Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Initiate Distributor Fees for MRX Options Trade Outline, 76162-76167 [2024-21034]
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Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Notices
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I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the Market Dominant or
the Competitive product list, or the
modification of an existing product
currently appearing on the Market
Dominant or the Competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern Market Dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
Competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2024–656 and
CP2024–665; Filing Title: USPS Request
to Add Priority Mail Express
International, Priority Mail International
& First-Class Package International
Service Contract 46 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: September 11, 2024; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative: Katalin
K. Clendenin; Comments Due:
September 19, 2024.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2024–21108 Filed 9–16–24; 8:45 am]
BILLING CODE 7710–FW–P
International Product Change—Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service Agreement
ACTION:
Postal ServiceTM.
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a Priority
Mail Express International, Priority Mail
International & First-Class Package
International Service contract to the list
of Negotiated Service Agreements in the
Competitive Product List in the Mail
Classification Schedule.
SUMMARY:
DATES:
Date of notice: September 17,
2024.
FOR FURTHER INFORMATION CONTACT:
Christopher C. Meyerson, (202) 268–
7820.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on September 11,
2024, it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express International,
Priority Mail International & First-Class
Package International Service Contract
46 to Competitive Product List.
Documents are available at
www.prc.gov, Docket Nos. MC2024–656
and CP2024–665.
SUPPLEMENTARY INFORMATION:
Colleen Hibbert-Kapler,
Attorney, Ethics and Legal Compliance.
[FR Doc. 2024–21118 Filed 9–16–24; 8:45 am]
BILLING CODE 7710–12–P
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Self-Regulatory Organizations; Nasdaq
MRX, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Initiate Distributor
Fees for MRX Options Trade Outline
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
September 3, 2024, Nasdaq MRX, LLC
(‘‘MRX’’ 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 initiate
Distributor fees for MRX Options Trade
Outline.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/mrx/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 initiate fees for the
distribution of MRX Trade Outline.
Distributor fees will be $750 per month
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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[Release No. 34–100995; File No. SR–MRX–
2024–35]
September 11, 2024.
POSTAL SERVICE
AGENCY:
SECURITIES AND EXCHANGE
COMMISSION
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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for the End of Day product, and $1,500
per month for the Intra-Day product.
Historical data will be available
through ad hoc requests for information
for $500 per month of End of Day
information, and $750 per month for
historical information. Current
Distributors 3 will also be able to
purchase the most recent 36 months of
historical data 4 at the discounted price
of $6,000 for End of Day information,
and $9,000 for Intra-Day information.
Historical information will be available
starting in September 2017.
MRX Options Trade Outline
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MRX Options Trade Outline will
provide aggregate quantity and volume
information for trades on the Exchange
for all series 5 during a trading session.6
Information is provided in the following
categories: (i) total exchange volume for
Intra-Day information and total
exchange and industry volume for End
of Day information for each reported
series; (ii) open interest for the series;
(iii) aggregate quantity of trades and
aggregate trade volume effected to open
a position,7 characterized by origin type
(Priority Customers,8 Broker-Dealers,9
3 A ‘‘Current Distributor’’ is any firm that
purchases either the End of Day Product for the
current month, or the Intra-Day Product for the
current month in the same month that the 36
months of historical End of Day or Intra-Day data
is ordered.
4 The most recent 36 months is measured based
on the date of purchase of the 36 months of data
by a Current Distributor.
5 Every options series trades as a distinct symbol;
the terms ‘‘series’’ and ‘‘symbol’’ are therefore
synonyms.
6 See Securities Exchange Act Release No. 100789
(August 21, 2024), 89 FR 68680 (August 27, 2024)
(SR–MRX–2024–31).
7 This includes the aggregate number of ‘‘opening
purchase transactions,’’ defined as an Exchange
Transaction that will create or increase a long
position in an options contract, see Options 1,
Section 1(a)(27), and the aggregate number of
‘‘opening writing transactions,’’ defined as an
Exchange Transaction that will create or increase a
short position in an options contract. See Options
1, Section 1(a)(28).
8 The term ‘‘Priority Customer’’ means a person
or entity that (i) is not a broker or dealer in
securities, and (ii) does not place more than 390
orders in listed options per day on average during
a calendar month for its own beneficial account(s).
See Options 1 § 1(a)(36).
9 A ‘‘Broker-Dealer’’ order is an order submitted
by a Member for a broker-dealer account that is not
its own proprietary account. See Options 7 § 1(c).
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Market Makers,10 Firm Proprietary,11
and Professional Customers 12); and (iv)
aggregate quantity of trades and
aggregate trade volume effected to close
a position,13 characterized by origin
type (Priority Customers, BrokerDealers, Market Makers, Firm
Proprietary, and Professional
Customers).14
Information will be provided on an
End of Day, Intra-Day, and historical
basis.
End of Day Information
The MRX Trade Outline End of Day
file will also provide opening buy,
closing buy, opening sell and closing
sell information, including option first
trade price, option high trade price,
option low trade price, and option last
trade price.
The End of Day file will be updated
during an overnight process with
additional fields 15 and will be available
the following morning, providing
aggregate data for the entire trading
session.
Intra-Day Information
Intra-Day information will be released
in scheduled ‘‘snapshots’’ available
every 10 minutes for all options series
over the course of the trading day. These
snapshots will be updated to reflect
whatever activity occurred, or to
indicate that no activity occurred.16
10 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See Options 1 § 1(a)(21). The
term ‘‘Competitive Market Maker’’ means a Member
that is approved to exercise trading privileges
associated with CMM Rights. See Options 1
§ 1(a)(12). The term ‘‘Primary Market Maker’’ means
a Member that is approved to exercise trading
privileges associated with PMM Rights. See Options
1 § 1(a)(35).
11 A ‘‘Firm Proprietary’’ order is an order
submitted by a Member for its own proprietary
account. See Options 7 § 1(c).
12 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer. See Options 7 § 1(c).
13 This includes the aggregate number of ‘‘closing
purchase transactions’’ in the affected series,
defined as an Exchange Transaction that will
reduce or eliminate a short position in an options
contract, see Options 1, Section 1(a)(9), and the
aggregate number of ‘‘closing writing transactions,’’
defined as an Exchange Transaction that will
reduce or eliminate a long position in an options
contract. See Options 1, Section 1(a)(10).
14 These are the same types of information
available on PHOTO, and the other trade outline
products offered by Nasdaq exchanges.
15 The additional fields are: First Trade Price,
High Trade Price, Low Trade Price, Last Trade
Price, Underlying Close, Moneyness, Total
Exchange volume, Total Industry Volume for the
Series, and Open Interest.
16 Subscribers will receive the first snapshot at
9:42 a.m. ET, representing data captured from 9:30
a.m. to 9:40 a.m., and the second calculation at 9:52
a.m., representing data from both the most recent
snapshot and previous snapshots, and continuing
over the course of the trading day. The final IntraDay snapshot will be distributed at 4:15 p.m.
