80 FR 55888 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 7018
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 180 (September 17, 2015)
Federal Register Volume 80, Issue 180 (September 17, 2015)
| Page Range | 55888-55891 | |
| FR Document | 2015-23289 |
[Federal Register Volume 80, Number 180 (Thursday, September 17, 2015)] [Notices] [Pages 55888-55891] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-23289] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75904; File No. SR-BX-2015-056] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 7018 September 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 September 1, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed [[Page 55889]] 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 the fee schedule under Exchange Rule 7018(a) with respect to execution and routing of orders in securities priced at $1 or more per share and to amend a credit under BX Rule 7018(e). While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on September 1, 2015. 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 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 BX Rule 7018(a), relating to charges and credits provided for orders in securities priced and $1 or more per share that execute on BX, as well as to reduce a credit provided in connection with the Retail Price Improvement (``RPI'') program under BX Rule 7018(e). Under BX 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 amend several of the credit tiers for orders that access liquidity (excluding orders with midpoint pegging and excluding orders that receive price improvement and execute against an order with midpoint pegging), as well as modify the criteria for receiving certain of the credits. The Exchange also proposes a few minor changes made for the purposes of clarity and conformity. Specifically, the Exchange proposes to add a new credit tier of $0.0016 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 0.15% of total consolidated volume \4\ (``Consolidated Volume'') during a month. Additionally, the Exchange proposes to amend the credit tier of $0.0015 per share executed, which is provided for 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 or exceeding 0.10% of Consolidated Volume by reducing the Consolidated Volume threshold to 0.09%. --------------------------------------------------------------------------- \3\ A Midpoint Peg order has its priced 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). --------------------------------------------------------------------------- BX also proposes to eliminate the credit tier of $0.0012 per share executed, which currently is provided for 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 0.10% [sic] of total Consolidated Volume during a month. Next, the Exchange proposes to revise the criteria for a member to qualify for the credit tier of $0.0008 per share executed, which will be provided for 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 (rather than adds as is currently stated) liquidity equal to or exceeding 0.05% (rather than 0.02% that is the current level), of total Consolidated Volume during a month. BX is also proposing to slightly increase the charge for providing liquidity through the NASDAQ OMX BX Equities System (``System'') for a displayed order entered by 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 from $0.0014 per share executed to $0.0016 per share executed. Currently, a firm may become a Qualified Market Maker (``QMM'') by being a member that provides through one or more of its BX System MPIDs more than 0.15% 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 national best bid and offer (``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 Exchange is proposing to increase the Consolidated Volume requirement from 0.15% to 0.20% during the month and to eliminate the additional requirement that the member must also provide an average daily volume of 1.5M shares or more of non-displayed liquidity during the month. Lastly, the Exchange is proposing to amend a credit provided under the Retail Price Improvement (``RPI'') program in BX Rule 7018(e). The Exchange's 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'' \5\ for the purpose of seeking price improvement. The Exchange is proposing to decrease the credit of $0.0002 per share executed to $0.0000 per share executed that is provided for a Retail Order that receives price improvement (when the accepted price of an order is different than the [[Page 55890]] executed price of an order) and accesses non-RPI order with midpoint pegging. --------------------------------------------------------------------------- \5\ 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 change is consistent with the provisions of section 6 of the Act,\6\ in general, and with sections 6(b)(4) and 6(b)(5) of the Act,\7\ 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 is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f. \7\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that the new and amended credit tiers for orders that access liquidity (excluding orders with midpoint pegging and excluding orders that receive price improvement and execute against an order with midpoint pegging), as well as the modified criteria for receiving certain of the credits based on Consolidated Volume together, as well as related clarifying changes, under BX Rule 7018(a) are reasonable because they provide additional opportunities for market participants to receive credits for participation on BX. Specifically, the Exchange is proposing a new of [sic] $0.0016 per