[Federal Register Volume 86, Number 94 (Tuesday, May 18, 2021)]
[Notices]
[Pages 26985-26990]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10388]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91874; File No. SR-NASDAQ-2021-036]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Allow Broker-Dealers That Purchase the Nasdaq Basic Enterprise License 
at Equity 7, Section 147(b)(5) to Distribute Nasdaq Last Sale (``NLS'') 
to the General Investing Public

May 12, 2021.
    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 April 30, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to allow broker-dealers that purchase the 
Nasdaq Basic enterprise license at Equity 7, Section 147(b)(5) to 
distribute Nasdaq Last Sale (``NLS'') to the general investing public 
under the same terms and conditions currently permitted under the NLS 
enterprise license at Equity 7, Section 139(b)(4). The current Nasdaq 
Basic enterprise license at Section 147(b)(5) allows distribution of 
NLS to natural persons in a brokerage relationship with the broker-
dealer, while the current NLS enterprise license at Section 139(b)(4) 
allows distribution to the general investing public for Display Usage, 
and requires the Distributor to have a reasonable basis to conclude 
that all Users of such information are either Non-Professionals or 
Professionals whom the Distributor has no reason to believe are using 
NLS in their professional capacity. The proposal is to allow broker-
dealers that purchase the Nasdaq Basic enterprise license at Section 
147(b)(5) to distribute NLS to the general investing public for Display 
Usage under the same conditions as set forth at Section 139(b)(4).
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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 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 Exchange proposes to allow broker-dealers that purchase the 
Nasdaq Basic enterprise license at Equity 7, Section 147(b)(5) to 
distribute NLS to the general investing public under the same terms and 
conditions currently permitted under the NLS enterprise license at 
Equity 7, Section 139(b)(4). The current Nasdaq Basic enterprise 
license at Section 147(b)(5) limits distribution of NLS to natural 
persons in a brokerage relationship with the broker-dealer, while the 
current NLS enterprise license at Section 139(b)(4) allows distribution 
to the general

[[Page 26986]]

investing public for Display Usage,\3\ and requires the Distributor \4\ 
to have a reasonable basis to conclude that all Users of such 
information are either Non-Professionals \5\ or Professionals \6\ whom 
the Distributor has no reason to believe are using NLS in their 
professional capacity. The proposal is to allow broker-dealers that 
purchase the Nasdaq Basic enterprise license at Section 147(b)(5) to 
distribute NLS to the general investing public for Display Usage under 
the same conditions set forth at Section 139(b)(4).\7\
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    \3\ ``Display Usage'' means ``any method of accessing Exchange 
Information that involves the display of such data on a screen or 
other mechanism designed for access or use by a natural person or 
persons.'' Equity 7, Section 139(f)(2).
    \4\ A ``Distributor'' is ``an entity, as identified in the 
Nasdaq Global Data Agreement (or any successor agreement), that 
executes such an Agreement and has access to Exchange Information, 
together with its affiliates having such access.'' Equity 7, Section 
139(f)(3).
    \5\ A ``Non-Professional Subscriber'' is ``a natural person who 
is not: (A) Registered or qualified in any capacity with the 
Securities and Exchange Commission, the Commodity Futures Trading 
Commission, any state securities agency, any securities exchange or 
association, or any commodities or futures contract market or 
association; (B) engaged as an ``investment adviser'' as that term 
is defined in Section 202(a)(11) of the Investment Advisers Act of 
1940 (whether or not registered or qualified under that Act); or (C) 
employed by a bank or other organization exempt from registration 
under federal or state securities laws to perform functions that 
would require registration or qualification if such functions were 
performed for an organization not so exempt.'' Equity 7, Section 
139(f)(6).
    \6\ A ``Professional Subscriber'' is ``any natural person, 
proprietorship, corporation, partnership, or other entity whatever 
other than a Non-Professional.'' Equity 7, Section 139(f)(7).
