Self-Regulatory Organizations;
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
FOOTNOTE 1 15 U.S.C. 78s(b)(1). END FOOTNOTE
FOOTNOTE 2 17 CFR 240.19b-4. END FOOTNOTE
I.
The Exchange proposes to assess reduced monthly fees for microwave or millimeter wave ports under Rule 7015(g)(1) and wireless market data connectivity under Rule 7034(b), based on the total number of subscriptions to such wireless connectivity under those rules. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on
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
II.
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.
1. Purpose
The Exchange is proposing to assess reduced monthly fees for microwave or millimeter wave ports under Rules 7015(g)(1) and 7034(b), based on the total number of subscriptions to ports under Rule 7015(g)(1) and colocation connectivity to market data feeds under Rule 7034(b).
Under Rule 7015(g)(1), the Exchange provides Multi-cast ITCH (“MITCH”) Wave Ports to clients co-located at other third-party data centers, including the
FOOTNOTE 3 Subscription to the connectivity options under Rule 7034(b) is entirely optional. To receive a particular data feed, a participant must subscribe to the connectivity under Rule 7034(b) and also have a subscription to the data feed with the applicable exchange. END FOOTNOTE
The Exchange is proposing to provide discounts to the current monthly fees for microwave or millimeter wave connectivity under Rules 7015(g)(1) and 7034(b) based on the total number of billable subscriptions under those rules. /4/ The fees under Rules 7015(g)(1) and 7034(b) differ based on the costs incurred by the Exchange in providing the connectivity, including vendor costs that generally increase with the distance between the origin and destination of the wireless signal. To keep the discounts in line with the different fees assessed for the connectivity under Rules 7015(g)(1) and 7034(b), the Exchange is proposing to apply a percentage-based reduction on the fees assessed in lieu of a fixed amount. Specifically, the Exchange is proposing to provide subscribers with three to five microwave or millimeter wave wireless subscriptions under Rule 7015(g)(1) and/or Rule 7034(b) a 5% discount on all such subscriptions; subscribers with six to ten microwave or millimeter wave wireless subscriptions under Rule 7015(g)(1) and/or Rule 7034(b) would receive a 10% discount on all such subscriptions; subscribers with eleven to fourteen microwave or millimeter wave wireless subscriptions under Rule 7015(g)(1) and/or Rule 7034(b) would receive a 15% discount on all such subscriptions; and subscribers with fifteen or more microwave or millimeter wave wireless subscriptions under Rule 7015(g)(1) and/or Rule 7034(b) would receive a 20% discount on all such subscriptions.
FOOTNOTE 4 The Exchange is proposing to add footnotes to Rules 7015(g)(1) and 7034(b) describing the proposed discounts. As described above, Rule 7015(g)(1) provides wireless connectivity to clients co-located at other third-party data centers and Rule 7034(b) provides wireless colocation connectivity options to clients at the Exchange’s colocation facility. Any of the options under these rules may be subscribed to by a client of the Exchange, and the Exchange is using the term “subscriber” to refer to any such client subscribing to one or more of the options under Rules 7015(g)(1) and/or 7034(b). END FOOTNOTE
The Exchange notes that the proposed reduction in fees will reward the greatest users of its wireless connectivity under Rule 7015(g)(1) and/or Rule 7034(b), although the Exchange does not believe that the proposed change will result in a fee assessed that is less than the cost of offering the connectivity.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section 6(b) of the Act, /5/ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act, /6/ 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.
FOOTNOTE 5 15 U.S.C. 78f(b). END FOOTNOTE
FOOTNOTE 6 15 U.S.C. 78f(b)(4) and (5). END FOOTNOTE
The Exchange believes that the proposed fee reductions are reasonable because they are less than the fees currently assessed for the connectivity under Rule 7015(g)(1) and Rule 7034(b), while continuing to allow the Exchange to cover the costs associated with offering the connectivity. The Exchange believes that the proposed fee reductions are an equitable allocation and are not unfairly discriminatory because the reduction to each fee is based on applying a percentage, which will account for the varying expense of each connectivity option under Rule 7015(g)(1) and Rule 7034(b). For example, a subscriber that has three subscriptions total under Rule 7015(g)(1) and/or Rule 7034(b) in a given month, with one MITCH Wave Port at
B.
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 continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because most competitors are not required to file their fees with regulators, they are free to quickly and easily modify their fees and discount policies for each subscriber. Subscribers also have a good amount of wireless connectivity vendors to choose from for these services and can switch between providers quite easily.
–This is a summary of a
Citation: “82 FR 17490”
Document Number: “Release No. 34-80380; File No. SR-NASDAQ-2017-030”
Federal Register Page Number: “17490”
“Notices”
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