Notice2021-25346
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Retire Certain Order Entry Protocols and Related Fees, at Equity 7, Section 115
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 22, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 222 (Monday, November 22, 2021)</title>
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[Federal Register Volume 86, Number 222 (Monday, November 22, 2021)]
[Notices]
[Pages 66379-66381]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25346]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93580; File No. SR-NASDAQ-2021-089]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Retire Certain Order Entry Protocols and Related Fees, at Equity 7,
Section 115
November 16, 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 November 4, 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 amend the Exchange's transaction [sic]
credits and charges at Equity 7, Section 115, as described further
below. The text of the proposed rule change is available on the
Exchange's website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules</a>, at the principal office of the Exchange, and at the Commission's
Public Reference Room.
[[Page 66380]]
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 purpose of this proposal is for the Exchange to discontinue the
following order entry protocols: (i) QIX OTCBB,\3\ effective as of
November 8, 2021; (ii) CTCI \4\ (except for CTCI MFUND, which will
remain active), effective as of November 22, 2021; and (iii) BRUT FIX
and SUMO FIX, effective as of November 22, 2021. The Exchange also
proposes to amend Equity 7, Section 115 of the Exchange's Rules to
reflect the retirement of these protocols and their related fees.
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\3\ The QIX Order entry protocol is a Nasdaq proprietary
protocol that allows automated, real-time trading. See <a href="https://www.nasdaqtrader.com/Trader.aspx?id=qix">https://www.nasdaqtrader.com/Trader.aspx?id=qix</a>. QIX OTCBB, in particular,
is utilized to enter orders on FINRA's Over the Counter Bulletin
Board (``OTCBB'') platform.
\4\ The Computer-to-Computer Interface (``CTCI'') is a method by
which Nasdaq subscribers can enter transactions, such as Nasdaq
Market Center orders and trade reports, from their computer systems
to Nasdaq's computer systems without using a Nasdaq Workstation. See
<a href="https://www.nasdaqtrader.com/Trader.aspx?id=ctci">https://www.nasdaqtrader.com/Trader.aspx?id=ctci</a>. In this instance,
the Exchange proposes to discontinue use of two varieties of CTCI--
CTCI/TCP and CTCI/MQ that are used for the FINRA/Nasdaq Trade
Reporting Facility Carteret (``FINRA/Nasdaq TRF Carteret'') and
ACES. As is discussed below, participants will use the FIX order
entry protocol with the FINRA/Nasdaq TRF Carteret and ACES, on a
going-forward basis.
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In Equity 7, Section 115(a), the Exchange proposes to delete
references to two QIX-related fees that relate to QIX OTCBB: (i) A
$1,200/port/month fee for a FINRA trading port (plus optional
proprietary quote information port); and (ii) a $1,000/port/month fee
for a FINRA unsolicited message port.\5\ The Exchange proposes to
delete these fees because QIX OTCBB is used for interacting with the
FINRA OTCBB platform, which FINRA plans to decommission, effective
November 5, 2021.\6\ Nasdaq has provided prior notice of the pending
retirement of QIX OTCBB.\7\ As of the date of this filing, less than 20
QIX OTCBB ports (FINRA trading ports, at $1,200 per port per month)
remain active, such that the impact of the proposal to discontinue
offering QIX OTCBB will have little practical effect. The availability
of Nasdaq's proprietary QIX trading ports and disaster recovery ports
will be unaffected by this proposal as QIX will continue to be
available for use in sending orders and receiving messages from Nasdaq
(at no charge).
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\5\ An ``unsolicited message port'' is used to separate the
message traffic for FINRA exceptions which are no longer applicable
due to rule changes. There are no active users or configured ports
under this category.
\6\ See <a href="https://www.finra.org/filing-reporting/market-transparency-reporting/reminder-upcoming-retirement-otc-bulletin-board-otcbb">https://www.finra.org/filing-reporting/market-transparency-reporting/reminder-upcoming-retirement-otc-bulletin-board-otcbb</a>; <a href="https://www.finra.org/filing-reporting/market-transparency-reporting/upcoming-retirement-otc-bulletin-board-otcbb">https://www.finra.org/filing-reporting/market-transparency-reporting/upcoming-retirement-otc-bulletin-board-otcbb</a>.
See also FINRA Regulatory Notice 21-28 (August 6, 2021), available
at <a href="https://www.finra.org/sites/default/files/2021-08/Regulatory-Notice-21-28.pdf">https://www.finra.org/sites/default/files/2021-08/Regulatory-Notice-21-28.pdf</a>.
\7\ See Nasdaq Equity Trader Alert 2020-28 Regulatory Notice 21-
28 (August 6, 2021), available at <a href="http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2020-28">http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2020-28</a> [sic].
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The Exchange proposes to discontinue the CTCI/TCP and CTCI/MQ
protocols for communicating trade information to the FINRA/Nasdaq TRF
Carteret and trade and order information to ACES \8\ because it plans
to replace these protocols with the FIX (FIX Port for services other
than Trading and FIX Trading Port, respectively) order entry protocol,
going forward. Again, Nasdaq \9\ has provided prior notice to market
participants of the impending transition from CTCI/TCP and CTCI/MQ to
FIX. As of the date of this filing, less than 15 CTCI/TCP and CTCI/MQ
ports remain active, such that the impact of the proposal to
discontinue offering CTCI/TCP & CTCI/MQ will have little practical
effect. The Exchange has already transitioned most other subscribers to
FIX. Going forward, the Exchange proposes to continue to offer CTCI for
use by participants in the Nasdaq Fund Network \10\ (``CTCI MFUND''),
due to the fact that FIX does not provide the capabilities that these
participants require for use with the Nasdaq Fund Network. The Exchange
proposes to amend Equity 7, Section 115(c), to specify that going
forward, fees relating to CTCI will be limited to CTCI MFUND.
