80 FR 21778 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NASDAQ Rules 7014 and 7018
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 75 (April 20, 2015)
Federal Register Volume 80, Issue 75 (April 20, 2015)
| Page Range | 21778-21782 | |
| FR Document | 2015-08941 |
[Federal Register Volume 80, Number 75 (Monday, April 20, 2015)] [Notices] [Pages 21778-21782] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-08941] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74725; File No. SR-NASDAQ-2015-032] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NASDAQ Rules 7014 and 7018 April 14, 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 April 1, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change NASDAQ is proposing changes to the Qualified Market Maker (``QMM'') Incentive Program under Rule 7014, and the qualification requirements for certain fees relating to Market-on-Close and/or Limit-on-Close orders under Rule 7018(a). 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 [[Page 21779]] 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 Rule 7014(d), which provides the qualification criteria for designation as a Qualified Market Maker (``QMM'') under the QMM incentive program, to limit qualification to registered NASDAQ market makers (``Market Makers''). Currently, a QMM may be, but is not required to be, a Market Maker in any security.\3\ The QMM program provides incentives to a member firm to make a significant contribution to market quality by providing liquidity at the NBBO in a large number of stocks for a significant portion of the day. In addition, the member must avoid imposing the burdens on NASDAQ and its market participants that may be associated with excessive rates of entry of orders away from the inside and/or order cancellation. The Exchange notes that the program, to date, has been used very little by member firms that are not Market Makers, and only Market Makers use the program at this time. Accordingly, the Exchange is proposing to amend Rule 7014(d)(3) to limit the program to Market Makers. The Exchange is also deleting the current qualification criteria under Rule 7014(d)(3) that requires a member firm to have liquidity provided in all securities through one of its NASDAQ Market Center MPIDs that represent 0.30% of Consolidated Volume during the month. The Exchange notes that the Consolidated Volume requirement is superfluous given that it is adopting Consolidated Volume eligibility criteria for the credits under the QMM program, and is adding an absolute Consolidated Volume eligibility criteria to receive the reduced removal rate under the program, as discussed below. --------------------------------------------------------------------------- \3\ Thus, the QMM designation does not by itself impose a two- sided quotation obligation or convey any of the benefits associated with being a registered market maker. --------------------------------------------------------------------------- NASDAQ is amending Rule 7014(e), which sets forth the criteria required to receive the benefits of the program, to move the two credits provided under subparagraphs (1) and (2) provided for executions in securities listed on NYSE (``Tape A'') and securities listed on exchanges other than NASDAQ and NYSE (``Tape B'') to a table format directly under Rule 7014(e). NASDAQ is also modifying the criteria a QMM must meet to receive the two tiers of credits under the rule. Currently, NASDAQ provides a rebate of $0.0002 per share executed (in addition to other credits received under Rule 7018(a)) 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; (D) were for securities listed on NYSE or securities listed on exchanges other than NASDAQ and NYSE and (E) that no additional rebate will be issued with respect to Designated Retail Orders (as defined in Rule 7018). NASDAQ is proposing to replace these requirements with a new requirement that a QMM execute shares of liquidity provided in all securities through one or more of its NASDAQ Market Center MPIDs that represent greater than 0.90% of Consolidated Volume during the month. The Exchange is replacing the current requirements, which provide the QMM with an incentive to provide displayed liquidity that sets the NBBO on NASDAQ, with a new requirement to provide a significant level Consolidated Volume in all securities through one or more of its MPIDs. Consolidated Volume is defined by Rule 7018(a) as the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot.\4\ The Exchange believes that tying the rebate to the provision of greater overall volume will provide an increased impact to improving market quality over the current NBBO-based criteria. --------------------------------------------------------------------------- \4\ For purposes of calculating Consolidated Volume and the extent of a member's trading activity, expressed as a percentage of or ratio to Consolidated Volume, the date of the annual reconstitution of the Russell Investments Indexes shall be excluded from both total Consolidated Volume and the member's trading activity. --------------------------------------------------------------------------- Similarly, the Exchange is proposing to modify the requirements to receive a rebate of $0.0001 per share executed under Rule 7014(e)(2). Currently, a QMM will receive the rebate 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 that are entered through a QMM MPID in Tape A or B securities. The Exchange is proposing to now require that a QMM execute shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent from 0.70% up to and including 0.90% of Consolidated Volume during the month. The Exchange believes that tying the rebate to the provision of greater overall volume will provide an increased impact to improving market quality over the current requirement that the orders are displayed and provide liquidity. As a consequence of moving and modifying the criteria of Rules 7014(e)(1) and (2), NASDAQ is moving certain rule text concerning the type of securities that the rule applies to, and certain exclusions from the program, from subparagraphs (1) and (2) to the first paragraph of Rule 7014(e). As noted above, NASDAQ is placing the two credits provided under subparagraphs (1) and (2) in a table format and, consequently, is deleting those subparagraphs. NASDAQ is moving language, which is repeated