share executed credit tier, which requires liquidity accessed of 0.15% or more of Consolidated Volume during the month. The Exchange is also proposing a [sic] eliminate the $0.0012 per share executed credit tier, which currently requires liquidity accessed of 0.05% or more of Consolidated Volume during the month. Additionally, the Exchange is modifying the existing credit tier of $0.0008 per share executed by increasing the minimum total Consolidated Volume required from 0.02% to 0.05% and making it applicable to members that access rather than add liquidity. As such, the Exchange is generally providing increased credits for member firms that remove increasing amounts of liquidity from the Exchange. With respect to the accesses Consolidated Volume requirement to receive the $0.0008 credit, the Exchange believes this is reasonable because for firms to receive the increased credit they must remove a certain amount of Consolidated Volume, which will improve market quality for all participants. The Exchange believes that the proposed credits noted above are 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 remove the greatest level of Consolidated Volume receiving the greatest credit. Additionally, the Exchange believes that this proposed rule change being changed from a member that adds liquidity to being applicable to a member that accesses liquidity is reasonable because the Exchange desires to further incentivize member firms to participate in the Exchange by removing liquidity. The Exchange believes that elimination of the $0.0012 per share executed credit tier is reasonable because the Exchange has added a $0.0016 credit tier per share executed, discussed above, and the Exchange desires to further incentivize member firms to participate in the Exchange by removing liquidity, generally. The Exchange believes that the proposed addition of the $0.0016 credit tier per share executed and elimination of the $0.0012 per share executed credit tier, are both an equitable allocation and are not unfairly discriminatory because the $0.0012 per share executed credit tier is a no longer needed incentive for [sic] market participant and member firms will continue to have the opportunity to qualify for a higher credit based on their participation in BX by removing liquidity. Additionally, the Exchange believes reducing the Consolidated Volume threshold for the credit tier of $0.0015 per share executed, which is provided for orders that access liquidity (excluding orders with midpoint pegging and orders that receive price improvement and execute against an order with midpoint pegging) and that is entered by a member that accesses liquidity, from equal or exceeding 0.10% of Consolidated Volume to 0.09%, is reasonable because it will make it easier for members to receive a rebate at that level and encourage market participant activity and will also support price discovery and liquidity provision. The Exchange also believes this proposed rule change is an equitable allocation and is not unfairly discriminatory because it will apply uniformly to all member firms that so qualify. The Exchange believes that the proposed change to slightly increase the charge assessed a member 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. The Exchange believes that the proposed change is both equitably allocated and is not unfairly discriminatory because the slightly increased charge applies uniformly to all member firms that previously had qualified to receive such a credit. The Exchange believes that the proposed increase to the monthly Consolidated Volume requirement from 0.15% to 0.20% for a firm to become a QMM is reasonable because member firms are being required to provide through one or more of its BX System MPIDs increased Consolidated Volume to qualify, which will increase liquidity in the market overall. Additionally, 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. BX also believes it is reasonable to eliminate the additional requirement that the member must also provide an average daily volume of 1.5M shares or more of non- displayed liquidity during the month because the Exchange believes removing this criteria will allow QMMs to focus on making better markets. The Exchange also believes that the proposed increase to the monthly Consolidated Volume requirement from 0.15% to 0.20% for a firm to become a QMM is both equitably allocated and is not unfairly discriminatory because it [sic] the slightly higher Consolidated Volume requirement applies uniformly to firms seeking to qualify as a QMM. The Exchange also believes that the proposed changes to the criteria for a firm to qualify as a QMM expands the opportunity for firms to qualify as a QMM and further perfects the mechanism of a free and open market by making it easier to qualify for this beneficial, market improving program [[Page 55891]] and bolster displayed liquidity by eliminating the additional requirement that the member must also provide an average daily volume of 1.5M shares or more of non-displayed liquidity during the month. BX believes that the proposed change to decrease the credit of $0.0002 per share executed to $0.0000 per share executed that is provided for a Retail Order that receives price improvement (when the accepted price of an order is different than the executed price of an order) and accesses non-RPI order with midpoint pegging is reasonable because this incentive is no longer needed to improve the market for retail order flow. Also, the Exchange must continually adjust its incentives to remain competitive with other exchanges. The Exchange also believes the reduced credit is equitably allocated and is not unfairly discriminatory because it applies uniformly to all firms. 