    \7\ The Exchange also proposes to introduce three conforming 
changes. First, Nasdaq proposes language to clarify that the 
approval requirements for electronic systems discussed in Section 
147 apply to the distribution of Nasdaq Basic, not to the 
distribution of NLS. Distribution of NLS will be approved according 
to the standards set forth in Section 139, and will be subject to 
all of the provisions, excluding the payment of fees, set forth in 
Section 139(b)(4). Second, the Exchange proposes to replace an 
incorrect citation to Equity 7, Section 147(d)(3) with the correct 
citation to Equity 7, Section 147(d)(4). Third, the Exchange 
proposes to remove a reference to Section 139(c) to clarify that the 
enterprise license under Section 147(b)(5) covers the fees for 
distribution to the general investing public listed in Equity 7, 
Section 139(b), but not the fees for specialized use cases set forth 
in Equity 7, Section 139(c).
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    No exchange fees will change as a result of the Proposal.
Current Enterprise Licenses for Nasdaq Basic and NLS
Nasdaq Basic
    Nasdaq Basic is a real-time market data product that offers best 
bid and offer and last sale information for all U.S. exchange-listed 
securities based on liquidity within the Nasdaq market center and 
trades reported to the FINRA/Nasdaq Trade Reporting Facility (``TRF''). 
It is a subset of the ``core'' quotation and last sale data provided by 
securities information processors (``SIPs''), which distribute 
consolidated data pursuant to the CTA/CQ Plan and the UTP Plan.
    Nasdaq Basic is separated into three components, which may be 
purchased individually or in combination: (i) Nasdaq Basic for Nasdaq, 
which contains the best bid and offer on the Nasdaq market center and 
last sale transaction reports for Nasdaq and the FINRA/Nasdaq TRF for 
Nasdaq-listed stocks; (ii) Nasdaq Basic for NYSE, which covers NYSE-
listed stocks, and (iii) Nasdaq Basic for NYSE American, which provides 
data on stocks listed on NYSE American and other listing venues that 
disseminate quotes and trade reports on Tape B. The specific data 
elements available through Nasdaq Basic are: (i) Nasdaq Basic Quotes 
(``QBBO''), the best bid and offer and associated size available in the 
Nasdaq Market Center, as well as last sale transaction reports; (ii) 
Nasdaq opening and closing prices, as well as IPO and trading halt 
cross prices; and (iii) general exchange information, including systems 
status reports, trading halt information, and a stock directory.
    Nasdaq offers an enterprise license for Nasdaq Basic that allows a 
broker-dealer to distribute Nasdaq Basic, or Derived Data therefrom, 
through any electronic system approved by Nasdaq, to an unlimited 
number of Professional and Non-Professional Subscribers who are natural 
persons and with whom the broker-dealer has a brokerage 
relationship.\8\ The monthly fee for that license is $100,000.\9\ That 
license also provides the right to distribute NLS to an unlimited 
number of Professional and Non-Professional Subscribers who are natural 
persons and with whom the broker-dealer has a brokerage relationship 
without paying the fees set forth in Equity 7, Section 139(b) or 
(c).\10\
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    \8\ See Equity 7 Section 147(b)(5).
    \9\ See id.
    \10\ The Nasdaq Basic enterprise license also includes a number 
of other provisions and restrictions not at issue here, including 
but not limited to: (i) A limitation that the use of the data by a 
Professional Subscriber shall be limited to the brokerage 
relationship, except that Nasdaq Basic data may be made available 
for up to 4,500 internal Subscribers without incurring additional 
fees; (ii) a requirement for a separate enterprise license for each 
discrete electronic system; (iii) a requirement that the broker-
dealer pay distributor fees under paragraph (c)(1); and (iv) a 
requirement that the broker-dealer report the number of Subscribers 
receiving Nasdaq Basic under this license.
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Nasdaq Last Sale
    NLS provides real-time last sale information for executions 
occurring within the Nasdaq market center and trades reported to the 
jointly-operated FINRA/Nasdaq TRF.\11\ The NLS data feed, which 
provides price, volume and time of execution data for last sale 
transactions, includes transaction information for Nasdaq-listed stocks 
(``NLS for Nasdaq'') and for stocks listed on NYSE, NYSE American, and 
other Tape B listing venues (``NLS for NYSE/NYSE American'').\12\ It 
is, like Nasdaq Basic, a non-core product that provides a subset of the 
core data provided by the SIPs under the CTA and UTP plans.\13\
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    \11\ See Securities Exchange Act Release No. 55255 (February 8, 
2007), 72 FR 7100 (February 14, 2007) (SR-NASDAQ-2006-060) 
(proposing to establish Nasdaq Last Sale data feeds); see also 
Securities Exchange Act Release No. 57965 (June 16, 2008), 73 FR 
35178 (June 20, 2008) (SR-NASDAQ-2006-060) (approving SR-NASDAQ-
2006-060, as amended by Amendment Nos. 1 and 2, to implement NLS on 
a pilot basis).
    \12\ See Securities Exchange Act Release No. 57965 (June 16, 
2008), 73 FR 35178 (June 20, 2008) (SR-NASDAQ-2006-060).
    \13\ See Securities Exchange Act Release No. 34-82723 (February 
15, 2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010).
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    The Exchange offers an enterprise license for NLS under Section 
139(b)(4), which allows any Distributor that is disseminating NLS to 
the general investing public, and which would otherwise pay the Per 
User, Per Query, or Per Device fees set forth in Equity 7, Sections 
139(b)(1) through (3), to purchase a monthly enterprise license for 
$41,500. To be eligible for the license, NLS must be distributed on a 
platform(s) controlled by the Distributor and pre-approved by the 
Exchange as providing the Distributor with a reasonable basis to 
conclude that all Users of such Information \14\ are either Non-
Professionals or Professionals whom the Distributor has no reason to 
believe are using Nasdaq Last Sale in their professional capacity.
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    \14\ ``Information'' means ``any data or information that has 
been collected, validated, processed and/or recorded by the Exchange 
and made available for transmission relating to: (i) Eligible 
securities or other financial instruments, markets, products, 
vehicles, indicators or devices; (ii) activities of the Exchange; or 
(iii) other information or data from the Exchange. Information 
includes, but is not limited to, any element of information used or 
processed in such a way that Exchange Information or a substitute 
for such Information can be identified, recalculated or re-
engineered from the processed information.'' See Equity 7, Section 
139(f)(5).
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Proposed Change
    The Exchange proposes to allow broker-dealers that purchase the 
Nasdaq Basic enterprise license at Equity 7, Section 147(b)(5) to 
distribute NLS to the general investing public under the same terms and 
conditions currently permitted under the NLS enterprise license at 
Equity 7, Section 139(b)(4). Currently, broker-dealers that purchase

[[Page 26987]]

the Nasdaq Basic enterprise license are allowed to distribute NLS to 
``an unlimited number of Professional and Non-Professional Subscribers 
who are natural persons and with whom the broker-dealer has a brokerage 
relationship,'' \15\ while Distributors that purchase the NLS 
enterprise license may distribute NLS to any member of the general 
investing public for Display Usage, provided that the Distributor has a 
``reasonable basis to conclude that all Users of such Information are 
either Non-Professionals or Professionals whom the Distributor has no 
reason to believe are using Nasdaq Last Sale in their professional 
capacity.'' \16\ Nasdaq proposes to allow purchasers of Nasdaq Basic to 
distribute NLS to the general investing public for Display Usage under 
the same terms and conditions as the NLS enterprise license.
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    \15\ Equity 7, Section 147(b)(5).
    \16\ Equity 7, Section 139(b)(4).
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    The Proposal will offer purchasers of the Nasdaq Basic enterprise 
license at Equity 7, Section 147(b)(5) the full use of the NLS 
enterprise license at Equity 7, Section 139(b)(4) at no extra charge. 