in both subparagraphs, that notes the credits provided apply to securities priced at $1 or more per share to the new table under Rule 7014(e) where the two credits are now located. The Exchange is also moving text that concerns exclusion of Designated Retail Orders from subparagraphs (1) and (2) to directly above the new table under Rule 7014(e). NASDAQ is proposing to amend the criteria under Rule 7014(e)(3) required to receive the reduced remove rate fee of $0.00295 per share executed under the rule in Tape A and B securities priced at $1 or more for shares executed via its QMM MPID. Currently, NASDAQ will charge a fee of $0.0030 per share executed for orders in securities listed on NASDAQ (``Tape C'') priced at $1 or more per share that access liquidity on the NASDAQ Market Center and that are entered through a QMM MPID, and charges a fee of $0.00295 per share executed for orders in Tape A or B securities priced at $1 or more per share that access liquidity on the NASDAQ Market Center and that are entered through a QMM MPID; provided, however, that after the first month in which an MPID becomes a QMM MPID, the QMM's volume of liquidity added, provided, and/or routed through the QMM MPID during the month (as a percentage of Consolidated Volume) must not be less than 0.05% lower than the volume of liquidity added, provided, and/or routed through such QMM MPID during the first month in which the MPID qualified as a QMM MPID (as a percentage of Consolidated Volume). NASDAQ is proposing to eliminate the current Consolidated Volume requirement, which relates to [[Page 21780]] the first month in which an MPID qualified as a QMM MPID, and now require that the QMM executes shares of liquidity provided in all securities through one or more of its NASDAQ Market Center MPIDs of 0.80% or more of Consolidated Volume during the month. The Exchange believes that the changes will tie receipt of the reduced removal fee in Tape A and B securities to a more meaningful measure of market- improvement. Decoupling the measure from the QMM's first month QMM Consolidated Volume will ensure that all QMMs meet a minimum standard that is uniform. Increasing the Consolidated Volume required to receive the fee will provide incentive to QMMs to provide greater market- improving participation in return for the benefit. The Exchange is also proposing to increase the level of Consolidated Volume that a member firm must have in Market-on-Close and/or Limit-on-Close orders during the month in order to qualify for fees to remove liquidity in securities executed at or above $1 under Rule 7018(a)(1), (2) and (3). Currently, NASDAQ assesses a fee for member firms that qualify based on their Market-on-Close and/or Limit- on-Close order participation in the Closing Cross of $0.0030 per share executed in Tape C securities under Rule 7018(a)(1), and fees of $0.00295 per share executed in Tape A and B securities under Rules 7018(a)(2) and (3), respectively. To qualify under each of the rules, a member firm must have Market-on-Close and/or Limit-on-Close orders executed in the NASDAQ Closing Cross, entered through a single NASDAQ Market Center market participant identifier, that represent more than 0.06% of Consolidated Volume during the month. The Exchange is proposing to increase the minimum level of Consolidated Volume required under each of the rules to 0.15%. 2. Statutory Basis NASDAQ believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\5\ in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 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. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78f. \6\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- NASDAQ believes that the proposed changes to the QMM program in NASDAQ Rule 7014(d)(3) is [sic] reasonable and will not discriminate unfairly because they refine the program to focus on market participants who currently use the program. As discussed above, Market Makers have provided the vast majority of participation in the program and are currently the only market participant utilizing the program. Accordingly, restricting the program to Market Makers will not result in a material change in who participates in the program. Additionally, Market Makers have both obligations to the market and regulatory requirements that normally do not apply to other market participants. As such, the Exchange believes that providing additional incentives to Market Makers to provide liquidity for the benefit of all investors and other market participants is reasonable and not unfairly discriminatory. The proposed modifications to the QMM program recognize the benefits of increased Market Maker participation and the Exchange believes that this proposal will improve displayed liquidity, and thus the execution quality overall on the Exchange. Moreover, the Exchange believes that eliminating the current Consolidated Volume requirement is reasonable and not unfairly discriminatory because it will become superfluous in light of additional requirements based on Consolidated Volume that are also being proposed herein. For the same reasons noted above, limiting eligibility in the program to Market Makers and eliminating the Consolidated Volume requirement under Rule 7014(d)(3) is an equitable allocation of the fees and credits provided by the program. In this regard, no current participants in the program will be excluded from being eligible to participate after the proposed change is effective, and applying the current Consolidated Volume criteria will have no significance in light of the proposed changes to the specific fees and credits under the program. The Exchange believes that the proposed changes to Rule 7014(e) are reasonable and not unfairly discriminatory because they impose stricter requirements on Market Makers to receive the benefits of the program, which will be applied uniformly to all Market Makers that are eligible to participate in the QMM program. With regard to the $0.0002 rebate provided in Tape A and B securities, the Exchange is eliminating the NBBO-based criteria and tying the rebate to greater overall volume, which the Exchange believes will provide a greater impact to improving overall market quality because the economic benefits provided to the Market Maker are more certain and therefore provide the Market Maker a means to more aggressively provide displayed liquidity to the Exchange for the benefit of all market participants. In this regard, the Exchange notes that Market Makers must provide more than 0.90% of Consolidated Volume during the month, which is a significant level participation in the market. Similarly, NASDAQ is proposing a significant level of Consolidated Volume to receive the $0.0001 rebate under the rule, which currently only requires that the QMM participant provide displayed liquidity. The Exchange believes that it is reasonable and not unfairly discriminatory to impose stricter criteria designed to improve market quality in return for the credit NASDAQ elects to provide. NASDAQ also believes that the proposed changes to the eligibility requirements for the reduced removal fee in Tape A and B securities of $0.00295 per share executed are reasonable and not unfairly discriminatory because they increase the level of Consolidated Volume required, which will be an absolute requirement and not tied to historical levels of Consolidated Volume, thereby increasing the level of market improvement necessary to receive the reduced rate. As an absolute requirement, the Consolidated Volume requirement will apply uniformly to all Market Makers eligible to participate in the program. The Exchange believes that the proposed changes to the eligibility requirements under Rule 7014(e) are an equitable allocation because NASDAQ will provide the same rebates and fees to all Market Makers that qualify under the rule. Lastly, NASDAQ notes that Market Makers serve an important role on the Exchange with regard to order interaction and provide continuous, passive liquidity in the marketplace. Additionally, Market Makers incur costs unlike the majority of other market participants including, but not limited to, their own infrastructure and other technology costs associated with market making activities. Consequently, the proposed differentiation between Market Makers and other market participants recognizes the differing contributions made to the quality of the market on the Exchange by Market Makers and the heightened regulatory requirements and costs associated with being a Market Maker. In brief, the Exchange believes that the proposed changes to the QMM program further [[Page 21781]] incentives registered Market Makers to provide liquidity improves market qualify [sic], furthers the price discovery process and benefits investors. The Exchange believes that the proposed changes to the level of Consolidated Volume in Market-on-Close and/or Limit-on-Close order participation in the Closing Cross required to receive the fees for orders that remove liquidity under Rules 7018(a)(1), (2), and (3) are reasonable and not unfairly discriminatory because they represent an increase in the level of market-improving Consolidated Volume contributed to the Closing Cross. NASDAQ provides discounted fees in Market-on-Close and/or Limit-on-Close orders in Tape A and B securities to provide incentives to member firms to provide liquidity in the closing process. NASDAQ is increasing the Consolidated Volume requirement to better align the discounted remove fees with members that use the closing cross process more regulatory [sic] over alternatives and also access liquidity more frequently on the Exchange as opposed to other members. Nonetheless, NASDAQ believes that it is reasonable and not unfairly discriminatory to change the eligibility criteria so that it mirrors the eligibility criteria of the related fees under Rules 7018(a)(2) and (3). Lastly, the Exchange believes that the proposed changes to the rules are an equitable allocation of the fees because the fee is provided uniformly to all member firms that qualify for the fees and all member firms have an equal opportunity to earn the discounted fee for accessing liquidity. 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.\7\ 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, 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 eligibility criteria required to receive credits and reduced fees under the QMM program do not impose a burden on competition because the incentive program remains in place, still offers economically advantageous credits and reduced fees, and is 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 to the QMM program 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. Similarly, the proposed changes to the eligibility criteria for remove fees under Rule 7018(a) based on Market-on-Close and/or Limit- on-Close order participation in the Closing Cross are designed to increase participation in the Closing Cross by setting the minimum level of Consolidated Volume eligibility criteria higher, thereby improving the market at the market close. To the extent the qualification criteria is too onerous or unattractive to market participants, NASDAQ will likely lose order flow and participation in the Closing Cross as a result. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- 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 rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.\8\ 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. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- 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 CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number SR-NASDAQ-2015-032 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASDAQ-2015-032. 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 a.m. and 3 p.m. Copies of such filing also will 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-2015-032, and should be submitted on or before May 8, 2015. [[Page 21782]] For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\9\ --------------------------------------------------------------------------- \9\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-08941 Filed 4-17-15; 8:45 am] BILLING CODE 8011-01-P
![21778 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Notices
consistent with the protection of IV. Solicitation of Comments For the Commission, by the Division of
investors and the public interest, the Trading and Markets, pursuant to delegated
proposed rule change has become Interested persons are invited to authority.24
effective pursuant to Section 19(b)(3)(A) submit written data, views, and Brent J. Fields,
of the Act 18 and Rule 19b–4(f)(6)(iii) arguments concerning the foregoing, Secretary.