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 changes to both credits and charges, with the price increases being minor, while [sic] the amended credits are designed overall 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.\8\ 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. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- In this instance, the modification to the fee schedule, as well as modifications to the criteria to become a QMM, do not impose a burden on competition because it is optional and is the subject of competition from other exchanges. The Exchange does not believe that the proposed change 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 change will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. 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 \9\ and paragraph (f) of Rule 19b-4 \10\ 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. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. --------------------------------------------------------------------------- \9\ 15 U.S.C. 78s(b)(3)(A). \10\ 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 rule-comments@sec.gov. Please include File Number SR-BX-2015-056 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-2015-056. 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-2015-056, and should be submitted on or before October 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\11\ --------------------------------------------------------------------------- \11\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2015-23289 Filed 9-16-15; 8:45 am] BILLING CODE 8011-01-P
![55888 Federal Register / Vol. 80, No. 180 / Thursday, September 17, 2015 / Notices
at the Commission’s Public Reference intermarket competition that is not subject line if email is used. To help the
Room. necessary or appropriate in furtherance Commission process and review your
of the purposes of the Act because it comments more efficiently, please use
II. Self-Regulatory Organization’s
only applies to trading on the Exchange only one method. The Commission will
Statement of the Purpose of, and
[sic] and orders sent from the Exchange post all comments on the Commission’s
Statutory Basis for, the Proposed Rule
to other exchanges via Linkage. Should Internet Web site (http://www.sec.gov/
Change
the proposed change make C2 a more rules/sro.shtml). Copies of the
In its filing with the Commission, the attractive trading venue for market submission, all subsequent
Exchange included statements participants at other exchanges, such amendments, all written statements
concerning the purpose of and basis for market participants may elect to become with respect to the proposed rule
the proposed rule change and discussed market participants at C2. change that are filed with the
any comments it received on the Commission, and all written
proposed rule change. The text of these C. Self-Regulatory Organization’s communications relating to the
statements may be examined at the Statement on Comments on the proposed rule change between the
places specified in Item IV below. The Proposed Rule Change Received From Commission and any person, other than
Exchange has prepared summaries, set Members, Participants, or Others those that may be withheld from the
forth in sections A, B, and C below, of The Exchange neither solicited nor public in accordance with the
the most significant aspects of such received comments on the proposed provisions of 5 U.S.C. 552, will be
statements. rule change. available for Web site viewing and
A. Self-Regulatory Organization’s printing in the Commission’s Public
III. Date of Effectiveness of the Reference Room, 100 F Street NE.,
Statement of the Purpose of, and Proposed Rule Change and Timing for
Statutory Basis for, the Proposed Rule Washington, DC 20549, on official
Commission Action business days between the hours of
Change
The foregoing rule change has become 10:00 a.m. and 3:00 p.m. Copies of the
1. Purpose effective pursuant to Section 19(b)(3)(A) filing also will be available for
The Exchange proposes to amend its of the Act 3 and paragraph (f) of Rule inspection and copying at the principal
Fees Schedule. Specifically, the 19b–4 4 thereunder. At any time within office of the Exchange. All comments
Exchange proposes to increase the 60 days of the filing of the proposed rule received will be posted without change;
Linkage Routing fee from $0.65 per change, the Commission summarily may the Commission does not edit personal
contract to $0.70 per contract in temporarily suspend such rule change if identifying information from
addition to the applicable C2 taker fee. it appears to the Commission that such submissions. You should submit only
The Linkage Routing fee is assessed to action is necessary or appropriate in the information that you wish to make
all orders routed pursuant to the public interest, for the protection of available publicly. All submissions
Options Order Protection and Locked/ investors, or otherwise in furtherance of should refer to File Number SR–C2–
Crossed Market Plan. The purpose of the the purposes of the Act. If the 2015–023 and should be submitted on
proposed change is to help offset the Commission takes such action, the or before October 8, 2015.
costs associated with routing orders Commission will institute proceedings For the Commission, by the Division of
through Linkage and paying the to determine whether the proposed rule Trading and Markets, pursuant to delegated
