Notice2022-18767
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Port-Related Fees, at Equity 7, Section 115, and Options 7, Section 3
Primary source
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Published
August 31, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 168 (Wednesday, August 31, 2022)</title>
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[Federal Register Volume 87, Number 168 (Wednesday, August 31, 2022)]
[Notices]
[Pages 53531-53533]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18767]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95604; File No. SR-NASDAQ-2022-049]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Port-Related Fees, at Equity 7, Section 115, and Options 7,
Section 3
August 25, 2022.
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 August 12, 2022, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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[[Page 53532]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's port-related fees, at
Equity 7, Section 115, and Options 7, Section 3, as described further
below.
While these amendments are effective upon filing, the Exchange has
designated the proposed amendments to be operative on September 1,
2022.
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.
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 the proposed rule change is to amend Equity 7,
Section 115, and Options 7, Section 3, to prorate port fees for the
first month of service. The Exchange also proposes to add language to
Equity 7, Section 115, and Options 7, Section 3, to clarify that port
fees for cancelled services will continue to be charged for the
remainder of month.
Currently, the Exchange does not prorate port connectivity fees
under either its equity or options rules. Thus, equity members and
options participants are assessed a full month's fee if they direct the
Exchange to make the subscribed connectivity live on any day of the
month, including the last day thereof. Equity members and options
participants are also assessed a full month's port fee if they cancel
service during the month.
The Exchange proposes to provide prorated port fees for the first
month of service for new requests. By prorating the first month's fees,
the Exchange would charge equity members and options participants port
fees only for the days in which the equity members and options
participants are connected to the Exchange during the first month of
service. The Exchange proposes to continue the current practice of
charging port fees for the remainder of the month upon cancellation,
with the exception of the specialized service fees in Equity 7, Section
115(e).\3\ If an equity member or options participant starts and
cancels service in the same month, the member or participant would not
be billed for those days prior to the service start date but would be
billed for the remainder of the month, including after the service is
cancelled.\4\
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\3\ The Exchange prorates the cost of the first and last month
of a user's subscription to the WebLink, Workstation, and WorkX
products. See Securities Exchange Act Release No. 94226 (February
11, 2022), 87 FR 9096 (February 17, 2022) (NASDAQ-2021-012) [sic].
\4\ For example, if a member orders a port on September 4, 2022
and cancels the port on September 16, 2022, the member would be
charged the prorated port fee for September 5, 2022 through
September 30, 2022.
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The Exchange believes it is important for equity members and
options participants to have the option to establish new connections to
the Exchange at any time during the month without being hampered by a
full month charge irrespective of when during the month service begins.
Moreover, other exchanges also charge new ports on a prorated basis for
the first month of service.\5\
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\5\ See, e.g., Cboe BZX U.S. Equities Exchange Fee Schedule,
available at <a href="https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/">https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/</a>; New York Stock Exchange Price List 2022,
available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf</a>.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\7\ 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.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its port fee schedule are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for options and
equity securities transaction services that constrain its pricing
determinations in that market. The Commission and the courts have
repeatedly expressed their preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. In Regulation NMS, while adopting a series of steps
to improve the current market model, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and,
also, recognized that current regulation of the market system ``has
been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \8\
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\8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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The Exchange believes that it is reasonable to prorate port fees
for the first month of connectivity. As discussed above, the Exchange
believes it is important for equity members and options participants to
have the flexibility to establish new connections to the Exchange at
any time during the month without being hampered by a full month
charge. For example, the Exchange believes it is reasonable to charge a
user who begins a subscription on the last day of the month to be
charged only for use of a port for that day. As noted above, other
exchanges already charge their customers for new ports on a prorated
basis for the first month of service.\9\ The proposed language
describing the Exchange's practice to bill for the remainder of the
month upon cancellation is intended only to clarify the existing
practice and limit any confusion.
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\9\ Supra note 4.
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The Exchange believes that the proposal is also equitable and not
unfairly discriminatory because the proposed change to prorate port
fees for the first month of service and continue to charge for the
remainder of the month upon cancellation will apply uniformly to all
similarly situated equity members and options participants. Removing
the requirement to pay a full month's port fee if a user joins any day
other than the first of the month is user-friendly and provides users
incentive to subscribe at their convenience. The Exchange believes that
prorating the fees for the first month of a user's subscription will
ensure that the fees are more equitable to a user's utilization of the
products. All users will benefit from the proration of the first month
of their subscription.
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.
[[Page 53533]]
Intramarket Competition
The Exchange does not believe that its proposal will place any
category of Exchange participants at a competitive disadvantage. The
proposed change to prorate port fees for the first month of service
will apply uniformly to all similarly situated equity members and
options participants. All users will receive the benefit of a proration
for the first month of port connectivity, which will enable users to
save money that they otherwise would incur under the Exchange's current
rules that do not provide for proration. The proposed language
describing the Exchange's practice to bill for the remainder of the
month upon cancellation merely codifies and clarifies an existing
practice of the Exchange.
Intermarket Competition
The Exchange believes that the proposed change to its port fee
schedule to provide proration for the first month of port connectivity
will not impose a burden on competition because the Exchange's
execution services are completely voluntary and subject to extensive
competition both from the other live exchanges and from off-exchange
venues, which include alternative trading systems that trade national
market system stock. Moreover, as noted above, other exchanges
currently charge new ports on a prorated basis for the first month of
service.\10\ The proposed changes will help ensure that the Exchange's
billing practices are commensurate with competitors.
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\10\ Supra note 4.
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The proposed change to the Exchange's port fee schedule is
reflective of this competition because, as a threshold issue, the
Exchange is a relatively small market so its ability to burden
intermarket competition is limited. In this regard, even the largest
U.S. equities exchange by volume only has 17-18% market share, which in
most markets could hardly be categorized as having enough market power
to burden competition. Accordingly, the Exchange does not believe that
the proposed change will impair the ability of members, participants,
or competing order execution venues to maintain their competitive
standing in the financial markets.
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) of the Act \11\ and paragraph (f) of Rule 19b-4 \12\
thereunder.
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\11\ 15 U.S.C. 78s(b)(3)(A).
\12\ 17 CFR 240.19b-4(f).
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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: (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
<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#aedcdbc2cb83cdc1c3c3cbc0daddeeddcbcd80c9c1d8"><span class="__cf_email__" data-cfemail="bac8cfd6df97d9d5d7d7dfd4cec9fac9dfd994ddd5cc">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2022-049 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-2022-049. 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-2022-049 and should be submitted
on or before September 21, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-18767 Filed 8-30-22; 8:45 am]
BILLING CODE 8011-01-P
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