80 FR 34758 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule Under Exchange Rule 7018 With Respect to Transactions in Securities Priced at $1 or More per Share and the Exchange's Retail Price Improvement Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 116 (June 17, 2015)
Federal Register Volume 80, Issue 116 (June 17, 2015)
| Page Range | 34758-34763 | |
| FR Document | 2015-14819 |
[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)] [Notices] [Pages 34758-34763] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-14819] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75145; File No. SR-BX-2015-033] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule Under Exchange Rule 7018 With Respect to Transactions in Securities Priced at $1 or More per Share and the Exchange's Retail Price Improvement Program June 11, 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 June 1, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the 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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend BX Rule 7018 with respect to transactions in securities priced at $1 or more per share and the Exchange's Retail Price Improvement Program. The text of the proposed rule change is also available on the Exchange's Web site at http://nasdaqomxbx.cchwallstreet.com, at the principal office of the Exchange, 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, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the [[Page 34759]] proposed rule change. The text of these 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 aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange is proposing to amend the fee schedule under Rule 7018(a), relating to fees and credits provided for orders in securities priced and $1 or more per share that execute on BX, and is proposing to increase a credit provided by the Retail Price Improvement program under Rule 7018(e). Under Rule 7018(a), the Exchange provides credits to member firms that access certain levels of liquidity on BX per month. The Exchange is proposing to add two new credit tiers of $0.0017 and $0.0012 per share executed, which will be provided for orders that access liquidity, excluding orders with Midpoint pegging \3\ and orders that receive price improvement and execute against an order with Midpoint pegging, entered by a member that accesses liquidity equal to or exceeding 0.20% and 0.05% of total Consolidated Volume \4\ during a month, respectively. --------------------------------------------------------------------------- \3\ A Midpoint Peg order has its priced [sic] based upon the national best bid and offer, excluding the effect that the Midpoint Peg Order itself has on the inside bid or inside offer. Primary Pegged Orders with an offset amount and Midpoint Pegged Orders will never be displayed. A Midpoint Pegged Order may be executed in sub- pennies if necessary to obtain a midpoint price. A new timestamp is created for the order each time it is automatically adjusted. \4\ Consolidated Volume is defined 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. 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. See Rule 7018(a). --------------------------------------------------------------------------- In a related change, the Exchange is amending existing credit tiers that provide a credit to members with orders that access liquidity, excluding orders with Midpoint pegging and orders that receive price improvement and execute against an order with Midpoint pegging, entered by a member that accesses liquidity equal to or exceeding 0.1% and 0.015% of total Consolidated Volume during a month, which currently provide credits of $0.0010 and $0.0008 per share executed, respectively. The Exchange is proposing to increase the credit provided under the 0.1% Consolidated Volume tier from $0.0010 per share executed to $0.0015 per share executed. The Exchange is also proposing to increase the total Consolidated Volume required to receive the $0.0008 per share executed credit from 0.015% to 0.02%. The Exchange is proposing to increase the credit it provides for all other orders that remove liquidity from BX and that do not qualify under another higher credit from $0.0004 per share executed to $0.0006 per share executed. In related changes, the Exchange is eliminating two credit tiers, which currently provide credits of $0.0006 per share executed and both of which are rendered moot in light of the increased credit the Exchange is provided for all other orders that remove liquidity from BX. Specifically, the Exchange is proposing to eliminate a $0.0006 per share executed credit provided to a member firm for an order that accesses liquidity, excluding orders with Midpoint pegging and orders that receive price improvement and execute against an order with Midpoint pegging, entered by a member that provides an average daily volume of at least 25,000 shares of liquidity during the month. The Exchange is also proposing to eliminate the $0.0006 per share executed credit provided to members with a BSTG,\5\ BSCN,\6\ BMOP,\7\ BTFY,\8\ BCRT,\9\ BDRK \10\ or BCST \11\ order that accesses liquidity in the NASDAQ OMX BX Equities System, excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with Midpoint pegging. --------------------------------------------------------------------------- \5\ See BX Rule 4758(a)(1)(A)(iii). \6\ See BX Rule 4758(a)(1)(A)(iv). \7\ See BX Rule 4758(a)(1)(A)(vi). \8\ See BX Rule 4758(a)(1)(A)(v). \9\ See BX Rule 4758(a)(1)(A)(vii). \10\ See BX Rule 4758(a)(1)(A)(viii). \11\ See BX Rule 4758(a)(1)(A)(ix). --------------------------------------------------------------------------- The Exchange is also proposing to modify and eliminate certain charges it assesses under Rule 7018(a). Specifically, the Exchange is proposing to increase the charge assessed for a Displayed order entered by a Qualified Market Maker \12\ (``QMM'') from $0.0009 per share executed to $0.0014 per share executed. The Exchange is also proposing to adopt a new charge tier of $0.0014 per share executed assessed a member that (i) adds liquidity equal to or exceeding 0.25% of total Consolidated Volume during a month, and (ii) adds and accesses liquidity equal to or exceeding 0.50% of total Consolidated Volume during a month. --------------------------------------------------------------------------- \12\ A member firm may become a QMM by providing through one or more of its NASDAQ OMX BX Equities System market maker participant identifier (``MPIDs'') more than 0.30% of Consolidated Volume during the month. For a member qualifying under this method, the member must have at least one Qualified MPID, that is, an MPID through which, for at least 200 securities, the QMM quotes at the NBBO an average of at least 50% of the time during regular market hours (9:30 a.m. through 4:00 p.m.) during the month. The member must also provide an average daily volume of 1.5 million shares or more using orders with Midpoint pegging during the month. --------------------------------------------------------------------------- The Exchange is proposing to increase the charges assessed under two tiers for a displayed order that adds liquidity equal to or exceeding 0.25% and 0.04% of total Consolidated Volume during a month, respectively, which are currently set a $0.0012 per share executed and $0.0014 per share executed, respectively. The Exchange is proposing to increase the charge under the 0.25% tier to $0.0018 per share executed, while also decreasing the minimum liquidity needed to be provided to qualify under the tier from 0.25% of total Consolidated Volume during a month to 0.20% of total Consolidated Volume during a month. The Exchange is proposing to increase the charge under the 0.04% tier to $0.0019 per share executed and is additionally proposing to increase the total Consolidated Volume required to receive the charge from 0.04% to 0.10%. The Exchange is also proposing to amend charges it assesses for providing liquidity in orders with Midpoint pegging. Specifically, it is proposing to eliminate the $0.0002 per share executed charge assessed for an order with Midpoint pegging entered by a member that adds 0.03% of total Consolidated Volume of non-displayed liquidity. The Exchange is also proposing to increase the charge assessed for an order with Midpoint pegging entered by a member that adds 0.015% of total Consolidated Volume of non-displayed liquidity from $0.0004 per share executed to $0.0005 per share executed and is additionally increasing the total Consolidated Volume requirement from 0.015% to 0.02%. The Exchange is proposing to increase the $0.0010 per share executed charge for an order with Midpoint pegging entered by a member that does not qualify for a lower charge for such an order to $0.0015 per share executed. The Exchange is proposing to amend certain charges relating to non- displayed orders. Specifically, the Exchange is proposing to eliminate the $0.0014 per share executed charge assessed for a non-displayed order, other than orders with Midpoint [[Page 34760]] pegging, entered by a member that adds 0.075% of total Consolidated Volume of non-displayed liquidity. The Exchange is also proposing to increase the $0.0019 per share executed charge assessed for a non- displayed order, other than orders with Midpoint pegging, entered by a member that adds 0.055% of total Consolidated Volume of non-displayed liquidity to $0.0024 per share executed and is additionally increasing the total Consolidated Volume requirement to 0.06%. The Exchange is proposing to increase the charge assessed for all other non-displayed orders from $0.0028 per share executed to $0.0030 per share executed. The Exchange is proposing to reduce the level of Consolidated Volume required to qualify as a QMM. Currently, to be considered a QMM a member firm must provide through one or more of its NASDAQ OMX BX Equities System MPIDs more than 0.30% of Consolidated Volume during the month. To qualify under this method, the member firm must have at least one Qualified MPID, that is, an MPID through which, for at least 200 securities, the QMM quotes at the NBBO an average of at least 50% of the time during regular market hours (9:30 a.m. through 4:00 p.m.) during the month. The member firm must also provide an average daily volume of 1.5M shares or more using orders with Midpoint pegging during the month. The Exchange is proposing to reduce the level of Consolidated Volume under the rule from 0.30% to 0.15%. Lastly, the Exchange is proposing to amend a charge assessed under the Retail Price Improvement Program of Rule 7018(e). The Exchange's Retail Price Improvement (``RPI'') program provides incentives to member firms (or a division thereof) approved by the Exchange to participate in the program (a ``Retail Member Organization'') to submit designated ``Retail Orders'' \13\ for the purpose of seeking price improvement. The Exchange is proposing to increase the $0.0012 per share executed credit provided for a Retail Order that accesses other liquidity on the Exchange book to $0.0017 per share executed. The credit applies to Retail Orders not covered by other credit tiers available for accessing liquidity under the rule. --------------------------------------------------------------------------- \13\ A Retail Order is defined in BX Rule 4780(a)(2), in part, as ``an agency or riskless principal order that satisfies the criteria of FINRA Rule 5320.03, that originates from a natural person and is submitted to the Exchange by a Retail Member Organization, provided that no change is made to the terms of the order with respect to price (except in the case that a market order is changed to a marketable limit order) or side of market and the order does not originate from a trading algorithm or any other computerized methodology.'' --------------------------------------------------------------------------- 2. Statutory Basis BX believes that the proposed rule changes are consistent with the provisions of Section 6 of the Act,\14\ in general, and with Sections 6(b)(4) and 6(b)(5) of the Act,\15\ 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 the Exchange operates or controls, and is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78f. \15\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that the proposed two new credit tiers based on Consolidated Volume together with the proposed changes to existing credit tiers based on Consolidated Volume under BX Rule 7018(a) are reasonable because they provide additional opportunities for market participants to receive credits for participation on BX. The Exchange also believes that the proposed changes to the credit tiers based on the level Consolidated Volume are reasonable because the credits tiers are directly tied to the level of Consolidated Volume a member firm accesses in a given month, with the highest credit provided for the greatest level of Consolidated Volume, and the lowest credit provided to the lowest level of Consolidated Volume. Specifically, the Exchange is proposing a new $0.0017 per share executed credit tier, which will require the highest level of Consolidated Volume in liquidity removal from the Exchange. The Exchange is proposing to increase the credit provided for the next lower tier, which requires liquidity accessed of 0.1% or more of Consolidated Volume, to $0.0015 per share executed. The Exchange is proposing to adopt a new $0.0012 per share executed credit tier, which will require adding liquidity equal to or exceeding 0.05% of total Consolidated Volume during the month. Lastly, the Exchange is modifying an existing credit tier by increasing the minimum total Consolidated Volume required from 0.015% to 0.02%. As such, the Exchange is generally providing increased credits to provide incentive to member firms to remove liquidity, excluding orders with Midpoint pegging and excluding orders that receive price improvement and execute against an order with Midpoint pegging, from the Exchange. With respect to the increased Consolidated Volume required to receive the $0.0008 credit, the Exchange notes that member firms are being required to provide increased Consolidated Volume to receive the credit, which will improve market quality for all participants. The Exchange believes that the proposed credits noted above are both equitably allocated and are not unfairly discriminatory as they are provided to all member firms that achieve the minimum level of Consolidated Volume required by the tier, with the member firms that provide the greatest level of Consolidated Volume receiving the greatest credit. The Exchange believes that elimination of the two $0.0006 per share executed credit tiers is reasonable because the Exchange has increased the credit it provides for all orders that do not otherwise receive a higher credit, which the Exchange is increasing to $0.0006 per share executed. This increased ``default'' credit is reasonable because the Exchange desires to further incentivize member firms to participate in the Exchange by removing liquidity, generally. The Exchange believes that the proposed elimination of the two $0.0006 per share executed credit tiers, and the proposed increase in the ``default'' credit to $0.0006 per share executed are both an equitable allocation and are not unfairly discriminatory because more member firms will have the opportunity to qualify for a higher credit based on their participation in BX by removing liquidity. The Exchange believes that the proposed change to increase the charge assessed a QMM for entering a displayed order is reasonable because the exchange must balance the cost of credits provided for orders removing liquidity and the desire to provide QMMs with incentives to provide displayed orders. The Exchange notes that the proposed charge continues to be lower than the default charge assessed for all other displayed orders that do not otherwise qualify for a lower charge, and as such continues to act as an incentive to market participants to provide such liquidity. Moreover, the Exchange will continue to provide a reduced charge in return for the [[Page 34761]] provision of market improving order activity. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because the increased charge applies uniformly to all member firms that previously had qualified to receive such a credit. The Exchange believes that the proposed new $0.0014 per share executed charge available to a member firm that adds liquidity equal to or exceeding 0.25% of total Consolidated Volume during a month and adds and accesses liquidity equal to or exceeding 0.50% of total Consolidated Volume during a month, is reasonable because it provides a new means by which a member firm may qualify for a lower charge than the default charge applied to liquidity-providing displayed orders. The Exchange provides incentives to member firms to enter displayed orders on BX and, in the present case, it is providing a reduced charge to a member that enters such an order, but also provides market improving liquidity in the form of significant levels of Consolidated Volume of adding and accessing liquidity during the month. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because the new charge applies uniformly to all member firms that qualify under the tier's requirements, which requires beneficial market activity by the member firm in return for the lower charge. The Exchange believes that the proposed increase to the $0.0012 per share executed and $0.0014 per share executed charge tiers assessed for Displayed orders entered by a member firm that adds liquidity equal to or exceeding 0.25% and 0.04% of total Consolidated Volume during a month, respectively, is reasonable because it reflects a small increase to the charges assessed for such orders by qualifying members, while each continue to remain lower than the default charge assessed for providing liquidity in displayed orders. As such, the proposed charges will continue [sic] act as an incentive to market participants to provide displayed orders. The Exchange also believes that decreasing the level of Consolidated Volume required to receive the proposed $0.0018 per share executed charge from 0.025% to 0.020% is reasonable because it lowers the total Consolidated Volume requirement, which the Exchange has observed was set too high to effectively provide incentive to market participants to improve the market. The Exchange also believes that it is reasonable to increase the level of Consolidated Volume required to receive the $0.0019 per share executed charge from 0.04% to 0.10% because the Exchange believes that increasing the level may result in improved market quality in the form of additional total Consolidated Volume in return for the reduced charge. The Exchange believes that the proposed changes to the $0.0012 charge tier is both an equitable allocation and is not unfairly discriminatory because the increased charge applies uniformly to all member firms that qualify under the tier's revised, lower Consolidated Volume requirement, which will continue to provide a charge lower than the default charge assessed for displayed orders. The Exchange also believes that the proposed changes to the $0.0014 charge tier is both an equitable allocation and is not unfairly discriminatory because the increased charge applies uniformly to all member firms that qualify under the tier's revised, higher Consolidated Volume requirement, which will continue to provide a charge lower than the default charge assessed for displayed orders. The Exchange believes that elimination of the $0.0002 per share executed charge provided for an order with Midpoint pegging entered by a member firm that adds 0.03% of total Consolidated Volume of non- displayed liquidity is reasonable because the Exchange will continue to provide opportunity for member firms to receive a reduced charge for such non-displayed liquidity based on a certain level of total Consolidated Volume. Specifically, the Exchange will provide a member firm with a reduced charge for non-displayed liquidity if it achieves 0.02% of total Consolidated Volume during a month. The Exchange believes that the 0.03% total Consolidated Volume tier is no longer needed to provide incentive to market participant [sic] to provide such Midpoint pegging orders. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because member firms will continue to receive a charge lower than the default charge assessed for non-displayed orders in return for providing beneficial liquidity in the form of Midpoint pegging orders, albeit at an increased charge. The Exchange believes that the proposed increase to the charge assessed for an order with Midpoint pegging entered by a member firm that adds 0.015% of total Consolidated Volume from $0.0004 per share executed to $0.0005 per share executed is reasonable because it represents a modest increase to the charge assessed for such orders, while remaining lower than the default charge assessed for other non- displayed orders. Moreover, the Exchange believes that the proposed increased charge will continue [sic] act as an incentive to market participants to provide orders with Midpoint pegging. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because member firms will continue to receive a charge lower than the default charge assessed for orders in return for providing beneficial liquidity in the form of Midpoint pegging orders, albeit at an increased charge. The Exchange also believes that the proposed increase to the charge is equitably allocated and not unfairly discriminatory because all members entering orders with Midpoint pegging that meet the criteria of the tier will be assessed the proposed charge. The Exchange believes that the increase the [sic] charge for Midpoint pegging orders that do not otherwise qualify for a lower charge from $0.0010 per share executed to $0.0015 per share executed is reasonable because it represents a modest increase to the charge assessed for such orders, while remaining lower than the default charge assessed for non-displayed orders. Moreover, the Exchange believes that the proposed increased charge will continue [sic] act as an incentive to market participants provide orders with Midpoint pegging. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because member firms will continue to receive a charge lower than the default charge assessed for non- displayed orders in return for providing beneficial liquidity in the form of Midpoint pegging orders, albeit at an increased charge. The Exchange also believes that the proposed increase to the charge is equitably allocated and not unfairly discriminatory because all members entering orders with Midpoint pegging that do not otherwise qualify for a lower charge under another tier will be assessed the proposed charge. The Exchange believes that elimination of the $0.0014 per share executed charge assessed for non-displayed orders, other than orders with Midpoint pegging, entered by a member firm that adds 0.075% of total Consolidated Volume of non-displayed liquidity is reasonable because the Exchange will continue to offer member firms opportunity to receive a reduced charge for such orders, albeit at a higher charge under a separate tier. The Exchange notes that, while the proposed charge under the remaining tier is $0.0024 per share executed, member firms will only be required to provide a minimum of 0.06% of total [[Page 34762]] Consolidated Volume of non-displayed liquidity. The Exchange believes that this charge tier will continue [sic] act as an incentive to market participants to provide non-displayed liquidity. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because member firms will continue to receive a charge lower than the default charge assessed for non-displayed orders that qualify under the deleted tier in return for providing non- displayed liquidity, albeit at an increased charge under the remaining tier. The Exchange believes that increasing the charge assessed and total Consolidated Volume required for non-displayed orders, other than orders with Midpoint pegging, entered by a member firm that adds 0.055% of total Consolidated Volume of non-displayed liquidity is reasonable because the charge continues to be lower than the charge assessed for other non-displayed orders, thereby continuing to serve as an incentive to market participants to provide non-displayed liquidity, and the modest increase in required total Consolidated Volume will encourage members to provide additional non-displayed liquidity. The Exchange notes that non-displayed liquidity is not as beneficial to market quality as other forms of displayed liquidity and, accordingly, the Exchange assesses a higher charge for such liquidity. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because member firms will continue to receive a charge lower than the default charge assessed for non- displayed orders that qualify under the tier in return for providing non-displayed liquidity at a level slightly higher than is currently required, which will apply to all member firms that qualify under the tier. Additionally, the Exchange believes that the proposed change is equitably allocated and not unfairly discriminatory because all members can add liquidity to BX and the more liquidity a member adds the lower the charge because the member is improving the quality of the market by providing this additional liquidity. The Exchange believes that the proposed increase to the default charge assessed for non-displayed orders that do not otherwise qualify for a lower charge from $0.0028 per share executed to $0.0030 per share executed is reasonable because it is reflective of the Exchange's need to balance the fees assessed with the desire to improve market quality. The Exchange believes that non-displayed liquidity on BX is sufficient that it can support a minor increase to the charge assessed, thus allowing the Exchange to apply other discounted charges and offer credits designed to further increase participation on the Exchange. The Exchange also believes that the proposed increase to the default charge is equitably allocated and not unfairly discriminatory because all members entering non-displayed orders on BX that do not qualify for a reduced charge will be assessed the proposed charge. The Exchange believes the proposed reduction in the level of Consolidated Volume required to qualify as a QMM from 0.30% to 0.15% is reasonable because it will provide a greater incentive to market participants to participate in the program, which is designed to improve the market by providing member firms with incentive to participate in the market in return for reduced charge for providing Displayed Orders. The Exchange also believes that the proposed reduction in Consolidated Volume required to qualify as a QMM is equitably allocated and not unfairly discriminatory because all member firms that qualify under