The same terms and conditions applicable to the NLS enterprise license 
will continue to apply to the distribution of NLS to the general 
investing public under the Nasdaq Basic enterprise license. These 
common conditions include: (i) A limitation that distribution of NLS 
will be limited to Display Usage; \17\ (ii) a separate approval for 
each platform that will distribute NLS will be required; \18\ and (iii) 
a requirement that distribution be limited to the general investing 
public.\19\ The Exchange also proposes to delete a reference Equity 7, 
Section 139(c) to make it clear that distributors that utilize NLS for 
one of the specialized use cases set forth at Equity 7, Section 139(c) 
will be required to pay the fees applicable to such use cases, whether 
or not they purchased the Nasdaq Basic or NLS enterprise licenses. All 
of these restrictions currently apply to purchasers of the NLS 
enterprise license.\20\ The Proposal will continue to allow the 
distribution of Nasdaq Basic, including the last sale information that 
is a component of Nasdaq Basic, under the terms and conditions set 
forth in Equity 7, Section 147(b)(5) without change.
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    \17\ See id. (``For any customer that would otherwise eligible 
for the Per User, Per Query, or Per Device fees set forth in 
subsections (1) through (3) above, excluding any requirement to 
count or track usage, a Distributor may purchase a monthly 
enterprise license for $41,500 to distribute Nasdaq Last Sale data 
to the General Investing Public for Display Usage to an unlimited 
number of Users or Devices, including, but not limited to, 
television distribution. . . .) (emphasis added).
    \18\ See id. (``To be eligible for the enterprise license, 
Nasdaq Last Sale must be distributed on platform(s) controlled by 
the Distributor and pre-approved by the Exchange as providing the 
Distributor with a reasonable basis to conclude that all Users of 
such Information are either Non-Professionals or Professionals whom 
the Distributor has no reason to believe are using Nasdaq Last Sale 
in their professional capacity.''). This is a different platform 
approval requirement from that required to distribute Nasdaq Basic 
under Section 147(b)(5). The approval for a Nasdaq Basic platform 
under Section 147(b)(5) is used to confirm that the platform 
distributes information within the brokerage relationship, and meets 
all other requirements set forth within that license. The approval 
for the NLS platform under Section 139(b)(4) is used to confirm that 
the Distributor has a reasonable basis to conclude that all Users of 
such Information are either Non-Professionals or Professionals whom 
the Distributor has no reason to believe are using Nasdaq Last Sale 
in their professional capacity. This modification places the same 
platform approval requirement on purchasers of the Nasdaq Basic 
enterprise license that choose to distribute NLS outside of the 
brokerage relationship as customers that choose to solely purchase 
the NLS enterprise license.
    \19\ Distribution of NLS under any specialized use case would 
occur under the applicable fee set forth in Equity 7, Section 
139(c). Compare Equity 7, Section 139(b) (identifying fees for 
distribution to the General Investing Public) with Equity 7, Section 
139(c) (identifying fees for specialized usage of NLS).
    \20\ Current purchasers of the Nasdaq Basic enterprise license 
will not be circumscribed in their ability to distribute last sale 
data within the parameters of that license. As explained above, 
Nasdaq Basic contains both best bid and offer information and last 
sale transaction reports. Customers that purchase Nasdaq Basic will 
continue to be able to distribute last sale data within the 
brokerage relationship as part of the Nasdaq Basic enterprise 
license without change. The proposal will simply add a new option 
for Nasdaq Basic customers: to distribute NLS data outside of the 
brokerage relationship, under the same terms and conditions that 
apply to purchasers of the NLS enterprise license.
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    The Proposal will allow broader distribution of NLS to the general 
investing public and will lower our customers' administrative costs, as 
they would not be required to restrict distribution to individuals with 
brokerage accounts.