thereunder.19 including whether the proposed rule [FR Doc. 2015–08942 Filed 4–17–15; 8:45 am]
change is consistent with the Act. BILLING CODE 8011–01–P
A proposed rule change filed Comments may be submitted by any of
pursuant to Rule 19b–4(f)(6) under the
the following methods:
Act 20 normally does not become SECURITIES AND EXCHANGE
operative for 30 days after the date of its Electronic Comments COMMISSION
filing. However, Rule 19b–4(f)(6)(iii) 21
permits the Commission to designate a • Use the Commission’s Internet [Release No. 34–74725; File No. SR–
shorter time if such action is consistent comment form (http://www.sec.gov/ NASDAQ–2015–032]
with the protection of investors and the rules/sro.shtml); or
Self-Regulatory Organizations; The
public interest. The Exchange has asked • Send an email to rule-comments@ NASDAQ Stock Market LLC; Notice of
the Commission to waive the 30-day sec.gov. Please include File Number SR– Filing and Immediate Effectiveness of
operative delay so that the proposal may BATS–2015–29 on the subject line. Proposed Rule Change To Amend
become operative immediately upon NASDAQ Rules 7014 and 7018
Paper Comments
filing. The Exchange believes that
waiving the 30-day operative delay is • Send paper comments in triplicate April 14, 2015.
consistent with the protection of to Brent J. Fields, Secretary, Securities Pursuant to Section 19(b)(1) of the
investors and the public interest and Exchange Commission, 100 F Street Securities Exchange Act of 1934
because it would allow the Exchange to (‘‘Act’’),1 and Rule 19b–4 thereunder,2
NE., Washington, DC 20549–1090.
timely offer investors a new option for notice is hereby given that, on April 1,
receiving consolidated volume All submissions should refer to File 2015, The NASDAQ Stock Market LLC
information. The Exchange further notes Number SR–BATS–2015–29. This file (‘‘NASDAQ’’ or the ‘‘Exchange’’) filed
that other exchanges currently offer number should be included on the with the Securities and Exchange
similar data products that include subject line if email is used. To help the Commission (‘‘Commission’’) the
consolidated volume.22 The Commission process and review your proposed rule change as described in
comments more efficiently, please use Items I and II below, which Items have
Commission believes that waiving the
only one method. The Commission will been prepared by the Exchange. The
30-day operative delay is consistent
post all comments on the Commission’s Commission is publishing this notice to
with the protection of investors and the
Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule
public interest. Therefore, the
rules/sro.shtml). Copies of the change from interested persons.
Commission hereby waives the
operative delay and designates the submission, all subsequent I. Self-Regulatory Organization’s
proposed rule change operative upon amendments, all written statements Statement of the Terms of the Substance
filing.23 with respect to the proposed rule of the Proposed Rule Change
change that are filed with the NASDAQ is proposing changes to the
At any time within 60 days of the
Commission, and all written Qualified Market Maker (‘‘QMM’’)
filing of the proposed rule change, the
communications relating to the Incentive Program under Rule 7014, and
Commission summarily may
proposed rule change between the the qualification requirements for
temporarily suspend such rule change if
it appears to the Commission that such Commission and any person, other than certain fees relating to Market-on-Close
action is necessary or appropriate in the those that may be withheld from the and/or Limit-on-Close orders under
public interest, for the protection of public in accordance with the Rule 7018(a).
investors, or otherwise in furtherance of provisions of 5 U.S.C. 552, will be The text of the proposed rule change
the purposes of the Act. If the available for Web site viewing and is available at nasdaq.cchwallstreet.com
Commission takes such action, the printing in the Commission’s Public at NASDAQ’s principal office, and at
Reference Room, 100 F Street NE., the Commission’s Public Reference
Commission shall institute proceedings
Washington, DC 20549 on official Room.
to determine whether the proposed rule
should be approved or disapproved. business days between the hours of II. Self-Regulatory Organization’s
10:00 a.m. and 3:00 p.m. Copies of such Statement of the Purpose of, and
18 15 U.S.C. 78s(b)(3)(A). filing also will be available for Statutory Basis for, the Proposed Rule
19 17 CFR 240.19b–4(f)(6)(iii). As required under inspection and copying at the principal Change
Rule 19b–4(f)(6)(iii), the Exchange provided the office of the Exchange. All comments
Commission with written notice of its intent to file In its filing with the Commission,
received will be posted without change;
the proposed rule change, along with a brief NASDAQ included statements
description and the text of the proposed rule the Commission does not edit personal concerning the purpose of, and basis for,
change, at least five business days prior to the date identifying information from the proposed rule change and discussed
of filing of the proposed rule change, or such submissions. You should submit only
shorter time as designated by the Commission. any comments it received on the
information that you wish to make
mstockstill on DSK4VPTVN1PROD with NOTICES
20 17 CFR 240.19b–4(f)(6). proposed rule change. The text of those
21 17 CFR 240.19b–4(f)(6)(iii). available publicly. All submissions statements may be examined at the
22 See supra note 14 (noting that NYSE BQT and should refer to File Number SR–BATS– places specified in Item IV below. The
NLS Plus carry consolidated volume for all listed 2015–29, and should be submitted on or Exchange has prepared summaries, set
equities). before May 11, 2015.
23 For purposes only of waiving the 30-day
forth in sections A, B, and C below, of
operative delay, the Commission has considered the
1 15 U.S.C. 78s(b)(1).