the amended QMM eligibility standard will be considered QMMs, and therefore be eligible for the reduced charge. As noted, the proposed change is designed to expand participation in the program, which will benefit all market participants in the form of improved liquidity. The Exchange believes the proposed increased credit provided for a Retail Order that accesses other liquidity on the Exchange book from $0.0012 per share executed to $0.0017 per share executed is reasonable because it will provide a greater incentive to market participants to participate in the program, which is designed to improve the market for retail order flow. The Exchange also believes that the proposed increase to the credit is equitably allocated and not unfairly discriminatory because all members entering a Retail Order that accesses other liquidity on the Exchange book will receive the credit. Finally, BX 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. In such an environment, BX 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. The changes reflect this environment because although they reflect both increases in credits and fees, with the price increases being minor and lower than the default charges assessed under the fee schedule, while the increased credits are designed to incentivize changes in market participant behavior to the benefit of the market overall. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange 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.\16\ BX notes that it operates in a highly competitive market in which market participants can readily favor dozens of different competing exchanges and alternative trading systems 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, BX must continually adjust its fees to remain competitive with other exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, BX believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- In this instance, the changes to fees and credits do not impose a burden on competition because participation in the Exchange is optional and is the subject of competition from other exchanges. The proposed changes to the credits and charges are reflective of the Exchange's overall efforts to provide greater incentives to market participants in the form of credits and reduced charges for market participation it believes needs improvement to the benefit of all participants. For these reasons, the Exchange does not believe that any of the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. Moreover, because there are numerous competitive alternatives to the use of the Exchange, it is likely that BX will lose market share as a result of the changes if they are unattractive to market participants. Accordingly, BX does not believe that the proposed rule changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. [[Page 34763]] C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or 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) of the Act \17\ and paragraph (f) of Rule 19b-4 \18\ thereunder. 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. --------------------------------------------------------------------------- \17\ 15 U.S.C. 78s(b)(3)(A). \18\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- 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 [email protected]. Please include File Number SR-BX-2015-033 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-BX-2015-033. 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 be available for inspection and copying at the principal offices 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-BX-2015-033, and should be submitted on or before July 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\19\ --------------------------------------------------------------------------- \19\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-14819 Filed 6-16-15; 8:45 am] BILLING CODE 8011-01-P
![34758 Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
C. Self-Regulatory Organization’s to determine whether the proposed rule For the Commission, by the Division of
Statement on Comments on the should be approved or disapproved. Trading and Markets, pursuant to delegated
Proposed Rule Change Received From authority.12
Members, Participants, or Others IV. Solicitation of Comments Robert W. Errett,
No written comments were solicited Deputy Secretary.
Interested persons are invited to
or received with respect to the proposed [FR Doc. 2015–14830 Filed 6–16–15; 8:45 am]
submit written data, views, and
rule change. arguments concerning the foregoing, BILLING CODE 8011–01–P
III. Date of Effectiveness of the including whether the proposed rule
Proposed Rule Change and Timing for change is consistent with the Act. SECURITIES AND EXCHANGE
Commission Action Comments may be submitted by any of COMMISSION
the following methods:
Because the proposed rule change [Release No. 34–75145; File No. SR–BX–
does not (i) significantly affect the Electronic Comments 2015–033]
protection of investors or the public
interest; (ii) impose any significant • Use the Commission’s Internet Self-Regulatory Organizations;
burden on competition; and (iii) become comment form (http://www.sec.gov/ NASDAQ OMX BX, Inc.; Notice of Filing
operative for 30 days from the date on rules/sro.shtml); or and Immediate Effectiveness of a
which it was filed, or such shorter time • Send an email to rule-comments@ Proposed Rule Change To Amend the
as the Commission may designate if sec.gov. Please include File Number SR– Fee Schedule Under Exchange Rule
consistent with the protection of NYSEArca–2015–45 on the subject line. 7018 With Respect to Transactions in
investors and the public interest, the Securities Priced at $1 or More per
proposed rule change has become Paper Comments Share and the Exchange’s Retail Price
effective pursuant to Section 19(b)(3)(A) Improvement Program
of the Act 9 and Rule 19b–4(f)(6)(iii) • Send paper comments in triplicate
thereunder.10 to Secretary, Securities and Exchange June 11, 2015.
The Exchange has asked the Commission, 100 F Street NE., Pursuant to Section 19(b)(1) of the
Commission to waive the 30-day Washington, DC 20549–1090. Securities Exchange Act of 1934
operative delay so that the proposal may All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2
become operative immediately upon Number SR–NYSEArca–2015–45. This notice is hereby given that on June 1,
filing. The Exchange stated that waiver file number should be included on the 2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or
of this requirement would enable the ‘‘Exchange’’) filed with the Securities
subject line if email is used. To help the
Exchange to implement immediately the and Exchange Commission (‘‘SEC’’ or
Commission process and review your
approved price protection risk ‘‘Commission’’) the proposed rule
comments more efficiently, please use change as described in Items I, II, and
mechanisms for which the associated
Exchange technology is currently only one method. The Commission will III below, which Items have been
available or is in the process of post all comments on the Commission’s prepared by the Exchange. The
becoming finalized, consistent with the Internet Web site (http://www.sec.gov/ Commission is publishing this notice to
proposed implementation schedule. The rules/sro.shtml). Copies of the solicit comments on the proposed rule
Commission believes the waiver of the submission, all subsequent change from interested persons.
operative delay is consistent with the amendments, all written statements
with respect to the proposed rule I. Self-Regulatory Organization’s
protection of investors and the public
change that are filed with the Statement of the Terms of Substance of
interest. Therefore, the Commission
Commission, and all written the Proposed Rule Change
hereby waives the operative delay and
designates the proposal operative upon communications relating to the The Exchange proposes to amend BX
filing.11 proposed rule change between the Rule 7018 with respect to transactions
At any time within 60 days of the Commission and any person, other than in securities priced at $1 or more per
filing of the proposed rule change, the those that may be withheld from the share and the Exchange’s Retail Price
Commission summarily may public in accordance with the Improvement Program.
temporarily suspend such rule change if provisions of 5 U.S.C. 552, will be The text of the proposed rule change
it appears to the Commission that such available for Web site viewing and is also available on the Exchange’s Web
action is necessary or appropriate in the printing in the Commission’s Public site at http://
public interest, for the protection of nasdaqomxbx.cchwallstreet.com, at the
Reference Room, 100 F Street, NE.,
investors, or otherwise in furtherance of principal office of the Exchange, and at
Washington, DC 20549 on official
the purposes of the Act. If the the Commission’s Public Reference
business days between the hours of
Commission takes such action, the Room.