transaction fees for such executions at change should be approved or authority.5
other exchanges. disapproved. Brent J. Fields,
2. Statutory Basis IV. Solicitation of Comments Secretary.
[FR Doc. 2015–23287 Filed 9–16–15; 8:45 am]
In particular, the Exchange’s proposal Interested persons are invited to BILLING CODE 8011–01–P
to increase the Linkage Routing fee from submit written data, views and
$0.65 per contract to $0.70 per contract arguments concerning the foregoing,
is reasonable because such increase will including whether the proposed rule SECURITIES AND EXCHANGE
help offset the costs associated with change is consistent with the Act. COMMISSION
routing orders through Linkage and Comments may be submitted by any of
paying the transaction fees for such the following methods: [Release No. 34–75904; File No. SR–BX–
executions at other exchanges. The 2015–056]
Exchange believes the proposed Electronic Comments
Self-Regulatory Organizations;
increase is equitable and not unfairly • Use the Commission’s Internet NASDAQ OMX BX, Inc.; Notice of Filing
discriminatory because it will apply to comment form (http://www.sec.gov/ and Immediate Effectiveness of a
all orders routed via Linkage. rules/sro.shtml); or Proposed Rule Change To Amend
B. Self-Regulatory Organization’s • Send an email to rule-comments@ Exchange Rule 7018
Statement on Burden on Competition sec.gov. Please include File Number SR–
C2–2015–023 on the subject line. September 11, 2015.
C2 does not believe that the proposed Pursuant to section 19(b)(1) of the
rule change will impose any burden on Paper Comments
Securities Exchange Act of 1934
competition that is not necessary or • Send paper comments in triplicate (‘‘Act’’),1 and Rule 19b–4 thereunder,2
appropriate in furtherance of the to Secretary, Securities and Exchange notice is hereby given that on
purposes of the Act. In particular, the Commission, 100 F Street NE., September 1, 2015, NASDAQ OMX BX,
tkelley on DSK3SPTVN1PROD with NOTICES
increase to the Linkage Routing Fee will Washington, DC 20549–1090. Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the
apply equally to all orders routed via All submissions should refer to File Securities and Exchange Commission
linkage and will help offset costs Number SR–C2–2015–023. This file (‘‘SEC’’ or ‘‘Commission’’) the proposed
associated with routing orders via number should be included on the
linkage. The Exchange does not believe 5 17 CFR 200.30–3(a)(12).
that the proposed change to the Linkage 3 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
Routing fee will impose any burden on 4 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 17:30 Sep 16, 2015 Jkt 235001 PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 E:\FR\FM\17SEN1.SGM 17SEN1](https://thefederalregister.org/doc/80_FR_56068/page/1.svg)
![Federal Register / Vol. 80, No. 180 / Thursday, September 17, 2015 / Notices 55889
rule change as described in Items I, II order with midpoint pegging), as well as currently stated) liquidity equal to or
and III below, which Items have been modify the criteria for receiving certain exceeding 0.05% (rather than 0.02%
prepared by the Exchange. The of the credits. The Exchange also that is the current level), of total
Commission is publishing this notice to proposes a few minor changes made for Consolidated Volume during a month.
solicit comments on the proposed rule the purposes of clarity and conformity. BX is also proposing to slightly
change from interested persons. Specifically, the Exchange proposes to increase the charge for providing
add a new credit tier of $0.0016 per liquidity through the NASDAQ OMX
I. Self-Regulatory Organization’s share executed, which will be provided BX Equities System (‘‘System’’) for a
Statement of the Terms of Substance of for orders that access liquidity, displayed order entered by a member
the Proposed Rule Change excluding orders with midpoint that (i) adds liquidity equal to or
The Exchange proposes to amend the pegging 3 and orders that receive price exceeding 0.25% of total Consolidated
fee schedule under Exchange Rule improvement and execute against an Volume during a month; and (ii) adds
7018(a) with respect to execution and order with midpoint pegging, entered by and accesses liquidity equal to or
routing of orders in securities priced at a member that accesses liquidity equal exceeding 0.50% of total Consolidated
$1 or more per share and to amend a to or exceeding 0.15% of total Volume during a month from $0.0014
credit under BX Rule 7018(e). consolidated volume 4 (‘‘Consolidated per share executed to $0.0016 per share
While the changes proposed herein Volume’’) during a month. Additionally, executed.