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f). 24 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4.
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![21780 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Notices
the first month in which an MPID NASDAQ believes that the proposed will provide a greater impact to
qualified as a QMM MPID, and now changes to the QMM program in improving overall market quality
require that the QMM executes shares of NASDAQ Rule 7014(d)(3) is [sic] because the economic benefits provided
liquidity provided in all securities reasonable and will not discriminate to the Market Maker are more certain
through one or more of its NASDAQ unfairly because they refine the program and therefore provide the Market Maker
Market Center MPIDs of 0.80% or more to focus on market participants who a means to more aggressively provide
of Consolidated Volume during the currently use the program. As discussed displayed liquidity to the Exchange for
month. The Exchange believes that the above, Market Makers have provided the the benefit of all market participants. In
changes will tie receipt of the reduced vast majority of participation in the this regard, the Exchange notes that
removal fee in Tape A and B securities program and are currently the only Market Makers must provide more than
to a more meaningful measure of market participant utilizing the 0.90% of Consolidated Volume during
market-improvement. Decoupling the program. Accordingly, restricting the the month, which is a significant level
measure from the QMM’s first month program to Market Makers will not participation in the market. Similarly,
QMM Consolidated Volume will ensure result in a material change in who NASDAQ is proposing a significant
that all QMMs meet a minimum participates in the program. level of Consolidated Volume to receive
standard that is uniform. Increasing the Additionally, Market Makers have both the $0.0001 rebate under the rule, which
Consolidated Volume required to obligations to the market and regulatory currently only requires that the QMM
receive the fee will provide incentive to requirements that normally do not apply participant provide displayed liquidity.
QMMs to provide greater market- to other market participants. As such, The Exchange believes that it is
improving participation in return for the the Exchange believes that providing reasonable and not unfairly
benefit. additional incentives to Market Makers discriminatory to impose stricter criteria
The Exchange is also proposing to to provide liquidity for the benefit of all designed to improve market quality in
increase the level of Consolidated investors and other market participants return for the credit NASDAQ elects to
Volume that a member firm must have is reasonable and not unfairly provide. NASDAQ also believes that the
in Market-on-Close and/or Limit-on- discriminatory. The proposed proposed changes to the eligibility
Close orders during the month in order modifications to the QMM program requirements for the reduced removal
to qualify for fees to remove liquidity in recognize the benefits of increased fee in Tape A and B securities of
securities executed at or above $1 under Market Maker participation and the $0.00295 per share executed are
Rule 7018(a)(1), (2) and (3). Currently, Exchange believes that this proposal reasonable and not unfairly
NASDAQ assesses a fee for member will improve displayed liquidity, and discriminatory because they increase
firms that qualify based on their Market- thus the execution quality overall on the the level of Consolidated Volume
on-Close and/or Limit-on-Close order Exchange. Moreover, the Exchange required, which will be an absolute
participation in the Closing Cross of believes that eliminating the current requirement and not tied to historical
$0.0030 per share executed in Tape C Consolidated Volume requirement is levels of Consolidated Volume, thereby
securities under Rule 7018(a)(1), and reasonable and not unfairly increasing the level of market
fees of $0.00295 per share executed in discriminatory because it will become improvement necessary to receive the
Tape A and B securities under Rules superfluous in light of additional reduced rate. As an absolute
7018(a)(2) and (3), respectively. To requirements based on Consolidated requirement, the Consolidated Volume
qualify under each of the rules, a Volume that are also being proposed requirement will apply uniformly to all
member firm must have Market-on- herein. For the same reasons noted Market Makers eligible to participate in
Close and/or Limit-on-Close orders above, limiting eligibility in the program the program. The Exchange believes that
executed in the NASDAQ Closing Cross, to Market Makers and eliminating the the proposed changes to the eligibility
entered through a single NASDAQ Consolidated Volume requirement requirements under Rule 7014(e) are an
Market Center market participant under Rule 7014(d)(3) is an equitable equitable allocation because NASDAQ
identifier, that represent more than allocation of the fees and credits will provide the same rebates and fees
0.06% of Consolidated Volume during provided by the program. In this regard, to all Market Makers that qualify under
the month. The Exchange is proposing no current participants in the program the rule.
to increase the minimum level of will be excluded from being eligible to Lastly, NASDAQ notes that Market
Consolidated Volume required under participate after the proposed change is Makers serve an important role on the
each of the rules to 0.15%. effective, and applying the current Exchange with regard to order
