80 FR 14427 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NASDAQ Rules 7014

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 53 (March 19, 2015)

[Federal Register Volume 80, Number 53 (Thursday, March 19, 2015)]
[Notices]
[Pages 14427-14428]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06264]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74506; File No. SR-NASDAQ-2015-020]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NASDAQ Rules 7014

March 13, 2015.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 2, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ is proposing changes to the Investor Support Program 
(``ISP'') and the Qualified Market Maker (``QMM'') Incentive Program 
under NASDAQ Rule 7014.
    The text of the proposed rule change is available at 
nasdaq.cchwallstreet.com, at NASDAQ's principal office, and at the 
Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    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 those statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NASDAQ is proposing to amend NASDAQ Rule 7014(c) to remove a 
member's ISP credit at the $0.00005 rate with respect to all shares of 
displayed liquidity that are executed at a price of $1 or more in the 
Nasdaq Market Center during a given month, as well as the related 
qualifying requirements for an ISP member to qualify for such a credit.
    Also, the Exchange is proposing to amend NASDAQ Rule 7014(e)(1) to 
apply QMM rebates only to securities listed on NYSE (``Tape A'') and 
securities listed on exchanges other than NASDAQ and NYSE (``Tape B''). 
Specifically, only Tape A and Tape B securities will be eligible to 
receive the additional QMM rebate of $0.0002 per share executed with 
respect to orders that are executed at a price of $1 or more and (A) 
displayed a quantity of at least one round lot at the time of 
execution; (B) either established the NBBO or was the first order 
posted on NASDAQ that had the same price as an order posted at another 
trading center with a protected quotation that established the NBBO; 
(C) were entered through a QMM MPID; and (D) that no additional rebate 
will be issued with respect to Designated Retail Orders (as defined in 
NASDAQ Rule 7018) (``Additional QMM Rebate Criteria'').\3\
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    \3\ The correction of a typographical error in the numbering in 
the middle of NASDAQ Rule 7014(e)(1) will also be included (changing 
a ``(4)'' to (``E'')).
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    Similarly, the Exchange is proposing to amend NASDAQ Rule 
7014(e)(2) to have only Tape A and Tape B securities receive the credit 
of $0.0001 per share executed with respect to all other displayed 
orders (other than Designated Retail Orders, as defined in Rule 7018) 
in securities priced at $1 or more per share that provide liquidity and 
that are entered through a QMM MPID.
    The proposed changes are intended to better align credits within 
the ISP and QMM programs, as well as to fix a typographical error in 
the rule text of NASDAQ Rule 7014(e)(1).
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of section 6 of the Act,\4\ in general, and with 
sections 6(b)(4) and 6(b)(5) of the Act,\5\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which NASDAQ operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    NASDAQ believes that the proposed changes to the ISP Program in 
NASDAQ Rule 7014(c) is reasonable because it eliminates an unnecessary 
credit, and related qualifying requirements, at the $0.00005 rate with 
respect to all shares of displayed liquidity that are executed at a 
price of $1 or more in the Nasdaq Market Center during a given month. 
The Exchange believes that the two other credit tiers that remain 
available to ISP members provide sufficient incentive. Also, the credit 
proposed to be eliminated is the least economically advantageous to ISP 
members. The Exchange also believes this change is consistent with a 
fair allocation of a reasonable fee and not unfairly discriminatory 
because the removal of this credit applies to all ISP members equally.

[[Page 14428]]

    The Exchange believes that the proposed change to the QMM Program 
in NASDAQ Rule 7014(e)(1) of only having Tape A and Tape B securities 
be eligible to receive the additional QMM rebate of $0.0002 per share 
executed with respect to orders that are executed at a price of $1 or 
more and that meet the Additional QMM Rebate Criteria, is reasonable 
because the Exchange believes that firms no longer need the additional 
incentive to quote at the NBBO in Nasdaq-listed securities (``Tape 
C''). The Exchange also believes this change is consistent with a fair 
allocation of a reasonable fee and not unfairly discriminatory because 
the additional rebate only applying to Tape A and Tape B securities 
will apply uniformly to all QMM members.
    The Exchange also believes that the proposed change to the QMM 
Program in NASDAQ Rule 7014(e)(2) of only having Tape A and Tape B 
securities receive the additional QMM credit of $0.0001 per share 
executed with respect to all other displayed orders (other than 
Designated Retail Orders, as defined in Rule 7018) in securities priced 
at $1 or more per share that provide liquidity and that are entered 
through a QMM MPID is reasonable because the Exchange believes that 
firms no longer need the additional incentive to quote in Tape C.
    The Exchange also believes that this change is consistent with a 
fair allocation of a reasonable fee and not unfairly discriminatory 
because the additional QMM credit only applying to Tape A and Tape B 
securities will apply uniformly to all QMM members.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASDAQ does not believe that the proposed rule changes will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.\6\ NASDAQ notes 
that it operates in a highly competitive market in which market 
participants can readily favor competing venues if they deem fee levels 
at a particular venue to be excessive, or rebate opportunities 
available at other venues to be more favorable. In such an environment, 
NASDAQ must continually adjust its fees to remain competitive with 
other exchanges and with alternative trading systems that have been 
exempted from compliance with the statutory standards applicable to 
exchanges. Because competitors are free to modify their own fees in 
response, and because market participants may readily adjust their 
order routing practices,
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    \6\ 15 U.S.C. 78f(b)(8).
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    NASDAQ believes that the degree to which fee changes in this market 
may impose any burden on competition is extremely limited or even non-
existent. In this instance, the changes to credits for the ISP and QMM 
programs do not impose a burden on competition because these NASDAQ 
incentive programs remain in place, still offer economically 
advantageous credits, and are reflective of the need for exchanges to 
offer and to let the financial incentives to attract order flow evolve. 
While the Exchange does not believe that the proposed changes will 
result in any burden on competition, if the changes proposed herein are 
unattractive to market participants it is likely that NASDAQ will lose 
market share as a result.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act.\7\ At any time within 60 days of the filing 
of the proposed rule change, the Commission summarily may temporarily 
suspend such rule change if it appears to the Commission 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 Act. If the Commission takes such action, the Commission shall 
institute proceedings to determine whether the proposed rule should be 
approved or disapproved.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2015-020 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2015-020. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will also be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NASDAQ-2015-020, and should be submitted on or before April 9, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06264 Filed 3-18-15; 8:45 am]
BILLING CODE 8011-01-P