
[Federal Register Volume 80, Number 123 (Friday, June 26, 2015)]
[Notices]
[Pages 36862-36865]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-15690]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75257; File No. SR-NASDAQ-2015-055]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Approving a Proposed Rule Change Regarding NASDAQ Last Sale Plus

June 22, 2015.

I. Introduction

    On May 11, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 market data 
product called NASDAQ Last Sale Plus (``NLS Plus''). The proposed rule 
change was published for comment in the Federal Register on May 21, 
2015.\3\ No comments on the proposed rule change have been received. 
The Commission is publishing this Order to approve 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. 74972 (May 15, 
2015), 80 FR 29370 (``Notice'').
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II. Description of the Proposal

    The Exchange proposes to amend Rule 7039 (NASDAQ Last Sale Data 
Feed) to include the NLS Plus data feed,

[[Page 36863]]

which is offered by NASDAQ OMX Information LLC.\4\ Currently, Rule 7039 
contains the NASDAQ Last Sale data feed (``NLS''). NLS consists of 
``NLS for NASDAQ,'' which is a real-time data channel that provides 
real-time last sale information including execution price, volume, and 
time for executions occurring within the NASDAQ system as well as those 
reported to the FINRA/NASDAQ Trade Reporting Facility (``FINRA/NASDAQ 
TRF''). NLS also consists of ``NLS for NYSE/NYSE MKT,'' which provides 
real-time last sale information over a second data channel including 
execution price, volume, and time for NYSE- and NYSE MKT-securities 
executions occurring within the NASDAQ system as well as those reported 
to the FINRA/NASDAQ TRF.\5\
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    \4\ NASDAQ OMX Information LLC is a subsidiary of The NASDAQ OMX 
Group, Inc. (``NASDAQ OMX'').
    \5\ These products are available via two separate data channels.
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Content of NLS Plus

    NLS Plus contains the three last sale products offered by each of 
NASDAQ OMX's three U.S. equity markets.\6\ Thus, NLS Plus includes all 
transactions from all of NASDAQ OMX's equity markets, as well as the 
FINRA/NASDAQ TRF data that is included in the current NLS product.
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    \6\ The NASDAQ OMX U.S. equity markets include The NASDAQ Stock 
Market (``NASDAQ''),\,\ NASDAQ OMX BX (``BX''), and NASDAQ OMX PSX 
(``PSX'') (together known as the ``NASDAQ OMX equity markets''). The 
Exchange represents that PSX and BX will shortly file companion 
proposals regarding NLS Plus. NLS includes last sale information 
from the FINRA/NASDAQ TRF, which is jointly operated by NASDAQ and 
FINRA. Accordingly, NASDAQ expects that FINRA will submit a proposed 
change to FINRA Rule 7640A with respect to NLS Plus.
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    NLS Plus also contains cumulative consolidated volume 
(``consolidated volume'') of real-time trading activity across all U.S. 
exchanges for Tape C securities \7\ and 15-minute delayed information 
for Tape A and Tape B securities.\8\ NLS Plus features total cross-
market volume information at the issue level, thereby providing 
redistribution of consolidated volume information from the securities 
information processors (``SIPs'') for Tape A, B, and C securities.
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    \7\ Tape C securities are disseminated pursuant to the NASDAQ 
Unlisted Trading Privileges (``UTP'') Plan.
    \8\ Tape A and Tape B securities are disseminated pursuant to 
the Security Industry Automation Corporation's (``SIAC'') 
Consolidated Tape Association Plan/Consolidated Quotation System, or 
CTA/CQS (``CTA'').
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    Similar to NLS, NLS Plus offers data for all U.S. equities via two 
separate data channels: The first data channel reflects NASDAQ, BX, and 
PSX trades with real-time consolidated volume for NASDAQ-listed 
securities; and the second data channel reflects NASDAQ, BX, and PSX 
trades with delayed consolidated volume for NYSE, NYSE MKT, NYSE Arca 
and BATS-listed securities.\9\
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    \9\ These NLS Plus channels are each made up of a series of 
sequenced messages so that each message is variable in length based 
on the message type and is typically delivered using a higher level 
protocol. NLS Plus Channel 1 contains NASDAQ trades with real time 
consolidated volume for NASDAQ listed (Tape C) securities. NLS Plus 
Channel 2 contains NASDAQ trades with delayed (15 minutes) 
consolidated volume for NYSE, NYSE Market, NYSE Arca, and BATS 
listed (Tape A and Tape B) securities.
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    In addition to last sale information, NLS Plus also disseminates 
the following data elements: Trade Price, Trade Size, Sale Condition 
Modifiers, Cumulative Consolidated Market Volume, End of Day Trade 
Summary, Adjusted Closing Price, IPO Information, and Bloomberg ID 
(together the ``data elements''). NLS Plus also features and 
disseminates the following messages: Market Wide Circuit Breaker, Reg 
SHO Short Sale Price Test Restricted Indicator, Trading Action, Symbol 
Directory, Adjusted Closing Price, and End of Day Trade Summary 
(together the ``messages'').\10\ NASDAQ states that these data elements 
and messages are the same as in and are sourced from NLS, BX Last Sale, 
and PSX Last Sale, except consolidated volume and Bloomberg ID, which 
are sourced from other publicly accessible or obtainable resources.
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    \10\ The Reg SHO Short Sale Price Test Restricted Indicator 
message is disseminated intra-day when a security has a price drop 
of 10% or more from the adjusted prior day's NASDAQ Official Closing 
Price. Trading Action indicates the current trading status of a 
security to the trading community, and indicates when a security is 
halted, paused, released for quotation, and released for trading. 
Symbol Directory is disseminated at the start of each trading day 
for all active NASDAQ and non-NASDAQ-listed security symbols. 
Adjusted Closing Price is disseminated at the start of each trading 
day for all active symbols in the NASDAQ system, and reflects the 
previous trading day's official closing price adjusted for any 
applicable corporate actions; if there were no corporate actions, 
however, the previous day's official closing price is used. End of 
Day Trade Summary is disseminated at the close of each trading day, 
as a summary for all active NASDAQ- and non-NASDAQ-listed 
securities. IPO Information reflects IPO general administrative 
messages from the UTP and CTA Level 1 feeds for Initial Public 
Offerings for all NASDAQ- and non-NASDAQ-listed securities.
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    Consolidated volume reflects the consolidated volume at the time 
that the NLS Plus trade message is generated, and includes the volume 
for the issue symbol as reported on the consolidated market data feed. 
The consolidated volume is based on the real-time trades reported via 
the UTP Trade Data Feed (``UTDF'') and delayed trades reported via CTA. 
NASDAQ OMX calculates the real-time trading volume for its trading 
venues, and then adds the real-time trading volume for the other (non-
NASDAQ OMX) trading venues as reported via the UTDF data feed. For non-
NASDAQ-listed issues, the consolidated volume is based on trades 
reported via SIAC's Consolidated Tape System (``CTS'') for the issue 
symbol. The Exchange calculates the real-time trading volume for its 
trading venues, and then adds the 15-minute delayed trading volume for 
the other (non-NASDAQ OMX) trading venues as reported via the CTS data 
feed.
    The second data point that is not sourced from NLS, BX Last Sale, 
and PSX Last Sale is Bloomberg ID. NASDAQ states that this composite ID 
is a component of Bloomberg's Open Symbology and acts as a global 
security identifier that Bloomberg assigns to securities, and is 
available free of charge.\11\
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    \11\ See http://bsym.bloomberg.com/sym/pages/bbgid-fact-sheet.pdf. http://bsym.bloomberg.com/sym/pages/NASDAQ_Adopts_BSYM.pdf.
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    NASDAQ states that NLS Plus may be received by itself or in 
combination with NASDAQ Basic.\12\ If a subscriber choses to receive 
NLS Plus in combination with NASDAQ Basic, the subscriber receives all 
of the elements contained in NLS Plus as well as the best bid and best 
offer information provided by NASDAQ Basic.
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    \12\ NASDAQ Basic provides the information contained in NLS, 
together with NASDAQ's best bid and best offer. See NASDAQ Rule 
7047.
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    The Exchange believes that market data distributors may use the NLS 
Plus data feed to feed stock tickers, portfolio trackers, trade alert 
programs, time and sale graphs, and other display systems. NASDAQ notes 
that NLS Plus provides investors with options for receiving market data 
that parallel products currently offered by BATS and BATS Y, EDGA, and 
EDGX and NYSE equity exchanges.\13\
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    \13\ See Securities Exchange Act Release No. 73918 (December 23, 
2014), 79 FR 78920 (December 31, 2014) (SR-BATS-2014-055; SR-BYX-
2014-030; SR-EDGA-2014-25; SR-EDGX-2014-25) (approving BATS One Data 
Feed). See also Securities Exchange Act Release No. 73553 (November 
6, 2014), 79 FR 67491 (November 13, 2014) (SR-NYSE-2014-40) 
(approving NYSE Best Quote & Trades Data Feed).
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Distribution of NLS Plus

    The Exchange states that NASDAQ OMX Information LLC distributes no 
data that is not equally available to all market data vendors. NASDAQ 
further states that NASDAQ OMX Information LLC has no competitive 
advantage over other market data vendors as it receives

