FR 2025-00415

The document in question is a notice from the Securities and Exchange Commission (SEC) concerning a proposal by The Nasdaq Stock Market LLC to adjust the fees for certain market data products based on the rate of inflation. These products include the Best of Nasdaq Options (BONO) and Nasdaq ITCH to Trade Options (ITTO). The proposal was filed towards the end of 2024 and has been marked for immediate effectiveness, with comments from the public invited until early February 2025.

General Summary

The notice outlines that Nasdaq intends to adjust fees for specific options market data products to account for inflation since they were last modified. The proposal is part of Nasdaq's regulatory obligations under the Securities Exchange Act of 1934. The adjustments are intended to reflect changes in the economic environment, presumably allowing Nasdaq to maintain its operational capacity and financial health in the face of inflation.

Significant Issues and Concerns

Lack of Specificity on Inflation Calculations: One of the main issues is the absence of detailed information on the exact rate of inflation used to calculate the fee adjustments. This omission can lead to ambiguity and confusion among stakeholders about how these fee changes are determined.

Justification for Fee Adjustments: The document does not provide a detailed explanation of why adjustments for these particular fees are necessary. Without this context, it's challenging to assess whether the fee changes are necessary or reasonable.

Complex Language on Regulatory Process: The language regarding the SEC's ability to suspend the rule change is complex, particularly in the footnote section. This complexity may make it difficult for individuals without a regulatory or legal background to understand the potential implications.

Clarity on Fee Adjustment Limits: There is no mention of any caps or limits on fee adjustments, which could raise concerns about potential unchecked increases in fees.

Impact on the Public

For the general public, especially those who are retail investors or users of Nasdaq's market data products, this proposal could mean increased costs if these fee adjustments are passed down to consumers. This could affect individual trading budgets and potentially influence trading activity among smaller investors.

Impact on Stakeholders

Positive Impact:

For Nasdaq and potentially other exchanges, adjusting fees for inflation could help maintain financial stability and ensure the continued provision of services at a level that matches economic realities. This can contribute to a robust infrastructure that benefits all market participants in the long run.

Negative Impact:

However, for professional users and enterprises that rely heavily on Nasdaq's data products, increased fees could lead to higher operational costs. Depending on the fee increases, smaller firms or startups may find it more challenging to compete with larger entities that can absorb such costs more easily.

In conclusion, while the proposal could help Nasdaq account for economic changes and sustain its operations, the lack of clarity and specific details surrounding the inflation adjustments might pose challenges for stakeholders seeking to understand and prepare for the potential impacts. Further transparency and detailed explanations could help address concerns and foster broader understanding and support for these regulatory changes.