Discussion
Background
    Limitations on the distribution of NLS under the Nasdaq Basic 
enterprise license have changed over time. The enterprise license was 
initially proposed in 2011. At that time, distribution was limited to 
Non-Professional Subscribers in a brokerage relationship, and NLS was 
not included.\21\ Distribution of NLS was added in 2017,\22\ and, in 
2018, distribution of NLS was limited to Professional and Non-
Professional Subscribers who are natural persons in a brokerage 
relationship with the broker-dealer, the same limitation as the 
distribution of Nasdaq Basic.\23\
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    \21\ See Securities Exchange Act Release No. 65526 (October 11, 
2011), 76 FR 64137 (October 17, 2011) (SR-Nasdaq-2011-130).
    \22\ See Securities Exchange Act Release No. 81697 (September 
25, 2017), 82 FR 45639 (September 29, 2017) (SR-Nasdaq-2017-095).
    \23\ See Securities Exchange Act Release No. 82723 (February 15, 
2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010).
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    In 2019, Nasdaq introduced the enterprise license fee for NLS at 
Section 139(b)(4).\24\ The purpose of the enterprise license was to 
lower the cost of distributing last sale data and expand its 
availability to the general investing public by eliminating certain 
counting requirements for NLS usage, and expanding the available 
mechanisms for the delivery of NLS data. Nasdaq noted in that filing 
that NLS had been designed to enable market-data distributors ``to 
provide free access to [ ] data to millions of individual investors via 
the internet and television'' and was expected to ``increase[ ] the 
availability of N[asdaq] proprietary market data to individual 
investors.'' \25\
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    \24\ See Securities Exchange Act Release No. 85504 (April 3, 
2019), 84 FR 14183 (April 9, 2019) (SR-NASDAQ-2019-024).
    \25\ See id.; see also Securities Exchange Act Release No. 57965 
(June 16, 2008), 73 FR 35178 (June 20, 2008) (SR-NASDAQ-2006-060) 
(notice of filing of Amendment No. 2 and Order granting accelerated 
approval to proposed rule change, ad modified by Amendment Nos. 1 
and 2, to establish Nasdaq last sale data feeds).
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    The 2019 filing for the NLS enterprise license included the 
requirement that the Distributor have a reasonable basis to conclude 
that all Users of such Information \26\ are either Non-Professionals or 
Professionals whom the Distributor has no reason to believe are using 
NLS in their professional capacity--the same test applied to the Per 
User model of NLS distribution.\27\ The Exchange explained that a 
Distributor has ``no reason to believe'' that NLS is being used in a 
professional capacity when, for example, the data is made available to 
the general investing public in a format that would be ``unlikely to be 
of significant use to Professionals acting in a professional 
capacity,'' as in the Per Query model,\28\ or when the Information is 
``made freely available to internet users,'' as in the Per Device 
model.\29\ Any Distributor that would be eligible to disseminate NLS 
under the Per User, Per Query, or Per Device models would be able to 
meet that test because it is inherent (or explicit) within the 
eligibility criteria

[[Page 26988]]

for each model.\30\ One of the chief benefits of the enterprise license 
was that it was designed to allow Distributors to disseminate NLS data 
to the general investing public in a manner not easily tracked using 
the Per User, Per Query, or Per Device models.\31\
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    \26\ See supra, note 14.
    \27\ See Section 139(b)(1).
    \28\ See Securities Exchange Act Release No. 85504 (April 3, 
2019), 84 FR 14183 (April 9, 2019) (SR-NASDAQ-2019-024); see also 
Securities Exchange Act Release No. 34-82723 (February 15, 2018), 83 
FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010).
    \29\ See id.
    \30\ The ``no reason to believe'' test is explicitly part of the 
criteria for the Per User model. See Section 139(b)(1). It is 
inherent in the Per Query model because, as noted above and in the 
filing instituting that fee, this model ``is unlikely to be of 
significant use to Professionals acting in a professional capacity . 
. .'' See Securities Exchange Act Release No. 34-82723 (February 15, 
2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010). It is 
also inherent in the Per Device model because that model is designed 
to make information ``freely available to internet users,'' and 
therefore is unlikely to be of significant use to Professionals 
acting in a professional capacity. See id.
    \31\ An example of the type of distribution model intended to 
benefit from the proposed license is a spreadsheet program that 
allows the User to refresh a stock price using an in-program command 
without copying data. Such usage is analogous to the Per Query 
model, which supplies only as much data as the User requests on an 
ad hoc basis, but is less susceptible to counting because the 
request is done using a command embedded within another program.
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Basis for Proposal
    At least two potential customers of the Nasdaq Basic enterprise 
license have requested permission to distribute NLS to the general 
investing public for Display Usage without requiring a brokerage 
relationship. Upon consideration of those customer requests, Nasdaq has 
determined that complying with them is in the best interest of our 
customers. First, the proposed change will allow broader distribution 
of NLS to the general investing public. Second, the Proposal will lower 
our customers' administrative costs as they would not be required to 
restrict distribution to individuals with brokerage accounts.\32\
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    \32\ See Securities Exchange Act Release No. 82723 (February 15, 
2018), 83 FR 7812 (February 22, 2018) (SR-NASDAQ-2018-010) (quoting 
SR-NASDAQ-2006-060 (Amendment No. 2, June 10, 2008), at 3.) 
(explaining that NLS was designed to enable market-data 
``distributors to provide free access to the data to millions of 
individual investors via the internet and television'' and was 
expected to ``increase the availability of NASDAQ proprietary market 
data to individual investors.''); see also Securities Exchange Act 
Release No. 57965 (June 16, 2008), 73 FR 35178 (June 20, 2008) (SR-
NASDAQ-2006-060) (notice of filing of Amendment No. 2 and Order 
granting accelerated approval to proposed rule change, ad modified 
by Amendment Nos. 1 and 2, to establish Nasdaq last sale data 
feeds).
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    There is little risk that the new standard will result in 
widespread distribution of NLS, which was designed for the general 
investing public, to professionals acting in their professional 
capacity. Although the new standard may occasionally result in 
incidental Professional use, such use is reasonable because NLS 
contains less information and does not provide pre-trade transparency, 
and is therefore likely to be less useful to a Professional than Nasdaq 
Basic or other products that provide greater pre-trade information.
    The proposed change is not targeted at, or expected to be limited 
in its applicability to, any particular segment of market participants, 
and no segment of retail investors, the general investing public, or 
any other market participant is expected to benefit more than any 
other.\33\
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    \33\ Although this is not a fee filing, the Exchange is 
addressing this question to provide as complete as possible an 
evaluation of the proposed change. See Division of Trading and 
Markets, U.S. Securities and Exchange Commission, ``Staff Guidance 
on SRO Filings Related to Fees'' (May 21, 2019) (``Staff 
Guidance''), available at https://www.sec.gov/tm/staff-guidance-sro-rule-filings-fees (indicating that the discussion of purpose should 
indicate ``whether the relevant product or service, including the 
corresponding proposed fee or fee change, is targeted at--or 
expected to be limited in its applicability to--a specific 
segment(s) of market participants (and if so, the related 
details))''.
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    The Exchange expects the Nasdaq Basic enterprise license to 
continue to be attractive to potential customers, but does not expect a 
large number of additional sales in response to this change. 
Nevertheless, based on conversations with potential customers and our 
overall familiarity with the market, as many as three additional 
broker-dealers may purchase the Nasdaq Basic enterprise license as a 
result of the proposed change.\34\
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    \34\ See id. (requesting that the discussion of purpose address 
``the projected number of purchasers (including members, as well as 
non-members) of any new or modified product or service and the 
expected number of purchasers likely to be subject to a new fee or 
pricing tier, including members and non-members . . .'').
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    The Proposal will not alter any Exchange fees.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\35\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\36\ in particular, 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 
customers, issuers, brokers, or dealers.