10:00 a.m. and 3:00 p.m. Copies of such
Commission shall institute proceedings II. Self-Regulatory Organization’s
filing also will be available for
9 15 inspection and copying at the principal Statement of the Purpose of, and
U.S.C. 78s(b)(3)(A).
10 17 CFR 240.19b–4(f)(6)(iii). As required under office of the Exchange. All comments Statutory Basis for, the Proposed Rule
Rule 19b–4(f)(6)(iii), the Exchange provided the received will be posted without change; Change
Commission with written notice of its intent to file
asabaliauskas on DSK5VPTVN1PROD with NOTICES
the Commission does not edit personal In its filing with the Commission, the
the proposed rule change, along with a brief
description and the text of the proposed rule identifying information from Exchange included statements
change, at least five business days prior to the date submissions. You should submit only concerning the purpose of and basis for
of filing of the proposed rule change, or such information that you wish to make the proposed rule change and discussed
shorter time as designated by the Commission.
11 For purposes only of waiving the 30-day
available publicly. All submissions any comments it received on the
operative delay, the Commission has also should refer to File Number SR–
12 17 CFR 200.30–3(a)(12).
considered the proposed rule’s impact on NYSEArca-2015–45, and should be
1 15 U.S.C. 78s(b)(1).
efficiency, competition, and capital formation. See submitted on or before July 8, 2015.
15 U.S.C. 78c(f). 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices 34759
proposed rule change. The text of these $0.0008 per share executed, per share executed to $0.0014 per share
statements may be examined at the respectively. The Exchange is proposing executed. The Exchange is also
places specified in Item IV below. The to increase the credit provided under proposing to adopt a new charge tier of
Exchange has prepared summaries, set the 0.1% Consolidated Volume tier from $0.0014 per share executed assessed a
forth in sections A, B, and C below, of $0.0010 per share executed to $0.0015 member that (i) adds liquidity equal to
the most significant aspects of such per share executed. The Exchange is or exceeding 0.25% of total
statements. also proposing to increase the total Consolidated Volume during a month,
Consolidated Volume required to and (ii) adds and accesses liquidity
A. Self-Regulatory Organization’s
receive the $0.0008 per share executed equal to or exceeding 0.50% of total
Statement of the Purpose of, and
credit from 0.015% to 0.02%. Consolidated Volume during a month.
Statutory Basis for, the Proposed Rule The Exchange is proposing to increase
Change The Exchange is proposing to increase
the credit it provides for all other orders the charges assessed under two tiers for
1. Purpose that remove liquidity from BX and that a displayed order that adds liquidity
The Exchange is proposing to amend do not qualify under another higher equal to or exceeding 0.25% and 0.04%
the fee schedule under Rule 7018(a), credit from $0.0004 per share executed of total Consolidated Volume during a
relating to fees and credits provided for to $0.0006 per share executed. In related month, respectively, which are
orders in securities priced and $1 or changes, the Exchange is eliminating currently set a $0.0012 per share
more per share that execute on BX, and two credit tiers, which currently executed and $0.0014 per share
is proposing to increase a credit provide credits of $0.0006 per share executed, respectively. The Exchange is
provided by the Retail Price executed and both of which are proposing to increase the charge under
Improvement program under Rule rendered moot in light of the increased the 0.25% tier to $0.0018 per share
7018(e). credit the Exchange is provided for all executed, while also decreasing the
Under Rule 7018(a), the Exchange other orders that remove liquidity from minimum liquidity needed to be
provides credits to member firms that BX. Specifically, the Exchange is provided to qualify under the tier from
access certain levels of liquidity on BX proposing to eliminate a $0.0006 per 0.25% of total Consolidated Volume
per month. The Exchange is proposing share executed credit provided to a during a month to 0.20% of total
to add two new credit tiers of $0.0017 member firm for an order that accesses Consolidated Volume during a month.
and $0.0012 per share executed, which liquidity, excluding orders with The Exchange is proposing to increase
will be provided for orders that access Midpoint pegging and orders that the charge under the 0.04% tier to
liquidity, excluding orders with receive price improvement and execute $0.0019 per share executed and is
Midpoint pegging 3 and orders that against an order with Midpoint pegging, additionally proposing to increase the
receive price improvement and execute entered by a member that provides an total Consolidated Volume required to
against an order with Midpoint pegging, average daily volume of at least 25,000 receive the charge from 0.04% to 0.10%.
entered by a member that accesses shares of liquidity during the month. The Exchange is also proposing to
liquidity equal to or exceeding 0.20% The Exchange is also proposing to amend charges it assesses for providing
and 0.05% of total Consolidated eliminate the $0.0006 per share liquidity in orders with Midpoint
Volume 4 during a month, respectively. executed credit provided to members pegging. Specifically, it is proposing to
In a related change, the Exchange is with a BSTG,5 BSCN,6 BMOP,7 BTFY,8 eliminate the $0.0002 per share
amending existing credit tiers that BCRT,9 BDRK 10 or BCST 11 order that executed charge assessed for an order
provide a credit to members with orders accesses liquidity in the NASDAQ OMX with Midpoint pegging entered by a
that access liquidity, excluding orders BX Equities System, excluding orders member that adds 0.03% of total
with Midpoint pegging and orders that with Midpoint pegging and excluding Consolidated Volume of non-displayed
receive price improvement and execute orders that receive price improvement liquidity. The Exchange is also
against an order with Midpoint pegging, and execute against an order with proposing to increase the charge
entered by a member that accesses Midpoint pegging. assessed for an order with Midpoint
liquidity equal to or exceeding 0.1% The Exchange is also proposing to pegging entered by a member that adds
and 0.015% of total Consolidated modify and eliminate certain charges it 0.015% of total Consolidated Volume of
Volume during a month, which assesses under Rule 7018(a). non-displayed liquidity from $0.0004
currently provide credits of $0.0010 and Specifically, the Exchange is proposing per share executed to $0.0005 per share
to increase the charge assessed for a executed and is additionally increasing
3 A Midpoint Peg order has its priced [sic] based
Displayed order entered by a Qualified the total Consolidated Volume
upon the national best bid and offer, excluding the requirement from 0.015% to 0.02%. The
effect that the Midpoint Peg Order itself has on the Market Maker 12 (‘‘QMM’’) from $0.0009
inside bid or inside offer. Primary Pegged Orders Exchange is proposing to increase the
with an offset amount and Midpoint Pegged Orders 5 See BX Rule 4758(a)(1)(A)(iii). $0.0010 per share executed charge for
will never be displayed. A Midpoint Pegged Order 6 See BX Rule 4758(a)(1)(A)(iv). an order with Midpoint pegging entered
may be executed in sub-pennies if necessary to 7 See BX Rule 4758(a)(1)(A)(vi). by a member that does not qualify for
obtain a midpoint price. A new timestamp is
created for the order each time it is automatically
8 See BX Rule 4758(a)(1)(A)(v).
a lower charge for such an order to
9 See BX Rule 4758(a)(1)(A)(vii).
adjusted. $0.0015 per share executed.
10 See BX Rule 4758(a)(1)(A)(viii).
4 Consolidated Volume is defined as the total The Exchange is proposing to amend
11 See BX Rule 4758(a)(1)(A)(ix).
consolidated volume reported to all consolidated certain charges relating to non-
asabaliauskas on DSK5VPTVN1PROD with NOTICES
transaction reporting plans by all exchanges and 12 A member firm may become a QMM by
trade reporting facilities during a month in equity providing through one or more of its NASDAQ displayed orders. Specifically, the
securities, excluding executed orders with a size of OMX BX Equities System market maker participant Exchange is proposing to eliminate the
less than one round lot. For purposes of calculating identifier (‘‘MPIDs’’) more than 0.30% of $0.0014 per share executed charge
Consolidated Volume and the extent of a member’s Consolidated Volume during the month. For a assessed for a non-displayed order,
trading activity, expressed as a percentage of or member qualifying under this method, the member
ratio to Consolidated Volume, the date of the must have at least one Qualified MPID, that is, an other than orders with Midpoint
annual reconstitution of the Russell Investments MPID through which, for at least 200 securities, the
Indexes shall be excluded from both total QMM quotes at the NBBO an average of at least member must also provide an average daily volume
Consolidated Volume and the member’s trading 50% of the time during regular market hours (9:30 of 1.5 million shares or more using orders with
activity. See Rule 7018(a). a.m. through 4:00 p.m.) during the month. The Midpoint pegging during the month.
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![Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices 34761
provision of market improving order required to receive the $0.0019 per other non-displayed orders. Moreover,
activity. The Exchange believes that the share executed charge from 0.04% to the Exchange believes that the proposed
proposed change is both equitably 0.10% because the Exchange believes increased charge will continue [sic] act
allocated and is not unfairly that increasing the level may result in as an incentive to market participants to
discriminatory because the increased improved market quality in the form of provide orders with Midpoint pegging.
charge applies uniformly to all member additional total Consolidated Volume in The Exchange believes that the
firms that previously had qualified to return for the reduced charge. The proposed change is both equitably
receive such a credit. Exchange believes that the proposed allocated and is not unfairly
The Exchange believes that the changes to the $0.0012 charge tier is discriminatory because member firms
proposed new $0.0014 per share both an equitable allocation and is not will continue to receive a charge lower
executed charge available to a member unfairly discriminatory because the than the default charge assessed for
firm that adds liquidity equal to or increased charge applies uniformly to orders in return for providing beneficial
exceeding 0.25% of total Consolidated all member firms that qualify under the liquidity in the form of Midpoint
Volume during a month and adds and tier’s revised, lower Consolidated pegging orders, albeit at an increased
accesses liquidity equal to or exceeding Volume requirement, which will charge. The Exchange also believes that
0.50% of total Consolidated Volume continue to provide a charge lower than the proposed increase to the charge is
during a month, is reasonable because it the default charge assessed for equitably allocated and not unfairly
provides a new means by which a displayed orders. The Exchange also discriminatory because all members
member firm may qualify for a lower believes that the proposed changes to entering orders with Midpoint pegging
charge than the default charge applied the $0.0014 charge tier is both an that meet the criteria of the tier will be
to liquidity-providing displayed orders. equitable allocation and is not unfairly assessed the proposed charge.
The Exchange provides incentives to discriminatory because the increased The Exchange believes that the
member firms to enter displayed orders charge applies uniformly to all member increase the [sic] charge for Midpoint
on BX and, in the present case, it is firms that qualify under the tier’s pegging orders that do not otherwise
providing a reduced charge to a member revised, higher Consolidated Volume qualify for a lower charge from $0.0010
that enters such an order, but also requirement, which will continue to per share executed to $0.0015 per share
provides market improving liquidity in provide a charge lower than the default executed is reasonable because it
the form of significant levels of charge assessed for displayed orders. represents a modest increase to the
Consolidated Volume of adding and The Exchange believes that charge assessed for such orders, while
accessing liquidity during the month. elimination of the $0.0002 per share remaining lower than the default charge
The Exchange believes that the executed charge provided for an order assessed for non-displayed orders.
proposed change is both equitably with Midpoint pegging entered by a Moreover, the Exchange believes that
allocated and is not unfairly member firm that adds 0.03% of total the proposed increased charge will
discriminatory because the new charge Consolidated Volume of non-displayed continue [sic] act as an incentive to
applies uniformly to all member firms liquidity is reasonable because the market participants provide orders with
that qualify under the tier’s Exchange will continue to provide Midpoint pegging. The Exchange
requirements, which requires beneficial opportunity for member firms to receive believes that the proposed change is
market activity by the member firm in a reduced charge for such non-displayed both equitably allocated and is not
return for the lower charge. liquidity based on a certain level of total unfairly discriminatory because member
The Exchange believes that the Consolidated Volume. Specifically, the firms will continue to receive a charge
proposed increase to the $0.0012 per Exchange will provide a member firm lower than the default charge assessed
share executed and $0.0014 per share with a reduced charge for non-displayed for non-displayed orders in return for
executed charge tiers assessed for liquidity if it achieves 0.02% of total providing beneficial liquidity in the
Displayed orders entered by a member Consolidated Volume during a month. form of Midpoint pegging orders, albeit
firm that adds liquidity equal to or The Exchange believes that the 0.03% at an increased charge. The Exchange
exceeding 0.25% and 0.04% of total total Consolidated Volume tier is no also believes that the proposed increase
Consolidated Volume during a month, longer needed to provide incentive to to the charge is equitably allocated and
respectively, is reasonable because it market participant [sic] to provide such not unfairly discriminatory because all
reflects a small increase to the charges Midpoint pegging orders. The Exchange members entering orders with Midpoint
assessed for such orders by qualifying believes that the proposed change is pegging that do not otherwise qualify for
members, while each continue to both equitably allocated and is not a lower charge under another tier will
remain lower than the default charge unfairly discriminatory because member be assessed the proposed charge.
