
[Federal Register Volume 79, Number 5 (Wednesday, January 8, 2014)]
[Notices]
[Pages 1399-1401]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00072]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71228; File No. SR-Phlx-2013-128]


Self-Regulatory Organizations; The NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Further 
Describe the Application of Fees Assessed for Connectivity to the 
Carteret Test Environment under Chapter VIII of the Exchange's Pricing 
Schedule

January 2, 2014.
    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 December 23, 2013, NASDAQ OMX PHLX LLC (``Phlx'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I and II 
below, which Items have been prepared by the Exchange. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes a rule change to further describe the 
application of fees assessed pursuant to subparagraph (d) of ``Testing 
Facilities'' under Chapter VIII of the Exchange's Pricing Schedule. The 
Exchange is also eliminating outdated text relating to the 
applicability of the fees assessed for use and connectivity to the 
Testing Facilities.
    The text of the proposed rule change is below. Proposed new 
language is italicized. Proposed deletions are in brackets.
* * * * *

NASDAQ OMX PHLX LLC \1\ PRICING SCHEDULE

    ALL BILLING DISPUTES MUST BE SUBMITTED TO THE EXCHANGE IN WRITING 
AND MUST BE ACCOMPANIED BY SUPPORTING DOCUMENTATION. ALL DISPUTES MUST 
BE SUBMITTED NO LATER THAN SIXTY (60) DAYS AFTER RECEIPT OF A BILLING 
INVOICE, EXCEPT FOR DISPUTES CONCERNING NASDAQ OMX PSX FEES, 
PROPRIETARY DATA FEED FEES AND CO-LOCATION SERVICES FEES. AS OF JANUARY 
3, 2011, THE EXCHANGE

[[Page 1400]]

WILL CALCULATE FEES ON A TRADE DATE BASIS.
------------------
\1\ PHLX[supreg] is a registered trademark of The NASDAQ OMX Group, 
Inc.
* * * * *
VIII. NASDAQ OMX PSX FEES
* * * * *

Testing Facilities[[dagger]]

    The Exchange operates two test environments. One is located in 
Ashburn, Virginia and the other in Carteret, New Jersey. Unless 
otherwise noted, reference to the ``Testing Facility'' applies to both 
environments.
    (a)-(c) No change.
    (d) Subscribers to the Testing Facility located in Carteret, New 
Jersey shall pay a fee of $1,000 per hand-off, per month for connection 
to the Testing Facility. The hand-off fee includes either a 1Gb or 10Gb 
switch port and a cross connect to the Testing Facility. Subscribers 
shall also pay a one-time installation fee of $1,000 per hand-off, 
which is waived for all installations ordered prior to March 31, 2014.
The connectivity provided under this rule also provides connectivity to 
the other test environments of NASDAQ OMX BX, Inc. and The NASDAQ Stock 
Market LLC.
[[dagger] Testing Facility fees will be waived for the period ending on 
the sixth full calendar month following the launch of NASDAQ OMX PSX.]
* * * * *

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 those 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 parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing to amend the Phlx Pricing Schedule to 
more fully describe the application of the newly-adopted fee \3\ 
assessed for direct connectivity to the Testing Facility \4\ test 
environment located in Carteret, New Jersey (``Carteret''). The Testing 
Facility provides subscribers with a virtual Exchange System test 
environment that closely approximates the production environment and on 
which they may test their automated systems that integrate with the 
Exchange. The Exchange recently developed a test environment located in 
Carteret that provides NASDAQ OMX PSX (``PSX'') \5\ equity trade 
testing functionality. The new test environment was developed together 
with equity test environments of the Phlx's sister exchanges, NASDAQ 
OMX BX, Inc. and The NASDAQ Stock Market LLC, also located at Carteret, 
New Jersey (collectively with PSX, the ``Equity Markets'').
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 71036 (December 11, 
2013), 78 FR 76350 (December 17, 2013) (SR-Phlx-2013-116).
    \4\ See http://www.nasdaqtrader.com/Trader.aspx?id=TestingFacility for a description of the Testing 
Facility.
    \5\ PSX is the Phlx equity market.
---------------------------------------------------------------------------