[[Page 36864]]

data from the exchange that is equally available to other market data 
vendors, with the same information distributed to NASDAQ OMX 
Information LLC at the same time it is distributed to other vendors.
    The Exchange represents that the path for distribution by the 
Exchange of NLS Plus is not faster than the path for distribution that 
would be used by a market data vendor to distribute an independently 
created NLS Plus-like product. As such, NASDAQ states that the proposed 
NLS Plus data feed is a data product that a competing market data 
vendor could create and sell without being in a disadvantaged position 
relative to the Exchange. In recognition that the Exchange is the 
source of its own market data and with BX and PSX being equity markets 
owned by NASDAQ OMX, the Exchange represents that the source of the 
market data it would use to create proposed NLS Plus is available to 
other vendors. The Exchange further represents that NASDAQ, BX, and PSX 
will continue to make available these individual underlying data 
elements, and thus, that the source of the market data that the 
Exchange would use to create the proposed NLS Plus is the same as what 
is available to other market data vendors.
    The Exchange states that the system creating and supporting NLS 
Plus receives the individual data feeds from each of the NASDAQ OMX 
equity markets and, in turn, aggregates and summarizes that data to 
create NLS Plus and then distribute it to end users. The Exchange notes 
that this is the same process that a competing market data vendor would 
undergo should it want to create a market data product similar to NLS 
Plus to distribute to its end users. The Exchange believes that a 
competing market data vendor could receive the individual data feeds 
from each of the NASDAQ OMX equity markets at the same time the system 
creating and supporting NLS Plus would for it to create NLS Plus. 
Therefore, NASDAQ believes that a competing market data vendor could 
obtain the underlying data elements from the NASDAQ OMX equity markets 
on the same latency basis as the system that would be performing the 
aggregation and consolidation of proposed NLS Plus, and provide a 
similar product to its customers with the same latency they could 
achieve by purchasing NLS Plus from the Exchange. As such, the Exchange 
believes it would not have any unfair advantage over competing market 
data vendors with respect to NLS Plus. The Exchange notes that it would 
access the underlying NLS feed from the same point as would a market 
data vendor and the Exchange would not have a speed advantage. The 
Exchange also represents that NLS Plus would not have any speed 
advantage vis-[agrave]-vis competing market data vendors with respect 
to access to end user customers.

Fees for NLS Plus

    The Exchange represents that it will file a separate proposal 
regarding the NLS Plus fee structure. The Exchange also represents that 
these fees will be designed to ensure that vendors could compete with 
the Exchange by creating a similar product as NLS Plus. The Exchange 
expects that the pricing will reflect the incremental cost of the 
aggregation and consolidation function for NLS Plus, and would not be 
lower than the cost to a vendor creating a competing product, including 
the cost of receiving the underlying data feeds. The Exchange 
represents that the pricing the Exchange would charge clients for NLS 
Plus would enable a vendor to receive the underlying data feeds and 
offer a similar product on a competitive basis and with no greater cost 
than the Exchange. For these reasons, the Exchange believes that 
vendors could readily offer a product similar to NLS Plus on a 
competitive basis at a similar cost.

Miscellaneous Changes

    The Exchange also proposes two housekeeping changes. In the Rule 
7039 title, the Exchange adds the phrase ``and NASDAQ Last Sale Plus'' 
to make it clear that the rule contains both NLS and NLS Plus. In 
section (a), the Exchange adds the phrase ``NASDAQ Last Sale'' to make 
it clear that section (a), (b), and (c) refers only to NLS.

III. Discussion and Commission Findings

    After carefully considering the proposal the Commission finds that 
the proposed rule change is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to national 
securities exchanges.\14\ In particular, the Commission finds that the 
proposed rule change is consistent with the requirements of section 
11A(c)(1)(C) of the Act \15\ and with Rule 603(a)(2) of Regulation NMS 
thereunder,\16\ which requires that any national securities exchange, 
national securities association, broker, or dealer that distributes 
information with respect to quotations for or transactions in an NMS 
stock to a securities information processor, broker, dealer, or other 
persons shall do so on terms that are not unreasonably discriminatory. 
The Commission also finds that the proposed rule change is consistent 
with section 6(b)(5) of the Act, which requires that the rules of an 
exchange be designed to promote just and equitable principles of trade, 
remove impediments to and perfect the mechanisms of a free and open 
market and a national market system and, in general, to protect 
investors and the public interest, and section 6(b)(8) of the Act, 
which requires that the rules of an exchange not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.\17\
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    \14\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
    \15\ Section 11A(c)(1)(C) of the Act requires, among other 
things, that no self-regulatory organization, member thereof, 
securities information processor, broker or dealer make use of the 
mails or any means or instrumentality of interstate commerce to 
collect, process, distribute, publish or prepare for distribution or 
publication any information with respect to quotations for or 
transactions in any security other than an exempted security in 
contravention of such rules and regulations as the Commission shall 
prescribe as necessary or appropriate in the public interest, for 
the protection of investors, or otherwise in furtherance of the 
purposes of the Act to assure that all securities information 
processors may, for purposes of distribution and publication, obtain 
on fair and reasonable terms such information with respect to 
quotations for and transactions in such securities as is collected, 
processed, or prepared for distribution or publication by an 
exclusive processor of such information acting in such capacity. 15 
U.S.C. 78k-1(c)(1)(C).
    \16\ 17 CFR 242.603(a)(2).
    \17\ 15 U.S.C. 78f(b)(5) and (b)(8).
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    The Commission notes that, to create NLS Plus, the Exchange would 
use underlying data feeds that belong to the NASDAQ OMX Equity Markets: 
NLS, BX Last Sale and PSX Last Sale. Accordingly, the Commission's 
review of the Exchanges' proposals has focused, in particular, on 
whether the proposals would result in affiliated exchanges--which are 
separate self-regulatory organizations under the Act--making their data 
products or services available to one another at terms (e.g., content, 
pricing, or latency) that are more favorable than those available to 
unaffiliated market participants.
    The Exchange represents that NLS Plus would be created using 
underlying data feeds that are available for subscription by vendors. 
In recognition that the Exchange is the source of its own market data 
and that it is affiliated with the other NASDAQ OMX equity markets, the 
Exchange also represents that it will continue to make available all of 
the individual underlying feeds and that the source of the market data

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they would use to create the proposed NLS Plus feed is the same as the 
source available to competing vendors.
    With respect to latency, the Exchange represents that a competing 
vendor could obtain the underlying data feeds on the same latency basis 
as the system that would be performing the aggregation and 
consolidation of the proposed NLS Plus feed and could provide the same 
kind of product to its customers with the same latency they could 
achieve by purchasing the NLS Plus feed from NASDAQ.\18\ The Exchange 
also represents that it has designed the NLS Plus feed so that it will 
have no advantages over a competing vendor with respect to the speed of 
access to the underlying feeds.
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    \18\ The Exchange represents that, in order to create NLS Plus, 
the system creating and supporting NLS Plus receives the individual 
data feeds from each of the NASDAQ OMX equity markets and, in turn, 
aggregates and summarizes that data to create NLS Plus and then 
distribute it to end users. The Exchange further represents that 
this is the same process that a competing market data vendor would 
undergo should it want to create a market data product similar to 
NLS Plus to distribute to its end users. The Exchange also 
represents that a competing market data vendor could receive the 
individual data feeds from each of the NASDAQ OMX equity markets at 
the same time the system creating and supporting NLS Plus would for 
it to create NLS Plus. Therefore, a competing market data vendor 
could obtain the underlying data elements from the NASDAQ OMX equity 
markets on the same latency basis as the system that would be 
performing the aggregation and consolidation of proposed NLS Plus, 
and provide a similar product to its customers with the same latency 
they could achieve by purchasing NLS Plus from the Exchange. The 
Exchange further represents that it would access the underlying NLS 
feed from the same point as would a market data vendor.
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    With respect to pricing, although specific fees to be charged for 
NLS Plus are not part of the proposed rule change, the Exchange 
represents that the pricing will reflect the incremental cost of the 
aggregation and consolidation function for NLS Plus, and would not be 
lower than the cost to a vendor creating a competing product, including 
the cost of receiving the underlying data feeds. The Exchange further 
represents that the pricing it would charge clients for NLS Plus would 
enable a vendor to receive the underlying data feeds and offer a 
similar product on a competitive basis and with no greater cost than 
the Exchange.
    Based on the Exchange's representations with respect to the 
content, latency, and pricing of NLS Plus--which are central to the 
Commission's analysis of the proposal--the Commission finds that the 
proposal is consistent with the Act and the rules and regulations 
thereunder applicable to national securities exchanges. The Commission 
believes that these representations are designed to ensure that the 
NASDAQ OMX equity markets, which are separate self-regulatory 
organizations, do not, because of their relationship as affiliates, 
offer one another products or services on a more favorable basis than 
that available to other competing market participants.
    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with section 11A(c)(1)(C) of the Act and Rule 
603(a)(2) of Regulation NMS thereunder,\19\ and sections 6(b)(5) and 
(b)(8) of the Act.\20\
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    \19\ 15 U.S.C. 78k-1(c)(1)(C) and 17 CFR 242.603(a)(2).
    \20\ 15 U.S.C. 78f(b)(5) and (b)(8).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-NASDAQ-2015-055) be, and 
hereby is, approved.
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    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
Robert W. Errett,
Deputy Secretary.
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    \22\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-15690 Filed 6-25-15; 8:45 am]
 BILLING CODE 8011-01-P