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    \35\ 15 U.S.C. 78f(b).
    \36\ 15 U.S.C. 78f(b)(5).
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    The Exchange has already shown the Nasdaq Basic enterprise license 
at Section 147(b)(5),\37\ and the NLS enterprise license at Section 
139(b)(4) \38\ to be consistent with Section 6(b) of the Act. This 
analysis therefore focuses on the change to the Nasdaq Basic enterprise 
license at Section 147(b)(5).
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    \37\ See Securities Exchange Act Release No. 81697 (September 
25, 2017), 82 FR 45639 (September 29, 2017) (SR-Nasdaq-2017-095).
    \38\ See Securities Exchange Act Release No. 85504 (April 3, 
2019), 84 FR 14183 (April 9, 2019) (SR-NASDAQ-2019-024).
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    As explained above, the Proposal will expand the coverage of the 
Nasdaq Basic enterprise license at Equity 7, Section 147(b)(5) to 
include the full use of the NLS enterprise license at Equity 7, Section 
139(b)(4) at no extra charge. The same terms and conditions applicable 
to the NLS enterprise license will continue to apply to the 
distribution of NLS to the general investing public under the Nasdaq 
Basic enterprise license. These common conditions include: (i) A 
requirement that distribution of NLS be limited to Display Usage; \39\ 
(ii) a separate approval of each platform that will distribute NLS will 
be required; \40\ and (iii) a restriction that distribution be limited 
to the general investing public.\41\ Distributors that utilize NLS for 
one of the specialized use cases set forth at Equity 7, Section 139(c) 
will be required to pay the fees applicable to such use cases, whether 
or not they purchased the Nasdaq Basic or NLS enterprise licenses. All 
of conditions that currently apply to purchasers of the NLS enterprise 
license will apply to distribution of NLS for Display Usage to the 
general investing public under the Nasdaq Basic enterprise license.\42\
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    \39\ See supra, note 17.
    \40\ See supra, note 18.
    \41\ See supra, note 19.
    \42\ See supra, note 20. Current purchasers of the Nasdaq Basic 
enterprise license will not be circumscribed in their ability to 
distribute last sale data within the parameters of that license. As 
explained above, Nasdaq Basic contains both best bid and offer 
information and last sale transaction reports. Customers that 
purchase Nasdaq Basic will continue to be able to distribute last 
sale data within the brokerage relationship as part of the Nasdaq 
Basic enterprise license without change. The proposal will simply 
add a new option for Nasdaq Basic customers: To distribute NLS data 
outside of the brokerage relationship, under the same terms and 
conditions that apply to purchasers of the NLS enterprise license.
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    Both Nasdaq Basic and NLS compete with the top-of-book proprietary 
data products offered by other exchanges, including the NYSE BQT feed, 
which disseminates top-of-book information from the NYSE, NYSE 
American, NYSE Arca, NYSE National, and NYSE Chicago exchanges,\43\ and 
the Cboe One Summary Feed, which disseminates data from the BZX 
Exchange, BYX

[[Page 26989]]

Exchange, EDGX Exchange and EDGA Exchange.\44\ The proposed change will 
enhance competition by allowing broader distribution of NLS in the 
context of the Nasdaq Basic license, and lowering the cost of 
compliance for Nasdaq's customers by removing the need to restrict 
distribution to individuals with brokerage accounts. Competition with 
other exchanges in the sale of top-of-book products, and the likelihood 
that the Proposal will enhance investor understanding of securities 
markets and promote consumer choice by expanding the availability of 
NLS to the general investing public, provide a substantial basis for 
finding that the Proposal promotes just and equitable principles of 
trade, removes impediments to and perfects the mechanism of a free and 
open market and a national market system, and protects investors and 
the public interest.
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    \43\ See Securities Exchange Act Release No. 87803 (December 19, 
2019), 84 FR 71505 (December 27, 2019) (SR-NYSE-2019-70) (explaining 
that the NYSE BQT market data product competes ``head to head with 
the Nasdaq Basic and Cboe One Feed market data products.'').
    \44\ See https://markets.cboe.com/us/equities/
market_data_services/
#:~:text=Cboe%20Top%20is%20a%20real,time%20on%20a%20Cboe%20book.&text
=It%20is%20a%20real%2Dtime,time%20on%20a%20Cboe%20book.
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    The Proposal is not unfairly discriminatory. As noted previously, 
both the Nasdaq Basic \45\ and NLS \46\ enterprise licenses were shown 
to be non-discriminatory and otherwise consistent with the Act. The 
only change here is to allow broader distribution of NLS under the 
Nasdaq Basic enterprise license at Section 147(b)(5). As explained 
above, the proposed change is not targeted at, or expected to be 
limited in its applicability to, any particular segment of market 
participants, and no segment of retail investors, the general investing 
public, or any other market participant is expected to benefit more 
than any other. The proposal will apply to any broker-dealer that 
purchases the Nasdaq Basic enterprise license without differentiation 
of any kind, and is therefore not unfairly discriminatory.
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    \45\ See Securities Exchange Act Release No. 81697 (September 
25, 2017), 82 FR 45639 (September 29, 2017) (SR-Nasdaq-2017-095).
    \46\ See Securities Exchange Act Release No. 85504 (April 3, 
2019), 84 FR 14183 (April 9, 2019) (SR-NASDAQ-2019-024).
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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.
Intermarket Competition
    Applying the same standard for the distribution of NLS to both the 
Nasdaq Basic and NLS enterprise licenses at Sections 147(b)(5), and 
139(b)(4), respectively, will place no burden on intermarket 
competition (the competition among SROs). Both Nasdaq Basic and NLS 
already compete directly against the NYSE BQT feed and the Cboe One 
Summary Feed. As noted above, the proposed change will enhance 
competition by allowing broader distribution of NLS, and lowering the 
cost of compliance for Nasdaq's customers by removing the need to 
restrict distribution to individuals with brokerage accounts. Nasdaq 
believes that the proposed change will enhance the value of the Nasdaq 
Basic enterprise license, promote customer choice, and therefore boost 
competition among exchanges.
Intramarket Competition
    The Proposal will not cause any unnecessary or inappropriate burden 
on intramarket competition (competition among exchange customers). The 
Proposal is not targeted at, or expected to be limited in its 
applicability to, any particular segment of broker-dealers, and no 
market participant or any segment of the general investing public is 
expected to benefit more than any other. As such, the Proposal does not 
place any category of market participant at a relative disadvantage 
compared to any other category, and therefore will not impose any 
burden on competition not necessary or appropriate in furtherance of 
the Act. Moreover, current purchasers of the Nasdaq Basic enterprise 
license will not be circumscribed in their ability to distribute last 
sale data within the parameters of that license. As explained above, 
Nasdaq Basic contains both best bid and offer information and last sale 
transaction reports. Customers that purchase Nasdaq Basic will continue 
to be able to distribute last sale data within the brokerage 
relationship as part of the Nasdaq Basic enterprise license without 
change. The proposal will simply add a new option for Nasdaq Basic 
customers: To distribute NLS data outside of the brokerage 
relationship, under the same terms and conditions that apply to 
purchasers of the NLS enterprise license. Given that this is an 
expansion of an existing license that does not curtail that license in 
any way, there is no burden on intramarket competition.

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

    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 \47\ and Rule 19b-
4(f)(6) thereunder.\48\
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    \47\ 15 U.S.C. 78s(b)(3)(A).
    \48\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its 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.
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    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-NASDAQ-2021-036 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-2021-036. 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

[[Page 26990]]

internet website (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 website 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2021-036 and should be submitted 
on or before June 8, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\49\
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    \49\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-10388 Filed 5-17-21; 8:45 am]
BILLING CODE 8011-01-P


