Monday, December 14, 2015

Data News #2015 - 9
Nasdaq Provides Clarification for U.S. Non-Display Policy

Markets Impacted:

Products Impacted:

Contact Information:

What you need to know:

  • As part of our commitment to customer service, Nasdaq is providing further clarification to the Nasdaq Global Data Policies. In particular, this notice provides examples of use cases, and details on how the Nasdaq U.S. Non-Display policies should be applied and reported.
  • This policy applies to Distributors who are accessing Nasdaq U.S Information and utilizing Nasdaq U.S. Information in a Non-Display manner.

What is changing?

Nasdaq is actively taking steps to increase customer understanding of our data policies and procedures. As a part of this effort, Nasdaq will begin offering clarifications on key terms to provide guidance to clients on how these definitions should be applied.

The clarifications are meant to offer more details around use cases. They do not replace the Nasdaq Global Data Policies or previous definitions of Non-Display. The Nasdaq Global Data Policies have been updated to reflect the clarification.

Nasdaq understands that the use of Information is an extremely complex and evolving issue. This clarification should help with some of the confusion in the industry; if there are specific use cases not illustrated or explained below, please reach out to your sales representative.

Nasdaq reserves the right to update our policies as needed to be consistent with industry changes. Any policy changes will be communicated via Data News.

How does Nasdaq define Non-Display?

Non-Display is any method of accessing Nasdaq U.S. Information that involves access or use by a machine or automated Device without access or use of a Display by a natural person or persons.

Note: Devices [or servers] used in the transportation, dissemination or aggregation of data (distribution) are not necessarily fee liable, but the Distributor should be able to identify such Devices that exist within the market data infrastructure and identify how many Devices are used for distribution separate and apart from the Devices that are used for the reasons listed in the examples below.

What is the relevant Unit of Count?

For purposes of counting Non-Display Devices, Distributors are required to report the greater of a) the number of Subscribers that can modify the application in real-time, or b) the number of Devices [usually servers] that receive and benefit from the information.

“Subscriber” is defined as a device or computer terminal or an automated service which is entitled to receive Information. Nasdaq may also use the terms “Interrogation Device” or "Device” or “Access”.

If the Distributor is unable to count the physical number of Subscribers or the number of Devices, then the Distributor may submit usage reports for 1) the number of IP addresses, or 2) the number of hosts that have access to Nasdaq U.S. Information.

What are examples of Devices that may be fee-liable?

Distributors should have a quantifiable and auditable procedure in place to count and exclude all Devices that are non-fee liable. For clarification purposes, the following are considered Devices and should be reported unless otherwise excluded:

  • Blade server (a type of server)
  • Rack server
  • FPGA may not necessarily be a server, but if an FPGA is run on a server that server may be fee liable.

Nasdaq does not recognize the following terms to determine whether a Device is fee liable for Non-Display purposes:

  • Cores – Nasdaq understands that Devices may utilize multiple cores or processors to handle market data and trading. If two or more cores sit on the same physical device then Nasdaq would require the Distributor to report one Subscriber.
  • GPU, Xeon Phi cards, memory or chassis linked to a server utilizing these hardware devices that is already counted
  • Virtual Machines run on the same Device (whether one or multiple cores) would be reported as one Subscriber.

What are examples of fee-liable Non-Display?

Examples of fee-liable Non-Display use include, but are not limited to, what is described below. Nasdaq provides these examples to help Distributors understand how Non-Display may be applied. This is not a complete list and Nasdaq strongly encourages every firm to verify with their Nasdaq Sales Representative the appropriate fees for their use case.

  • Automated Trading
  • All automated trading programs, applications, and scripts. Nasdaq recognizes that many programs including, but not limited to workbook software and applications and third party software and applications with auto-quoting/pegging (e.g. Microsoft Excel, GoogleDocs, Numbers for Mac or other third party software) may be utilized to implement an automated trade, and such use would be considered Non-Display. Other similar use cases would also require payment of the Non-Display license.
  • Orders that are created or delivered via an automated order handling logic
  • Automated conditional orders, or complex order chain building whereby an algorithm responds to certain pre-set conditions
  • Automated order/quote generation and/or order/quote pegging
  • Price referencing for use in algorithmic trading
  • Price referencing for use in smart order routing
  • Program Trading and High Frequency Trading
  • The use of automated programs to trade instruments
  • Order Verification
  • An Order Verification program that calculates estimated costs
  • An Order Verification program that provides warning/informational messages such as an order at a defined percentage threshold away from the quote
  • Automated Surveillance Programs
  • Risk management that encompasses auto stop loss/position exiting functions
  • Risk management, the process of identification and analysis of investment decision making, occurs whenever a person, bank, or other such interested party analyzes and attempts to determine their potential gain or loss and takes the appropriate action depending on their investment objectives.
  • Automatic order cancellation, or automatic error discovery
  • Clearing and settlement activities
  • Account maintenance (e.g. controlling margin for a customer account)
  • Hot disaster recovery
  • Trading Platform - in this context- shall mean any execution platform operated as or by a registered National Securities Exchange (as defined in Section 3(a)(1) of the Exchange Act), an Alternative Trading System (as defined in Rule 300(a) of Regulation ATS), or an Electronic Communications Network (as defined by Rule 600(b)(23) of Regulation NMS).

