
[Federal Register: March 23, 2009 (Volume 74, Number 54)]
[Notices]               
[Page 12169-12170]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23mr09-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59580; File No. SR-NASDAQ-2007-006]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Approving Proposed Rule Change as Modified by Amendment No. 1 Thereto 
To Establish the Nasdaq Daily Share Volume Service and To Establish 
Fees for the Service

March 13, 2009.
    On February 7, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission''), pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') 
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to establish 
the Nasdaq Daily Share Volume Service (``Service'') and to establish 
fees for the Service. The Service will provide the volume of shares 
traded each day by issue for participating market participants on a T+1 
basis. The volume data will consist of trades from the Nasdaq Execution 
System.\3\ Subscribers will have File Transfer Protocol (``FTP'') 
access to the full underlying data set to create custom reports. 
Subscribers will also be able to redistribute the data, although the 
subscriber will be required to enter into a distributor agreement.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Nasdaq also proposed to include internalized prints from the 
FINRA/Nasdaq Trade Reporting Facility (``TRF'') in the Service. 
However, as part of Amendment No. 1, Nasdaq has represented that it 
will not include any TRF data in the Service until FINRA has 
submitted a separate filing to include TRF data in the Service, and 
the Commission has acted favorably upon that filing. See note 5 
infra.
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    Nasdaq proposes to charge $2,500 per month for the Service. 
Participation by eligible market participants will be voluntary, and 
eligible market participants who choose to participate will be able to 
decide whether to advertise their trade volume by market participant ID 
code and issue.
    The proposed rule change was published in the Federal Register on 
March 16, 2007.\4\ The Commission received no comments on the proposal. 
On March 6, 2009, Nasdaq filed Amendment No. 1 to the proposed rule 
change.\5\
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    \4\ See Securities Exchange Act Release No. 55444 (March 12, 
2007), 72 FR 12648 (``Notice'').
    \5\ In Amendment No. 1, Nasdaq clarified certain aspects of the 
Service. For example, Nasdaq noted that it will not include any data 
in the Service that is received from the FINRA/Nasdaq TRF until 
FINRA has submitted a separate filing to include TRF data in the 
Service, and the Commission has acted favorably upon that filing. 
Nasdaq also noted that it is eliminating the individual access fee 
for web subscribers from the Service, and deleted the corresponding 
portion of the proposed rule text. Because the Amendment is 
technical in nature, it is not subject to notice and comment.
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    The Commission has reviewed carefully the proposed rule change and 
finds that the proposed rule change is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to a 
national securities exchange \6\ and, in particular, Section 6(b)(4) of 
the Act,\7\ which requires, among other things, that Nasdaq's rules 
provide for the equitable allocation of reasonable dues, fees and other 
charges among members and issuers and other persons using any facility 
or system which Nasdaq operates or controls. The Commission also finds 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act,\8\ which requires, among other things, that Nasdaq's rules are not 
designed to unfairly discriminate between customers, issuers, brokers 
or dealers.
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission finds that the proposed rule change is consistent 
with these statutory standards. Use of the Service is optional, and the 
fee associated with the Service will be imposed on all subscribers 
equally. The fee for the Service is intended to cover the costs of 
establishing and maintaining the Service.\9\
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    \9\ See Notice at 12649.
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    In addition, the proposal meets the criteria, formulated by the 
Commission \10\ in connection with the petition filed by 
NetCoalition,\11\ for approval of proposed rule changes concerning the 
distribution of non-core market data.\12\ In its order issued in 
connection with the NetCoalition petition, the Commission stated that 
``reliance on competitive forces is the most appropriate and effective 
means to assess whether the terms for the distribution of non-core data 
are equitable, fair and reasonable, and not unreasonably 
discriminatory.'' \13\ As such, 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.'' \14\ If an exchange ``was 
subject to significant competitive forces in setting the terms of a 
proposal,'' the proposal will be approved unless the Commission 
determines that ``there is a substantial countervailing basis to find 
that the terms nevertheless fail to meet an applicable requirement of 
the Exchange Act or the rules thereunder.'' \15\
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    \10\ See Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21).
    \11\ See Securities Exchange Act Release No. 55011 (December 27, 
2006) (order granting petition for review of SR-NYSEArca-2006-21).
    \12\ The Commission's order distinguishes between core market 
data, which is defined as ``the best-priced quotations and last sale 
information of all markets in U.S.-listed equities that Commission 
rules require to be consolidated and distributed to the public by a 
single central processor,'' and non-core market data. See 73 FR at 
74771. Because the Service, which provides daily traded share volume 
for trades executed by, or reported to, Nasdaq systems, does not 
involve core market data, this proposed rule change is properly 
categorized as a non-core market data proposal.
    \13\ Id. at 74781.
    \14\ Id. at 74781-82.
    \15\ Id. at 74781. In approving NYSEArca-2006-21, the Commission 
found that the proposed rule change was consistent with Section 
6(b)(4) of the Act, 15 U.S.C. 78f(b)(4). See 73 FR at 74779. The 
Commission also found that the proposal was consistent with Section 
6(b)(5) of the Act, 15 U.S.C. 78f(b)(5), Section 6(b)(8) of the Act, 
15 U.S.C. 78f(b)(8), and Rule 603(a) of Regulation NMS, 17 CFR 
242.603(a). See 73 FR at 74779. The Commission noted that the 
presence of competitive forces guided its analysis under both 
Section 6 of the Act and Rule 603 of Regulation NMS. Id.
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    In its order approving NYSEArca-2006-21, the Commission also stated 
that the terms of a proposed rule change to distribute market data for 
which the exchange is the exclusive processor must provide for an 
equitable allocation of fees under Section 6(b)(4) of the Act,\16\ not 
be designed to permit unfair discrimination under Section 6(b)(5) of 
the Act,\17\ be fair and reasonable under Rule 603(a)(1),\18\ and not 
be unreasonably discriminatory under Rule 603(a)(2).\19\ If the 
proposal involves non-core market data, an analysis of competitive 
forces may be used, and that analysis will apply to findings

