
[Federal Register Volume 81, Number 117 (Friday, June 17, 2016)]
[Notices]
[Pages 39724-39726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14312]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78050; File No. SR-NASDAQ-2016-081]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Eliminate the Limited WebLink ACT or Nasdaq Workstation Post Trade Fee 
Tier Under Rule 7015(e)

June 13, 2016.
    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 June 3, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 7015(e) to eliminate the 
limited WebLink ACT or Nasdaq Workstation Post Trade (``Post Trade'') 
fee tier. While these amendments are effective upon filing, the 
Exchange has designated the proposed amendments to be operative on June 
1, 2016.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, 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

[[Page 39725]]

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 amend the Exchange's 
access services fees at Rule 7015(e) to eliminate the limited Post 
Trade fee tier. WebLink ACT \3\ and Nasdaq Workstation \4\ provide 
connectivity to the FINRA/NASDAQ TRF (``TRF''). Under Rule 7015(e), the 
Exchange provides members with the Post Trade service, which is a 
front-end interface with the TRF for trade reporting and historical 
trade reporting research.
---------------------------------------------------------------------------

    \3\ WebLink ACT is a browser-based application that 
electronically facilitates trade reporting and clearing functions 
for trades reported to the FINRA/Nasdaq Trade Reporting Facility.
    \4\ The Nasdaq Workstation provides, among other things, a web-
based interface with Nasdaq's trade reporting system, ACT.
---------------------------------------------------------------------------

    Currently, the Exchange provides two subscription tiers: (1) A full 
functionality subscription for a monthly fee of $525; and (2) a 
subscription limited to an average of 20 transactions \5\ per day each 
month for a monthly fee of $275. In light of decreased subscribership 
and increased fixed costs associated with offering Post Trade, the 
Exchange is proposing to eliminate the limited subscription fee tier. 
The Exchange will continue to offer the full functionality subscription 
fee tier.\6\
---------------------------------------------------------------------------

    \5\ For purposes of the service, a transaction is defined as an 
original trade entry, either on trade date or as-of transactions per 
month.
    \6\ Current subscribers to the limited subscription will be 
automatically subscribed to the full subscription effective June 1, 
2016, unless their subscription is cancelled prior to that date.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\7\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\8\ 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 
or system which the Exchange operates or controls, and is not designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that applying the full Post Trade fee tier to 
all subscribers, including current limited tier subscribers, is 
reasonable because, as described below, the per-subscriber costs 
associated with providing the limited subscription tier have increased 
significantly. Nasdaq incurs the same fixed costs in offering Post 
Trade, regardless of the number of transactions reported. These fixed 
costs have increased while the overall number of subscribers to Post 
Trade has declined due to consolidation among members and stagnant 
growth in the industry overall.
    Furthermore, the Exchange incurs additional expense in monitoring 
the number of individual subscriber transaction reports and calculating 
a daily average per month for subscribers to the limited Post Trade 
offering to ensure that their usage is consistent with the 20 
transaction per day limitation. Coupled with decreased subscribership 
to the limited tier in comparison to the full functionality tier,\9\ 
the relative cost of offering the limited Post Trade subscription has 
increased significantly in relation to the full functionality 
subscription tier.
---------------------------------------------------------------------------

    \9\ The Exchange notes that less than ten percent of subscribers 
to Post Trade choose the limited fee tier.
---------------------------------------------------------------------------

    Instead of increasing all Post Trade fees, the Exchange has 
determined to offer only the unlimited subscription, but with no 
increase to that fee. Therefore, current subscribers to the limited 
Post Trade fee tier will have to either subscribe to the full 
functionality tier at the higher fee or choose an alternative means to 
report their transactions to the TRF, of which there are several. For 
example, a subscriber may develop its own in-house system to replicate 
the Post Trade functionality, or alternatively use a third party order 
management system to provide similar functionality.
    The Exchange believes that applying the full Post Trade fee tier to 
all subscribers, including current limited tier subscribers, is an 
equitable allocation and is not unfairly discriminatory because current 
subscribers to the limited offering will have reasonable alternatives, 
which include subscribing to the full functionality Post Trade offering 
at a higher fee but with an unlimited number of transaction reports 
during a month, developing their own internal system, or using a third 
party order management system.
    As noted above, the Exchange has observed a reduction in the number 
of subscribers to Post Trade, which has led to a smaller pool of 
subscribers among which it can spread the fixed costs associated with 
offering the service. With respect to the limited subscription tier, 
the costs have increased significantly due to the small number of 
subscribers in contrast to the full functionality subscription tier.
    Thus, the Exchange must either increase the limited functionality 
fee significantly to a point that it is near the fee of the full 
functionality offering, or eliminate the limited service altogether. As 
explained, offering the limited Post Trade offering is costlier to the 
Exchange because it must track the average number of transactions used 
by a subscriber during the month to ensure that it is within the limits 
required by the rule. Consequently, the Exchange is proposing to 
eliminate the option that is costlier to the Exchange, while keeping 
the fee of the remaining full functionality Post Trade subscription 
tier the same.
    The Exchange also notes that, although current subscribers to a 
limited Post Trade subscription will pay more under the full 
functionality subscription, they will receive an unlimited number of 
transaction reports per month in return. Thus, all subscribers to the 
service will receive the same functionality for the same price, and the 
Exchange will have the same cost per subscriber in offering the 
service.
    Last, the Exchange notes that the service is voluntary and members 
will continue to have the option to subscribe to the full functionality 
fee tier or choose an alternative. For these reasons, the Exchange 
believes that the proposed elimination of the limited offering fee is 
an equitable allocation and is not unfairly discriminatory.

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.
    In such an environment, the Exchange must carefully assess the 
potential impact that increasing a fee for a service may have on the 
overall number of subscribers, balanced against the need to cover the 
costs associated with

[[Page 39726]]

offering the service and also deriving a profit therefrom. As noted 
above, this service is completely voluntary and market participants 
have connectivity options for reporting to the TRF other than the 
Exchange. Thus, market participants are able to readily choose a third 
party offering if the Exchange's does not satisfy their needs or 
perform the functionality in-house, rendering the degree to which fee 
changes to this service may impose any burden on competition to be 
extremely limited.

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.\10\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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.

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-NASDAQ-2016-081 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-NASDAQ-2016-081. 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 office 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-NASDAQ-2016-081, and should 
be submitted on or before July 8, 2016.
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14312 Filed 6-16-16; 8:45 am]
 BILLING CODE 8011-01-P