If your firm is unsure about a specific use case, please submit your use case to your Nasdaq Sales Representative for a determination at any time. For avoidance of doubt, Non-Display is fee liable regardless of whether the Order Management System, Execution Management System, or trading infrastructure is:

  • Hosted by a vendor or sub vendor,
  • Located in the cloud,
  • Installed locally within your own data center,
  • Enterprise, or
  • Locally on an individual’s desktop or device.

If your firm utilizes Nasdaq Information in accordance with the Non-Display clarification above please contact Nasdaq for the applicable paperwork.

Note: the Non-Display fee structure and reporting requirements may vary depending upon the Nasdaq U.S. Information, but the Non-Display Policy and Unit of Count are consistent across all Nasdaq U.S. data products.

Please refer to the Nasdaq Global Data Policies for more information on Unit of Count and the Non-Display definition.

Does the Trading Platform fee replace the existing Nasdaq U.S. Non-Display fee?

No. Distributors must continue to pay the existing Nasdaq U.S. Non-Display fee based on the pricing and policies previously set forth. Trading Platform fees cannot be used to waive (or in any way alleviate) the current Nasdaq U.S. Non-Display fee. However, the Trading Platform fee only applies to Distributors that pay less than $15,000 per month in Direct Access fees for Nasdaq U.S. Non-Display use.

For further clarity, the Trading Platform fee applies to any and all components of the registered ATS, ECN, or Exchange that utilize the Information, including , but not limited to, the Internal matching engine, order routing functionality and infrastructure, and any algorithms utilized within the Trading Platform. For example, if the Trading Platform leverages an order router(s) that utilizes the Information, but the Trading Platform does not use the Information for internal matching, the organization is still required to report use of the Trading Platform.

What does Non-Display exclude?

Non-Display does not include any use of Nasdaq U.S. Information that merely enables and in actuality results in output of such use or distribution of the Nasdaq U.S. Information solely in a display. Examples include, but are not limited to:

  • If an application is updating a portfolio and exposes such information on the display, this use is not considered Non-Display.
  • For example, calculating VWAPs or other derived information for use in a Display is not considered Non-Display.
  • If an application is updating a risk management officer on a trader’s position and exposing that information on a display, this is not considered Non-Display (provided there are no automated risk management/position exiting functions).
  • Authorization and entitlement
  • Transportation and cold disaster recovery servers – Distributor needs to identify and show that servers used in this process are only used for transportation of market data or trades, and are not utilized for any other fee-liable purpose identified above. Further, disaster recovery servers utilized in a cold environment are non-fee liable, but hot disaster recovery servers are fee-liable because they are typically optimized for load balancing.
  • Devices [or servers] used in the transportation, dissemination or aggregation of data (distribution) are not considered Non-Display. The Distributor should be able to identify such Devices that exist within the market data infrastructure and identify how many Devices are used for distribution separate and apart from the Devices that are used for the reasons listed above.

How does my firm report Non-Display?

Below are some reporting examples of Non-Display:

  • The Device only displays data with no Non-Display – report one Display Subscriber
  • The Device supports both Non-Display and Display – report one Non-Display Subscriber and one Display Subscriber
  • The Device supports Display but also Non-Display use on a separate server – report one Non-Display Subscriber and one Display Subscriber. Note, only count the separate Non-Display server once, not with every use of Display.
  • The Device supports Display but also Non-Display use where the Nasdaq Information for the Non-Display solely originates from another third party distributor – report one Display Subscriber. Third party distributor will report one Non-Display.
  • The Device supports Display but automated trading is built into the Display - report one Non-Display Subscriber and one Display Subscriber
  • The Device supports Display with automated trading functions on a third party software that the Display connects to via an API, DDE or similar solution – report one Non-Display Subscriber and one Display Subscriber

Please contact your Nasdaq Sales Representative for the following:

  • Activation of Non-Display report titles
  • Questions about whether a product requires a separate non-display report title (Please note: not all products have separate Non-Display report titles)

Does reporting differ if the Information is received via Direct Access and used in a Non-Display manner?

Yes. If a Distributor receives the Information via Direct Access, they do not need to report both a Non-Display Subscriber and a Display Subscriber. They only need to report the Non-Display Subscriber. However, if the Display is on a separate device, remote desktop or similar service then both Non-Display and Display are fee liable.

Where can I find Non-Display pricing information?

Non-Display prices vary by data product. Please see the Nasdaq Price List.

Where can I find additional Information?

Contact your Nasdaq Sales Representative or Nasdaq Global Data Products at +1 301 978 5307 or +45 33 93 33 66 for general inquiries.

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Nasdaq (Nasdaq: NDAQ) is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today's global capital markets. As the creator of the world's first electronic stock market, its technology powers more than 90 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to approximately 3,900 total listings with a market value of approximately $13 trillion. To learn more, visit: