Wednesday, October 1, 2014

Data News #2014 - 10
REVISED 1.16.2015: Nasdaq Announces New Fee Structure and More Flexible Enhanced Display Solution Program

What is changing?

Effective January 1, 2015, Nasdaq will increase the flexibility of the current Nasdaq Enhanced Display Solution (EDS), pending filing with the Securities and Exchange Commission (SEC). For certain Nasdaq proprietary U.S. products as detailed in a below question, Distributor may disseminate Information to EDS Subscribers without the requirement of controlling the display. This does not replace the existing EDS program, but rather provides additional flexibility and clarity, while also ensuring fairness. Effective January 1, 2015, all Application Programming Interfaces ("APIs") and similar distribution mechanisms that contain certain Nasdaq proprietary U.S. data must be classified as one of the following:

• Retransmission data feed
• Managed Data Solution data feed
• Enhanced Display Solution

In response to industry demand and ongoing changes in the technical distribution of market data, Nasdaq is now allowing Distributors to offer APIs that power third party software display applications and where the Distributor controls the entitlement but not the display under a more flexible fee structure. Previously, EDS required the Distributor to offer a controlled display in conjunction with the API.

What products are affected?

The following products are eligible for EDS distribution:

• Nasdaq Totalview
• Nasdaq Basic
• Nasdaq Level 2
• BX Totalview
• PSX Totalview
• BX Basic
• PSX Basic

What are the distribution models that Nasdaq offers?

Nasdaq offers the following distribution models for data:

How can an EDS Subscriber use NASDAQ data?

The EDS Subscriber, or end user, to an Enhanced Display Solution may use the Nasdaq data for its own purposes and may not redistribute the Information outside of their organization, externally, or even internally to other Subscribers in the same organization. Any EDS Subscriber distributing the information further, such as posting the Information on a shared drive or delivering the Information into another system is prohibited under EDS; such use would be considered a Retransmission data feed. In addition, Non-Display use is not permitted under EDS and such usage would be considered a Retransmission data feed or a Managed Data Solution.

What does it mean that Non-Display usage is not permitted?

Non-display use is not permitted contractually under EDS. Although the Distributor is not required to technically control non-display usage because it is extremely difficult to technically control for non-display, the Distributor is required to contractually restrict non-display usage.

While the non-display definition in the policy document is not changing, any non-display (or derived) use that powers the display is allowed. For example, if an application is updating a portfolio and exposes such information on the display, this use is included under EDS. Also, calculating VWAPs or other derived information for use on the display /device is permitted under EDS.

Examples of non-display that are strictly prohibited include but are not limited to, auto-quoting, algorithmic trading, risk management, etc. even if that information is used to power the display. If a Distributor is concerned about whether a certain type of non-display use is permitted under EDS, the firm should reach out to its Nasdaq Sales Representative.

Is a firm required to become a Distributor under the EDS Program?

No. A firm is not required to become a Distributor under the EDS Program. However, if a Distributor allows access to Nasdaq data in the manner described under this program, the Distributor must report such usage as either EDS or a Retransmission data feed.

What are my firm's obligations as a Distributor of an EDS?

Distributors offering an Enhanced Display Solution must:

• Offer an integrated data solution with secured data transmissions, a robust entitlement system and monitor Subscribers for any non-display or excessive usage to ensure compliance.
• Offer Nasdaq data in Distributor’s own messaging formats (rather than its raw Nasdaq message formats) by reformatting, redisplaying and/or altering the Nasdaq data prior to retransmission, but not to affect the integrity of the Nasdaq data and not to render it inaccurate, unfair, uninformative, fictitious, misleading or discriminatory.
• Contractually restrict non-display usage.
• Report the number of EDS Subscribers under new report titles and separately from controlled products.
• Include EDS Subscribers under new products codes in the Detailed Usage Reporting.
• Assume the liability for any unauthorized use of Nasdaq data by Enhanced Display Solution Subscribers.

What are the new fees for Enhanced Display Solution?

As of January 1, 2015, pending SEC filing, Nasdaq will offer new pricing for proprietary Nasdaq data products within the EDS Program. If the Distributor offers multiple Enhanced Display Solutions, it would only be fee liable for one Distribution fee.

The simplified fees to be paid by Distributors offering EDS are as follows:

EDS Distribution fees are only applicable for Distributors offering entitlements to Nasdaq TotalView, Nasdaq OpenView or Nasdaq Level 2.

a) Distributors opting for an Enhanced Display Solution would, in addition, be fee liable for the applicable Professional or Non-Professional Subscriber fees for the underlying Nasdaq data products.

b) Distributors that are subscribing to certain enterprise Nasdaq data capped fees may be exempt from this fee. Please contact your Nasdaq Sales Representative for further assistance.

c) Distributors that are subscribing to the EDS Enterprise License shall entitle the Distributor to distribute to an unlimited number of Professional EDS Subscribers at the enterprise license subscriber rate.

Are EDS subscriber fees changing on January 1, 2015?

Yes. The new EDS subscriber rates are shown below.

Do EDS subscriber fees currently apply for Nasdaq Basic, BX TotalView, PSX TotalView, BX Basic, PSX Basic?

The fees for EDS Subscribers on Nasdaq Basic, BX TotalView, PSX TotalView, BX Basic and/or PSX Basic match the Controlled Product/Subscriber rates for these products. Therefore, there is no fee change for a Subscriber utilizing EDS for these products.

If a Distributor already pays EDS fees, will the Distributor have a fee change?

Yes. The new fees apply to all Distributors offering EDS. However, if a Distributor offers EDS on multiple applications, it will only be charged once.

How should a Distributor count EDS Subscribers if the Distributor offers multiple Enhanced Display Solutions?

If a Distributor offers multiple Enhanced Display Solutions, they should count all EDS Subscribers from each solution and add them together to get a total EDS Subscriber count; this is then used to determine the appropriate EDS fee. For example, if a Distributor offers a solution with 403 EDS Subscribers and also offers another solution with 512 EDS Subscribers, the $7,500 rate would apply because there are 915 underlying EDS Subscribers.

Are fees different for Controlled Products/Subscribers and EDS Subscribers?

Yes. Controlled Products without API usage continue to be charged at the current underlying rates for both Subscriber and Distributor fees. Therefore, neither Distributors nor Subscribers will be subject to a fee increase. For products where the Controlled Products rates are different from EDS Subscriber rates, the Distributor must report EDS Subscribers separately from Controlled Product/ Subscribers.

Which products require new report titles?

The following products will require new report titles for each Distributor offering EDS: Nasdaq TotalView, Nasdaq TotalView/OpenView and Nasdaq Level 2.

If your firm has EDS usage to report and does not see a report title available in NORA by January 1, 2015, please contact dataops@nasdaq.com.

How does my firm become an approved Distributor of EDS?

To receive approval to offer EDS to Subscribers, Distributors must submit the appropriate documentation and receive prior approval from Nasdaq:

• Nasdaq Global Data Agreement - Required for all firms, prior to initiation of the first Nasdaq data service only.
• System Application - Required for all distributors of Enhanced Display Solutions.

Note: EDS Subscribers/End Users are not required to submit documentation at this time.

Where can I find additional pricing information?

The complete price lists are accessible at the following links:

• U.S. Data Products Fee Schedule
• European Data Products Fee Schedule

Where can I find additional information?

• Refer to the Nasdaq Global Data Products Operations webpage.
• Contact Nasdaq Global Data Products at +1 301 978 5307, Option #3 or + 45 33 93 33 66.

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