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\8\ ACES is an order routing system that allows user to route
orders between order-entry firms and market makers that have
established relationships. See <a href="http://nasdaqtrader.com/Trader.aspx?id=ACES">http://nasdaqtrader.com/Trader.aspx?id=ACES</a>. The Exchange notes that when customers
transition from CTCI to FIX for purposes of communicating with ACES
or the FINRA/Nasdaq TRF Carteret, they will realize a cost savings
of $25 per port per month and $75 [sic] per port per month,
respectively.
\9\ See Nasdaq Equity Trader Alert 2021-80 (October 14, 2021),
available at <a href="http://www.nasdaqtrader.com/TraderNews.aspx?id=%20ETA2021-80">http://www.nasdaqtrader.com/TraderNews.aspx?id=%20ETA2021-80</a>; Nasdaq Equity Trader Alert 2021-59
(August 9, 2021), available at <a href="http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2021-59">http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2021-59</a>; Nasdaq Equity Trader Alert 2021-18
(March 11, 2021), available at <a href="http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2021-18">http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2021-18</a>; Nasdaq Equity Trader Alert 2020-28
(May 21, 2020), available at <a href="http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2020-28">http://www.nasdaqtrader.com/TraderNews.aspx?id=ETA2020-28</a>.
\10\ The Nasdaq Fund Network facilitates the collection and
dissemination of performance NAV, valuation, and strategy-level
reference data for over 35,000 investable products. See <a href="https://www.nasdaq.com/solutions/nasdaq-fund-network">https://www.nasdaq.com/solutions/nasdaq-fund-network</a>.
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Finally, the Exchange proposes to discontinue offering BRUT FIX and
SUMO FIX, as these are older varieties of the FIX order entry protocol
that are legacies of prior application acquisitions and are now
obsolete as their specifications have been integrated into the standard
FIX protocol specification and the standard Nasdaq INET applications.
Going forward, market participants that utilize BRUT FIX and SUMO FIX
will be required to utilize FIX Trading Ports instead at the same price
per port per month. Given that only a small number of market
participants continue to use BRUT FIX and SUMO FIX ports, Nasdaq
contacted these participants directly, as early as December 2020, to
inform them of the impending transition. As of the date of this filing,
only three ports remain, none which are in active use. Thus, the impact
of the proposal to discontinue offering BRUT FIX and SUMO FIX will have
little or no practical effect.
2. Statutory Basis
The Exchange believes that its proposals are consistent with
Section 6(b) of the Act,\11\ in general, and further the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ in particular, in that
they provide for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and are not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The proposals are also
consistent with Section 11A of the Act relating to the establishment of
the national market system for securities.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that its proposals to discontinue offering
the QIX OTCBB, CTCI/TCP, CTCI/MQ, BRUT FIX, and SUMO FIX order entry
protocols and to delete related fees are reasonable. In the case of QIX
OTCBB, the proposal is reasonable given that FINRA plans to
decommission the OTCBB platform to which market
[[Page 66381]]
participants use QIX OTCBB to connect, such that after this
decommissioning, there will be no further basis for offering or
charging fees for use of QIX OTCBB ports. The other proposals, to
discontinue offering and charging fees for ports using the CTCI/TCP,
CTCI/MQ, BRUT FIX, and SUMO FIX order entry protocols are reasonable
because these order entry protocols are associated with legacy
applications and have become obsolete and the Exchange wishes to
transition market participants to the newer and more capable FIX order
entry protocol. The Exchange proposes to continue offering and charging
fees for the CTCI MFUND order entry protocol because customers that
utilize it cannot currently attain their existing functionality through
the use of FIX.
The Exchange believes that it is an equitable allocation of its
fees to cease charging customers for ports that connect to discontinued
platforms or that use order entry protocols that have become obsolete
and will be replaced with newer and more capable protocols.
The proposals are not unfairly discriminatory to existing users of
the order entry protocols that the Exchange will eliminate. The
Exchange continually invests in new technologies to serve its
customers' growing and evolving needs. At the same time it deploys new
technologies, the Exchange must also periodically cease to support, or
retire, technologies that have become obsolete and are no longer widely
used. To mitigate the effect of transitions to new technologies in this
instance, the Exchange has provided ample prior notice to market
participants and has assisted them in the transition process. As of the
date of this filing, Nasdaq has already transitioned most of its
customers from CTCI/TCP, CTCI/MQ, BRUT FIX, and SUMO FIX to using the
FIX order entry protocol, such that the proposals will little to no
practical impact on them. Given that FINRA plans to decommission OTCBB,
Nasdaq's proposal to eliminate QIX OTCBB should have no effect on them.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that its proposed rule changes will
impose any burden on competition. Again, the proposals to eliminate the
QIX OTCBB order entry protocol will merely help to effectuate FINRA's
elimination of the OTCBB platform, while the proposed elimination of
the CTCI/TCP, CTCI/MQ, BRUT FIX, and SUMO FIX order entry protocols
will serve to transition market participants to a newer and more
capable alternative to these protocols. Participants should suffer no
adverse competitive impact from the elimination of these order entry
protocols.
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 \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\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 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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#eb999e878ec6888486868e859f98ab988e88c58c849d"><span class="__cf_email__" data-cfemail="95e7e0f9f0b8f6faf8f8f0fbe1e6d5e6f0f6bbf2fae3">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2021-089 on the subject line.
Paper Comments
<bullet> 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-2021-089. 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 website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-2021-089 and should be submitted
on or before December 13, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25346 Filed 11-19-21; 8:45 am]
BILLING CODE 8011-01-P
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