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This is the same schedule currently
offered on PHLX, ISE, GEMX, and
Nasdaq Options Market.17
Historical Information
Historical data will be available
through ad hoc requests for information
in both End of Day and Intra-Day
formats for all option series traded for
every calendar month after September
2017, based on specific request.18
Historical data is useful in analyzing
option trade and volume data,
evaluating historical trends in the
trading activity of a particular option
series, and creating and testing trading
models and analytical strategies. In
Nasdaq’s experience, historical
information is often purchased
concurrently with a new subscription to
a trade outline product.
Patterned after PHLX Options Trade
Outline ‘‘PHOTO,’’ 19 MRX Options
Trade Outline will replicate in
substance 20 PHOTO and the other trade
outline products currently offered by
Nasdaq ISE, LLC (‘‘ISE’’),21 Nasdaq
GEMX, LLC (‘‘GEMX’’),22 and the
options market operated by the Nasdaq
Stock Market LLC (‘‘Nasdaq Options
Market’’ or ‘‘NOM’’).23 Similar products
are also available from options markets
not affiliated with Nasdaq such as Cboe
17 See
Infra, notes 21 through 23.
participants generally use historical
files for model testing and research, and the period
of time required by a particular market participant
will depend on its unique testing and research
needs as well as whether it is using End of Day or
Intra-Day information. Some customers, for
example, may request years of data, while others
only months, or even a single month. The same
principle applies to End of Day vs. Intra-Day
information.
19 See PHLX Rules, Options 7, Section 10;
Securities Exchange Act Release No. 62887
(September 10, 2010), 75 FR 57092 (September 17,
2010) (SR–Phlx–2010–121) (introducing PHOTO on
September 1, 2010).
20 The underlying information for MRX Options
Trade Outline will be the same as the other trade
outline products offered by the Nasdaq exchanges.
Presentation will differ, however, in that data will
not be subdivided into categories. For example, the
trade outline products offered by PHLX, ISE, GEMX
and NOM subdivide the aggregate volume traded
for each reported series into categories according to
the quantity of contracts (less than 100, 100–199,
and greater than 200). MRX Options Trade Outline
will not separate this information into quantitative
categories, but rather will provide the same
aggregate volume information as PHOTO and the
other Nasdaq exchanges without separating the
information into categories according to the
quantity of contracts.
21 See Nasdaq ISE Rules, Options 7, Section 10(A)
and (B) (Nasdaq ISE Open/Close Trade Profile End
of Day; Nasdaq ISE Open/Close Trade Profile
Intraday).
22 See Nasdaq GEMX Rules, Options 7, Sections
7(D) (Nasdaq GEMX Open/Close End of Day Trade
Profile) and 7(E) (Nasdaq GEMX Open/Close
Intraday Trade Profile).
23 See Nasdaq Rules, Options 7, Section 4 (Nasdaq
Options Trade Outline (‘‘NOTO’’)).
18 Market
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Options Exchange (‘‘Cboe’’),24 NYSE
American Options (‘‘NYSE
American’’),25 NYSE Arca Options
(‘‘NYSE Arca’’),26 BOX Options Market
LLC (‘‘BOX’’),27 MIAX Pearl Options
Exchange (‘‘Pearl’’),28 and others. MRX
Options Trade Outline, like all of these
other trade outline products, provides
data to help market participants
understand market sentiment on the
Exchange and to support the creation of
trading models useful in both options
and equities markets.
Nasdaq’s experience is that
investment banks, market makers, asset
managers and other buy-side investors
purchase trade outline products. In
general, the relative value of these
products depends on the volume of
transactions included; the greater the
volume of transactions, the greater the
value of the data.
MRX Options Trade Outline will
provide proprietary Exchange trading
data and will not include any intra-day
trading data from any other exchange.29
The information provided, both in End
of Day and Intra-Day formats, will not
be a real-time data feed.
Proposed Fees
End of Day and Intra-Day Information
The Exchange proposes to offer the
End of Day product for $750 per month
and the Intra-Day product at $1,500 per
month.
Historical Information
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The Exchange proposes to offer
historical data for $500 per month for
24 See, e.g., Securities Exchange Act Release No.
94913 (May 13, 2022), 87 FR 30534 (May 19, 2022)
(SR–Cboe–2022–023) (describing End of Day and
Intra-Day Open-Close Data as a summary of trading
activity on the exchange at the option level by
origin, side of the market, price, and transaction
type).
25 See, e.g., Securities Exchange Act Release No.
93803 (December 16, 2021, 86 FR 72647 (December
22, 2021) (SR–NYSEAMER–2021–46) (describing
the NYSE Options Open-Close Volume Summary as
a volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
26 See, e.g., Securities Exchange Act Release No.
93132 (September 27, 2021), 86 FR 54499 (October
1, 2021) (SR–NYSEArca–2021–82) (describing the
NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
27 See, e.g., Securities Exchange Act Release No.
97174 (March 21, 2023), 88 FR 18201 (March 27,
2023) (SR–BOX–2023–09) (describing the BOX
exchange Open-Close Data report as providing
volume by origin, buying/selling, and opening/
closing criteria).
28 See, e.g., Securities Exchange Act Release No.
91964 (May 21, 2021), 86 FR 28667 (May 27, 2021)
(SR–PEARL–2021–24) (introducing the Open-Close
Report).
29 The End of Day report includes a field that
presents Total Industry Volume for the Series.
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End of Day data, and $750 per month for
Intra-Day information based on ad hoc
requests for particular months of
information.
The Exchange also proposes to offer a
discounted fee of $9,000 in total for the
most recent 36 months 30 of historical
Intra-Day data for Current
Distributors,31 and a discounted fee of
$6,000 in total for the most recent 36
months of End of Day data for Current
Distributors.
This is a substantial discount from the
proposed fees for ad hoc data requests.
With respect to End of Day data, ad hoc
requests are $500 per month. Thirty-six
months would cost a total of $18,000.
The proposed discounted fee of $6,000
is two-thirds less than the standard rate.
With respect to Intra-Day information,
ad hoc requests are $750 per month.
Thirty-six months would cost a total of
$27,000. The proposed discounted fee of
$9,000 for Intra-Day information is also
two-thirds less than the standard rate.
Eligibility for the discount will
depend on the type of current
subscription. A current purchaser of
End of Day data would be eligible for
the historical End of Day product at the
reduced rate. A current purchaser of the
Intra-Day product would similarly be
able to purchase the historical Intra-Day
product at the reduced rate. A purchaser
of both the current End of Day and IntraDay products would be entitled to
purchase both types of history at the
reduced rate. The fees for historical data
are linked to the current product
because effective historical testing
requires a comparison of similar
licenses. Effective testing of the End of
Day product, for example, requires End
of Day historical data, and the same
would hold true for Intra-Day data.
