80 FR 77057 - 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 238 (December 11, 2015)
Federal Register Volume 80, Issue 238 (December 11, 2015)
| Page Range | 77057-77058 | |
| FR Document | 2015-31282 |
[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)] [Notices] [Pages 77057-77058] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-31282] [[Page 77057]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76586; File No. SR-NASDAQ-2015-147] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend Nasdaq Rule 7018 December 8, 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 November 30, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or the ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``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. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change Nasdaq is proposing changes to amend Nasdaq Rule 7018(a), governing fees and credits assessed for execution and routing of securities. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on December 1, 2015. The text of the proposed rule change is available at nasdaq.cchwallstreet.com, at Nasdaq's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Nasdaq Rule 7018, governing fees and credits assessed for execution and routing of securities listed 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''). --------------------------------------------------------------------------- \3\ Nasdaq Rule 7018(a)(1). \4\ Nasdaq Rule 7018(a)(2). \5\ Nasdaq Rule 7018(a)(3). --------------------------------------------------------------------------- The purpose of the proposed rule change is to increase a current credit tier for all three Tapes from $0.0029 per share executed to $0.00295 per share executed. Specifically, this credit tier is available to members for displayed quotes/orders (other than supplemental orders or designated retail orders) that provide liquidity and, as stated in Nasdaq Rule 7018(a)(1), (2) and (3), ``Adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 1.15% or more of total industry ADV in the customer clearing range for Equity and ETF option contracts per day in a month on the Nasdaq Options Market''. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\6\ in general, and furthers the objectives of 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 not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f(b). \7\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, for example, the Commission indicated that market forces should generally determine the price of non-core market data because national market system regulation ``has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.'' \8\ Likewise, in NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir. 2010), (``NetCoalition'') the DC Circuit upheld the Commission's use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a cost-based approach.\9\ As the court emphasized, the Commission ``intended in Regulation NMS that `market forces, rather than regulatory requirements' play a role in determining the market data . . . to be made available to investors and at what cost.'' \10\ --------------------------------------------------------------------------- \8\ Exchange Act Release No. 34-51808 (June 9, 2005) (``Regulation NMS Adopting Release''). \9\ See NetCoalition, at 534. \10\ Id. at 537. --------------------------------------------------------------------------- Further, ``[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers'. . . .'' \11\ Although the court and the SEC were discussing the cash equities markets, the Exchange believes that these views apply with equal force to the options markets. --------------------------------------------------------------------------- \11\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783). --------------------------------------------------------------------------- Nasdaq believes that the proposed rule change to Nasdaq Rule 7018(a)(1), (2) and (3) is reasonable because it is competitive with the credits of other exchanges and also may result in increased participation in the marketplace. Currently, for all three Tapes a member receives a credit of $0.0029 per share executed for displayed quotes/orders (other than supplemental orders or designated retail orders) that provide liquidity and, as stated in Nasdaq Rule 7018(a)(1), (2) and (3), the member ``Adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of 1.15% or more of total industry ADV in the customer clearing range for Equity and ETF option contracts per day in a month on the Nasdaq Options Market''. Under the proposal, the credit will increase to $0.00295 per share executed. The Exchange also believes that the proposed rule change is an equitable allocation and is not unfairly discriminatory because the Exchange will provide the same credit to all similarly situated members and is available across all Tapes. [[Page 77058]] 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.\12\ In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or credit opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and credits to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. --------------------------------------------------------------------------- \12\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- In this instance, the proposed change to the credits provided for all three Tapes to member firms for displayed quotes/orders (other than supplemental orders or designated retail orders) that provide liquidity, does not impose a burden on competition because the Exchange's execution services are voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. In sum, if the change proposed herein is unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, 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. 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.\13\ 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. --------------------------------------------------------------------------- \13\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NASDAQ-2015-147 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-2015-147. 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 office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASDAQ-2015-147, and should be submitted on or before January 4, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-31282 Filed 12-10-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 238 / Friday, December 11, 2015 / Notices 77057
SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s v. NYSE Arca, Inc., 615 F.3d 525 (D.C.