are effective upon filing, the Exchange the Exchange proposes to amend the Currently, a firm may become a
has designated that the amendments be credit tier of $0.0015 per share Qualified Market Maker (‘‘QMM’’) by
operative on September 1, 2015. executed, which is provided for orders being a member that provides through
The text of the proposed rule change that access liquidity, excluding orders one or more of its BX System MPIDs
is also available on the Exchange’s Web with midpoint pegging and orders that more than 0.15% of Consolidated
site at http:// receive price improvement and execute Volume during the month. For a
nasdaqomxbx.cchwallstreet.com, at the against an order with midpoint pegging, member qualifying under this method,
principal office of the Exchange, and at entered by a member that accesses the member must have at least one
the Commission’s Public Reference liquidity equal or exceeding 0.10% of Qualified MPID, that is, an MPID
Room. Consolidated Volume by reducing the through which, for at least 200
Consolidated Volume threshold to securities, the QMM quotes at the
II. Self-Regulatory Organization’s 0.09%.
Statement of the Purpose of, and national best bid and offer (‘‘NBBO’’) an
BX also proposes to eliminate the
Statutory Basis for, the Proposed Rule average of at least 50% of the time
credit tier of $0.0012 per share
Change during regular market hours (9:30 a.m.
executed, which currently is provided
through 4:00 p.m.) during the month.
In its filing with the Commission, the for orders that access liquidity,
The Exchange is proposing to increase
Exchange included statements excluding orders with midpoint pegging
the Consolidated Volume requirement
concerning the purpose of and basis for and orders that receive price
improvement and execute against an from 0.15% to 0.20% during the month
the proposed rule change and discussed and to eliminate the additional
any comments it received on the order with midpoint pegging, entered by
a member that accesses liquidity equal requirement that the member must also
proposed rule change. The text of these provide an average daily volume of
statements may be examined at the to or exceeding 0.10% [sic] of total
Consolidated Volume during a month. 1.5M shares or more of non-displayed
places specified in Item IV below. The liquidity during the month.
Exchange has prepared summaries, set Next, the Exchange proposes to revise
the criteria for a member to qualify for Lastly, the Exchange is proposing to
forth in sections A, B, and C below, of amend a credit provided under the
the most significant aspects of such the credit tier of $0.0008 per share
executed, which will be provided for Retail Price Improvement (‘‘RPI’’)
statements. program in BX Rule 7018(e). The
orders that access liquidity, excluding
A. Self-Regulatory Organization’s orders with midpoint pegging and Exchange’s RPI program provides
Statement of the Purpose of, and orders that receive price improvement incentives to member firms (or a
Statutory Basis for, the Proposed Rule and execute against an order with division thereof) approved by the
Change midpoint pegging, entered by a member Exchange to participate in the program
that accesses (rather than adds as is (a ‘‘Retail Member Organization’’) to
1. Purpose submit designated ‘‘Retail Orders’’ 5 for
The Exchange is proposing to amend 3 A Midpoint Peg order has its priced based upon the purpose of seeking price
the fee schedule under BX Rule 7018(a), the national best bid and offer, excluding the effect improvement. The Exchange is
relating to charges and credits provided that the Midpoint Peg Order itself has on the inside proposing to decrease the credit of
bid or inside offer. Primary Pegged Orders with an
for orders in securities priced and $1 or offset amount and Midpoint Pegged Orders will
$0.0002 per share executed to $0.0000
more per share that execute on BX, as never be displayed. A Midpoint Pegged Order may per share executed that is provided for
well as to reduce a credit provided in be executed in sub-pennies if necessary to obtain a Retail Order that receives price
connection with the Retail Price a midpoint price. A new timestamp is created for improvement (when the accepted price
the order each time it is automatically adjusted.
Improvement (‘‘RPI’’) program under BX 4 Consolidated Volume is defined as the total
of an order is different than the
Rule 7018(e). consolidated volume reported to all consolidated
Under BX Rule 7018(a), the Exchange transaction reporting plans by all exchanges and 5 A Retail Order is defined in BX Rule 4780(a)(2),
provides credits to member firms that trade reporting facilities during a month in equity in part, as ‘‘an agency or riskless principal order
securities, excluding executed orders with a size of that satisfies the criteria of FINRA Rule 5320.03,
tkelley on DSK3SPTVN1PROD with NOTICES
access certain levels of liquidity on BX less than one round lot. For purposes of calculating that originates from a natural person and is
per month. The Exchange is proposing Consolidated Volume and the extent of a member’s submitted to the Exchange by a Retail Member
to amend several of the credit tiers for trading activity, expressed as a percentage of or Organization, provided that no change is made to
orders that access liquidity (excluding ratio to Consolidated Volume, the date of the the terms of the order with respect to price (except
annual reconstitution of the Russell Investments in the case that a market order is changed to a
orders with midpoint pegging and Indexes shall be excluded from both total marketable limit order) or side of market and the
excluding orders that receive price Consolidated Volume and the member’s trading order does not originate from a trading algorithm or
improvement and execute against an activity. See Rule 7018(a). any other computerized methodology.’’
VerDate Sep<11>2014 17:30 Sep 16, 2015 Jkt 235001 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\17SEN1.SGM 17SEN1](https://thefederalregister.org/doc/80_FR_56068/page/2.svg)
![55890 Federal Register / Vol. 80, No. 180 / Thursday, September 17, 2015 / Notices
executed price of an order) and accesses requirement to receive the $0.0008 uniformly to all member firms that so
non-RPI order with midpoint pegging. credit, the Exchange believes this is qualify.
reasonable because for firms to receive The Exchange believes that the
2. Statutory Basis proposed change to slightly increase the
the increased credit they must remove a
BX believes that the proposed rule certain amount of Consolidated Volume, charge assessed a member for entering a
change is consistent with the provisions which will improve market quality for displayed order is reasonable because
of section 6 of the Act,6 in general, and all participants. the exchange must balance the cost of
with sections 6(b)(4) and 6(b)(5) of the The Exchange believes that the credits provided for orders removing
Act,7 in particular, in that it provides for proposed credits noted above are liquidity and the desire to provide
the equitable allocation of reasonable equitably allocated and are not unfairly QMMs with incentives to provide
dues, fees and other charges among discriminatory as they are provided to displayed orders. The Exchange notes
members and issuers and other persons all member firms that achieve the that the proposed charge continues to be
using any facility or system which the minimum level of Consolidated Volume lower than the default charge assessed
Exchange operates or controls, and is required by the tier, with the member for all other displayed orders that do not
designed to prevent fraudulent and firms that remove the greatest level of otherwise qualify for a lower charge,
manipulative acts and practices, to Consolidated Volume receiving the and as such continues to act as an
promote just and equitable principles of greatest credit. Additionally, the incentive to market participants to
trade, to foster cooperation and Exchange believes that this proposed provide such liquidity. The Exchange
coordination with persons engaged in rule change being changed from a believes that the proposed change is
regulating, clearing, settling, processing member that adds liquidity to being both equitably allocated and is not
information with respect to, and applicable to a member that accesses unfairly discriminatory because the
facilitating transactions in securities, to liquidity is reasonable because the slightly increased charge applies
remove impediments to and perfect the uniformly to all member firms that
Exchange desires to further incentivize
mechanism of a free and open market previously had qualified to receive such
member firms to participate in the
and a national market system, and, in a credit.
Exchange by removing liquidity.
general, to protect investors and the The Exchange believes that the
public interest; and is not designed to The Exchange believes that
proposed increase to the monthly
permit unfair discrimination between elimination of the $0.0012 per share Consolidated Volume requirement from
customers, issuers, brokers, or dealers. executed credit tier is reasonable 0.15% to 0.20% for a firm to become a
The Exchange believes that the new because the Exchange has added a QMM is reasonable because member
and amended credit tiers for orders that $0.0016 credit tier per share executed, firms are being required to provide
access liquidity (excluding orders with discussed above, and the Exchange through one or more of its BX System
midpoint pegging and excluding orders desires to further incentivize member MPIDs increased Consolidated Volume
that receive price improvement and firms to participate in the Exchange by to qualify, which will increase liquidity
execute against an order with midpoint removing liquidity, generally. The in the market overall. Additionally, for
pegging), as well as the modified criteria Exchange believes that the proposed a member qualifying under this method,
for receiving certain of the credits based addition of the $0.0016 credit tier per the member must have at least one
on Consolidated Volume together, as share executed and elimination of the Qualified MPID, that is, an MPID
well as related clarifying changes, under $0.0012 per share executed credit tier, through which, for at least 200
BX Rule 7018(a) are reasonable because are both an equitable allocation and are securities, the QMM quotes at the NBBO
they provide additional opportunities not unfairly discriminatory because the an average of at least 50% of the time
for market participants to receive credits $0.0012 per share executed credit tier is during regular market hours (9:30 a.m.
for participation on BX. a no longer needed incentive for [sic] through 4:00 p.m.) during the month.
