicago
exchanges.27 The Cboe One Summary
Feed provides data from the four Cboe
equities exchanges: BZX Exchange, BYX
Exchange, EDGX Exchange and EDGA
Exchange.28
Nasdaq, NYSE and Cboe compete on
price and quality. Like Nasdaq, both
NYSE 29 and Cboe 30 offer enterprise
licenses for their top-of book feeds. All
of these top-of-book data feeds are
substitutes. The value of the data
depends on its quality, which is in large
part determined by the amount of order
25 See Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (SR–NYSEArca–2006–21).
26 Id.
27 See New York Stock Exchange, NYSE Best
Quote & Trades (BQT), available at https://
www.nyse.com/market-data/real-time/nyse-bqt.
28 See Cboe Market Data Services, U.S. Equities,
U.S. Equities Market Data Products, available at:
https://markets.cboe.com/us/equities/market_data_
services/#:∼:text=Cboe%20Top%20is%20a%20real,
time%20on%20a%20Cboe%20book.&text=It%20
is%20a%20real%2Dtime,time%20
on%20a%20Cboe%20book.
29 See New York Stock Exchange, NYSE Best
Quote & Trades (BQT), available at https://
www.nyse.com/market-data/real-time/nyse-bqt.
30 See Cboe, Market Data Services, Cboe One
Feed, available at https://markets.cboe.com/us/
equities/market_data_services/cboe_one/.
PO 00000
Frm 00111
Fmt 4703
Sfmt 4703
flow attracted by the exchange—the
more order flow, the more quotes and
trades, and the better the exchange data
will be able to match the NBBO.
Competition among exchanges for
order flow has long been recognized by
the courts. As the D.C. Circuit stated in
NetCoalition v. Securities and Exchange
Commission, ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . ‘In the U.S. national market system,
buyers and sellers of securities, and the
broker-dealers that act as their orderrouting 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’
. . . .’’ 31
The proposed Media Enterprise
License is an element of the competition
among exchanges for the sale of top-ofbook feeds. As explained above, it was
drafted in response to requests from
potential customers, including financial
media firms, mobile application
vendors, and data vendors, and also as
a response to the license offered by one
of Nasdaq’s competitors allowing
general news websites to distribute realtime quote and trade information.32 The
Exchange expects the new license to be
attractive to financial media outlets,
search engines, and firms engaged in the
development and sale of new financial
applications, as well as broker-dealers,
and expects that the increased
dissemination of Nasdaq data will
enhance Nasdaq’s ability to compete
with other exchanges in the sale of topof-book data.
In addition to the new Media
Enterprise License, Nasdaq proposes to
expand the broker-dealer enterprise
license at Equity 7, Section 147(b)(5),
and the Market Data Enterprise License
for Display Usage at Equity 7, Section
132, to include the Media Enterprise
License at no additional cost. The
Exchange also proposes to add the
Media Enterprise License at Equity 7,
31 See NetCoalition v. SEC, 615 F.3d 525, 539
(D.C. Cir. 2010) (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca–2006–21)).
32 See, e.g., Securities Exchange Act Release No.
79699 (December 28, 2016), 82 FR 892 (January 4,
2017) (SR–BatsEDGA–2016–32) (introducing the
digital media license for Bats EDGA); see also Cboe
One Feed, Digital Media License, available at
https://www.cboe.com/us/equities/market_data_
services/cboe_one/ (allowing general news websites
to distribute real-time quote and trade information
on open public websites and applications;
information may be distributed via television,
websites and mobile devices for informational and
non-trading purposes only).
E:\FR\FM\24MRN1.SGM
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Federal Register / Vol. 87, No. 57 / Thursday, March 24, 2022 / Notices
Section 147(b)(6) to the list of licenses
which will allow distribution of the
Short Interest Report to an unlimited
number of external Subscribers or on an
open website for a monthly fee. All of
these changes will expand existing
services at no additional cost to the
purchaser.
The fact that the new Media
Enterprise License is subject to
competition provides a substantial basis
for a finding that the terms of the
proposal are equitable, fair, and
reasonable.
khammond on DSKJM1Z7X2PROD with NOTICES
The Proposal Does Not Permit Unfair
Discrimination
The Proposal is not unfairly
discriminatory. The proposed license
will be available to any External
Distributor to disseminate Nasdaq Basic
to the general investing public for
Display Usage. Broker-dealers that
purchase the enterprise licenses at
Equity 7, Sections 147(b)(5) and 132
will be able to distribute the same data
to the general investing public at no
additional charge, beyond the fees for
the underlying licenses, and, as
discussed above, these broker-dealers
may continue to distribute NLS as they
did before this change. Any firm that is
interested in distributing Nasdaq Basic
to the general investing public under the
conditions set forth in the proposed rule
would be able to do so on a nondiscriminatory basis.
With respect to the Short Interest
Report at Equity 7, Section 122(c), there
is no unfair discrimination in allowing
customers another means to qualify for
purchase of the Short Interest Report for
a reduced fee.
For all of the reasons set forth herein,
the proposed Media Enterprise License
will be subject to significant
competition, and that competition will
ensure that there is no unfair
discrimination. The Proposal will also
benefit the general investing public by
lowering the cost of distributing Nasdaq
Basic, thereby enhancing overall market
transparency.
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. With respect
to inter-market competition—the
competition among SROs—the
Exchange’s ability to price market data
products is constrained by competition
among exchanges for top-of-book data.
The proposed Media Enterprise License
is itself a response to a similar product
offered by another exchange, and other
VerDate Sep<11>2014
17:39 Mar 23, 2022
Jkt 256001
exchanges are free to follow Nasdaq in
offering their own version of the
product. With respect to intra-market
competition—the competition among
consumers of exchange data—the
Exchange expects the Proposal to
promote competition by making Nasdaq
Basic freely available to any External
Distributor willing to distribute it to the
general investing public under the terms
set forth in this license.
Intermarket Competition
As discussed in detail under Statutory
Basis, Nasdaq competes with other
exchanges in the sale of top-of-book
products.
Nasdaq is offering the proposed
Media Enterprise License to gain new
customers and to compete with a similar
product offered by another exchange.
The Proposal will not cause any
unnecessary or inappropriate burden on
intermarket competition, as other
exchanges are free to respond with a
similar license of their own.
Intramarket Competition
The Proposal will not cause any
unnecessary or inappropriate burden on
intramarket competition. Indeed, it will
foster competition by providing External
Distributors—including financial media
firms, search engines, vendors, and
broker-dealers—with more options to
deliver top-of-book information to the
general investing public. The Proposal
will also promote competition by
increasing market transparency through
greater dissemination of QBBO
information to the general investing
public. The license is available to all
market participants that meet the terms
set forth in the license, and nothing in
the Proposal will place any unnecessary
or inappropriate burden on intramarket
competition.
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.33
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
33 15
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
Frm 00112
Fmt 4703
Sfmt 4703
16815
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–2022–024 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–2022–024. 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 website (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 website 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2022–024 and
E:\FR\FM\24MRN1.SGM
24MRN1
16816
Federal Register / Vol. 87, No. 57 / Thursday, March 24, 2022 / Notices
should be submitted on or before April
14, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–06187 Filed 3–23–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94468; File No. SR–ISE–
2022–07]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Qualifications for the Market Maker
Plus Program in Options 7, Section 3
March 18, 2022.
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 March 4,
2022, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I and II
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 amend the
qualifications for the Exchange’s Market
Maker Plus program in its Pricing
Schedule at Options 7, Section 3.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/ise/rules, 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 amend the qualifications for
the Exchange’s Market Maker Plus
program in its Pricing Schedule at
Options 7, Section 3. The Exchange
initially filed the proposed pricing
changes on February 23, 2022 (SR–ISE–
2022–05). On March 4, 2022, the
Exchange withdrew that filing and
submitted this filing.
Today, the Exchange operates a
Market Maker Plus program for regular
orders in Select Symbols 3 and NonSelect Symbols 4 that provides the
below tiered incentives to Market
Makers 5 based on time spent quoting at
the National Best Bid or National Best
Offer (‘‘NBBO’’). This program is
designed to reward Market Makers that
contribute to market quality by
maintaining tight markets in Select and
Non-Select Symbols.
SELECT SYMBOLS OTHER THAN SPY, QQQ, IWM, AMZN, FB, AND NVDA
Market Maker Plus tier
(specified percentage)
Maker rebate
Tier 1 (80% to less than 85%) ............................................................................................................................................................
Tier 2 (85% to less than 95%) ............................................................................................................................................................
Tier 3 (95% or greater) ........................................................................................................................................................................
($0.15)
(0.18)
(0.22)
SPY, QQQ, AND IWM
Market Maker Plus tier
(specified percentage)
Regular Maker
rebate
Tier 1a (50% to less than 65%) ..............................................................................................................................
Tier 1b (65% to less than 80%) or (over 50% and adds liquidity in the qualifying symbol that is executed at a
volume of greater than 0.10% of Customer Total Consolidated Volume) ..........................................................
