80 FR 68377 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Nasdaq Rule 7018

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 213 (November 4, 2015)

[Federal Register Volume 80, Number 213 (Wednesday, November 4, 2015)]
[Notices]
[Pages 68377-68379]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-28022]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76298; File No. SR-NASDAQ-2015-126]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Nasdaq Rule 7018

October 29, 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 October 22, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or the 
``Exchange'') filed with the Securities and Exchange

[[Page 68378]]

Commission (``Commission'') a proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq is proposing changes to amend Nasdaq Rule 7018(a), governing 
fees and credits assessed for execution and routing of securities.
    The text of the proposed rule change is available at 
nasdaq.cchwallstreet.com at Nasdaq principal office, and at the 
Commission's Public Reference Room.

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

    In its filing with the Commission, Nasdaq included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of those statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant parts of such 
statements.

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

1. Purpose
    The Exchange proposes to amend Nasdaq Rule 7018, governing fees and 
credits assessed for execution and routing of securities on Nasdaq,\3\ 
listed on the New York Stock Exchange (``NYSE'') \4\ and listed on 
exchanges other than Nasdaq and NYSE \5\ (collectively, the ``Tapes'').
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    \3\ Nasdaq Rule 7018(a)(1).
    \4\ Nasdaq Rule 7018(a)(2).
    \5\ Nasdaq Rule 7018(a)(3).
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    Specifically, the Exchange proposes to amend the criteria for a 
member to be eligible for the $0.0030 per share executed credit. Nasdaq 
proposes to amend romanette (i) across all Tapes in order to reduce the 
Consolidated Volume requirement during the month for a member from 
0.60% to 0.20%. The Exchange also proposes to amend romanette (ii) 
across all Tapes in order to include NOM Market Maker volume as part of 
the qualifying volume and to reduce the volume threshold in Penny Pilot 
and Non-Penny Pilot Options from 1.25% to 0.90%.
    Nasdaq also proposes to add new subsection (4) to Nasdaq Rule 
7018(a) and entitle it ``Fees and Credits for Execution of Orders in 
Select Symbols''.\6\ This new subsection will state that for members 
receiving less than a $0.0029 per share executed credit in paragraphs 
(1) through (3) of Nasdaq Rule 7018(a) for displayed quotes/orders 
(other than Supplemental Orders or Designated Retail Orders) that 
provide liquidity for certain enumerated securities, Nasdaq will 
provide a credit of $0.0029 per share executed for the enumerated 
securities: EEM, EWJ, GDX, IWM, NUGT, SPY, UWTI, VXX, XIV and XLF.
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    \6\ This is not related to the previous Select Symbols program. 
See Securities Exchange Act Release No. 73967 (December 30, 2014), 
80 FR 594 (January 6, 2015) (SR-NASDAQ-2014-128) (creating the 
unrelated Select Symbol program); see also Securities Exchange Act 
Release No. 75261 (June 22, 2015), 80 FR 36877 (June 26, 2015) (SR-
NASDAQ-2015-062) (eliminating the unrelated Select Symbol program).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\7\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\8\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which Nasdaq operates or controls and is 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.
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    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(4) and (5).
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    Nasdaq believes that the proposed changes to Nasdaq Rule 
7018(a)(1), (2) and (3) are reasonable because broadening the above 
criteria so that this credit is applicable to more members falls within 
the Exchange's efforts to draw additional order flow to the Exchange to 
improve market quality for all market participants. The Exchange also 
believes that the proposed rule change is equitable and not unfairly 
discriminatory because the amended credit criteria applies uniformly to 
securities across all Tapes and makes it easier for members to satisfy 
the requirements for this credit tier.
    Nasdaq believes that the proposed credits of no less than $0.0029 
per share executed for displayed orders to members for trading in the 
Select Symbols are reasonable and equitably allocated as all members 
are eligible for the credits and the Exchange believes it will improve 
market quality, specifically in the trading of these symbols. These 
credits for adding displayed liquidity only replace the credits 
provided in paragraphs (1) through (3) of Nasdaq Rule 7018(a) when a 
member would otherwise receive a credit of less than $0.0029 per share 
executed. The Select Symbols include EEM, EWJ, GDX, IWM, NUGT, SPY, 
UWTI, VXX, XIV and XLF. If members qualify for credits under Nasdaq 
Rule 7014, such credits will continue to apply to these symbols.
    Nasdaq also believes that the proposed changes are not unfairly 
discriminatory because they will apply uniformly to all member firms 
that trade in the Select Symbols. Moreover, the proposed minimum credit 
for all member firms that trade in the Select Symbols is not unfairly 
discriminatory because the Exchange seeks to provide incentives to 
member firms to direct order flow away from off-exchange venues and on 
to Nasdaq and to improve the markets for these symbols. Additionally, 
members that trade in the Select Symbols may still qualify for higher 
credits in trading in these symbols and all members are entitled to 
determine whether or not to trade in these Select Symbols. Also, 
members will still be able to receive the credits they are otherwise 
entitled to in other symbols and can only benefit from this additional 
credit.

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

    Nasdaq does not believe that the proposed rule change will result 
in a burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.\9\ Nasdaq notes 
that it operates in a highly competitive market in which market 
participants can readily favor competing venues if they deem fee and 
credit levels at a particular venue to be excessive, or rebate 
opportunities available at other venues to be more favorable. In such 
an environment, Nasdaq must continually adjust its fees and credits to 
remain competitive with

[[Page 68379]]

other exchanges and with alternative trading systems that have been 
exempted from compliance with the statutory standards applicable to 
exchanges. Because competitors are free to modify their own fees in 
response, and because market participants may readily adjust their 
order routing practices, Nasdaq believes that the degree to which 
changes to credits in this market may impose a burden on competition is 
extremely limited or even non-existent. In this instance, the changes 
to Nasdaq Rule 7018 to amend criteria to qualify for credits do not 
impose a burden on competition because Nasdaq's execution services are 
voluntary and subject to extensive competition both from other 
exchanges and from off-exchange venues.
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    \9\ 15 U.S.C. 78f(b)(8).
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    Additionally, the Exchange does not believe the addition of credits 
available to members that execute shares in Select Symbols will impose 
a burden on competition, but rather may promote competition among 
exchanges in trading in the Select Symbols. Moreover, the proposed 
changes are reflective of the competition that exists between exchanges 
and off-exchange venues that are subject to lesser regulatory burdens 
than the exchanges, including transparency. Lastly, the proposed 
changes are designed to enhance market quality.
    While the Exchange does not believe that the proposed changes will 
result in burden on competition, if the changes proposed herein are 
unattractive to market participants it is likely that Nasdaq will lose 
market share as a result.

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

    Written comments were neither solicited nor received.

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

    The foregoing change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\10\ 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2015-126 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2015-126. 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-NASDAQ-2015-
126, and should be submitted on or before November 25, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28022 Filed 11-3-15; 8:45 am]
 BILLING CODE 8011-01-P