assessed for providing liquidity in firms will continue to receive a charge The Exchange believes that
displayed orders. As such, the proposed lower than the default charge assessed elimination of the $0.0014 per share
charges will continue [sic] act as an for non-displayed orders in return for executed charge assessed for non-
incentive to market participants to providing beneficial liquidity in the displayed orders, other than orders with
provide displayed orders. The Exchange form of Midpoint pegging orders, albeit Midpoint pegging, entered by a member
also believes that decreasing the level of at an increased charge. firm that adds 0.075% of total
Consolidated Volume required to The Exchange believes that the Consolidated Volume of non-displayed
receive the proposed $0.0018 per share proposed increase to the charge assessed liquidity is reasonable because the
executed charge from 0.025% to 0.020% for an order with Midpoint pegging Exchange will continue to offer member
asabaliauskas on DSK5VPTVN1PROD with NOTICES
is reasonable because it lowers the total entered by a member firm that adds firms opportunity to receive a reduced
Consolidated Volume requirement, 0.015% of total Consolidated Volume charge for such orders, albeit at a higher
which the Exchange has observed was from $0.0004 per share executed to charge under a separate tier. The
set too high to effectively provide $0.0005 per share executed is Exchange notes that, while the proposed
incentive to market participants to reasonable because it represents a charge under the remaining tier is
improve the market. The Exchange also modest increase to the charge assessed $0.0024 per share executed, member
believes that it is reasonable to increase for such orders, while remaining lower firms will only be required to provide a
the level of Consolidated Volume than the default charge assessed for minimum of 0.06% of total
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![34762 Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
Consolidated Volume of non-displayed increase to the charge assessed, thus being minor and lower than the default
liquidity. The Exchange believes that allowing the Exchange to apply other charges assessed under the fee schedule,
this charge tier will continue [sic] act as discounted charges and offer credits while the increased credits are designed
an incentive to market participants to designed to further increase to incentivize changes in market
provide non-displayed liquidity. The participation on the Exchange. The participant behavior to the benefit of the
Exchange believes that the proposed Exchange also believes that the market overall.
change is both equitably allocated and proposed increase to the default charge
is not unfairly discriminatory because is equitably allocated and not unfairly B. Self-Regulatory Organization’s
member firms will continue to receive a discriminatory because all members Statement on Burden on Competition
charge lower than the default charge entering non-displayed orders on BX
assessed for non-displayed orders that that do not qualify for a reduced charge The Exchange does not believe that
qualify under the deleted tier in return will be assessed the proposed charge. the proposed rule changes will result in
for providing non-displayed liquidity, The Exchange believes the proposed any burden on competition that is not
albeit at an increased charge under the reduction in the level of Consolidated necessary or appropriate in furtherance
remaining tier. Volume required to qualify as a QMM of the purposes of the Act, as
The Exchange believes that increasing from 0.30% to 0.15% is reasonable amended.16 BX notes that it operates in
the charge assessed and total because it will provide a greater a highly competitive market in which
Consolidated Volume required for non- incentive to market participants to market participants can readily favor
displayed orders, other than orders with participate in the program, which is dozens of different competing
Midpoint pegging, entered by a member designed to improve the market by exchanges and alternative trading
firm that adds 0.055% of total providing member firms with incentive systems if they deem fee levels at a
Consolidated Volume of non-displayed to participate in the market in return for particular venue to be excessive, or
liquidity is reasonable because the reduced charge for providing Displayed rebate opportunities available at other
charge continues to be lower than the Orders. The Exchange also believes that venues to be more favorable. In such an
charge assessed for other non-displayed the proposed reduction in Consolidated environment, BX must continually
orders, thereby continuing to serve as an Volume required to qualify as a QMM
adjust its fees to remain competitive
incentive to market participants to is equitably allocated and not unfairly
with other exchanges. Because
provide non-displayed liquidity, and discriminatory because all member
the modest increase in required total firms that qualify under the amended competitors are free to modify their own
Consolidated Volume will encourage QMM eligibility standard will be fees in response, and because market
members to provide additional non- considered QMMs, and therefore be participants may readily adjust their
displayed liquidity. The Exchange notes eligible for the reduced charge. As order routing practices, BX believes that
that non-displayed liquidity is not as noted, the proposed change is designed the degree to which fee changes in this
beneficial to market quality as other to expand participation in the program, market may impose any burden on
forms of displayed liquidity and, which will benefit all market competition is extremely limited.
accordingly, the Exchange assesses a participants in the form of improved In this instance, the changes to fees
higher charge for such liquidity. The liquidity. and credits do not impose a burden on
Exchange believes that the proposed The Exchange believes the proposed competition because participation in the
change is both equitably allocated and increased credit provided for a Retail Exchange is optional and is the subject
is not unfairly discriminatory because Order that accesses other liquidity on
of competition from other exchanges.
member firms will continue to receive a the Exchange book from $0.0012 per
The proposed changes to the credits and
charge lower than the default charge share executed to $0.0017 per share
executed is reasonable because it will charges are reflective of the Exchange’s
assessed for non-displayed orders that
qualify under the tier in return for provide a greater incentive to market overall efforts to provide greater
providing non-displayed liquidity at a participants to participate in the incentives to market participants in the
level slightly higher than is currently program, which is designed to improve form of credits and reduced charges for
required, which will apply to all the market for retail order flow. The market participation it believes needs
member firms that qualify under the Exchange also believes that the improvement to the benefit of all
tier. Additionally, the Exchange believes proposed increase to the credit is participants. For these reasons, the
that the proposed change is equitably equitably allocated and not unfairly Exchange does not believe that any of
allocated and not unfairly discriminatory because all members the proposed changes will impair the
discriminatory because all members can entering a Retail Order that accesses ability of members or competing order
add liquidity to BX and the more other liquidity on the Exchange book execution venues to maintain their
liquidity a member adds the lower the will receive the credit. competitive standing in the financial
charge because the member is Finally, BX notes that it operates in a markets. Moreover, because there are
improving the quality of the market by highly competitive market in which numerous competitive alternatives to
providing this additional liquidity. market participants can readily favor the use of the Exchange, it is likely that
The Exchange believes that the competing venues if they deem fee BX will lose market share as a result of
proposed increase to the default charge levels at a particular venue to be the changes if they are unattractive to
assessed for non-displayed orders that excessive. In such an environment, BX market participants.
do not otherwise qualify for a lower must continually adjust its fees to
asabaliauskas on DSK5VPTVN1PROD with NOTICES
charge from $0.0028 per share executed remain competitive with other Accordingly, BX does not believe that
to $0.0030 per share executed is exchanges and with alternative trading the proposed rule changes will impair
reasonable because it is reflective of the systems that have been exempted from the ability of members or competing
Exchange’s need to balance the fees compliance with the statutory standards order execution venues to maintain
assessed with the desire to improve applicable to exchanges. The changes their competitive standing in the
market quality. The Exchange believes reflect this environment because financial markets.
that non-displayed liquidity on BX is although they reflect both increases in
sufficient that it can support a minor credits and fees, with the price increases 16 15 U.S.C. 78f(b)(8).