Tier 2 (80% to less than 85%) or (over 50% and adds liquidity in the qualifying symbol that is executed at a
volume of greater than 0.20% of Customer Total Consolidated Volume) ..........................................................
Tier 3 (85% to less than 90%) or (over 50% and adds liquidity in the qualifying symbol that is executed at a
volume of greater than 0.25% of Customer Total Consolidated Volume) ..........................................................
Tier 4 (90% or greater) or (over 50% and adds liquidity in the qualifying symbol that is executed at a volume
of greater than 0.50% of Customer Total Consolidated Volume) .......................................................................
Linked Maker
rebate
($0.00)
N/A
(0.05)
N/A
(0.18)
($0.15)
(0.22)
(0.19)
(0.26)
(0.23)
khammond on DSKJM1Z7X2PROD with NOTICES
AMZN, FB, AND NVDA
Market Maker Plus tier
(specified percentage)
Maker rebate
Tier 1 (70% to less than 85%) ............................................................................................................................................................
Tier 2 (85% to less than 95%) ............................................................................................................................................................
34 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 ‘‘Select Symbols’’ are options overlying all
symbols listed on the Exchange that are in the
Penny Interval Program.
4 ‘‘Non-Select Symbols’’ are options overlying all
symbols excluding Select Symbols.
1 15
VerDate Sep<11>2014
17:39 Mar 23, 2022
Jkt 256001
PO 00000
Frm 00113
Fmt 4703
Sfmt 4703
($0.15)
(0.18)
5 The term ‘‘Market Makers’’ refers to Competitive
Market Makers and Primary Market Makers,
collectively.
E:\FR\FM\24MRN1.SGM
24MRN1
]]>Agencies
[Federal Register Volume 87, Number 57 (Thursday, March 24, 2022)]
[Notices]
[Pages 16811-16816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-06187]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94466; File No. SR-NASDAQ-2022-024]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Create a Monthly Media Enterprise License for the Distribution of
Nasdaq Basic to the General Investing Public for Display Usage
March 18, 2022.
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 March 9, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by 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 amend the Exchange's fees to create a
monthly Media Enterprise License for the distribution of Nasdaq Basic
to the general investing public for Display Usage.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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
[[Page 16812]]
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 create a monthly Media Enterprise
License for the distribution of Nasdaq Basic to the general investing
public for Display Usage.\3\
---------------------------------------------------------------------------
\3\ The Exchange initially filed the proposed pricing changes on
January 31, 2022 (SR-NASDAQ-2022-014). On February 14, 2022, the
Exchange withdrew that filing and submitted a new filing (SR-NASDAQ-
2022-016). The second filing was withdrawn on February 28, 2022, and
replaced with another filing (SR-NASDAQ-2022-018). This last filing
was withdrawn on March 9, 2022, and replaced with this filing.
---------------------------------------------------------------------------
Nasdaq Basic
Nasdaq Basic is a real-time market data product that offers best
bid and offer and last sale information for all U.S. exchange-listed
securities based on liquidity within the Nasdaq market center and
trades reported to the FINRA/Nasdaq Trade Reporting Facilities at
Chicago and Carteret (``TRFs''). It is a subset of the core quotation
and last sale data provided by securities information processors
(``SIPs''), which distribute consolidated data pursuant to the CTA/CQ
Plan and the UTP Plan.
Nasdaq Basic is separated into three components, which may be
purchased individually or in combination: (i) Nasdaq Basic for Nasdaq,
which contains the best bid and offer on the Nasdaq Market Center and
last sale transaction reports for Nasdaq and the FINRA/Nasdaq TRFs for
Nasdaq-listed stocks; (ii) Nasdaq Basic for NYSE, which covers NYSE-
listed stocks, and (iii) Nasdaq Basic for NYSE American, which provides
data on stocks listed on NYSE American and other listing venues that
disseminate quotes and trade reports on Tape B. The specific data
elements available through Nasdaq Basic are: (i) Nasdaq Basic Quotes
(``QBBO''), the best bid and offer and associated size available in the
Nasdaq Market Center, as well as last sale transaction reports; \4\
(ii) Nasdaq opening and closing prices, as well as IPO and trading halt
cross prices; and (iii) general exchange information, including systems
status reports, trading halt information, and a stock directory.
---------------------------------------------------------------------------
\4\ Last sale transaction reports are available from both Nasdaq
Last Sale and Nasdaq Last Sale Plus. See Equity 7, Section 139(e)
(``NLS Plus may be received by itself or in combination with Nasdaq
Basic.''). The customer that purchases Nasdaq Basic will also
receive Nasdaq Last Sale because it is a component of Nasdaq Basic.
