Notice2022-23087
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Temporarily Waive Certain Port-Related Fees at Equity 7, Section 115 and Equity 7, Section 130
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
October 25, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 205 (Tuesday, October 25, 2022)</title>
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[Federal Register Volume 87, Number 205 (Tuesday, October 25, 2022)]
[Notices]
[Pages 64529-64531]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-23087]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96104; File No. SR-NASDAQ-2022-054]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Temporarily Waive Certain Port-Related Fees at Equity 7, Section 115
and Equity 7, Section 130
October 19, 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 October 11, 2022, 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 temporarily waive certain port-related
fees at Equity 7, Section 115 and Equity 7, Section 130, 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.
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
[[Page 64530]]
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 Equity 7, Section 130 to provide a temporary fee waiver
for newly added OUCH order entry ports (production and Nasdaq Testing
Facility ``NTF'' environments) with the updated version of the OUCH
Order entry protocol,\3\ referred to as ``OUCH 5.0.'' The Exchange has
proposed \4\ to introduce this new upgraded version of the OUCH Order
entry protocol that will enable the Exchange to make functional
enhancements and improvements to specific Order Types \5\ and Order
Attributes.\6\
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\3\ The OUCH Order entry protocol is a proprietary protocol that
allows subscribers to quickly enter orders into the System and
receive executions. OUCH accepts limit Orders from members, and if
there are matching Orders, they will execute. Non-matching Orders
are added to the Limit Order Book, a database of available limit
Orders, where they are matched in price-time priority. OUCH only
provides a method for members to send Orders and receive status
updates on those Orders. See <a href="https://www.nasdaqtrader.com/Trader.aspx?id=OUCH">https://www.nasdaqtrader.com/Trader.aspx?id=OUCH</a>.
\4\ See Securities Exchange Act Release No. 95768 (September 14,
2022), 87 FR 57534 (September 20, 2022).
\5\ An ``Order Type'' is a standardized set of instructions
associated with an Order that define how it will behave with respect
to pricing, execution, and/or posting to the Exchange Book when
submitted to Nasdaq. See Equity 1, Section 1(a)(7).
\6\ An ``Order Attribute'' is a further set of variable
instructions that may be associated with an Order to further define
how it will behave with respect to pricing, execution, and/or
posting to the Exchange Book when submitted to the Exchange. See id.
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Temporary Fee Waiver Pursuant to Equity 7, Section 115
First, the Exchange proposes to amend Equity 7, Section 115 to
provide a 30-day waiver of the OUCH production port fee for up to five
\7\ newly added OUCH ports with the updated version of the OUCH Order
entry protocol, OUCH 5.0. The fee waiver would be offered for a three-
month period, beginning on the date when OUCH 5.0 first becomes
available on the Exchange, which such date the Exchange shall announce
in a Equity Trader Alert. At the end of the three-month period, users
would no longer be eligible for the waiver. A user may only receive the
30-day waiver once per port (up to a maximum of five ports) within the
three-month window. The Exchange proposes to offer this temporary
waiver to encourage new, prospective customers to adopt and returning
customers to migrate to the updated version of the OUCH Order entry
protocol.
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\7\ The fee waiver is limited to a maximum of five OUCH
production ports per Web Central Registration Depository (``CRD'')
membership.
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Temporary Fee Waiver Pursuant to Equity 7, Section 130
Second, the Exchange proposes to amend Equity 7, Section 130 to
provide a 30-day waiver of the $300 NTF fee in Section 130(d)(1)(B) for
up to five \8\ newly added OUCH NTF ports with the updated version of
the OUCH Order entry protocol, OUCH 5.0. This fee waiver would also be
offered for a three-month period, beginning on a date specified by the
Exchange in an Equity Trader Alert. At the end of the three-month
period, users would no longer be eligible for the waiver. A user may
only receive the 30-day waiver once per port (up to a maximum of five
ports) within the three-month window. The NTF provides subscribers with
a virtual System test environment that closely approximates the
production environment on which they may test their automated systems
that integrate with the Exchange. For example, the NTF provides
subscribers a virtual System environment for testing upcoming releases
and product enhancements, as well as testing firm software prior to
implementation. The Exchange proposes to offer this temporary waiver to
encourage customers to test the updated version of the OUCH Order entry
protocol free of charge.
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\8\ The fee waiver is limited to a maximum of five OUCH NTF
ports per CRD membership.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed changes to its fee schedule are reasonable
in several respects. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for 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.'' \11\
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\11\ 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 provide temporary
fee waivers for up to five newly added OUCH order entry ports
(production and Nasdaq Testing Facility ``NTF'' environments) with the
updated version of the OUCH Order entry protocol, OUCH 5.0. The
Exchange believes it is important to provide users an opportunity to
test OUCH 5.0 free of charge. The temporary fee waivers would encourage
users to test and adopt the enhanced OUCH Order entry protocol.
The Exchange believes that the proposed temporary fee waivers are
an equitable allocation of reasonable dues, fees and other charges and
not unfairly discriminatory because the Exchange will apply the same
temporary fee waivers to all similarly situated members. The waivers
will reduce fees for and benefit all users that add OUCH 5.0 order
entry ports (production and NTF environments) within the three-month
window.
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.
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 temporarily waive fees for newly added OUCH 5.0
order entry ports (production and NTF environments) will apply
uniformly to all similarly situated participants. The temporary fee
waivers are available to all users and would enable users to test the
OUCH enhancements at no cost.
[[Page 64531]]
Intermarket Competition
The Exchange believes that the proposed temporary fee waivers 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.
The proposed fee waivers are 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. The proposed fee
waivers would facilitate adoption of enhancements to the Exchange's
System and Order entry protocols, which is pro-competitive because the
enhancements bolster the efficiency, functionality, and overall
attractiveness of the Exchange in an absolute sense and relative to its
peers. 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)(ii) of the Act,\12\ and Rule 19b-4(f)(2) \13\ thereunder.
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
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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#fd8f889198d09e9290909893898ebd8e989ed39a928b"><span class="__cf_email__" data-cfemail="abd9dec7ce86c8c4c6c6cec5dfd8ebd8cec885ccc4dd">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2022-054 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-2022-054. 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-2022-054 and should be submitted
on or before November 15, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-23087 Filed 10-24-22; 8:45 am]
BILLING CODE 8011-01-P
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