COMMISSION Statement of the Purpose of, and Cir. 2010), (‘‘NetCoalition’’) the DC
Statutory Basis for, the Proposed Rule Circuit upheld the Commission’s use of
[Release No. 34–76586; File No. SR–
Change a market-based approach in evaluating
NASDAQ–2015–147] the fairness of market data fees against
1. Purpose
a challenge claiming that Congress
The Exchange proposes to amend mandated a cost-based approach.9 As
Self-Regulatory Organizations; The
Nasdaq Rule 7018, governing fees and the court emphasized, the Commission
NASDAQ Stock Market LLC; Notice of
credits assessed for execution and ‘‘intended in Regulation NMS that
Filing and Immediate Effectiveness of routing of securities listed on Nasdaq,3
Proposed Rule Change to Amend ‘market forces, rather than regulatory
listed on the New York Stock Exchange requirements’ play a role in determining
Nasdaq Rule 7018 (‘‘NYSE’’) 4 and listed on exchanges the market data . . . to be made
December 8, 2015. other than Nasdaq and NYSE 5 available to investors and at what
(collectively, the ‘‘Tapes’’). cost.’’ 10
Pursuant to Section 19(b)(1) of the The purpose of the proposed rule
Securities Exchange Act of 1934 change is to increase a current credit tier Further, ‘‘[n]o one disputes that
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 for all three Tapes from $0.0029 per competition for order flow is ‘fierce.’
share executed to $0.00295 per share . . . As the SEC explained, ‘[i]n the U.S.
notice is hereby given that on November
executed. Specifically, this credit tier is national market system, buyers and
30, 2015, The NASDAQ Stock Market
available to members for displayed sellers of securities, and the broker-
LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed
quotes/orders (other than supplemental dealers that act as their order-routing
with the Securities and Exchange agents, have a wide range of choices of
Commission (‘‘SEC’’ or ‘‘Commission’’) orders or designated retail orders) that
provide liquidity and, as stated in where to route orders for execution’;
a proposed rule change as described in [and] ‘no exchange can afford to take its
Items I, II and III below, which Items Nasdaq Rule 7018(a)(1), (2) and (3),
‘‘Adds Customer, Professional, Firm, market share percentages for granted’
have been prepared by the Exchange. because ‘no exchange possesses a
The Commission is publishing this Non-NOM Market Maker and/or Broker-
Dealer liquidity in Penny Pilot Options monopoly, regulatory or otherwise, in
notice to solicit comments on the the execution of order flow from broker
and/or Non-Penny Pilot Options of
proposed rule change from interested dealers’. . . .’’ 11 Although the court
1.15% or more of total industry ADV in
persons. the customer clearing range for Equity and the SEC were discussing the cash
and ETF option contracts per day in a equities markets, the Exchange believes
I. Self-Regulatory Organization’s
month on the Nasdaq Options Market’’. that these views apply with equal force
Statement of the Terms of the Substance
to the options markets.
of the Proposed Rule Change 2. Statutory Basis Nasdaq believes that the proposed
Nasdaq is proposing changes to The Exchange believes that its rule change to Nasdaq Rule 7018(a)(1),
amend Nasdaq Rule 7018(a), governing proposal is consistent with Section 6(b) (2) and (3) is reasonable because it is
fees and credits assessed for execution of the Act,6 in general, and furthers the competitive with the credits of other
and routing of securities. objectives of Sections 6(b)(4) and 6(b)(5) exchanges and also may result in
of the Act,7 in particular, in that it increased participation in the
While these amendments are effective provides for the equitable allocation of marketplace. Currently, for all three
upon filing, the Exchange has reasonable dues, fees and other charges Tapes a member receives a credit of
designated the proposed amendments to among members and issuers and other $0.0029 per share executed for
be operative on December 1, 2015. persons using any facility or system displayed quotes/orders (other than
The text of the proposed rule change which the Exchange operates or supplemental orders or designated retail
is available at controls, and is not designed to permit orders) that provide liquidity and, as
nasdaq.cchwallstreet.com, at Nasdaq’s unfair discrimination between stated in Nasdaq Rule 7018(a)(1), (2) and
principal office, and at the customers, issuers, brokers, or dealers. (3), the member ‘‘Adds Customer,
Commission’s Public Reference Room. The Commission and the courts have Professional, Firm, Non-NOM Market
repeatedly expressed their preference Maker and/or Broker-Dealer liquidity in
II. Self-Regulatory Organization’s for competition over regulatory Penny Pilot Options and/or Non- Penny
Statement of the Purpose of, and intervention in determining prices, Pilot Options of 1.15% or more of total
Statutory Basis for, the Proposed Rule products, and services in the securities industry ADV in the customer clearing
Change markets. In Regulation NMS, for range for Equity and ETF option
example, the Commission indicated that contracts per day in a month on the
In its filing with the Commission, market forces should generally Nasdaq Options Market’’. Under the
Nasdaq included statements concerning determine the price of non-core market proposal, the credit will increase to
the purpose of, and basis for, the data because national market system $0.00295 per share executed.
proposed rule change and discussed any regulation ‘‘has been remarkably
The Exchange also believes that the
comments it received on the proposed successful in promoting market
proposed rule change is an equitable
rule change. The text of those competition in its broader forms that are
allocation and is not unfairly
statements may be examined at the most important to investors and listed
discriminatory because the Exchange
places specified in Item IV below. The companies.’’ 8 Likewise, in NetCoalition
jstallworth on DSK7TPTVN1PROD with NOTICES
will provide the same credit to all
Exchange has prepared summaries, set similarly situated members and is
3 Nasdaq Rule 7018(a)(1).
forth in sections A, B, and C below, of available across all Tapes.
4 Nasdaq Rule 7018(a)(2).
the most significant parts of such 5 Nasdaq Rule 7018(a)(3).
statements. 6 15 U.S.C. 78f(b). 9 See NetCoalition, at 534.
7 15 U.S.C. 78f(b)(4) and (5). 10 Id. at 537.
1 15 U.S.C. 78s(b)(1). 8 Exchange Act Release No. 34–51808 (June 9, 11 Id. at 539 (quoting ArcaBook Order, 73 FR at
2 17 CFR 240.19b–4. 2005) (‘‘Regulation NMS Adopting Release’’). 74782–74783).
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![77058 Federal Register / Vol. 80, No. 238 / Friday, December 11, 2015 / Notices
B. Self-Regulatory Organization’s within 60 days of the filing of the NASDAQ–2015–147, and should be
Statement on Burden on Competition proposed rule change, the Commission submitted on or before January 4, 2016.
Nasdaq does not believe that the summarily may temporarily suspend For the Commission, by the Division of
proposed rule change will result in a such rule change if it appears to the Trading and Markets, pursuant to delegated
burden on competition that is not Commission that such action is authority.14
necessary or appropriate in furtherance necessary or appropriate in the public Robert W. Errett,
of the purposes of the Act, as interest, for the protection of investors, Deputy Secretary.
amended.12 In terms of inter-market or otherwise in furtherance of the
[FR Doc. 2015–31282 Filed 12–10–15; 8:45 am]
competition, the Exchange notes that it purposes of the Act.
BILLING CODE 8011–01–P
operates in a highly competitive market IV. Solicitation of Comments
in which market participants can
Interested persons are invited to
readily favor competing venues if they SECURITIES AND EXCHANGE
submit written data, views, and
deem fee levels at a particular venue to COMMISSION
arguments concerning the foregoing,
be excessive, or credit opportunities
including whether the proposed rule
available at other venues to be more [Release No. 34–76579; File No. SR–
change is consistent with the Act. NYSEMKT–2015–100]
favorable. In such an environment, the
Comments may be submitted by any of
Exchange must continually adjust its
the following methods: Self-Regulatory Organizations; NYSE
fees and credits to remain competitive
with other exchanges and with Electronic Comments MKT LLC; Notice of Filing and
alternative trading systems that have Immediate Effectiveness of Proposed
• Use the Commission’s Internet Rule Change Amending Exchange
been exempted from compliance with comment form (http://www.sec.gov/
the statutory standards applicable to Rules To Establish the Securities
rules/sro.shtml); or Trader and Securities Trader Principal
exchanges. Because competitors are free • Send an email to rule-comments@
to modify their own fees and credits in Registration Categories
sec.gov. Please include File Number SR–
response, and because market NASDAQ–2015–147 on the subject line. December 8, 2015.
participants may readily adjust their Pursuant to Section 19(b)(1) 1 of the
order routing practices, the Exchange Paper Comments
Securities Exchange Act of 1934 (the
believes that the degree to which fee • Send paper comments in triplicate ‘‘Act’’) 2 and Rule 19b–4 thereunder,3
changes in this market may impose any to Secretary, Securities and Exchange notice is hereby given that on November
burden on competition is extremely Commission, 100 F Street NE., 24, 2015, NYSE MKT LLC (the
limited. Washington, DC 20549–1090. ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with
In this instance, the proposed change All submissions should refer to File
to the credits provided for all three the Securities and Exchange
Number SR–NASDAQ–2015–147. This Commission (the ‘‘Commission’’) the
Tapes to member firms for displayed file number should be included on the
quotes/orders (other than supplemental proposed rule change as described in
subject line if email is used. To help the Items I, II, and III below, which Items
orders or designated retail orders) that Commission process and review your
provide liquidity, does not impose a have been prepared by the self-
comments more efficiently, please use regulatory organization. The
burden on competition because the only one method. The Commission will
Exchange’s execution services are Commission is publishing this notice to
post all comments on the Commission’s solicit comments on the proposed rule
voluntary and subject to extensive Internet Web site (http://www.sec.gov/
competition both from other exchanges change from interested persons.
rules/sro.shtml). Copies of the
and from off-exchange venues. In sum, submission, all subsequent I. Self-Regulatory Organization’s
if the change proposed herein is amendments, all written statements Statement of the Terms of Substance of
unattractive to market participants, it is with respect to the proposed rule the Proposed Rule Change
likely that the Exchange will lose change that are filed with the
market share as a result. Accordingly, The Exchange proposes to amend
Commission, and all written Exchange Rules to (1) prescribe the
the Exchange does not believe that the communications relating to the
proposed change will impair the ability Securities Traders examination (Series
proposed rule change between the 57) (the ‘‘Series 57 Examination’’) as the
of members or competing order Commission and any person, other than
execution venues to maintain their qualifying examination for registered
those that may be withheld from the Market Makers, Market Maker
competitive standing in the financial public in accordance with the
markets. Authorized Traders (‘‘MMATs’’), and
provisions of 5 U.S.C. 552, will be Floor Brokers, (2) eliminate reference to
C. Self-Regulatory Organization’s available for Web site viewing and the S501 Program as a continuing
Statement on Comments on the printing in the Commission’s Public education requirement, and (3) rename
Proposed Rule Change Received From Reference Room, 100 F Street NE., the category ‘‘Proprietary Trader’’ as
Members, Participants, or Others Washington, DC 20549 on official ‘‘Securities Trader’’ in Exchange rules
Written comments were neither business days between the hours of without making any substantive change
solicited nor received. 10:00 a.m. and 3:00 p.m. Copies of such to the definition of such term. The
filing also will be available for proposed rule change is available on the
III. Date of Effectiveness of the inspection and copying at the principal Exchange’s Web site at www.nyse.com,
Proposed Rule Change and Timing for office of the Exchange. All comments
jstallworth on DSK7TPTVN1PROD with NOTICES
at the principal office of the Exchange,
Commission Action received will be posted without change; and at the Commission’s Public
The foregoing change has become the Commission does not edit personal Reference Room.
effective pursuant to Section identifying information from
19(b)(3)(A)(ii) of the Act.13 At any time submissions. You should submit only 14 17 CFR 200.30–3(a)(12).
information that you wish to make 1 15 U.S.C. 78s(b)(1).
12 15 U.S.C. 78f(b)(8). available publicly. All submissions 2 15 U.S.C. 78a.
13 15 U.S.C. 78s(b)(3)(A)(ii). should refer to File Number SR– 3 17 CFR 240.19b–4.
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Document Created: 2018-03-02 09:12:29
Document Modified: 2018-03-02 09:12:29
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 80 FR 77057 |
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