---------------------------------------------------------------------------
Proposed Changes
Media Enterprise License
Nasdaq proposes to introduce a Media Enterprise License that will
allow any External Distributor \5\ to disseminate Nasdaq Basic, or any
subset thereof,\6\ to the general investing public for Display Usage
\7\ for a monthly fee of $100,000.\8\ Information may be distributed
via television, websites, mobile devices, or any other unrestricted
means of transmission to an unlimited number of Users.\9\ A Hosted
Display Solution \10\ may be used to distribute data under this
license, provided that the External Distributor purchases a separate
Media Enterprise License for each such Hosted Display Solution.
---------------------------------------------------------------------------
\5\ The term ``Distributor'' refers to any entity that receives
Nasdaq Basic data directly from Nasdaq or indirectly through another
entity and then distributes it to one or more Subscribers. Equity 7,
Section 147(d)(1). ``External Distributors'' are Distributors that
receive Nasdaq Basic data and then distribute that data to one or
more Subscribers outside the Distributor's own entity. Equity 7,
Section 147(d)(1)(B).
\6\ The Exchange expects most purchasers of the proposed license
to distribute last sale transaction reports and best bid and offer
information. Firms will have the discretion, however, to distribute
less than the full set of information available--for example, some
firms may distribute last sale information only--or to distribute
all of the information available on Nasdaq Basic.
\7\ ``Display Usage'' means any method of accessing Nasdaq Basic
data that involves the display of such data on a screen or other
visualization mechanism for access or use by a natural person or
persons. Equity 7, Section 147(d)(2).
\8\ The proposed license will not cover the Distributor Fee for
Nasdaq Basic set forth in Equity 7, Section 147(c)(1).
\9\ The Exchange proposes to define a ``User'' as ``a natural
person who has access to Exchange information.'' Equity 7, Section
147(d)(7).
\10\ A ``Hosted Display Solution'' is a product, solution or
capability provided by a Distributor in which the Distributor makes
available Nasdaq data or Derived Data to an application branded or
co-branded with the third-party brand for use by external
subscribers of the third-party entity or Distributor. The
Distributor maintains control of the data, entitlements and display
of the product, solution or capability. Hosted Display Solutions
include, but are not limited to: (1) ``Widgets'' (such as an iframe,
applet, or other solution), in which the Hosted Display Solution is
a part or a subset of a website or platform hosted or maintained by
the third-party entity; and (2) ``White Labels,'' in which the
Distributor hosts or maintains the website or platform on behalf of
the third-party entity. Equity 7, Section 147(d)(5).
---------------------------------------------------------------------------
Distribution of Nasdaq Basic through the Media Enterprise License
will be subject to two primary restrictions. First, distribution of
Derived Data \11\ is not permitted. The purpose of the license is to
disseminate accurate market information to the general investing
public. Derived Data--which cannot be reverse engineered to recreate
Nasdaq information, or be used to create other data that is
recognizable as a reasonable substitute for Nasdaq information--does
not serve that purpose.
---------------------------------------------------------------------------
\11\ ``Derived Data'' is pricing data or other information that
is created in whole or in part from Nasdaq information; it cannot be
reverse engineered to recreate Nasdaq information, or be used to
create other data that is recognizable as a reasonable substitute
for Nasdaq information. Equity 7, Section 147(d)(6).
---------------------------------------------------------------------------
Second, data may only be used for informational and non-trading
purposes. Nasdaq Basic information may only be distributed on platforms
pre-approved by the Exchange as providing a reasonable basis to
conclude that all Users of such Information are either Non-
Professionals \12\ or Professionals \13\ whom the Distributor has no
reason to believe are using Nasdaq Basic in their professional
capacity. A Distributor has ``no reason to believe'' that Nasdaq Basic
is being used in a professional capacity when, for example, the data is
made available to the general investing public in a format that would
be ``unlikely to be of significant use to Professionals acting in a
professional capacity.'' \14\
---------------------------------------------------------------------------
\12\ A ``Non-Professional Subscriber'' is a natural person who
is not: (A) Registered or qualified in any capacity with the
Securities and Exchange Commission, the Commodity Futures Trading
Commission, any state securities agency, any securities exchange or
association, or any commodities or futures contract market or
association; (B) engaged as an `investment adviser' as that term is
defined in Section 202(a)(11) of the Investment Advisers Act of 1940
(whether or not registered or qualified under that Act); or (C)
employed by a bank or other organization exempt from registration
under federal or state securities laws to perform functions that
would require registration or qualification if such functions were
performed for an organization not so exempt. Equity 7, Section
147(d)(4)(A).