[[Page 12170]]

under Section 6 of the Act, and to findings under Rule 603.\20\
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    \16\ 15 U.S.C. 78f(b)(4).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ 17 CFR 242.603(a)(1).
    \19\ 17 CFR 242.603(a)(2). See 73 FR at 74782.
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    As noted above, use of the Service is voluntary, and the fee for 
the Service will be imposed equally on all purchasers. In addition, 
vendors and other exchanges currently make daily broker volume reports 
available. For example, the New York Stock Exchange LLC (``NYSE'') 
provides a broker volume report in a database format on a T+1 basis, 
which compiles the trading volume of member firms based on trades 
reported to NYSE.\21\ The cost of receiving the Service is comparable 
to the cost for receiving the NYSE broker volume report.\22\
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    \20\ See 73 FR at 74779.
    \21\ See http://www.nyxdata.com/page/584 (listing of NYSE data 
products, including NYSE Broker Volume Database).
    \22\ Id.
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    In formulating the terms of the Service, Nasdaq was thus subject to 
significant competitive forces--specifically, the availability to 
market participants of alternatives to purchasing the Service. Because 
the proposed Service here involves the distribution of non-core market 
data, and significant competitive forces are present, the Service is 
thus consistent with both Section 6(b)(4) \23\ and Section 6(b)(5) of 
the Act,\24\ and with Rule 603(a).\25\ There is not a substantial 
countervailing basis that would render the proposal inconsistent with 
the Act or the rules thereunder.
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    \23\ 15 U.S.C. 78f(b)(4).
    \24\ 15 U.S.C. 78f(b)(5).
    \25\ 17 CFR 242.603(a).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\26\ that the proposed rule change (SR-NASDAQ-2007-006), as 
modified by Amendment No. 1 be, and it hereby is, approved.
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    \26\ 15 U.S.C. 78s(b)(2).
    \27\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-6147 Filed 3-20-09; 8:45 am]