The 36-month period will be based on
the date of purchase of the 36 months
of data by a Current Distributor. For
example, a customer that buys the End
of Day product for the first time in
September 2024 would also be able to
purchase historical End of Day data for
the period September 2021 through
September 2024 (inclusive) at the
discounted rate. Similarly, a customer
with an existing End of Day
subscription in September 2024 would
be able to purchase the historical End of
Day data from September 2021 through
September 2024 at the discounted rate.
30 The most recent 36 months is measured based
on the date of purchase of the 36 months of data
by a Current Distributor.
31 A ‘‘Current Distributor’’ is any firm that
purchases either the End of Day Product for the
current month, or the Intra-Day Product for the
current month in the same month that the 36
months of historical End of Day or Intra-Day data
is ordered.
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The same reasoning would apply to
Intra-Day customers.32
Many customers use historical data to
test their strategies and models, and our
discussions with current and former
customers and experience indicate that
36 months of data is sufficient for most
customer needs, and is an effective
baseline for review.
For customers that request historical
information outside of the three year
period, end of day historical
information can be purchased through
ad hoc requests for monthly information
for $500 per request per month, and
Intra-Day information can be purchased
at $750 per request per month.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,33 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,34 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.
Equitable Allocation of Reasonable
Dues, Fees and Other Charges
The proposed changes are an
equitable allocation of reasonable dues,
fees and other charges because: (i) the
trade outline products offered by
multiple exchanges are substitutes, and
customers are free to choose which
product they purchase; and (ii) the
proposed fees are comparable to the fees
charged by other exchanges, and
customers are free to purchase other
products if the Exchange has mistaken
the value of its product.
Substitution
Trade outline products have been
available on multiple exchanges for
many years and are well known in the
market and used by many market
participants. PHLX Options Trade
Outline, which is a model for MRX
Options Trade Outline, has been
available for well over a decade.35
32 A customer may use the proposed historical
data discount more than once. For example, a
Current Distributor that purchases 36 months of
historical data at a discount, but later terminates
that subscription, would be eligible to purchase
another 36 months of historical data (based on the
date of purchase) upon renewing that subscription.
(Current Distributors that never terminate would
have no need for a second purchase, as they would
already possess the most recent months of historical
data.).
33 15 U.S.C. 78f(b).
34 15 U.S.C. 78f(b)(4) and (5).
35 See Securities Exchange Act Release No. 62887
(September 10, 2010), 75 FR 57092 (September 17,
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Similar products available on other
Nasdaq exchanges include ISE Trade
Profile,36 GEMX Trade Profile,37 and
Nasdaq Options Trade Outline.38 Trade
outline products are also offered by
competitor exchanges such a Cboe,39
NYSE American,40 NYSE Arca,41
BOX,42 and MIAX PEARL.43 The trade
outline products offered by the Nasdaqaffiliated exchanges provide exactly the
same information as MRX Options
Trade outline, and those offered by
other exchanges provide substantially
the same information, including both
Intra-Day and End of Day data.
The information provided by one
exchange in its trade outline product is
generally similar to that provided by
other exchanges for competing products
because order flow can move from one
exchange to another, and market
sentiment trends that appear on one
exchange are likely to be similar to the
sentiment trends on other exchanges.
The key differentiator in the quality of
the data depends on the volume of
transactions on a given exchange; the
greater the volume of transactions, the
greater the value of the data. Customers
can choose not to purchase the trade
outline product of one exchange and
substitute it for that of another
2010) (SR–Phlx–2010–121) (introducing PHOTO on
September 1, 2010).
36 See Nasdaq ISE Rules, Options 7, Section 10(A)
and (B) (Nasdaq ISE Open/Close Trade Profile End
of Day; Nasdaq ISE Open/Close Trade Profile
Intraday).
37 See Nasdaq GEMX Rules, Options 7, Sections
7(D) (Nasdaq GEMX Open/Close End of Day Trade
Profile) and 7(E) (Nasdaq GEMX Open/Close
Intraday Trade Profile).
38 See Nasdaq Rules, Options 7, Section 4 (Nasdaq
Options Trade Outline (‘‘NOTO’’)).
39 See, e.g., Securities Exchange Act Release No.
94913 (May 13, 2022), 87 FR 30534 (May 19, 2022)
(SR–Cboe–2022–023) (describing End-of-Day and
Intraday Open-Close Data as a summary of trading
activity on the exchange at the option level by
origin, side of the market, price and transaction
type).
40 See, e.g., Securities Exchange Act Release No.
93803 (December 16, 2021, 86 FR 72647 (December
22, 2021) (SR–NYSEAMER–2021–46) (describing
the NYSE Options Open-Close Volume Summary as
a volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
41 See, e.g., Securities Exchange Act Release No.
93132 (September 27, 2021), 86 FR 54499 (October
1, 2021) (SR–NYSEArca–2021–82) (describing the
NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the
exchange at the option level by origin, side of the
market, contract volume and transaction type).
42 See, e.g., Securities Exchange Act Release No.
97174 (March 21, 2023), 88 FR 18201 (March 27,
2023) (SR–BOX–2023–09) (describing the BOX
exchange Open-Close Data report as providing
volume by origin, buying/selling, and opening/
closing criteria).
43 See, e.g., Securities Exchange Act Release No.
91964 (May 21, 2021), 86 FR 28667 (May 27, 2021)
(SR–PEARL–2021–24) (introducing the Open-Close
Report).
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exchange. This applies to both current
and historical data.
Customers can also choose not to
purchase a trade outline product at all.
Trade outline products are designed to
help investors understand underlying
market trends to improve the quality of
investment decisions, but are not
necessary to execute a trade. Customers
may choose to forego the information
from MRX Options Trade Outline or any
of its competitor products when making
a trade.
Nasdaq and its affiliates have
observed that customers purchase
sufficient data to provide a view of the
market, but not more, as the value of
data from each additional exchange
yields diminishing returns. As a result,
all exchanges are limited in what they
will be able to charge for Trade Outline.
As the Commission and courts 44 have
recognized, ‘‘[i]f competitive forces are
operative, the self-interest of the
exchanges themselves will work
powerfully to constrain unreasonable or
unfair behavior.’’ 45 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.’’ 46 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
44 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, 74771 (December
9, 2008) (SR–NYSEArca–2006–21)).
45 See Securities Exchange Act Release No. 59039
(December 2, 2008), 73 FR 74770 (December 9,
2008) (SR–NYSEArca–2006–21).
46 See id.
PO 00000
Frm 00101
Fmt 4703
Sfmt 4703
76165
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 47
MRX Options Trade Outline is in direct
competition with multiple exchanges
that offer similar products in end of day
and intra-day formats.48
The discounted fees for historical
data, like the purchase of the end of day,
Intra-Day and Derived Data licenses, is
also subject to competition. Any
exchange that wishes to provide
discounts for historical data would be
able to do so with an immediately
effective fee filing in response.
Comparability
The proposed fees are comparable to
the fees charged by similarly situated
exchanges.
As explained above, the value of a
trade outline product is determined in
part by the number of underlying
transactions reflected in the data. MRX
has a market share comparable to Cboe
C2 and MIAX Emerald, in the range of
approximately 2% to 4% at the time of
this filing.49 For intra-day products,
MIAX Emerald charges $2,000 50 and
Cboe C2 charges $1,000.51 The proposed
fee of $1,500 is within that range and
comparable to those fees.
For End of Day products, MIAX
Emerald charges $600,52 and Cboe C2
charges $500.53 Although the proposed
fees of $750 are above that range, MRX
believes that the relative value of IntraDay and End of Day fees should be in
the ratio of 2:1, and therefore MIAX
Emerald and Cboe C2 have somewhat
undervalued their end of day products.
If Nasdaq is incorrect in that
47 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
48 These substitute products include NOTO, ISE
Trade Profile, GEMX Trade Profile data; open-close
data from Cboe C1, C2, BZX, and EDGX; and Open
Close Reports from MIAX Options, Pearl, and
Emerald.
49 See NasdaqTrader.com, ‘‘Options Market
Statistics,’’ available at https://www.nasdaq
trader.com/Trader.aspx?id=OptionsVolume
Summary.
50 See MIAX Emerald Options Exchange Fee
Schedule as of April 18, 2024,’’ available at https://
www.miaxglobal.com/sites/default/files/fee_
schedule-files/MIAX_Emerald_Fee_Schedule_
04182024.pdf.
51 See Cboe DataShop, ‘‘Cboe Open-Close Volume
Summary,’’ available at https://datashop.cboe.com/
cboe-options-open-close-volume-summary.
52 See MIAX Emerald Options Exchange Fee
Schedule as of April 18, 2024,’’ available at https://
www.miaxglobal.com/sites/default/files/fee_
schedule-files/MIAX_Emerald_Fee_Schedule_
04182024.pdf.
53 See Cboe DataShop, ‘‘Cboe Open-Close Volume
Summary,’’ available at https://datashop.cboe.com/
cboe-options-open-close-volume-summary.
E:\FR\FM\17SEN1.SGM
17SEN1
76166
Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Notices
ddrumheller on DSK120RN23PROD with NOTICES1
assessment, customers will purchase the
products of its competitors.
Nasdaq is not aware of another
exchange that provides a discount for
historical data other than its own
affiliates. Volume on MRX is
comparable to volume on BX and
GEMX. The proposed discounted prices
of $6,000 for 36 months of historical
End of Day data and $9,000 for 36
months of historical Intra-Day data for
MRX are identical to the proposed
discounts for the BX exchange,
submitted congruently with this filing.
The proposed discounted prices for
Intra-Day data for MRX and BX are also
identical to that of GEMX. Although
proposed fees for 36 months of End of
Day data for MRX and BX ($6,000) are
higher than those for GEMX ($4,800),
the overall pricing methodology of
offering three years of historical data for
the price of one year of ad hoc requests
for information is consistent across all
of these exchanges, and therefore
comparable.54
With respect to ad hoc requests for
information, MRX provides a discount
from current requests. Current End of
Day information is available for $750
per month, while ad hoc requests for
historical End of Day information is
available for $500 per month. Similarly,
Current Intra-Day information is
available for $1,500 per month, while ad
hoc requests for historical Intra-Day
information is available for $750 per
month. This is identical to the fee
structure proposed for the BX exchange,
and comparable to the fee structure for
the GEMX exchange (which offers
current End of Day data for $575 per
month and historical End of Day data
for $400 per month; current Intra-Day
data is offered for $1,500 per month,
and historical Intra-Day data is offered
for $750 per month).
If the Exchange is incorrect in its
assessments for any of these fees,
current and prospective customers will
elect not to purchase Trade Outline.
The Proposal Does Not Permit Unfair
Discrimination
Nothing in the proposal treats any
category of market participant any
differently from any other category of
market participant.
The proposed fees, including both
current and historical information,
apply equally to all current and
potential distributors. Trade Outline is
54 The fee for an ad hoc request for one month
of End of Day data on the GEMX exchange is $400,
and the discounted fee for 12 months of data is
$400 × 12, or $4,800. The fee for an ad hoc request
for one month of End of Day data on the BX and
MRX exchanges is $500, and the discounted fee for
12 months of data is $500 × 12, or $6,000.
VerDate Sep<11>2014
17:12 Sep 16, 2024
Jkt 262001
available to all market participants,
including members and non-members,
and all market participants receive the
same information.
It is not unfair discrimination to
provide a discount for 36 months of
historical data to Current Distributors,
but not former distributors or firms that
have never purchased the product. Any
firm would be able to become a Current
Distributor at any time by subscribing to
Trade Outline, and would be able to
cancel the subscription at any time after
receiving the 36 months of historical
data for the proposed discounted fee.
More specifically, a firm that is not a
Current Distributor may obtain access to
the 36 months of historical data at a
discount by becoming a Current
Distributor for a limited time and then
terminating the subscription.
It is not unfair discrimination to limit
the discount for 36 months of historical
data to Current Distributors. Historical
information is generally used by Current
Distributors to test their strategies and
trading models, and Current Distributors
are therefore in the best position to
benefit from the historical data. Outside
of the 36 month period, all firms will
have the opportunity to purchase
historical data on an ad hoc basis.
For all of these reasons, the proposal
does not permit unfair discrimination.
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.
Intermarket Competition
Nothing in the proposal burdens
inter-market competition (the
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
competition among self-regulatory
organizations).
As discussed above, Trade Outline is
subject to direct competition from other
options exchanges that offer substitutes.
Any of these exchanges can replicate
this proposal in full or in part, and
nothing in the proposal would interfere
with the ability of any exchange to do
so.
Intra-Market Competition
Nothing in the proposal burdens
intra-market competition (the
competition among consumers of
exchange data). Trade Outline is
available to any customer under the
same fee schedule as any other
customer, and any market participant
that wishes to purchase these products
can do so on a non-discriminatory basis.
Offering the 36 months of historical
data to Current Distributors, but not
former distributors or firms that have
never purchased the product, will not
burden competition because nonsubscribers are free to purchase a
current subscription. Moreover, a firm
that is not a Current Distributor may
become a Current Distributor and then
cancel the product after receiving the
historical discount. As such, firms that
are not Current Distributors will have an
opportunity to pay the same fees for the
most recent 36 months of historical data
as Current Distributors. Outside of the
36 month period, all firms will have the
opportunity to purchase historical data
on an ad hoc basis.
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.55 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.
55 15
E:\FR\FM\17SEN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
17SEN1
Federal Register / Vol. 89, No. 180 / Tuesday, September 17, 2024 / Notices
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:
• 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–
MRX–2024–35 on the subject line.
Paper Comments
ddrumheller on DSK120RN23PROD with NOTICES1
• 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–MRX–2024–35. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–MRX–2024–35 and should be
submitted on or before October 8, 2024.
17:12 Sep 16, 2024
[FR Doc. 2024–21034 Filed 9–16–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
VerDate Sep<11>2014
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.56
Vanessa A. Countryman,
Secretary.
Jkt 262001
[Release No. 34–100999; File No. SR–
MEMX–2024–36]
Self-Regulatory Organizations; MEMX
LLC; Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend the Exchange’s Fee
Schedule Concerning Transaction
Pricing
September 11, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that, on
September 6, 2024, MEMX LLC
(‘‘MEMX’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (the ‘‘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 is filing with the
Commission a proposed rule change to
amend the Exchange’s fee schedule
applicable to Members 3 (the ‘‘Fee
Schedule’’) pursuant to Exchange Rules
15.1(a) and (c). The Exchange proposes
to implement the changes to the Fee
Schedule pursuant to this proposal
immediately. The text of the proposed
rule change is provided in Exhibit 5.
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
56 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Exchange Rule 1.5(p).
1 15
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
76167
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 Fee Schedule to
(i) modify the required criteria under
Liquidity Provision Tier 1; and (ii)
reduce the fee and modify the required
criteria under Liquidity Removal Tier 1,
as further described below.4
The Exchange first notes that it
operates in a highly competitive market
in which market participants can
readily direct order flow to competing
venues if they deem fee levels at a
particular venue to be excessive or
incentives to be insufficient. More
specifically, the Exchange is only one of
16 registered equities exchanges, as well
as a number of alternative trading
systems and other off-exchange venues,
to which market participants may direct
their order flow. Based on publicly
available information, no single
registered equities exchange currently
has more than approximately 15.77% of
the total market share of executed
volume of equities trading.5 Thus, in
such a low-concentrated and highly
competitive market, no single equities
exchange possesses significant pricing
power in the execution of order flow,
and the Exchange currently represents
approximately 2.59% of the overall
market share.6 The Exchange in
particular operates a ‘‘Maker-Taker’’
model whereby it provides rebates to
Members that add liquidity to the
Exchange and charges fees to Members
that remove liquidity from the
Exchange. The Fee Schedule sets forth
the standard rebates and fees applied
per share for orders that add and remove
liquidity, respectively. Additionally, in
response to the competitive
environment, the Exchange also offers
tiered pricing, which provides Members
with opportunities to qualify for higher
rebates or lower fees where certain
volume criteria and thresholds are met.
Tiered pricing provides an incremental
incentive for Members to strive for
higher tier levels, which provides
4 The Exchange initially filed the proposed Fee
Schedule changes on August 30, 2024 (SR–MEMX–
2024–35). On September 6, 2024, the Exchange
withdrew that filing and submitted this proposal.
5 Market share percentage calculated as of
September 6, 2024. The Exchange receives and
processes data made available through consolidated
data feeds (i.e., CTS and UTDF).
6 Id.
E:\FR\FM\17SEN1.SGM
17SEN1
]]>Agencies
[Federal Register Volume 89, Number 180 (Tuesday, September 17, 2024)]
[Notices]
[Pages 76162-76167]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21034]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100995; File No. SR-MRX-2024-35]
Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Initiate
Distributor Fees for MRX Options Trade Outline
September 11, 2024.
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 September 3, 2024, Nasdaq MRX, LLC (``MRX'' 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 initiate Distributor fees for MRX Options
Trade Outline.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/mrx/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 initiate fees for the
distribution of MRX Trade Outline. Distributor fees will be $750 per
month
[[Page 76163]]
for the End of Day product, and $1,500 per month for the Intra-Day
product.
Historical data will be available through ad hoc requests for
information for $500 per month of End of Day information, and $750 per
month for historical information. Current Distributors \3\ will also be
able to purchase the most recent 36 months of historical data \4\ at
the discounted price of $6,000 for End of Day information, and $9,000
for Intra-Day information. Historical information will be available
starting in September 2017.
---------------------------------------------------------------------------
\3\ A ``Current Distributor'' is any firm that purchases either
the End of Day Product for the current month, or the Intra-Day
Product for the current month in the same month that the 36 months
of historical End of Day or Intra-Day data is ordered.
\4\ The most recent 36 months is measured based on the date of
purchase of the 36 months of data by a Current Distributor.
---------------------------------------------------------------------------
MRX Options Trade Outline
MRX Options Trade Outline will provide aggregate quantity and
volume information for trades on the Exchange for all series \5\ during
a trading session.\6\ Information is provided in the following
categories: (i) total exchange volume for Intra-Day information and
total exchange and industry volume for End of Day information for each
reported series; (ii) open interest for the series; (iii) aggregate
quantity of trades and aggregate trade volume effected to open a
position,\7\ characterized by origin type (Priority Customers,\8\
Broker-Dealers,\9\ Market Makers,\10\ Firm Proprietary,\11\ and
Professional Customers \12\); and (iv) aggregate quantity of trades and
aggregate trade volume effected to close a position,\13\ characterized
by origin type (Priority Customers, Broker-Dealers, Market Makers, Firm
Proprietary, and Professional Customers).\14\
---------------------------------------------------------------------------
\5\ Every options series trades as a distinct symbol; the terms
``series'' and ``symbol'' are therefore synonyms.
\6\ See Securities Exchange Act Release No. 100789 (August 21,
2024), 89 FR 68680 (August 27, 2024) (SR-MRX-2024-31).
\7\ This includes the aggregate number of ``opening purchase
transactions,'' defined as an Exchange Transaction that will create
or increase a long position in an options contract, see Options 1,
Section 1(a)(27), and the aggregate number of ``opening writing
transactions,'' defined as an Exchange Transaction that will create
or increase a short position in an options contract. See Options 1,
Section 1(a)(28).
\8\ The term ``Priority Customer'' means a person or entity that
(i) is not a broker or dealer in securities, and (ii) does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Options 1
Sec. 1(a)(36).
\9\ A ``Broker-Dealer'' order is an order submitted by a Member
for a broker-dealer account that is not its own proprietary account.
See Options 7 Sec. 1(c).
\10\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See Options 1
Sec. 1(a)(21). The term ``Competitive Market Maker'' means a Member
that is approved to exercise trading privileges associated with CMM
Rights. See Options 1 Sec. 1(a)(12). The term ``Primary Market
Maker'' means a Member that is approved to exercise trading
privileges associated with PMM Rights. See Options 1 Sec. 1(a)(35).
\11\ A ``Firm Proprietary'' order is an order submitted by a
Member for its own proprietary account. See Options 7 Sec. 1(c).
\12\ A ``Professional Customer'' is a person or entity that is
not a broker/dealer and is not a Priority Customer. See Options 7
Sec. 1(c).
\13\ This includes the aggregate number of ``closing purchase
transactions'' in the affected series, defined as an Exchange
Transaction that will reduce or eliminate a short position in an
options contract, see Options 1, Section 1(a)(9), and the aggregate
number of ``closing writing transactions,'' defined as an Exchange
Transaction that will reduce or eliminate a long position in an
options contract. See Options 1, Section 1(a)(10).
\14\ These are the same types of information available on PHOTO,
and the other trade outline products offered by Nasdaq exchanges.
---------------------------------------------------------------------------
Information will be provided on an End of Day, Intra-Day, and
historical basis.
End of Day Information
The MRX Trade Outline End of Day file will also provide opening
buy, closing buy, opening sell and closing sell information, including
option first trade price, option high trade price, option low trade
price, and option last trade price.
The End of Day file will be updated during an overnight process
with additional fields \15\ and will be available the following
morning, providing aggregate data for the entire trading session.
---------------------------------------------------------------------------
\15\ The additional fields are: First Trade Price, High Trade
Price, Low Trade Price, Last Trade Price, Underlying Close,
Moneyness, Total Exchange volume, Total Industry Volume for the
Series, and Open Interest.
---------------------------------------------------------------------------
Intra-Day Information
Intra-Day information will be released in scheduled ``snapshots''
available every 10 minutes for all options series over the course of
the trading day. These snapshots will be updated to reflect whatever
activity occurred, or to indicate that no activity occurred.\16\ This
is the same schedule currently offered on PHLX, ISE, GEMX, and Nasdaq
Options Market.\17\
---------------------------------------------------------------------------
\16\ Subscribers will receive the first snapshot at 9:42 a.m.
ET, representing data captured from 9:30 a.m. to 9:40 a.m., and the
second calculation at 9:52 a.m., representing data from both the
most recent snapshot and previous snapshots, and continuing over the
course of the trading day. The final Intra-Day snapshot will be
distributed at 4:15 p.m.
\17\ See Infra, notes 21 through 23.
---------------------------------------------------------------------------
Historical Information
Historical data will be available through ad hoc requests for
information in both End of Day and Intra-Day formats for all option
series traded for every calendar month after September 2017, based on
specific request.\18\ Historical data is useful in analyzing option
trade and volume data, evaluating historical trends in the trading
activity of a particular option series, and creating and testing
trading models and analytical strategies. In Nasdaq's experience,
historical information is often purchased concurrently with a new
subscription to a trade outline product.
---------------------------------------------------------------------------
\18\ Market participants generally use historical files for
model testing and research, and the period of time required by a
particular market participant will depend on its unique testing and
research needs as well as whether it is using End of Day or Intra-
Day information. Some customers, for example, may request years of
data, while others only months, or even a single month. The same
principle applies to End of Day vs. Intra-Day information.
---------------------------------------------------------------------------
Patterned after PHLX Options Trade Outline ``PHOTO,'' \19\ MRX
Options Trade Outline will replicate in substance \20\ PHOTO and the
other trade outline products currently offered by Nasdaq ISE, LLC
(``ISE''),\21\ Nasdaq GEMX, LLC (``GEMX''),\22\ and the options market
operated by the Nasdaq Stock Market LLC (``Nasdaq Options Market'' or
``NOM'').\23\ Similar products are also available from options markets
not affiliated with Nasdaq such as Cboe
[[Page 76164]]
Options Exchange (``Cboe''),\24\ NYSE American Options (``NYSE
American''),\25\ NYSE Arca Options (``NYSE Arca''),\26\ BOX Options
Market LLC (``BOX''),\27\ MIAX Pearl Options Exchange (``Pearl''),\28\
and others. MRX Options Trade Outline, like all of these other trade
outline products, provides data to help market participants understand
market sentiment on the Exchange and to support the creation of trading
models useful in both options and equities markets.
---------------------------------------------------------------------------
\19\ See PHLX Rules, Options 7, Section 10; Securities Exchange
Act Release No. 62887 (September 10, 2010), 75 FR 57092 (September
17, 2010) (SR-Phlx-2010-121) (introducing PHOTO on September 1,
2010).
\20\ The underlying information for MRX Options Trade Outline
will be the same as the other trade outline products offered by the
Nasdaq exchanges. Presentation will differ, however, in that data
will not be subdivided into categories. For example, the trade
outline products offered by PHLX, ISE, GEMX and NOM subdivide the
aggregate volume traded for each reported series into categories
according to the quantity of contracts (less than 100, 100-199, and
greater than 200). MRX Options Trade Outline will not separate this
information into quantitative categories, but rather will provide
the same aggregate volume information as PHOTO and the other Nasdaq
exchanges without separating the information into categories
according to the quantity of contracts.
\21\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B)
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
\22\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX
Open/Close Intraday Trade Profile).
\23\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options
Trade Outline (``NOTO'')).
\24\ See, e.g., Securities Exchange Act Release No. 94913 (May
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing
End of Day and Intra-Day Open-Close Data as a summary of trading
activity on the exchange at the option level by origin, side of the
market, price, and transaction type).
\25\ See, e.g., Securities Exchange Act Release No. 93803
(December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\26\ See, e.g., Securities Exchange Act Release No. 93132
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\27\ See, e.g., Securities Exchange Act Release No. 97174 (March
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing
the BOX exchange Open-Close Data report as providing volume by
origin, buying/selling, and opening/closing criteria).
\28\ See, e.g., Securities Exchange Act Release No. 91964 (May
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24)
(introducing the Open-Close Report).
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Nasdaq's experience is that investment banks, market makers, asset
managers and other buy-side investors purchase trade outline products.
In general, the relative value of these products depends on the volume
of transactions included; the greater the volume of transactions, the
greater the value of the data.
MRX Options Trade Outline will provide proprietary Exchange trading
data and will not include any intra-day trading data from any other
exchange.\29\ The information provided, both in End of Day and Intra-
Day formats, will not be a real-time data feed.
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\29\ The End of Day report includes a field that presents Total
Industry Volume for the Series.
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Proposed Fees
End of Day and Intra-Day Information
The Exchange proposes to offer the End of Day product for $750 per
month and the Intra-Day product at $1,500 per month.
Historical Information
The Exchange proposes to offer historical data for $500 per month
for End of Day data, and $750 per month for Intra-Day information based
on ad hoc requests for particular months of information.
The Exchange also proposes to offer a discounted fee of $9,000 in
total for the most recent 36 months \30\ of historical Intra-Day data
for Current Distributors,\31\ and a discounted fee of $6,000 in total
for the most recent 36 months of End of Day data for Current
Distributors.
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\30\ The most recent 36 months is measured based on the date of
purchase of the 36 months of data by a Current Distributor.
\31\ A ``Current Distributor'' is any firm that purchases either
the End of Day Product for the current month, or the Intra-Day
Product for the current month in the same month that the 36 months
of historical End of Day or Intra-Day data is ordered.
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This is a substantial discount from the proposed fees for ad hoc
data requests. With respect to End of Day data, ad hoc requests are
$500 per month. Thirty-six months would cost a total of $18,000. The
proposed discounted fee of $6,000 is two-thirds less than the standard
rate. With respect to Intra-Day information, ad hoc requests are $750
per month. Thirty-six months would cost a total of $27,000. The
proposed discounted fee of $9,000 for Intra-Day information is also
two-thirds less than the standard rate.
Eligibility for the discount will depend on the type of current
subscription. A current purchaser of End of Day data would be eligible
for the historical End of Day product at the reduced rate. A current
purchaser of the Intra-Day product would similarly be able to purchase
the historical Intra-Day product at the reduced rate. A purchaser of
both the current End of Day and Intra-Day products would be entitled to
purchase both types of history at the reduced rate. The fees for
historical data are linked to the current product because effective
historical testing requires a comparison of similar licenses. Effective
testing of the End of Day product, for example, requires End of Day
historical data, and the same would hold true for Intra-Day data.
The 36-month period will be based on the date of purchase of the 36
months of data by a Current Distributor. For example, a customer that
buys the End of Day product for the first time in September 2024 would
also be able to purchase historical End of Day data for the period
September 2021 through September 2024 (inclusive) at the discounted
rate. Similarly, a customer with an existing End of Day subscription in
September 2024 would be able to purchase the historical End of Day data
from September 2021 through September 2024 at the discounted rate. The
same reasoning would apply to Intra-Day customers.\32\
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\32\ A customer may use the proposed historical data discount
more than once. For example, a Current Distributor that purchases 36
months of historical data at a discount, but later terminates that
subscription, would be eligible to purchase another 36 months of
historical data (based on the date of purchase) upon renewing that
subscription. (Current Distributors that never terminate would have
no need for a second purchase, as they would already possess the
most recent months of historical data.).
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Many customers use historical data to test their strategies and
models, and our discussions with current and former customers and
experience indicate that 36 months of data is sufficient for most
customer needs, and is an effective baseline for review.
For customers that request historical information outside of the
three year period, end of day historical information can be purchased
through ad hoc requests for monthly information for $500 per request
per month, and Intra-Day information can be purchased at $750 per
request per month.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\33\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\34\ 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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\33\ 15 U.S.C. 78f(b).
\34\ 15 U.S.C. 78f(b)(4) and (5).
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Equitable Allocation of Reasonable Dues, Fees and Other Charges
The proposed changes are an equitable allocation of reasonable
dues, fees and other charges because: (i) the trade outline products
offered by multiple exchanges are substitutes, and customers are free
to choose which product they purchase; and (ii) the proposed fees are
comparable to the fees charged by other exchanges, and customers are
free to purchase other products if the Exchange has mistaken the value
of its product.
Substitution
Trade outline products have been available on multiple exchanges
for many years and are well known in the market and used by many market
participants. PHLX Options Trade Outline, which is a model for MRX
Options Trade Outline, has been available for well over a decade.\35\
[[Page 76165]]
Similar products available on other Nasdaq exchanges include ISE Trade
Profile,\36\ GEMX Trade Profile,\37\ and Nasdaq Options Trade
Outline.\38\ Trade outline products are also offered by competitor
exchanges such a Cboe,\39\ NYSE American,\40\ NYSE Arca,\41\ BOX,\42\
and MIAX PEARL.\43\ The trade outline products offered by the Nasdaq-
affiliated exchanges provide exactly the same information as MRX
Options Trade outline, and those offered by other exchanges provide
substantially the same information, including both Intra-Day and End of
Day data.
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\35\ See Securities Exchange Act Release No. 62887 (September
10, 2010), 75 FR 57092 (September 17, 2010) (SR-Phlx-2010-121)
(introducing PHOTO on September 1, 2010).
\36\ See Nasdaq ISE Rules, Options 7, Section 10(A) and (B)
(Nasdaq ISE Open/Close Trade Profile End of Day; Nasdaq ISE Open/
Close Trade Profile Intraday).
\37\ See Nasdaq GEMX Rules, Options 7, Sections 7(D) (Nasdaq
GEMX Open/Close End of Day Trade Profile) and 7(E) (Nasdaq GEMX
Open/Close Intraday Trade Profile).
\38\ See Nasdaq Rules, Options 7, Section 4 (Nasdaq Options
Trade Outline (``NOTO'')).
\39\ See, e.g., Securities Exchange Act Release No. 94913 (May
13, 2022), 87 FR 30534 (May 19, 2022) (SR-Cboe-2022-023) (describing
End-of-Day and Intraday Open-Close Data as a summary of trading
activity on the exchange at the option level by origin, side of the
market, price and transaction type).
\40\ See, e.g., Securities Exchange Act Release No. 93803
(December 16, 2021, 86 FR 72647 (December 22, 2021) (SR-NYSEAMER-
2021-46) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\41\ See, e.g., Securities Exchange Act Release No. 93132
(September 27, 2021), 86 FR 54499 (October 1, 2021) (SR-NYSEArca-
2021-82) (describing the NYSE Options Open-Close Volume Summary as a
volume summary of trading activity on the exchange at the option
level by origin, side of the market, contract volume and transaction
type).
\42\ See, e.g., Securities Exchange Act Release No. 97174 (March
21, 2023), 88 FR 18201 (March 27, 2023) (SR-BOX-2023-09) (describing
the BOX exchange Open-Close Data report as providing volume by
origin, buying/selling, and opening/closing criteria).
\43\ See, e.g., Securities Exchange Act Release No. 91964 (May
21, 2021), 86 FR 28667 (May 27, 2021) (SR-PEARL-2021-24)
(introducing the Open-Close Report).
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The information provided by one exchange in its trade outline
product is generally similar to that provided by other exchanges for
competing products because order flow can move from one exchange to
another, and market sentiment trends that appear on one exchange are
likely to be similar to the sentiment trends on other exchanges. The
key differentiator in the quality of the data depends on the volume of
transactions on a given exchange; the greater the volume of
transactions, the greater the value of the data. Customers can choose
not to purchase the trade outline product of one exchange and
substitute it for that of another exchange. This applies to both
current and historical data.
Customers can also choose not to purchase a trade outline product
at all. Trade outline products are designed to help investors
understand underlying market trends to improve the quality of
investment decisions, but are not necessary to execute a trade.
Customers may choose to forego the information from MRX Options Trade
Outline or any of its competitor products when making a trade.
Nasdaq and its affiliates have observed that customers purchase
sufficient data to provide a view of the market, but not more, as the
value of data from each additional exchange yields diminishing returns.
As a result, all exchanges are limited in what they will be able to
charge for Trade Outline.
As the Commission and courts \44\ have recognized, ``[i]f
competitive forces are operative, the self-interest of the exchanges
themselves will work powerfully to constrain unreasonable or unfair
behavior.'' \45\ 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.'' \46\ 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.'' \47\ MRX Options Trade Outline is in direct competition
with multiple exchanges that offer similar products in end of day and
intra-day formats.\48\
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\44\ 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,
74771 (December 9, 2008) (SR-NYSEArca-2006-21)).
\45\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
\46\ See id.
\47\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
\48\ These substitute products include NOTO, ISE Trade Profile,
GEMX Trade Profile data; open-close data from Cboe C1, C2, BZX, and
EDGX; and Open Close Reports from MIAX Options, Pearl, and Emerald.
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The discounted fees for historical data, like the purchase of the
end of day, Intra-Day and Derived Data licenses, is also subject to
competition. Any exchange that wishes to provide discounts for
historical data would be able to do so with an immediately effective
fee filing in response.
Comparability
The proposed fees are comparable to the fees charged by similarly
situated exchanges.
As explained above, the value of a trade outline product is
determined in part by the number of underlying transactions reflected
in the data. MRX has a market share comparable to Cboe C2 and MIAX
Emerald, in the range of approximately 2% to 4% at the time of this
filing.\49\ For intra-day products, MIAX Emerald charges $2,000 \50\
and Cboe C2 charges $1,000.\51\ The proposed fee of $1,500 is within
that range and comparable to those fees.
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\49\ See NasdaqTrader.com, ``Options Market Statistics,''
available at https://www.nasdaqtrader.com/Trader.aspx?id=OptionsVolumeSummary.
\50\ See MIAX Emerald Options Exchange Fee Schedule as of April
18, 2024,'' available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_04182024.pdf.
\51\ See Cboe DataShop, ``Cboe Open-Close Volume Summary,''
available at https://datashop.cboe.com/cboe-options-open-close-volume-summary.
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For End of Day products, MIAX Emerald charges $600,\52\ and Cboe C2
charges $500.\53\ Although the proposed fees of $750 are above that
range, MRX believes that the relative value of Intra-Day and End of Day
fees should be in the ratio of 2:1, and therefore MIAX Emerald and Cboe
C2 have somewhat undervalued their end of day products. If Nasdaq is
incorrect in that
[[Page 76166]]
assessment, customers will purchase the products of its competitors.
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\52\ See MIAX Emerald Options Exchange Fee Schedule as of April
18, 2024,'' available at https://www.miaxglobal.com/sites/default/files/fee_schedule-files/MIAX_Emerald_Fee_Schedule_04182024.pdf.
\53\ See Cboe DataShop, ``Cboe Open-Close Volume Summary,''
available at https://datashop.cboe.com/cboe-options-open-close-volume-summary.
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Nasdaq is not aware of another exchange that provides a discount
for historical data other than its own affiliates. Volume on MRX is
comparable to volume on BX and GEMX. The proposed discounted prices of
$6,000 for 36 months of historical End of Day data and $9,000 for 36
months of historical Intra-Day data for MRX are identical to the
proposed discounts for the BX exchange, submitted congruently with this
filing. The proposed discounted prices for Intra-Day data for MRX and
BX are also identical to that of GEMX. Although proposed fees for 36
months of End of Day data for MRX and BX ($6,000) are higher than those
for GEMX ($4,800), the overall pricing methodology of offering three
years of historical data for the price of one year of ad hoc requests
for information is consistent across all of these exchanges, and
therefore comparable.\54\
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\54\ The fee for an ad hoc request for one month of End of Day
data on the GEMX exchange is $400, and the discounted fee for 12
months of data is $400 x 12, or $4,800. The fee for an ad hoc
request for one month of End of Day data on the BX and MRX exchanges
is $500, and the discounted fee for 12 months of data is $500 x 12,
or $6,000.
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With respect to ad hoc requests for information, MRX provides a
discount from current requests. Current End of Day information is
available for $750 per month, while ad hoc requests for historical End
of Day information is available for $500 per month. Similarly, Current
Intra-Day information is available for $1,500 per month, while ad hoc
requests for historical Intra-Day information is available for $750 per
month. This is identical to the fee structure proposed for the BX
exchange, and comparable to the fee structure for the GEMX exchange
(which offers current End of Day data for $575 per month and historical
End of Day data for $400 per month; current Intra-Day data is offered
for $1,500 per month, and historical Intra-Day data is offered for $750
per month).
If the Exchange is incorrect in its assessments for any of these
fees, current and prospective customers will elect not to purchase
Trade Outline.
The Proposal Does Not Permit Unfair Discrimination
Nothing in the proposal treats any category of market participant
any differently from any other category of market participant.
The proposed fees, including both current and historical
information, apply equally to all current and potential distributors.
Trade Outline is available to all market participants, including
members and non-members, and all market participants receive the same
information.
It is not unfair discrimination to provide a discount for 36 months
of historical data to Current Distributors, but not former distributors
or firms that have never purchased the product. Any firm would be able
to become a Current Distributor at any time by subscribing to Trade
Outline, and would be able to cancel the subscription at any time after
receiving the 36 months of historical data for the proposed discounted
fee. More specifically, a firm that is not a Current Distributor may
obtain access to the 36 months of historical data at a discount by
becoming a Current Distributor for a limited time and then terminating
the subscription.
It is not unfair discrimination to limit the discount for 36 months
of historical data to Current Distributors. Historical information is
generally used by Current Distributors to test their strategies and
trading models, and Current Distributors are therefore in the best
position to benefit from the historical data. Outside of the 36 month
period, all firms will have the opportunity to purchase historical data
on an ad hoc basis.
For all of these reasons, the proposal does not permit unfair
discrimination.
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.
Intermarket Competition
Nothing in the proposal burdens inter-market competition (the
competition among self-regulatory organizations).
As discussed above, Trade Outline is subject to direct competition
from other options exchanges that offer substitutes. Any of these
exchanges can replicate this proposal in full or in part, and nothing
in the proposal would interfere with the ability of any exchange to do
so.
Intra-Market Competition
Nothing in the proposal burdens intra-market competition (the
competition among consumers of exchange data). Trade Outline is
available to any customer under the same fee schedule as any other
customer, and any market participant that wishes to purchase these
products can do so on a non-discriminatory basis.
Offering the 36 months of historical data to Current Distributors,
but not former distributors or firms that have never purchased the
product, will not burden competition because non-subscribers are free
to purchase a current subscription. Moreover, a firm that is not a
Current Distributor may become a Current Distributor and then cancel
the product after receiving the historical discount. As such, firms
that are not Current Distributors will have an opportunity to pay the
same fees for the most recent 36 months of historical data as Current
Distributors. Outside of the 36 month period, all firms will have the
opportunity to purchase historical data on an ad hoc basis.
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.\55\ 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.
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\55\ 15 U.S.C. 78s(b)(3)(A)(ii).
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[[Page 76167]]
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-MRX-2024-35 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-MRX-2024-35. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-MRX-2024-35 and should be
submitted on or before October 8, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\56\
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\56\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21034 Filed 9-16-24; 8:45 am]
BILLING CODE 8011-01-P