Specifically, the Exchange is market participant and member firms BX also believes it is reasonable to
proposing a new of [sic] $0.0016 per will continue to have the opportunity to eliminate the additional requirement
share executed credit tier, which qualify for a higher credit based on their that the member must also provide an
requires liquidity accessed of 0.15% or participation in BX by removing average daily volume of 1.5M shares or
more of Consolidated Volume during liquidity. more of non-displayed liquidity during
the month. The Exchange is also Additionally, the Exchange believes the month because the Exchange
proposing a [sic] eliminate the $0.0012 reducing the Consolidated Volume believes removing this criteria will
per share executed credit tier, which threshold for the credit tier of $0.0015 allow QMMs to focus on making better
currently requires liquidity accessed of per share executed, which is provided markets.
0.05% or more of Consolidated Volume for orders that access liquidity The Exchange also believes that the
during the month. Additionally, the (excluding orders with midpoint proposed increase to the monthly
Exchange is modifying the existing pegging and orders that receive price Consolidated Volume requirement from
credit tier of $0.0008 per share executed improvement and execute against an 0.15% to 0.20% for a firm to become a
by increasing the minimum total order with midpoint pegging) and that QMM is both equitably allocated and is
Consolidated Volume required from is entered by a member that accesses not unfairly discriminatory because it
0.02% to 0.05% and making it liquidity, from equal or exceeding [sic] the slightly higher Consolidated
applicable to members that access rather 0.10% of Consolidated Volume to Volume requirement applies uniformly
than add liquidity. As such, the 0.09%, is reasonable because it will to firms seeking to qualify as a QMM.
Exchange is generally providing make it easier for members to receive a The Exchange also believes that the
tkelley on DSK3SPTVN1PROD with NOTICES
increased credits for member firms that rebate at that level and encourage proposed changes to the criteria for a
remove increasing amounts of liquidity market participant activity and will also firm to qualify as a QMM expands the
from the Exchange. With respect to the support price discovery and liquidity opportunity for firms to qualify as a
accesses Consolidated Volume provision. The Exchange also believes QMM and further perfects the
this proposed rule change is an mechanism of a free and open market by
6 15 U.S.C. 78f. equitable allocation and is not unfairly making it easier to qualify for this
7 15 U.S.C. 78f(b)(4) and (5). discriminatory because it will apply beneficial, market improving program
VerDate Sep<11>2014 17:30 Sep 16, 2015 Jkt 235001 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\17SEN1.SGM 17SEN1](https://thefederalregister.org/doc/80_FR_56068/page/3.svg)
![Federal Register / Vol. 80, No. 180 / Thursday, September 17, 2015 / Notices 55891
and bolster displayed liquidity by practices, BX believes that the degree to Electronic Comments
eliminating the additional requirement which fee changes in this market may
that the member must also provide an impose any burden on competition is • Use the Commission’s Internet
average daily volume of 1.5M shares or extremely limited. comment form (http://www.sec.gov/
more of non-displayed liquidity during rules/sro.shtml); or
In this instance, the modification to
the month. the fee schedule, as well as • Send an email to rule-comments@
BX believes that the proposed change sec.gov. Please include File Number SR–
to decrease the credit of $0.0002 per modifications to the criteria to become
a QMM, do not impose a burden on BX–2015–056 on the subject line.
share executed to $0.0000 per share
executed that is provided for a Retail competition because it is optional and is Paper Comments
Order that receives price improvement the subject of competition from other
(when the accepted price of an order is exchanges. The Exchange does not • Send paper comments in triplicate
different than the executed price of an believe that the proposed change will to Secretary, Securities and Exchange
order) and accesses non-RPI order with impair the ability of members or Commission, 100 F Street NE.,
midpoint pegging is reasonable because competing order execution venues to Washington, DC 20549–1090.
this incentive is no longer needed to maintain their competitive standing in All submissions should refer to File
improve the market for retail order flow. the financial markets. Moreover, Number SR–BX–2015–056. This file
Also, the Exchange must continually because there are numerous competitive number should be included on the
adjust its incentives to remain alternatives to the use of the Exchange, subject line if email is used. To help the
competitive with other exchanges. The it is likely that BX will lose market
Commission process and review your
Exchange also believes the reduced share as a result of the changes if they
comments more efficiently, please use
credit is equitably allocated and is not are unattractive to market participants.
