Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Nasdaq filed with the Commission a proposed rule change to NASD Rule 7010(q). The proposed rule change would rename the Nasdaq Prime data feed as the TotalView Data Feed, expand it to include quotes and orders at all price levels associated with an individual issue traded on Nasdaq, and discontinue the Nasdaq Aggregated Depth at Price (“ADAP”) data feed.
Nasdaq proposes to expand the TotalView Data Feed on or after April 1, 2004 and to eliminate the ADAP data feed on or after February 16, 2004; in each case, Nasdaq will issue a vendor alert announcing the actual date of the change at least three calendar days before it is implemented.
Proposed new language is
(a)–(p) No change.
(q) Nasdaq Data Entitlement Packages
This subsection (q) sets out the charges for the data entitlement packages collectively known as ViewSuite. Subsections (q)(1) and (q)(2) describe the data entitlement packages and set out the regular charges for each. Subsection (q)(3) describes the Enterprise License Program, an optional pilot program that modifies the regular charges for participants as set out therein. Subsection (q)(4) describes
(1) DepthView and PowerView
(A) The DepthView entitlement package contains all [information disseminated through the Nasdaq Aggregated Depth at Price (ADAP) data feed: the five best price levels in Nasdaq on both the bid and offer side of the market. Each price level is dynamically updated and displays the aggregate size of “displayed” trading interest, attributable and non-attributable, at each price level.]
(i) Except as provided in
(ii) [t]
(B)(i) Except as provided in [paragraph]
(ii) [t]
(C) Distributors [
(D) Thirty-Day Free-Trial Offer. Nasdaq [will]
(i) DepthView. For the period of the offer, the DepthView fee of $50 per professional user and $25 per non-professional user
(ii) PowerView. For the period of the offer, the PowerView fee of $45 per professional user and $20 per non-professional user
The
(A) Distributors of TotalView data shall pay a charge of $7,500 per month.
(B) For TotalView, there [will]
(C) 30-Day Free-Trial Offer. Nasdaq [will]
[(i)] For the period of the offer, the TotalView fee of $120 per professional user and $141 per non-professional user
For a nine-month period commencing on April 1, 2003, each distributor of DepthView, PowerView, and/or TotalView may purchase one or more enterprise licenses that entitle it to distribute the licensed product to its entitled Level 1 or NQDS subscribers[
(A) DepthView Non-Professional Enterprise License:
(i) The DepthView Non-Professional Enterprise License permits a distributor to provide DepthView to all of its entitled Level 1 non-professional subscribers.
(ii) The formula for the DepthView Non-Professional Enterprise License fee is 0.25 × number of entitled Level 1 non-professional subscribers in the Predicate Month[
(B) DepthView Professional Enterprise License:
(i) The DepthView Professional Enterprise License permits a distributor to provide DepthView to all of its entitled Level 1 professional subscribers.
(ii) The formula for the DepthView Professional Enterprise License fee is 0.25 × number of Level 1 professional subscribers in the Predicate Month × $50.
(C) PowerView Non-Professional Enterprise License:
(i) The PowerView Non-Professional Enterprise License permits a distributor to provide PowerView to all of its entitled NQDS non-professional subscribers.
(ii) The formula for the PowerView Non-Professional Enterprise License fee is 0.35 × number of NQDS non-professional subscribers in the Predicate Month × $20.
(D) PowerView Professional Enterprise License:
(i) The PowerView Professional Enterprise License permits a distributor to provide PowerView to all of its entitled NQDS professional subscribers.
(ii) The formula for the PowerView Professional Enterprise License fee is 0.35 × number of NQDS professional subscribers in the Predicate Month × $45.
(E) TotalView Non-Professional Enterprise License:
(i) The TotalView Non-Professional Enterprise License permits a distributor to provide TotalView to all of its entitled NQDS non-professional subscribers.
(ii) The formula for the TotalView Non-Professional Enterprise License fee is 0.25 × number of NQDS non-
(F) TotalView Professional Enterprise License:
(i) The TotalView Professional Enterprise License permits a distributor to provide TotalView to all of its entitled NQDS professional subscribers.
(ii) The formula for the TotalView Professional Enterprise License fee is 0.25 × number of NQDS professional subscribers in the Predicate Month × $120.
In addition or as an alternative to the Enterprise License Pilot, for a nine-month period commencing on April 1, 2003, each distributor of DepthView, PowerView, and/or TotalView may purchase one or more non-display licenses that entitle it to provide non-display benefits of the product to users of controlled devices who do not display the data for an additional fee calculated based on the formulae set forth in [subparagraphs]
(A) DepthView Non-Display License. A distributor may provide non-display benefits of DepthView to users of controlled devices who do not display the data for an additional fee calculated as 0.25 × the population of non-display controlled devices in March 2003 × $50 for professional users or $25 for non-professional users.
(B) PowerView Non-Display License. A distributor may provide non-display benefits of PowerView to users of controlled devices who do not display the data for an additional fee calculated as 0.35 × the population of non-display controlled devices in March 2003 × $45 for professional users or $20 for non-professional users.
(C) TotalView Non-Display License. A distributor may provide non-display benefits of TotalView to users of controlled devices who do not display the data for an additional fee calculated as 0.25 × the population of non-display controlled devices in March 2003 × $120 for professional users or $141 for non-professional users.
For a one-year pilot period commencing on October 1, 2003, the DepthView, PowerView and TotalView entitlements described above in
(A)(i) Except as provided in
(ii) A non-professional subscriber[, as defined in subsection (q)(1)(A)(ii) above,] shall pay $14 per month for each controlled device.
(B) The pilot [ViewSuite]
[1. A controlled device is any device that a distributor of the Nasdaq Data Entitlement Package(s) permits to: (a) Access the information in the Nasdaq Data Entitlement Package(s); (b) communicate with the distributor so as to cause the distributor to access the information in the Nasdaq Data Entitlement Package(s). If a controlled device is part of an electronic network between computers used for investment, trading or order routing activities, the burden will be on the distributor to demonstrate that the particular controlled device should not have to
2. A “non-professional” is a natural person who is neither: (a) Registered or qualified in any capacity with the Commission, the Commodities 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 advisor” as that term is defined in Section 201(11) of the Investment Advisors Act of 1940 (whether or not registered or qualified under that Act); nor (c) employed by a bank or other organization exempt from registration under federal or state securities law to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt.
3. So long as NQDS is subject to the Nasdaq Unlisted Trading Privileges (UTP) Plan, the revenues garnered from use of PowerView that are directly attributable to the sale of NQDS under the currently approved pricing for NQDS will be shared pursuant to the UTP Plan.
4.
5.
6. A distributor of a Nasdaq data feed is any firm that receives a Nasdaq data feed directly from Nasdaq or indirectly through another vendor and then distributes it either internally or externally. All distributors must execute a Nasdaq distributor agreement. Nasdaq itself is a vendor of its data feed(s) and will execute a Nasdaq distributor agreement and pay the distributor charge.
7. The NQDS-only fees (incremental to the Level 1 charges) are $30 for professional users and $9 for non-professional users.
8. So long as NQDS is subject to the Nasdaq UTP plan, the revenues from TotalView that are directly attributable to the sale of NQDS under the currently approved pricing for NQDS will be shared pursuant to the UTP Plan.
9. The NQDS-only fees (incremental to the Level 1 charges) are $30 for professional users and $9 for non-professional users.]
[3. The Enterprise License Pilot does not apply to the Level 1 and NQDS data services. All distributors continue to be obligated to report and pay for all entitled Level 1 and NQDS subscribers throughout the pilot period.
4. “Predicate Month” shall mean December of 2002 or, if a distributor reported no Level 1 or NQDS subscribers in December of 2002, the most recent month after December of 2002 in which the distributor did report Level 1 or NQDS subscribers.