\13\ A ``Professional Subscriber'' is any Subscriber other than
a Non-Professional Subscriber. Equity 7, Section 147(d)(4)(B).
\14\ Securities Exchange Act Release No. 34-82723 (February 15,
2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010)
(discussing when a distributor of NLS has ``no reason to believe''
that it is being used by Professionals acting in their professional
capacity).
---------------------------------------------------------------------------
The proposed Media Enterprise License does not cover the
Distributor Fee for Nasdaq Basic set forth in subparagraph (c)(1).
Extension to Broker-Dealer Enterprise Licenses
Nasdaq also proposes to provide the Media Enterprise License at no
additional cost to broker-dealers that purchase either of the following
two enterprise licenses: (i) The license to distribute Nasdaq Basic to
natural persons in a brokerage relationship with
[[Page 16813]]
the broker-dealer at Equity 7, Section 147(b)(5); or (ii) the Market
Data Enterprise License for Display Usage at Equity 7, Section 132. All
of the terms and conditions set forth in Equity 7, Section 147(b)(6)
will apply to any broker-dealer obtaining the license pursuant to
either of these subsections.
The enterprise license at Equity 7, Section 147(b)(5), allows a
broker-dealer to distribute Nasdaq Basic, or Derived Data therefrom,
through any electronic system approved by Nasdaq, to an unlimited
number of Professional and Non-Professional Subscribers who are natural
persons and with whom the broker-dealer has a brokerage relationship
for a monthly fee of $100,000.\15\ That license currently includes the
right to distribute Nasdaq Last Sale (``NLS'') \16\ data to the general
investing public for Display Usage without paying the fees set forth in
Equity 7, Section 139(b), subject to all of the provisions set forth
therein, excluding those related to the payment of fees.\17\
---------------------------------------------------------------------------
\15\ Equity 7 Section 147(b)(5).
\16\ NLS provides real-time last sale information for executions
occurring within the Nasdaq market center and trades reported to the
jointly-operated FINRA/Nasdaq TRFs. The NLS data feed, which
provides price, volume and time of execution data for last sale
transactions, includes transaction information for Nasdaq-listed
stocks (``NLS for Nasdaq'') and for stocks listed on NYSE, NYSE
American, and other Tape B listing venues (``NLS for NYSE/NYSE
American''). It is, like Nasdaq Basic, a non-core product that
provides a subset of the core data provided by the SIPs under the
CTA and UTP plans. See, e.g., Securities Exchange Act Release No.
91874 (May 12, 2021), 86 FR 26985 (May 18, 2021) (SR-Nasdaq-2021-
036).
\17\ The Nasdaq Basic enterprise license also includes a number
of other provisions and restrictions, including but not limited to:
(i) A limitation that the use of the data by a Professional
Subscriber shall be limited to the brokerage relationship, except
that Nasdaq Basic data may be made available for up to 4,500
internal Subscribers without incurring additional fees; (ii) a
requirement for a separate enterprise license for each discrete
electronic system; (iii) a requirement that the broker-dealer pay
distributor fees under paragraph (c)(1); and (iv) a requirement that
the broker-dealer report the number of Subscribers receiving Nasdaq
Basic under this license. Equity 7, Section 147(b)(5).
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Nasdaq proposes to add a reference to the Media Enterprise License
to Equity 7, Section 147(b)(5). If a customer chooses to continue to
distribute NLS it may do so without change.
The Market Data Enterprise License for Display Usage at Equity 7,
Section 132, allows a Distributor that is also a broker-dealer or an
investment adviser to distribute, for Display Usage only, Depth-of-Book
data and Nasdaq Basic to an unlimited number of internal and external
recipients, to be used only in the context of a brokerage relationship
with a broker-dealer or an engagement with an Investment Adviser. The
license currently allows unlimited external distribution of NLS and NLS
Plus through one of the mechanisms for the general investing public
identified at Equity 7, Section 139(b), provided that platforms
distributing such information are pre-approved by the Exchange as
reasonably designed to meet the requirements with respect to each of
the products identified. This license may be purchased for a monthly
fee of $600,000, or the Distributor may purchase a full twelve months
of the license in advance for a monthly fee of $500,000.
The Exchange proposes to add a reference to Nasdaq Basic for the
Market Data Enterprise License. If the purchaser wishes to continue to
distribute NLS after the Proposal, it may do so without change.