    The Exchange is proposing to add language to subparagraph (d) of 
``Testing Facilities'' under Chapter VIII of the Exchange's Pricing 
Schedule that was erroneously omitted when the fee was originally 
adopted.\6\ The new rule text explains that a firm that is a member of 
more than one of the Equity Markets may access the test environments of 
each of the Equity Markets of which it is a member through a single 
connectivity subscription under the rule. The Exchange notes that each 
of the Equity Markets has identical installation and hand-off fees for 
Carteret connectivity and these fees relate to the physical connection 
to the hardware infrastructure that houses all three test environments 
of the Equity Markets. Members of the Equity Markets must separately 
pay port fees to connect to the individual test environments of the 
Equity Markets of which it is a member within the hardware 
infrastructure housing them.\7\ Therefore, a firm that is a member of 
multiple Equity Markets is not charged the Carteret connectivity fees 
for a hand-off under each of the identical rules of such markets, but 
rather is assessed a single market's Carteret connectivity fees. 
Consequently, a member organization of PSX using the Carteret test 
environment may be assessed the connectivity fee under another Equity 
Markets' rules of which it is a member, yet pay the PSX port fee to 
connect to the PSX test environment. Similarly, a member organization 
may subscribe to Carteret connectivity under the Phlx Pricing Schedule 
and not have an obligation to pay the same fee under the rules of the 
other Equity Markets of which it is a member, but have an obligation to 
pay those markets' port fees. The Exchange notes that, in adopting the 
identical fee for Carteret connectivity, NASDAQ OMX BX, Inc. included 
rule text consistent with the rule text proposed herein.\8\ 
Accordingly, the Exchange is adding rule text to Carteret connectivity 
fee rule to reflect that the connectivity provided by the rule also 
provides access to the test environments of NASDAQ OMX BX, Inc. and The 
NASDAQ Stock Market LLC.
---------------------------------------------------------------------------

    \6\ Supra note 3.
    \7\ Phlx Pricing Schedule, Chapter VIII Testing Facilities 
subparagraph (a), NASDAQ Rule 7030(d)(1)(B), and BX Rule 7030(d)(1).
    \8\ See Securities Exchange Act Release No. 71035 (December 11, 
2013), 78 FR 76344 (December 17, 2013) (SR-BX-2013-058).
---------------------------------------------------------------------------

    The Exchange is also eliminating text from the Testing Facilities 
rule that relates to a general waiver of fees under the rule, which was 
effective with the launch of PSX and ended six months thereafter. PSX 
launched in October 2010,\9\ and consequently the fee waiver period has 
expired. Accordingly, the Exchange is removing the text relating to 
this fee waiver period.
---------------------------------------------------------------------------

    \9\ See http://www.nasdaqtrader.com/Tradernews.aspx?id=eta2010-56.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act \10\ in general, and with Section 6(b)(5) of the 
Act,\11\ in particular. The Exchange believes the proposal furthers the 
objectives of Section 6(b)(5) of the Act \12\ in that it is 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 is not designed to permit unfair discrimination between 
customer, issuers, brokers and dealers. The Exchange is proposing to 
add clarifying language to the rule, which was erroneously omitted when 
the rule was adopted and further describes the application of the rule. 
Moreover, the proposed new rule text is consistent with the identical 
rule of NASDAQ OMX BX, Inc. and how fees are assessed under that rule. 
Last, the Exchange is proposing to eliminate outdated rule text from 
the rule, which serves no purpose. Accordingly, the Exchange believes 
that it is consistent with the protection of investors and the public

[[Page 1401]]

interest to avoid potential market participant confusion that may be 
caused by the omission of the proposed rule text and the inclusion of 
outdated rule text.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ Id.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
proposed rule change clarifies how fees will be assessed to a firm that 
is a member of more than one of the Equity Markets and makes clear that 
a member organization may gain access to the test environments of the 
other Equity Markets through a subscription under the rule. Members of 
multiple Equity Markets are assessed the same fee for Carteret 
connectivity and must pay the port fees of each of the Equity Markets 
to gain access to such markets' test environments. In addition, the 
proposed change eliminates rule text that relates to a fee waiver that 
has since expired. As a consequence, the Exchange does not believe that 
the proposed rule change is impactful to competition in any respect.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) \14\ thereunder. 
Because the foregoing proposed rule change does not: (i) Significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; and (iii) become operative for 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act \15\ and subparagraph (f)(6) of Rule 
19b-4 thereunder.\16\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires the Exchange to give the Commission written notice of the 
Exchange's intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.
    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
---------------------------------------------------------------------------

    \17\ Id.
    \18\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative 
delay. The Exchange notes that such waiver will allow the Exchange to 
immediately add language to its rule text that was incorrectly omitted 
from a previous rule change, thereby clarifying its rules and avoiding 
potential market participant confusion.\19\ The Commission believes 
that waiving the 30-day operative delay is consistent with the 
protection of investors and the public interest as the proposal is 
designed to avoid potential investor confusion regarding the Exchange's 
rules and provide clarification to the public. For these reasons, the 
Commission hereby waives the 30-day operative delay and designates the 
proposal operative upon filing.\20\
---------------------------------------------------------------------------

    \19\ See SR-Phlx-2013-128, Item 7.
    \20\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2013-128 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2013-128. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal offices of the Exchange. 
All comments received will be posted without change; the Commission 
does not edit personal identifying information from submissions. You 
should submit only information that you wish to make available 
publicly. All submissions should refer to File Number SR-Phlx-2013-128, 
and should be submitted on or before January 29, 2014.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00072 Filed 1-7-14; 8:45 am]
BILLING CODE 8011-01-P