5. The Non-Display License Pilot does not apply to the Level 1 and NQDS data services. All distributors continue to be obligated to report and pay for all entitled Level 1 and NQDS subscribers throughout the pilot period.]
In its filing with the Commission, Nasdaq 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. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
Currently, Nasdaq offers two data feeds to distributors to support the proprietary ViewSuite products that are offered to professional and non-professional subscribers. The Aggregated Depth at Price (“ADAP”) data feed includes the five best price levels in SuperMontage and the aggregate size of attributable and non-attributable quotes and orders at each of the five price levels, but does not include the individual quotes and orders that make up the aggregate size. The Prime data feed provides all of the information in the ADAP data feed plus the individual quotes and orders at the top five price levels in SuperMontage.
In this rule filing, Nasdaq proposes to rename Prime as the Nasdaq TotalView Data Feed and expand it to include all of the Prime data feed information at all price levels in SuperMontage, rather than just the top five price levels. Nasdaq also proposes to discontinue the ADAP data feed since all of the data currently offered through it would be available in the new TotalView Data Feed. Nasdaq proposes no change to its distributor fees or its professional or non-professional subscriber fees.
Nasdaq believes that the proposed rule change offers many benefits to investors and market data vendors. First, expanding the Prime data feed to cover all price levels, rather than just the top five price levels, enhances the transparency of the Nasdaq market for both securities professionals and individual investors. Second, current Prime distributors will have an opportunity to reduce their telecommunications charges because the new TotalView Data Feed is expected to use less bandwidth than the Prime data feed. Although the TotalView Data Feed will carry more price levels, it will not have to accommodate message traffic for eliminating quotes that have fallen out of the top five levels in SuperMontage as the Prime data feed did. Third, because the TotalView Data Feed will contain all of the data that is currently carried in the NQDS data feed plus the aggregate size information, some data recipients may choose to discontinue receipt of the NQDS data feed as a way to save telecommunications costs.
Nasdaq also proposes to eliminate ADAP because the market for it as a separate data feed has been extremely limited. Nasdaq represents that the cost of maintaining a separate feed that carries redundant information is substantial, and Nasdaq does not recoup its costs from the few distributors choosing to take only ADAP. Nasdaq also believes that eliminating the ADAP feed will enable Nasdaq to reduce its overall costs, enabling greater opportunities to maintain low prices on all data products. Finally, Nasdaq represents that almost all of the current recipients of ADAP already receive the Prime data feed. Nasdaq believes that the elimination of ADAP feed will result in minimal disruption to the current recipients.
The proposed rule change also corrects certain subsection and footnote designations that were inadvertently duplicated in the adoption of SR–NASD–2003–27 and SR–NASD–2003–111. SR–NASD–2003–27 added new subsections (q)(3) and (q)(4) and new footnotes 3, 4, and 5, although footnotes with such numbers already existed in the then-effective rule. Nasdaq proposes to correct the duplicate footnote issue by eliminating all footnotes and adding the footnote text to the rule text or to the new subsection (q)(6) or (q)(7) as appropriate. SR–NASD–2003–111 inadvertently added a second subsection designated as (q)(4), which is redesignated as (q)(5). Nasdaq also proposes other non-substantive changes to the rule to make it more readable and consistent.
Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act,
Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Nasdaq believes that the expansion of the Prime data feed to include all price levels will benefit distributors and subscribers by providing more data at the same price. Nasdaq also believes that this benefit substantially outweighs any potential additional cost to the few distributors receiving only the ADAP feed directly from Nasdaq that may have to increase the bandwidth of their telecommunications lines to receive the new TotalView data feed directly from Nasdaq. Nasdaq represents that the proposed rule change also would not violate any of Nasdaq's contractual obligations.
Written comments were neither solicited nor received.
Within 35 days of the date of publication of this notice in the
A. By order approve such proposed rule change, or
B. institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549–0609. Comments should be submitted electronically at the following e-mail address:
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.