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![Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices 34763
C. Self-Regulatory Organization’s available for Web site viewing and ongoing timer or auction will maintain
Statement on Comments on the printing in the Commission’s Public priority over a new incoming Customer
Proposed Rule Change Received From Reference Room, 100 F Street NE., Cross Order or Qualified Contingent
Members, Participants, or Others Washington, DC 20549 on official Cross Order. MIAX Rule 515(h)(1)
No written comments were either business days between the hours of provides that Customer Cross Orders 4
solicited or received. 10:00 a.m. and 3:00 p.m. Copies of such are automatically executed upon entry
filing also will be available for provided that the execution (i) is at or
III. Date of Effectiveness of the inspection and copying at the principal between the best bid and offer on the
Proposed Rule Change and Timing for offices of the Exchange. All comments Exchange; (ii) is not at the same price as
Commission Action received will be posted without change; a Priority Customer Order on the
The foregoing change has become the Commission does not edit personal Exchange’s Book; and (iii) will not trade
effective pursuant to Section 19(b)(3)(A) identifying information from at a price inferior to the national best
of the Act 17 and paragraph (f) of Rule submissions. You should submit only bid or offer (‘‘NBBO’’). Customer Cross
19b–4 18 thereunder. At any time within information that you wish to make Orders are automatically canceled if
60 days of the filing of the proposed rule available publicly. All submissions they cannot be executed.5 Customer
change, the Commission summarily may should refer to File Number SR–BX– Cross Orders may only be entered in the
temporarily suspend such rule change if 2015–033, and should be submitted on minimum trading increments applicable
it appears to the Commission that such or before July 8, 2015. to the options class under Rule 510.6
action is necessary or appropriate in the MIAX Rule 515(h)(2) provides that
For the Commission, by the Division of
public interest, for the protection of Trading and Markets, pursuant to delegated Qualified Contingent Cross Orders 7 are
investors, or otherwise in furtherance of authority.19 automatically executed upon entry
the purposes of the Act. Robert W. Errett, provided that the execution (i) is not at
the same price as a Priority Customer
IV. Solicitation of Comments Deputy Secretary.
Order on the Exchange’s Book; and (ii)
Interested persons are invited to [FR Doc. 2015–14819 Filed 6–16–15; 8:45 am]
is at or between the NBBO. Qualified
submit written data, views, and BILLING CODE 8011–01–P
Contingent Cross Orders are
arguments concerning the foregoing, automatically canceled if they cannot be
including whether the proposed rule executed.8 Qualified Contingent Cross
change is consistent with the Act. SECURITIES AND EXCHANGE
Orders may only be entered in the
Comments may be submitted by any of COMMISSION
minimum trading increments applicable
the following methods: [Release No. 34–75152; File No. SR–MIAX– to the options class under MIAX Rule
Electronic Comments 2015–19) 510.9
Although neither the Customer Cross
• Use the Commission’s Internet Self-Regulatory Organizations; Miami Order nor the Qualified Contingent
comment form (http://www.sec.gov/ International Securities Exchange LLC; Cross Order may be executed at a price
rules/sro.shtml); or Order Approving a Proposed Rule inferior to the NBBO, the Exchange
• Send an email to rule-comments@ Change To Amend Exchange Rule 515 notes that there are situations at the
sec.gov. Please include File Number SR– Exchange during which trading interest
BX–2015–033 on the subject line. June 11, 2015.
may exist in the Exchange’s System that
Paper Comments I. Introduction could be executable at prices up to the
NBBO but is not automatically executed
• Send paper comments in triplicate On April 13, 2015, Miami
International Securities Exchange LLC because the Exchange is either
to Secretary, Securities and Exchange
(‘‘MIAX’’ or ‘‘Exchange’’) filed with the attempting to obtain additional price
Commission, 100 F Street NE.,
Securities and Exchange Commission improvement for the order or additional
Washington, DC 20549–1090.
(‘‘Commission’’), pursuant to Section liquidity to trade against the order on
All submissions should refer to File the Exchange. The Exchange states that
Number SR–BX–2015–033. This file 19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4 it employs a variety of timers and
number should be included on the auctions to provide market participants
subject line if email is used. To help the thereunder,2 a proposed rule change to
amend Exchange Rule 515 regarding the with an opportunity to obtain additional
Commission process and review your price improvement for their order or to
comments more efficiently, please use functionality of Customer Cross Order
and Qualified Contingent Cross Order access additional liquidity to trade
only one method. The Commission will against the order on the Exchange.
post all comments on the Commission’s types. The proposed rule change was
published for comment in the Federal Specifically, during the liquidity refresh
Internet Web site (http://www.sec.gov/ pause or managed interest process
rules/sro.shtml). Copies of the Register on April 30, 2015.3 The
submission, all subsequent Commission did not receive any
4 See MIAX Rules 515(h)(1) and 516(i). The
amendments, all written statements comments on the proposal. This order Commission notes that the Customer Cross Order
with respect to the proposed rule approves the proposed rule change. type is currently not available for use on the
change that are filed with the Exchange. See MIAX Options Regulatory Circular,
II. Description of the Proposal RC–2015–05.
Commission, and all written 5 See Notice, supra note 3, at 24297.
The Exchange proposes amendments
asabaliauskas on DSK5VPTVN1PROD with NOTICES
communications relating to the 6 See MIAX Rule 515(h)(1).
proposed rule change between the to MIAX Rule 515(h) to provide that
7 See MIAX Rules 515(h)(2) and 516(j). See also
Commission and any person, other than trading interest that is subject to an MIAX Rule 516, Interpretations and Policies .01.
those that may be withheld from the The Qualified Contingent Cross Order is currently
19 17 CFR 200.30–3(a)(12). not deployed; however, the Exchange represents
public in accordance with the 1 15 U.S.C. 78s(b)(1). that it intends to make the order type available
provisions of 5 U.S.C. 552, will be 2 17 CFR 240.19b–4. pending Commission approval of the proposed rule
3 See Securities Exchange Act Release No. 74809 change. See Notice, supra note 3, at 24297.
17 15 U.S.C. 78s(b)(3)(A). 8 See Notice, supra note 3, at 24297.
(April 24, 2015), 80 FR 24297 (SR–MIAX–2015–19)
18 17 CFR 240.19b–4(f). (‘‘Notice’’). 9 See MIAX Rule 515(h)(2).
VerDate Sep<11>2014 18:47 Jun 16, 2015 Jkt 235001 PO 00000 Frm 00158 Fmt 4703 Sfmt 4703 E:\FR\FM\17JNN1.SGM 17JNN1](https://thefederalregister.org/doc/80_FR_34874/page/6.svg)
Document Created: 2015-12-15 14:22:59
Document Modified: 2015-12-15 14:22:59
| 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 34758 |
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