Consolidated Volume criteria will have interaction and provide continuous,
2. Statutory Basis no significance in light of the proposed passive liquidity in the marketplace.
NASDAQ believes that the proposed changes to the specific fees and credits Additionally, Market Makers incur costs
rule change is consistent with the under the program. unlike the majority of other market
provisions of Section 6 of the Act,5 in The Exchange believes that the participants including, but not limited
general, and with Sections 6(b)(4) and proposed changes to Rule 7014(e) are to, their own infrastructure and other
6(b)(5) of the Act,6 in particular, in that reasonable and not unfairly technology costs associated with market
it provides for the equitable allocation discriminatory because they impose making activities. Consequently, the
of reasonable dues, fees and other stricter requirements on Market Makers proposed differentiation between
charges among members and issuers and to receive the benefits of the program, Market Makers and other market
mstockstill on DSK4VPTVN1PROD with NOTICES
other persons using any facility or which will be applied uniformly to all participants recognizes the differing
system which NASDAQ operates or Market Makers that are eligible to contributions made to the quality of the
controls, and is not designed to permit participate in the QMM program. With market on the Exchange by Market
unfair discrimination between regard to the $0.0002 rebate provided in Makers and the heightened regulatory
customers, issuers, brokers, or dealers. Tape A and B securities, the Exchange requirements and costs associated with
is eliminating the NBBO-based criteria being a Market Maker. In brief, the
5 15 U.S.C. 78f. and tying the rebate to greater overall Exchange believes that the proposed
6 15 U.S.C. 78f(b)(4) and (5). volume, which the Exchange believes changes to the QMM program further
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![Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Notices 21781
incentives registered Market Makers to order routing practices, NASDAQ IV. Solicitation of Comments
provide liquidity improves market believes that the degree to which fee
qualify [sic], furthers the price discovery changes in this market may impose any Interested persons are invited to
process and benefits investors. burden on competition is extremely submit written data, views, and
The Exchange believes that the limited or even non-existent. In this arguments concerning the foregoing,
proposed changes to the level of instance, the changes to eligibility including whether the proposed rule
Consolidated Volume in Market-on- criteria required to receive credits and change is consistent with the Act.
Close and/or Limit-on-Close order reduced fees under the QMM program Comments may be submitted by any of
participation in the Closing Cross do not impose a burden on competition the following methods:
required to receive the fees for orders because the incentive program remains
that remove liquidity under Rules Electronic Comments
in place, still offers economically
7018(a)(1), (2), and (3) are reasonable • Use the Commission’s Internet
advantageous credits and reduced fees,
and not unfairly discriminatory because
and is reflective of the need for comment form (http://www.sec.gov/
they represent an increase in the level
exchanges to offer, and to let, the rules/sro.shtml); or
of market-improving Consolidated
Volume contributed to the Closing financial incentives to attract order flow • Send an email to rule-comments@
Cross. NASDAQ provides discounted evolve. While the Exchange does not sec.gov. Please include File Number SR–
fees in Market-on-Close and/or Limit- believe that the proposed changes to the NASDAQ–2015–032 on the subject line.
on-Close orders in Tape A and B QMM program will result in any burden
securities to provide incentives to on competition, if the changes proposed Paper Comments
member firms to provide liquidity in the herein are unattractive to market
• Send paper comments in triplicate
closing process. NASDAQ is increasing participants it is likely that NASDAQ
to Brent J. Fields, Secretary, Securities
the Consolidated Volume requirement will lose market share as a result.
and Exchange Commission, 100 F Street
to better align the discounted remove Similarly, the proposed changes to the
NE., Washington, DC 20549–1090.
fees with members that use the closing eligibility criteria for remove fees under
cross process more regulatory [sic] over Rule 7018(a) based on Market-on-Close All submissions should refer to File
alternatives and also access liquidity and/or Limit-on-Close order Number SR–NASDAQ–2015–032. This
more frequently on the Exchange as participation in the Closing Cross are file number should be included on the
opposed to other members. Nonetheless, designed to increase participation in the subject line if email is used. To help the
NASDAQ believes that it is reasonable Closing Cross by setting the minimum Commission process and review your
and not unfairly discriminatory to level of Consolidated Volume eligibility comments more efficiently, please use
change the eligibility criteria so that it criteria higher, thereby improving the only one method. The Commission will
mirrors the eligibility criteria of the market at the market close. To the extent post all comments on the Commission’s
related fees under Rules 7018(a)(2) and the qualification criteria is too onerous Internet Web site (http://www.sec.gov/
(3). Lastly, the Exchange believes that or unattractive to market participants, rules/sro.shtml). Copies of the
the proposed changes to the rules are an NASDAQ will likely lose order flow and submission, all subsequent
equitable allocation of the fees because
participation in the Closing Cross as a amendments, all written statements
the fee is provided uniformly to all
result. with respect to the proposed rule
member firms that qualify for the fees
and all member firms have an equal C. Self-Regulatory Organization’s change that are filed with the
opportunity to earn the discounted fee Statement on Comments on the Commission, and all written
for accessing liquidity. Proposed Rule Change Received From communications relating to the
Members, Participants, or Others proposed rule change between the
B. Self-Regulatory Organization’s Commission and any person, other than
Statement on Burden on Competition Written comments were neither those that may be withheld from the
NASDAQ does not believe that the solicited nor received. public in accordance with the
proposed rule changes will result in any provisions of 5 U.S.C. 552, will be
burden on competition that is not III. Date of Effectiveness of the
available for Web site viewing and
necessary or appropriate in furtherance Proposed Rule Change and Timing for
printing in the Commission’s Public
of the purposes of the Act, as amended.7 Commission Action
Reference Room, 100 F Street NE.,
NASDAQ notes that it operates in a Washington, DC 20549 on official
The foregoing rule change has become
highly competitive market in which business days between the hours of 10
market participants can readily favor effective pursuant to Section
19(b)(3)(A)(ii) of the Act.8 At any time a.m. and 3 p.m. Copies of such filing
competing venues if they deem fee
within 60 days of the filing of the also will be available for inspection and
levels at a particular venue to be
excessive, or rebate opportunities proposed rule change, the Commission copying at the principal office of the
available at other venues to be more summarily may temporarily suspend Exchange. All comments received will
favorable. In such an environment, such rule change if it appears to the be posted without change; the
NASDAQ must continually adjust its Commission that such action is Commission does not edit personal
fees to remain competitive with other necessary or appropriate in the public identifying information from
exchanges and with alternative trading interest, for the protection of investors, submissions. You should submit only
or otherwise in furtherance of the information that you wish to make
mstockstill on DSK4VPTVN1PROD with NOTICES
systems that have been exempted from
compliance with the statutory standards purposes of the Act. If the Commission available publicly. All submissions
applicable to exchanges. Because takes such action, the Commission shall should refer to File Number SR–
competitors are free to modify their own institute proceedings to determine NASDAQ–2015–032, and should be
fees in response, and because market whether the proposed rule should be submitted on or before May 8, 2015.
participants may readily adjust their approved or disapproved.
7 15 U.S.C. 78f(b)(8). 8 15 U.S.C. 78s(b)(3)(A)(ii).
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![21782 Federal Register / Vol. 80, No. 75 / Monday, April 20, 2015 / Notices
For the Commission, by the Division of concerning the purpose of and basis for Exchange on which the trade was
Trading and Markets, pursuant to delegated the proposed rule change and discussed executed. The last sale information also
authority.9 any comments it received on the includes the cumulative number of
Brent J. Fields, proposed rule change. The text of these shares executed on all BATS Exchanges
Secretary. statements may be examined at the for that trading day.8 The Exchange now
[FR Doc. 2015–08941 Filed 4–17–15; 8:45 am] places specified in Item IV below. The proposes to expand the last sale
BILLING CODE 8011–01–P Exchange has prepared summaries, set information to include consolidated
forth in Sections A, B, and C below, of volume for all listed equity securities
the most significant parts of such regardless of where the transaction was
SECURITIES AND EXCHANGE statements. executed. The Exchange would obtain
COMMISSION the consolidated volume directly from
A. Self-Regulatory Organization’s the securities information processors
[Release No. 34–74723; File No. SR–BYX– Statement of the Purpose of, and and then distribute in a manner
2015–22] Statutory Basis for, the Proposed Rule consistent with the requirements for
Change redistributing such data as set forth in
Self-Regulatory Organizations; BATS
Y-Exchange, Inc.; Notice of Filing and 1. Purpose the CTA Plan and Nasdaq UTP Plan.9
Immediate Effectiveness of a Proposed The Exchange proposes to amend the Ministerial Change
Rule Change To Amend the Content of content of the BATS One Feed under The Exchange also proposes to delete
the BATS One Feed Under Rule 11.22(i) Rule 11.22(i) to include consolidated from Rule 11.22(i) language indicating
To Include Consolidated Volume for All volume for all listed equity securities. that the Retail Liquidity Identifier is
Listed Equity Securities The Exchange also proposes to make a disseminated on behalf of the Exchange,
April 14, 2015. ministerial change to Rule 11.22(i). The ‘‘an affiliated exchange of the
Commission recently approved a Exchange’’. The Retail Liquidity
Pursuant to Section 19(b)(1) of the
proposed rule change by the Exchange Identifier indicator message is
Securities Exchange Act of 1934 (the
to establish a new market data product disseminated via the BATS One Feed on
‘‘Act’’),1 and Rule 19b–4 thereunder,2
called the BATS One Feed.5 The BATS behalf of the Exchange pursuant to the
notice is hereby given that on April 1,
2015, BATS Y-Exchange, Inc. (the One Feed is a data feed that Exchange’s Retail Price Improvement
‘‘Exchange’’ or ‘‘BYX’’) filed with the disseminates, on a real-time basis, the (‘‘RPI’’) Program.10 For purposes of BYX
Securities and Exchange Commission aggregate best bid and offer (‘‘BBO’’) of Rule 11.22(i), the Exchange believes it is
(‘‘Commission’’) the proposed rule all displayed orders for securities traded unnecessary to include the phrase ‘‘an
change as described in Items I and II on BYX and its affiliated exchanges 6 affiliated exchange of the Exchange’’
below, which Items have been prepared and for which the BATS Exchanges and could lead to potential investor
by the Exchange. The Exchange has reports quotes under the Consolidated confusion.
designated this proposal as a ‘‘non- Tape Association (‘‘CTA’’) Plan or the
Nasdaq/UTP Plan.7 2. Statutory Basis
controversial’’ proposed rule change
The Exchange believes that its
pursuant to Section 19(b)(3)(A) of the Consolidated Volume proposal is consistent with Section 6(b)
Act 3 and Rule 19b–4(f)(6)(iii)
The last sale information
thereunder,4 which renders it effective
disseminated as part of the BATS One 8 The BATS One Feed also contains optional
upon filing with the Commission. The functionality which enables recipients to receive
Feed includes the price, size, time of
Commission is publishing this notice to aggregated two-sided quotations from the BATS
execution, and individual BATS Exchanges for up to five (5) price levels for all
solicit comments on the proposed rule
securities that are traded on the BATS Exchanges
change from interested persons. 5 See Securities Exchange Act Release No. 73918 in addition to the BATS One Summary Feed
(December 23, 2014), 79 FR 78920 (December 31, (‘‘BATS One Premium Feed’’). For each price level
I. Self-Regulatory Organization’s 2014) (File Nos. SR–EDGX–2014–25; SR–EDGA– on one of the BATS Exchanges, the BATS One
Statement of the Terms of the Substance 2014–25; SR–BATS–2014–055; SR–BYX–2014–030) Premium Feed includes a two-sided quote and the
of the Proposed Rule Change (Notice of Amendments No. 2 and Order Granting number of shares available to buy and sell at that
Accelerated Approval to Proposed Rule Changes, as particular price level.
The Exchange amend [sic] the content Modified by Amendments Nos. 1 and 2, to Establish 9 See CTA Consolidated Volume Display Policy
of the BATS One Feed under Rule a New Market Data Product called the BATS One available at https://www.ctaplan.com (dated March
11.22(i) to include consolidated volume Feed) (‘‘BATS One Approval Order’’). 2015). The CTA Consolidated Volume Display
6 BYX’s affiliated exchanges are the BATS Policy requires that, ‘‘[i]f a Customer calculates the
for all listed equity securities. The text
Exchange, Inc. (‘‘BZX’’), the EDGA Exchange, Inc. CTA Consolidated Volume and displays that
of the proposed rule change is available (‘‘EDGA’’), and the EDGX Exchange, Inc. (‘‘EDGX’’, alongside last sale prices or bid-asked quotes that
at the Exchange’s Web site at together with EDGA, BZX, and BYX, the ‘‘BATS are not consolidated prices or quotes under the CTA
www.batstrading.com, at the principal Exchanges’’). On January 23, 2014, BATS Global Plan or the CQ Plan, then the Customer must
office of the Exchange, and at the Markets, Inc. (‘‘BGMI’’), the former parent company incorporate into its display the following statement:
of the Exchange and BZX, completed its business ‘‘Realtime quote and/or trade prices are not sourced
Commission’s Public Reference Room. combination with Direct Edge Holdings LLC, the from all markets.’’ Customer must also assure that
parent company of EDGA and EDGX. See Securities any person included in the redistribution chain
II. Self-Regulatory Organization’s Exchange Act Release No. 71375 (January 23, 2014), starting with the Customer conspicuously places
Statement of the Purpose of, and 79 FR 4771 (January 29, 2014) (SR–BATS–2013– such a statement in any such display that it
Statutory Basis for, the Proposed Rule 059; SR–BYX–2013–039). Upon completion of the provides.’’ Id.
Change business combination, DE Holdings and BGMI each 10 For a description of BYX’s RPI Program, see
became intermediate holding companies, held BYX Rule 11.24. See also Securities Exchange Act
mstockstill on DSK4VPTVN1PROD with NOTICES
In its filing with the Commission, the under a single new holding company. The new Release No. 68303 (November 27, 2012), 77 FR
Exchange included statements holding company, formerly named ‘‘BATS Global 71652 (December 3, 2012) (SR–BYX–2012–019)
Markets Holdings, Inc.,’’ changed its name to (Order Granting Approval of Proposed Rule Change,
9 17
‘‘BATS Global Markets, Inc.’’ and BGMI changed its as Modified by Amendment No. 2, to Adopt a Retail
CFR 200.30–3(a)(12). name to ‘‘BATS Global Markets Holdings, Inc.’’
1 15
Price Improvement Program); Securities Exchange
U.S.C. 78s(b)(1). 7 The Exchange understands that each of the Act Release No. 67734 (August 27, 2012), 77 FR
2 17 CFR 240.19b–4.
BATS Exchanges will separately file substantially 53242 (August 31, 2012) (SR–BYX–2012–019)
3 15 U.S.C. 78s(b)(3)(A).
similar proposed rule changes with the Commission (Notice of Filing of Proposed Rule Change to Adopt
4 17 CFR 240.19b–4(f)(6)(iii). to implement fees for the BATS One Feed. a Retail Price Improvement Program).
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Document Created: 2018-02-21 10:12:48
Document Modified: 2018-02-21 10:12:48
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 21778 |
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