Extension to Short Interest Report
Nasdaq distributes a Short Interest Report under a fee schedule set
forth at Equity 7, Section 122(c). Distributors that currently purchase
enterprise licenses at Equity 7, Section 123(c)(3) or Equity 7, Section
147(b)(5), or that expend $5,000 or more on any product offered at
Equity 7, Section 139 in a particular month, excluding distributor fees
at Equity 7, Section 139(c), may distribute the Short Interest Report
to an unlimited number of external Subscribers, or on an open website,
for $1,500 per month. The Exchange proposes to add the Media Enterprise
License at Equity 7, Section 147(b)(6) to the list of licenses which
will allow distribution of the Short Interest Report to an unlimited
number of external Subscribers or on an open website for $1,500 per
month.\18\
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\18\ In addition, Nasdaq proposes to correct current references
to ``NYSE MKT,'' which no longer exists, to ``NYSE American,'' and
revise numbering to accommodate the addition of new Subsection
147(b)(6).
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Discussion
This Proposal is a response to customer requests. A number of
firms, including financial media firms, mobile application vendors, and
data vendors, have informed Nasdaq that they have observed an increase
in demand for bid and offer information from the general investing
public, and requested that Nasdaq create the proposed enterprise
license. These potential customers compared Nasdaq's market data fee
schedule to that of one of its competitors, which already allows
general news websites to distribute real-time quote and trade
information on open public websites and applications,\19\ and concluded
that overall market transparency would be improved if Nasdaq Basic
Quotes were distributed on open public websites and applications as
well.
---------------------------------------------------------------------------
\19\ See, e.g., Securities Exchange Act Release No. 79699
(December 28, 2016), 82 FR 892 (January 4, 2017) (SR-BatsEDGA-2016-
32) (introducing the digital media license for Bats EDGA); see also
Cboe One Feed, Digital Media License, available at https://www.cboe.com/us/equities/market_data_services/cboe_one/(allowing
general news websites to distribute real-time quote and trade
information on open public websites and applications; information
may be distributed via television, websites and mobile devices for
informational and non-trading purposes only).
---------------------------------------------------------------------------
Upon consideration of these requests, Nasdaq has determined that
distribution of best bid and offer information is in the best interest
of our customers and the market as a whole. When NLS was introduced in
2007, it was a significant leap forward for Retail Investors. NLS
allowed, for the first time, a cost-effective method for the retail
audience to gain insights into the real time price movements of US
securities on open websites. The release of pre-trade information on a
similar basis is the next step in expanding the availability and
accessibility of accurate and reliable trading information, increasing
overall transparency.
Nasdaq believes that there is little risk that the proposed license
will change the way that Professionals use pre-trade data. Although the
new license may occasionally result in incidental professional use,
data that is generally available to online customers via television,
open websites, mobile devices, or any other unrestricted means of
transmission is unlikely to have the breadth or depth of information,
or desktop applications, used by professionals. Information for
professional use is typically distributed through firewall-protected
websites, intranet sites, secured terminals, or is otherwise protected
from widespread dissemination.\20\ As an additional safeguard, Nasdaq
proposes that any platform used to distribute data under this license
contain sufficient controls to ensure that the feeds cannot be modified
into a data feed or otherwise made suitable for professional use.
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\20\ Professionals are also subject to regulatory requirements
not applicable to the general investing public that require
different sets of information to be displayed. SEC Rule 603(c), for
example, requires Professionals to provide consolidated information,
rather than proprietary data, under certain circumstances. See 17
CFR 242.603(c).
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The Exchange expects the new license to be attractive to financial
media outlets, search engines and firms engaged in the development and
sale of new financial applications. Based on Nasdaq's familiarity with
the market, it
[[Page 16814]]
also believes that broker-dealers that currently distribute last sale
transaction reports to the general investing public would similarly be
interested in distributing QBBO information on their open websites to
generate traffic and attract customers.
Any firm that is interested in distributing Nasdaq Basic to the
general investing public under the conditions set forth in the proposed
rule would be able to do so. The Exchange expects financial media
firms, firms engaged in the development and sale of new financial
applications, broker-dealers, and data vendors in particular to benefit
from the proposed license. The Proposal will promote competition as it
is similar to a media license already offered by another exchange.\21\
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\21\ See Cboe One Feed, Digital Media License, available at
https://www.cboe.com/us/equities/market_data_services/cboe_one/
(allowing general news websites to distribute real-time quote and
trade information on open public websites and applications;
information may be distributed via television, websites and mobile
devices for informational and non-trading purposes only).
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2. Statutory Basis
The Exchange believes that its Proposal is consistent with Section
6(b) of the Act,\22\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\23\ 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, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\22\ See 15 U.S.C. 78f(b).
\23\ See 15 U.S.C. 78f(b)(4) and (5).
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The Proposal Is an Equitable Allocation of Reasonable Dues, Fees and
Other Charges
As the Commission and courts \24\ have recognized, ``[i]f
competitive forces are operative, the self-interest of the exchanges
themselves will work powerfully to constrain unreasonable or unfair
behavior.'' \25\ Accordingly, ``the existence of significant
competition provides a substantial basis for finding that the terms of
an exchange's fee proposal are equitable, fair, reasonable, and not
unreasonably or unfairly discriminatory.'' \26\ Competition among
exchanges in the sale of top-of-book data is a powerful competitive
force that constrains the price of top-of-book data products.
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\24\ The decision of the United States Court of Appeals for the
District of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525
(D.C. Cir. 2010) upheld the Commission's reliance upon competitive
markets to set reasonable and equitably allocated fees for market
data. ``In fact, the legislative history indicates that the Congress
intended that the market system evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed and that the SEC wield its regulatory power in those
situations where competition may not be sufficient, such as in the
creation of a consolidated transactional reporting system.''
NetCoalition I, at 535 (quoting H.R. Rep. No. 94-229, at 92 (1975),
as reprinted in 1975 U.S.C.C.A.N. 321, 323) (internal quotation
marks omitted). The court agreed with the Commission's conclusion
that ``Congress intended that competitive forces should dictate the
services and practices that constitute the U.S. national market
system for trading equity securities.'' Id. (quoting Securities
Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770,
74,771 (December 9, 2008) (SR-NYSEArca-2006-21)).
\25\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
\26\ Id.
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Nasdaq Basic provides choices to broker-dealers and other data
consumers by offering less than the quantum of data provided through
the consolidated tape feeds, but at a lower price. All of the top-of-
book proprietary products offered by the exchanges are readily
substitutable for each other.
Top-of-book data can be used for many purposes--from a retail
investor casually surveying the market to sophisticated market
participants using it for a variety of applications, such as investment
analysis, risk management, or portfolio valuation.
All major exchange groups compete to sell top-of-book data. Nasdaq
Basic provides data derived from liquidity within the Nasdaq market
center and trades reported to the FINRA/Nasdaq TRFs. The NYSE BQT feed
disseminates top-of-book information from the NYSE, NYSE American, NYSE
Arca, NYSE National and NYSE Chicago exchanges.\27\ The Cboe One
Summary Feed provides data from the four Cboe equities exchanges: BZX
Exchange, BYX Exchange, EDGX Exchange and EDGA Exchange.\28\
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\27\ See New York Stock Exchange, NYSE Best Quote & Trades
(BQT), available at https://www.nyse.com/market-data/real-time/nyse-bqt.
\28\ See Cboe Market Data Services, U.S. Equities, U.S. Equities
Market Data Products, available at: https://markets.cboe.com/us/
equities/market_data_services/
#:~:text=Cboe%20Top%20is%20a%20real,time%20on%20a%20Cboe%20book.&text
=It%20is%20a%20real%2Dtime,time%20on%20a%20Cboe%20book.
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Nasdaq, NYSE and Cboe compete on price and quality. Like Nasdaq,
both NYSE \29\ and Cboe \30\ offer enterprise licenses for their top-of
book feeds. All of these top-of-book data feeds are substitutes. The
value of the data depends on its quality, which is in large part
determined by the amount of order flow attracted by the exchange--the
more order flow, the more quotes and trades, and the better the
exchange data will be able to match the NBBO.
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\29\ See New York Stock Exchange, NYSE Best Quote & Trades
(BQT), available at https://www.nyse.com/market-data/real-time/nyse-bqt.
\30\ See Cboe, Market Data Services, Cboe One Feed, available at
https://markets.cboe.com/us/equities/market_data_services/cboe_one/.
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Competition among exchanges for order flow has long been recognized
by the courts. As the D.C. Circuit stated in NetCoalition v. Securities
and Exchange Commission, ``[n]o one disputes that competition for order
flow is `fierce.' . . . `In 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' . . . .'' \31\
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\31\ See NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------
The proposed Media Enterprise License is an element of the
competition among exchanges for the sale of top-of-book feeds. As
explained above, it was drafted in response to requests from potential
customers, including financial media firms, mobile application vendors,
and data vendors, and also as a response to the license offered by one
of Nasdaq's competitors allowing general news websites to distribute
real-time quote and trade information.\32\ The Exchange expects the new
license to be attractive to financial media outlets, search engines,
and firms engaged in the development and sale of new financial
applications, as well as broker-dealers, and expects that the increased
dissemination of Nasdaq data will enhance Nasdaq's ability to compete
with other exchanges in the sale of top-of-book data.
---------------------------------------------------------------------------
\32\ See, e.g., Securities Exchange Act Release No. 79699
(December 28, 2016), 82 FR 892 (January 4, 2017) (SR-BatsEDGA-2016-
32) (introducing the digital media license for Bats EDGA); see also
Cboe One Feed, Digital Media License, available at https://www.cboe.com/us/equities/market_data_services/cboe_one/ (allowing
general news websites to distribute real-time quote and trade
information on open public websites and applications; information
may be distributed via television, websites and mobile devices for
informational and non-trading purposes only).
---------------------------------------------------------------------------
In addition to the new Media Enterprise License, Nasdaq proposes to
expand the broker-dealer enterprise license at Equity 7, Section
147(b)(5), and the Market Data Enterprise License for Display Usage at
Equity 7, Section 132, to include the Media Enterprise License at no
additional cost. The Exchange also proposes to add the Media Enterprise
License at Equity 7,
[[Page 16815]]
Section 147(b)(6) to the list of licenses which will allow distribution
of the Short Interest Report to an unlimited number of external
Subscribers or on an open website for a monthly fee. All of these
changes will expand existing services at no additional cost to the
purchaser.
The fact that the new Media Enterprise License is subject to
competition provides a substantial basis for a finding that the terms
of the proposal are equitable, fair, and reasonable.
The Proposal Does Not Permit Unfair Discrimination
The Proposal is not unfairly discriminatory. The proposed license
will be available to any External Distributor to disseminate Nasdaq
Basic to the general investing public for Display Usage. Broker-dealers
that purchase the enterprise licenses at Equity 7, Sections 147(b)(5)
and 132 will be able to distribute the same data to the general
investing public at no additional charge, beyond the fees for the
underlying licenses, and, as discussed above, these broker-dealers may
continue to distribute NLS as they did before this change. Any firm
that is interested in distributing Nasdaq Basic to the general
investing public under the conditions set forth in the proposed rule
would be able to do so on a non-discriminatory basis.
With respect to the Short Interest Report at Equity 7, Section
122(c), there is no unfair discrimination in allowing customers another
means to qualify for purchase of the Short Interest Report for a
reduced fee.
For all of the reasons set forth herein, the proposed Media
Enterprise License will be subject to significant competition, and that
competition will ensure that there is no unfair discrimination. The
Proposal will also benefit the general investing public by lowering the
cost of distributing Nasdaq Basic, thereby enhancing overall market
transparency.
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. With respect to inter-market
competition--the competition among SROs--the Exchange's ability to
price market data products is constrained by competition among
exchanges for top-of-book data. The proposed Media Enterprise License
is itself a response to a similar product offered by another exchange,
and other exchanges are free to follow Nasdaq in offering their own
version of the product. With respect to intra-market competition--the
competition among consumers of exchange data--the Exchange expects the
Proposal to promote competition by making Nasdaq Basic freely available
to any External Distributor willing to distribute it to the general
investing public under the terms set forth in this license.
Intermarket Competition
As discussed in detail under Statutory Basis, Nasdaq competes with
other exchanges in the sale of top-of-book products.
Nasdaq is offering the proposed Media Enterprise License to gain
new customers and to compete with a similar product offered by another
exchange. The Proposal will not cause any unnecessary or inappropriate
burden on intermarket competition, as other exchanges are free to
respond with a similar license of their own.
Intramarket Competition
The Proposal will not cause any unnecessary or inappropriate burden
on intramarket competition. Indeed, it will foster competition by
providing External Distributors--including financial media firms,
search engines, vendors, and broker-dealers--with more options to
deliver top-of-book information to the general investing public. The
Proposal will also promote competition by increasing market
transparency through greater dissemination of QBBO information to the
general investing public. The license is available to all market
participants that meet the terms set forth in the license, and nothing
in the Proposal will place any unnecessary or inappropriate burden on
intramarket competition.
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.\33\
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\33\ 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 [email protected]. Please include
File Number SR-NASDAQ-2022-024 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-2022-024. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2022-024 and
[[Page 16816]]
should be submitted on or before April 14, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-06187 Filed 3-23-22; 8:45 am]
BILLING CODE 8011-01-P