only one method. The Commission will
unfairly discriminatory because it Accordingly, BX does not believe that post all comments on the Commission’s
applies uniformly to all firms. the proposed rule change will impair
Finally, BX notes that it operates in a Internet Web site (http://www.sec.gov/
the ability of members or competing rules/sro.shtml). Copies of the
highly competitive market in which order execution venues to maintain
market participants can readily favor submission, all subsequent
their competitive standing in the amendments, all written statements
competing venues if they deem fee financial markets.
levels at a particular venue to be with respect to the proposed rule
excessive. In such an environment, BX C. Self-Regulatory Organization’s change that are filed with the
must continually adjust its fees to Statement on Comments on the Commission, and all written
remain competitive with other Proposed Rule Change Received From communications relating to the
exchanges and with alternative trading Members, Participants, or Others proposed rule change between the
systems that have been exempted from Commission and any person, other than
compliance with the statutory standards No written comments were either those that may be withheld from the
applicable to exchanges. The changes solicited or received. public in accordance with the
reflect this environment because III. Date of Effectiveness of the provisions of 5 U.S.C. 552, will be
although they reflect changes to both available for Web site viewing and
Proposed Rule Change and Timing for
credits and charges, with the price printing in the Commission’s Public
Commission Action
increases being minor, while [sic] the Reference Room, 100 F Street NE.,
amended credits are designed overall to The foregoing change has become Washington, DC 20549 on official
incentivize changes in market effective pursuant to section 19(b)(3)(A) business days between the hours of
participant behavior to the benefit of the of the Act 9 and paragraph (f) of Rule 10:00 a.m. and 3:00 p.m. Copies of such
market overall. 19b–4 10 thereunder. At any time within filing also will be available for
B. Self-Regulatory Organization’s 60 days of the filing of the proposed rule inspection and copying at the principal
Statement on Burden on Competition change, the Commission summarily may offices of the Exchange. All comments
temporarily suspend such rule change if received will be posted without change;
The Exchange does not believe that
it appears to the Commission that such the Commission does not edit personal
the proposed rule changes will result in
action is necessary or appropriate in the
any burden on competition that is not identifying information from
public interest, for the protection of
necessary or appropriate in furtherance submissions. You should submit only
investors, or otherwise in furtherance of
of the purposes of the Act, as amended.8 information that you wish to make
the purposes of the Act. If the
BX notes that it operates in a highly available publicly. All submissions
competitive market in which market Commission takes such action, the
Commission shall institute proceedings should refer to File Number SR–BX–
participants can readily favor dozens of 2015–056, and should be submitted on
different competing exchanges and to determine whether the proposed rule
should be approved or disapproved. or before October 8, 2015.
alternative trading systems if they deem
For the Commission, by the Division of
fee levels at a particular venue to be IV. Solicitation of Comments Trading and Markets, pursuant to delegated
excessive, or rebate opportunities
Interested persons are invited to authority.11
available at other venues to be more
favorable. In such an environment, BX submit written data, views, and Brent J. Fields,
must continually adjust its fees to arguments concerning the foregoing, Secretary.
tkelley on DSK3SPTVN1PROD with NOTICES
remain competitive with other including whether the proposed rule [FR Doc. 2015–23289 Filed 9–16–15; 8:45 am]
exchanges. Because competitors are free change is consistent with the Act. BILLING CODE 8011–01–P
to modify their own fees in response, Comments may be submitted by any of
and because market participants may the following methods:
readily adjust their order routing
9 15 U.S.C. 78s(b)(3)(A).
8 15 U.S.C. 78f(b)(8). 10 17 CFR 240.19b–4(f). 11 17 CFR 200.30–3(a)(12).
VerDate Sep<11>2014 17:30 Sep 16, 2015 Jkt 235001 PO 00000 Frm 00066 Fmt 4703 Sfmt 9990 E:\FR\FM\17SEN1.SGM 17SEN1](https://thefederalregister.org/doc/80_FR_56068/page/4.svg)
Document Created: 2015-12-15 09:33:57
Document Modified: 2015-12-15 09:33:57
| 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 55888 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR