
[Federal Register: August 6, 2010 (Volume 75, Number 151)]
[Notices]               
[Page 47651-47652]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au10-140]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62605; File No. SR-NASDAQ-2010-068]

 
 Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Order Approving a Proposed Rule Change to Establish a Revenue Sharing 
Program With Correlix, Inc.

July 30, 2010.
    On June 8, 2010, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') 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 a revenue sharing program with 
Correlix, Inc. (``Correlix''). The proposed rule change was published 
for comment in the Federal Register on

[[Page 47652]]

June 25, 2010.\3\ The Commission received no comment letters on the 
proposal. This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 62326 (June 18, 
2010), 75 FR 36460 (``Notice'').
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    In its proposal, NASDAQ described real-time analytical tools 
offered by Correlix to measure the latency of orders to and from the 
NASDAQ Market Center, and also described the terms of the pricing and 
the revenue sharing agreement between Correlix and the Exchange. In 
addition, NASDAQ represented that under the agreement, NASDAQ will 
receive 30% of the total monthly subscription fees received by Correlix 
from parties who have contracted directly with Correlix to use their 
RaceTeam latency measurement service for the NASDAQ Market Center. 
According to the Exchange, NASDAQ will not bill or contract with any 
Correlix RaceTeam customer directly.
    Pricing for the Correlix RaceTeam product for the NASDAQ market 
varies depending on the number of unique MPIDs and ports selected by 
the customer for monitoring by Correlix. For NASDAQ (including the 
NASDAQ Options Market), the fee will be an initial $3,000 monthly base 
fee for the first unique MPID monitored. For each additional unique 
MPID sought to be monitored, an additional monthly charge of $1,000 
will be assessed. The monthly price for each unique MPID includes the 
monitoring of up to 25 NASDAQ port connections associated with that 
particular MPID. Customers that wish to exceed 25 ports per MPID for 
monitoring can purchase additional 25 port blocks for an additional fee 
of $1,000 per month per MPID.
    According to the Exchange, Correlix will see an individualized 
unique NASDAQ-generated identifier that will allow Correlix RaceTeam to 
determine round-trip order time,\4\ from the time the order reaches the 
NASDAQ extranet, through the NASDAQ matching engine, and back out of 
the NASDAQ extranet. In its proposal, the Exchange represented that the 
RaceTeam product offering does not measure latency outside of the 
NASDAQ extranet. Further, NASDAQ stated that the unique identifier 
serves as a technological information barrier so that the RaceTeam data 
collector will only be able to view data for Correlix RaceTeam 
subscriber firms related to latency. Accordingly, Correlix will not see 
subscriber's individual order detail such as security, price or size; 
individual RaceTeam subscribers' logins will restrict access to only 
their own latency data; and Correlix will not see specific information 
regarding the trading activity of non-subscribers.
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    \4\ According to NASDAQ, the product measures latency of orders 
regardless of whether the orders are rejected, executed, or 
partially executed.
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    After careful review, the Commission 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.\5\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(4) of the Act,\6\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and issuers and other persons using its facilities, and with Section 
6(b)(5) of the Act,\7\ which requires, among other things, that that 
the rules of a national securities exchange be designed to promote just 
and equitable principles of trade, to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and, in general, to protect investors and the public interest, and not 
be designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \5\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(5).
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    Pursuant to the arrangement, NASDAQ makes the RaceTeam product 
uniformly available to all customers who voluntarily request it and pay 
the fees as detailed in the proposal, pursuant to a standard non-
discriminatory pricing schedule. In addition, the Commission believes 
that the proposal will further the protection of investors and the 
public interest because: (1) Correlix will only be able to view data 
related to latency for Correlix RaceTeam subscriber firms; (2) Correlix 
will not see a subscriber's individual order detail such as security, 
price or size; (3) individual RaceTeam subscribers' logins will 
restrict access to only their own latency data; and (4) Correlix will 
not see specific information regarding the trading activity of non-
subscribers.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (SR-NASDAQ-2010-068) be, and 
hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19330 Filed 8-5-10; 8:45 am]
BILLING CODE 8010-01-P

