NASDAQ has filed a rule change that is immediately effective with the SEC regarding a product called NOTO.  NOTO is a market data product offered by the NASDAQ that is designed to provide proprietary electronic trade data to subscribers. NOTO provides information about the activity of a particular option series during a particular trading session.

In the filing, NASDAQ asserts that for the most part the SEC is out of the business in reviewing many NASDAQ fees.  Section 916 of the Dodd-Frank Act amended paragraph (A) of Section 19(b)(3) of the Dodd-Frank Act by inserting the phrase ‘‘on any person, whether or not the person is a member of the self regulatory organization’’ after ‘‘due, fee or other charge imposed by the self regulatory organization.’’ As a result, according to NASDAQ, all self regulatory organizations, or SRO, rule proposals establishing or changing dues, fees, or other charges are immediately effective upon filing regardless of whether such dues, fees, or other charges are imposed on members of the SRO, non-members, or both.

Section 916 of the Dodd-Frank Act further amended paragraph (C) of Section 19(b)(3) of the Exchange Act to read, in pertinent part, to provide a mechanic for the SEC to challenge the fee if it appears to the SEC 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 Exchange Act.

NASDAQ believes that these amendments to Section 19 of the Exchange Act reflect Congress’s intent to allow the SEC to rely upon the forces of competition to ensure that fees for market data are reasonable and equitably allocated. Although Section 19(b) had formerly authorized immediate effectiveness for a ‘‘due, fee or other charge imposed by the self regulatory organization,’’ the SEC adopted a policy and subsequently a rule stipulating that fees for data and other products available to persons that are not members of the self regulatory organization must be approved by the SEC after first being published for comment.  NASDAQ believes that the amendment to Section 19 reflects Congress’s conclusion that the evolution of self-regulatory organization governance and competitive market structure have rendered the SEC’s prior policy on nonmember fees obsolete.

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