81 FR 14497 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fees Under Rule 7018(a)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 52 (March 17, 2016)
Federal Register Volume 81, Issue 52 (March 17, 2016)
| Page Range | 14497-14500 | |
| FR Document | 2016-05989 |
[Federal Register Volume 81, Number 52 (Thursday, March 17, 2016)] [Notices] [Pages 14497-14500] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-05989] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77355; File No. SR-NASDAQ-2016-031] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fees Under Rule 7018(a) March 11, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 [[Page 14498]] (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on February 29, 2016, The NASDAQ Stock Market LLC (``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7018(a), concerning the fees and credits provided for the use of the order execution and routing services of the Nasdaq Market Center by members for all securities priced at $1 or more that it trades. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on March 1, 2016. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaq.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 purpose of the proposed rule change is to amend Rule 7018(a), concerning the fees and credits provided for the use of the order execution and routing services of the Nasdaq Market Center by members for all securities priced at $1 or more that it trades. The Exchange is proposing to: (i) Increase a credit provided to a member for displayed quotes/orders that provide liquidity; (ii) modify the criteria required to receive a credit; and (iii) eliminate the fees and credits provided for execution of Orders in Select Symbols, as described further below. First Change The Exchange is proposing to increase a credit that it provides to members for displayed liquidity under Rule 7018(a). Currently, the Exchange provides a credit of $0.0030 per share executed to a member for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity if the member has (i) shares of liquidity provided in all securities during the month representing at least 0.15% of Consolidated Volume during the month, through one or more of its Nasdaq Market Center MPIDs, and (ii) Adds [sic] NOM Market Maker liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of 0.90% 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. The Exchange provides the credit with the same criteria to securities of all three Tapes \3\ under Rule 7018(a)(1)-(3). --------------------------------------------------------------------------- \3\ Tape C securities are those that are listed on the Exchange, Tape A securities are those that are listed on NYSE, and Tape B securities are those that are listed on exchanges other than Nasdaq or NYSE. --------------------------------------------------------------------------- The Exchange is proposing to increase the credit provided from $0.0030 per share executed to $0.00305 per share executed applicable to securities of all three Tapes. The Exchange believes that increasing the credit will provide members with a greater incentive to increase their provision of liquidity on both the Exchange and the Nasdaq Options Market. Second Change The Exchange is proposing to modify the criteria required to receive a credit for providing non-displayed orders (other than Supplemental Orders) that provide liquidity. Currently, the Exchange provides a credit of $0.0005 per share executed for other non-displayed orders if the member provides an average daily volume of 1 million or more shares per day through midpoint orders or other non-displayed orders during the month in Tape C securities. Similarly, the Exchange provides a credit of $0.0010 per share executed for other \4\ non-displayed orders if the member provides an average daily volume of 1 million or more shares per day through midpoint orders or other non-displayed orders during the month in Tape A and B securities. --------------------------------------------------------------------------- \4\ The Exchange also provides credits for non-displayed mid- point orders that provide liquidity under the rule. --------------------------------------------------------------------------- The Exchange is proposing to modify the qualification criteria for each of the credit tiers under Rule 7018(a)(1)-(3) to now require that a member provide 0.03% or more of Consolidated Volume \5\ during the month through midpoint orders or other non-displayed orders in lieu of the current requirement that the member have an average daily volume of 1 million or more shares per day through midpoint orders or other non- displayed orders during the month. --------------------------------------------------------------------------- \5\ Consolidated Volume is 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). --------------------------------------------------------------------------- The Exchange believes that the new criteria will more closely tie the amount [sic] midpoint orders and other non-displayed orders required to receive the credit with the overall market conditions in any given month. The Exchange is also proposing to eliminate the credit it provides for all other non-displayed orders (other than Supplemental Orders) that provide liquidity in Tape A and B securities, which do not otherwise qualify for the higher tier discussed above. Currently, the Exchange provides a credit of $0.0005 per share executed for other non- displayed orders in Tape A and B securities that provide liquidity. The Exchange does not provide a credit and does not assess a fee for such orders in Tape C securities. The Exchange is proposing to harmonize the credit tiers for Tape A and B securities with [sic] credit tier for Tape C securities by eliminating the $0.0005 per share executed credit and not assessing a fee or credit for such orders. Third Change The Exchange is proposing to eliminate the credit provided for certain ``select symbols'' under Rule 7018(a)(4). Under the current rule, [sic] members receiving less than a $0.0029 per share executed credit in [sic] pursuant to Rule 7018(a)(1)-(3) for displayed quotes/ orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity for the securities listed under the rule, the Exchange will provide a credit of $0.0029 per share executed instead of the lower credit to these members for those securities. Currently, the credit provided by the [[Page 14499]] rule applies to the following securities, by ticker symbol: EEM, EWJ, GDX, IWM, NUGT, SPY, UWTI, VXX, XIV, and XLF. The Exchange did not observe an appreciable improvement in market quality in the select symbols on the Exchange, which was its goal in adopting the credit.\6\ As a consequence, the Exchange is proposing to eliminate the credit [sic] --------------------------------------------------------------------------- \6\ See Securities Exchange Act Release No. 73967 [sic] (October 29, 2015), 80 FR 68377 (November 4, 2015) (SR-NASDAQ-2015-126). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act \7\ in general, and furthers the objectives of 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 the Exchange operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \7\ 15 U.S.C. 78f(b). \8\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- First Change The Exchange believes that the proposed increase to the credit it provides to members for displayed liquidity is reasonable because it is designed to further incentivize members to improve the market through the provision of shares of liquidity in all securities during the month, consistent with its efforts to draw additional order flow to the Exchange to improve market quality for all market participants. If effective, the Exchange believes that the increased incentive will improve overall market quality on both the Exchange and NOM. The Exchange believes that the proposed increased credit is an equitable allocation and is not unfairly discriminatory because the Exchange will provide the credit to all members that qualify for it under the rule. Second Change The Exchange believes that modifying the criteria required to receive the credit for providing non-displayed orders (other than Supplemental Orders) that provide liquidity is reasonable because the proposed change will more closely align the level of liquidity provided by the members in comparison to the market as a whole. Specifically, the Exchange is tying the requirement to Consolidated Volume provided during the month through midpoint orders or other non- displayed orders in lieu of the current requirement that the member have an average daily volume of 1 million or more shares per day through midpoint orders or other non-displayed orders during the month. The Exchange believes that the new criteria may potentially make achieving the credit more difficult to the extent Consolidated Volume is high in a given month and will likely represent a stricter criterion upon adoption. The Exchange believes it is a better metric to apply to measure a member's participation through midpoint orders or other non- displayed orders during the month in contrast to a static criteria average daily volume. The Exchange believes that the proposed modification of the criteria is equitably allocated [sic] and not unfairly discriminatory because the amended credit criteria applies uniformly to securities across all Tapes and all members that elect to meet the criteria of the credit tier will receive the credit. The Exchange believes reducing the credit it provides for all other non-displayed orders (other than Supplemental Orders) that provide liquidity in Tape A and B securities that do not otherwise qualify for the higher tier is reasonable because the Exchange must periodically assess the effectiveness of the incentives it provides in the form of reduced fees and credits and, in certain cases, change or eliminate those fees and credits once they are no longer needed. By doing so, the Exchange is able to deploy incentives in other areas that the Exchange determines are in need of market improvement. The Exchange notes that it currently does not provide any credit for such orders in Tape C securities. The Exchange believes that the proposed elimination of the credits is equitably allocated and not unfairly discriminatory because all members will neither receive a credit nor be assessed a fee under the tier, regardless of the listing venue of the security. Third Change The Exchange believes that eliminating the credit provided to members for transactions in ``select symbols'' under Rule 7018(a) is reasonable because the Exchange did not observe an appreciable improvement in market quality in the select symbols which, as explained, was the Exchange's goal in adopting the credit. As noted above, the Exchange must periodically assess the effectiveness of the incentives it provides in the form of reduced fees and credits and, in the case of ineffective incentives, eliminate the incentive so that the Exchange may apply its resources to other, possibly more effective, incentives. The Exchange believes that elimination of the credit is equitably allocated and not unfairly discriminatory because it will apply to all members equally. In this regard, the credit was available to any member that met the criteria and in the absence of the credit, members may now qualify for other, albeit lower, credits under Rule 7018(a). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. 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 rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed changes to the credits available to member firms for execution of securities of the three Tapes do not impose a burden on competition because the Exchange's execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. The proposed changes to the credits provided to members are reflective of a robust and competitive securities market, where trading venues must provide incentives to participants in the form of credits to attract order flow and adjust those incentives to make them more competitive or to allow the Exchange to provide other market-improving incentives elsewhere. Moreover, trading venues are free to adjust their fees and credits in response to any changes that the Exchange makes to its fees and credits. If any of the changes proposed herein are [sic] unattractive to market participants, it is likely that the Exchange will lose [[Page 14500]] market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets [sic]. 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 rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.\9\ --------------------------------------------------------------------------- \9\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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. 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-2016-031 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-2016-031. 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 the 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-2016-031 and should be submitted on or before April 7, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\ --------------------------------------------------------------------------- \10\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Lynn M. Powalski, Deputy Secretary. [FR Doc. 2016-05989 Filed 3-16-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 52 / Thursday, March 17, 2016 / Notices 14497
this fee will help the Exchange offset the believes that the degree to which fee Commission, 100 F Street NE.,
payment of credits to other members changes in this market may impose any Washington, DC 20549–1090.
and maintain an overall balance burden on competition is extremely
limited. In this instance, the proposed All submissions should refer to File
between the payment of credits and
collection of fees, all in an effort to eliminated and amended credit tiers, as Number SR–BX–2016–014. This file
encourage liquidity on the market and well as the eliminated fee, are subject to number should be included on the
to the benefit of market participants. BX extensive competition both from other subject line if email is used. To help the
also believes this proposed rule change exchanges and from off-exchange Commission process and review your
is an equitable allocation of fees and is venues. comments more efficiently, please use
not unfairly discriminatory because the In sum, if the changes proposed only one method. The Commission will
Exchange will apply the elimination of herein are unattractive to market post all comments on the Commission’s
this fee equally to all similarly situated participants, it is likely that the Internet Web site (http://www.sec.gov/
members. Additionally, the elimination Exchange will lose market share as a rules/sro.shtml). Copies of the
of this fee combined with the result. Accordingly, the Exchange does submission, all subsequent
elimination and amending of the credit not believe that the proposed changes amendments, all written statements
tiers are [sic] evidence that the current will impair the ability of members or with respect to the proposed rule
fee and credit combinations did not competing order execution venues to change that are filed with the
have the intended effect of increasing maintain their competitive standing in Commission, and all written
activity so the Exchange is pursuing the financial markets. communications relating to the
other avenues of credit and fee proposed rule change between the
C. Self-Regulatory Organization’s Commission and any person, other than
combinations. Statement on Comments on the
Finally, BX notes that it operates in a those that may be withheld from the
Proposed Rule Change Received From public in accordance with the
highly competitive market in which
Members, Participants, or Others provisions of 5 U.S.C. 552, will be
market participants can readily favor
competing venues if they deem fee No written comments were either available for Web site viewing and
levels at a particular venue to be solicited or received. printing in the Commission’s Public
excessive or credit opportunities Reference Room, 100 F Street NE.,
III. Date of Effectiveness of the
available at other venues to be more Washington, DC 20549 on official
Proposed Rule Change and Timing for
favorable. In such an environment, BX business days between the hours of
Commission Action
must continually adjust its fees and 10:00 a.m. and 3:00 p.m. Copies of the
credits to remain competitive with other The foregoing change has become filing also will be available for
exchanges and with alternative trading effective pursuant to Section 19(b)(3)(A) inspection and copying at the principal
systems that have been exempted from of the Act 11 and paragraph (f) of Rule office of the Exchange. All comments
compliance with the statutory standards 19b–4 12 thereunder. At any time within received will be posted without change;
applicable to exchanges. The changes 60 days of the filing of the proposed rule the Commission does not edit personal
reflect this environment because they change, the Commission summarily may identifying information from
are designed to incentivize changes in temporarily suspend such rule change if submissions. You should submit only
market participant behavior to the it appears to the Commission that such information that you wish to make
benefit of the market overall. action is necessary or appropriate in the available publicly. All submissions
public interest, for the protection of should refer to File Number SR–BX–
B. Self-Regulatory Organization’s investors, or otherwise in furtherance of 2016–014, and should be submitted on
Statement on Burden on Competition the purposes of the Act. If the or before April 7, 2016.
The Exchange does not believe that Commission takes such action, the
Commission shall institute proceedings For the Commission, by the Division of
the proposed rule change will result in
to determine whether the proposed rule Trading and Markets, pursuant to delegated
a burden on competition that is not authority.13
necessary or appropriate in furtherance should be approved or disapproved.
Lynn M. Powalski,
of the purposes of the Act, as IV. Solicitation of Comments
amended.10 In terms of inter-market Deputy Secretary.
competition, the Exchange notes that it Interested persons are invited to [FR Doc. 2016–05974 Filed 3–16–16; 8:45 am]
operates in a highly competitive market submit written data, views, and BILLING CODE 8011–01–P
in which market participants can arguments concerning the foregoing,
readily favor competing venues if they including whether the proposed rule
deem fee levels at a particular venue to change is consistent with the Act. SECURITIES AND EXCHANGE
be excessive, or credit opportunities Comments may be submitted by any of COMMISSION
available at other venues to be more the following methods:
favorable. In such an environment, the Electronic Comments [Release No. 34–77355; File No. SR–
Exchange must continually adjust its • Use the Commission’s Internet NASDAQ–2016–031]
fees and credits to remain competitive comment form (http://www.sec.gov/
with other exchanges and with Self-Regulatory Organizations; The
rules/sro.shtml); or NASDAQ Stock Market LLC; Notice of
alternative trading systems that have • Send an email to rule-comments@
been exempted from compliance with Filing and Immediate Effectiveness of
asabaliauskas on DSK3SPTVN1PROD with NOTICES
sec.gov. Please include File Number SR–
the statutory standards applicable to Proposed Rule Change To Amend
BX–2016–014 on the subject line.
exchanges. Because competitors are free Fees Under Rule 7018(a)
to modify their own fees and credits in Paper Comments
March 11, 2016.
response, and because market • Send paper comments in triplicate
participants may readily adjust their to Secretary, Securities and Exchange Pursuant to Section 19(b)(1) of the
order routing practices, the Exchange Securities Exchange Act of 1934
11 15 U.S.C. 78f(b)(3)(A).
10 15 U.S.C. 78f(b)(8). 12 17 CFR 140.19n–4(f). 1317 CFR 200.30–3(a)(12).
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(‘‘Act’’),1 and Rule 19b–4 thereunder,2 required to receive a credit; and (iii) non-displayed orders during the month
notice is hereby given that on February eliminate the fees and credits provided in Tape A and B securities.
29, 2016, The NASDAQ Stock Market for execution of Orders in Select The Exchange is proposing to modify
LLC (‘‘Exchange’’) filed with the Symbols, as described further below. the qualification criteria for each of the
Securities and Exchange Commission credit tiers under Rule 7018(a)(1)–(3) to
(‘‘SEC’’ or ‘‘Commission’’) the proposed First Change now require that a member provide
rule change as described in Items I, II, The Exchange is proposing to increase 0.03% or more of Consolidated
and III, below, which Items have been a credit that it provides to members for Volume 5 during the month through
prepared by the Exchange. The displayed liquidity under Rule 7018(a). midpoint orders or other non-displayed
Commission is publishing this notice to Currently, the Exchange provides a orders in lieu of the current requirement
solicit comments on the proposed rule credit of $0.0030 per share executed to that the member have an average daily
change from interested persons. a member for displayed quotes/orders volume of 1 million or more shares per
I. Self-Regulatory Organization’s (other than Supplemental Orders or day through midpoint orders or other
Statement of the Terms of Substance of Designated Retail Orders) that provide non-displayed orders during the month.
liquidity if the member has (i) shares of The Exchange believes that the new
the Proposed Rule Change
liquidity provided in all securities criteria will more closely tie the amount
The Exchange proposes to amend [sic] midpoint orders and other non-
Rule 7018(a), concerning the fees and during the month representing at least
0.15% of Consolidated Volume during displayed orders required to receive the
credits provided for the use of the order credit with the overall market
execution and routing services of the the month, through one or more of its
Nasdaq Market Center MPIDs, and (ii) conditions in any given month.
Nasdaq Market Center by members for The Exchange is also proposing to
all securities priced at $1 or more that Adds [sic] NOM Market Maker liquidity
eliminate the credit it provides for all
it trades. While these amendments are in Penny Pilot Options and/or Non-
other non-displayed orders (other than
effective upon filing, the Exchange has Penny Pilot Options of 0.90% or more
Supplemental Orders) that provide
designated the proposed amendments to of total industry ADV in the customer
liquidity in Tape A and B securities,
be operative on March 1, 2016. clearing range for Equity and ETF
which do not otherwise qualify for the
The text of the proposed rule change option contracts per day in a month on
higher tier discussed above. Currently,
is available on the Exchange’s Web site the Nasdaq Options Market. The
the Exchange provides a credit of
at http://nasdaq.cchwallstreet.com, at Exchange provides the credit with the
$0.0005 per share executed for other
the principal office of the Exchange, and same criteria to securities of all three
non-displayed orders in Tape A and B
at the Commission’s Public Reference Tapes 3 under Rule 7018(a)(1)–(3).
securities that provide liquidity. The
Room. The Exchange is proposing to increase Exchange does not provide a credit and
II. Self-Regulatory Organization’s the credit provided from $0.0030 per does not assess a fee for such orders in
Statement of the Purpose of, and share executed to $0.00305 per share Tape C securities. The Exchange is
Statutory Basis for, the Proposed Rule executed applicable to securities of all proposing to harmonize the credit tiers
Change three Tapes. The Exchange believes that for Tape A and B securities with [sic]
increasing the credit will provide credit tier for Tape C securities by
In its filing with the Commission, the members with a greater incentive to
Exchange included statements eliminating the $0.0005 per share
increase their provision of liquidity on executed credit and not assessing a fee
concerning the purpose of and basis for both the Exchange and the Nasdaq
the proposed rule change and discussed or credit for such orders.
Options Market.
any comments it received on the Third Change
proposed rule change. The text of these Second Change
The Exchange is proposing to
statements may be examined at the
The Exchange is proposing to modify eliminate the credit provided for certain
places specified in Item IV below. The
the criteria required to receive a credit ‘‘select symbols’’ under Rule 7018(a)(4).
Exchange has prepared summaries, set
for providing non-displayed orders Under the current rule, [sic] members
forth in sections A, B, and C below, of
(other than Supplemental Orders) that receiving less than a $0.0029 per share
the most significant aspects of such
provide liquidity. Currently, the executed credit in [sic] pursuant to Rule
statements.
Exchange provides a credit of $0.0005 7018(a)(1)–(3) for displayed quotes/
A. Self-Regulatory Organization’s per share executed for other non- orders (other than Supplemental Orders
Statement of the Purpose of, and displayed orders if the member provides or Designated Retail Orders) that
Statutory Basis for, the Proposed Rule an average daily volume of 1 million or provide liquidity for the securities listed
Change more shares per day through midpoint under the rule, the Exchange will
1. Purpose orders or other non-displayed orders provide a credit of $0.0029 per share
during the month in Tape C securities. executed instead of the lower credit to
The purpose of the proposed rule these members for those securities.
change is to amend Rule 7018(a), Similarly, the Exchange provides a Currently, the credit provided by the
concerning the fees and credits credit of $0.0010 per share executed for
provided for the use of the order other 4 non-displayed orders if the 5 Consolidated Volume is the total consolidated
execution and routing services of the member provides an average daily volume reported to all consolidated transaction
volume of 1 million or more shares per
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Nasdaq Market Center by members for reporting plans by all exchanges and trade reporting
day through midpoint orders or other facilities during a month in equity securities,
all securities priced at $1 or more that excluding executed orders with a size of less than
it trades. The Exchange is proposing to: one round lot. For purposes of calculating
(i) Increase a credit provided to a 3 Tape C securities are those that are listed on the
Consolidated Volume and the extent of a member’s
member for displayed quotes/orders that Exchange, Tape A securities are those that are listed trading activity, expressed as a percentage of or
on NYSE, and Tape B securities are those that are ratio to Consolidated Volume, the date of the
provide liquidity; (ii) modify the criteria listed on exchanges other than Nasdaq or NYSE. annual reconstitution of the Russell Investments
4 The Exchange also provides credits for non- Indexes shall be excluded from both total
1 15 U.S.C. 78s(b)(1). displayed mid-point orders that provide liquidity Consolidated Volume and the member’s trading
2 17 CFR 240.19b–4. under the rule. activity. See Rule 7018(a).
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rule applies to the following securities, volume of 1 million or more shares per apply its resources to other, possibly
by ticker symbol: EEM, EWJ, GDX, IWM, day through midpoint orders or other more effective, incentives.
NUGT, SPY, UWTI, VXX, XIV, and XLF. non-displayed orders during the month. The Exchange believes that
The Exchange did not observe an The Exchange believes that the new elimination of the credit is equitably
appreciable improvement in market criteria may potentially make achieving allocated and not unfairly
quality in the select symbols on the the credit more difficult to the extent discriminatory because it will apply to
Exchange, which was its goal in Consolidated Volume is high in a given all members equally. In this regard, the
adopting the credit.6 As a consequence, month and will likely represent a credit was available to any member that
the Exchange is proposing to eliminate stricter criterion upon adoption. The met the criteria and in the absence of
the credit [sic] Exchange believes it is a better metric to the credit, members may now qualify for
apply to measure a member’s other, albeit lower, credits under Rule
2. Statutory Basis 7018(a).
participation through midpoint orders
The Exchange believes that its or other non-displayed orders during
proposal is consistent with Section 6(b) B. Self-Regulatory Organization’s
the month in contrast to a static criteria Statement on Burden on Competition
of the Act 7 in general, and furthers the average daily volume. The Exchange
objectives of Sections 6(b)(4) and 6(b)(5) The Exchange does not believe that
believes that the proposed modification
of the Act 8 in particular, in that it the proposed rule change will impose
of the criteria is equitably allocated [sic]
provides for the equitable allocation of any burden on competition not
and not unfairly discriminatory because
reasonable dues, fees and other charges necessary or appropriate in furtherance
the amended credit criteria applies
among members and issuers and other of the purposes of the Act. In terms of
uniformly to securities across all Tapes
persons using any facility or system inter-market competition, the Exchange
and all members that elect to meet the
which the Exchange operates or notes that it operates in a highly
criteria of the credit tier will receive the
controls, and is not designed to permit competitive market in which market
credit.
unfair discrimination between participants can readily favor competing
The Exchange believes reducing the venues if they deem fee levels at a
customers, issuers, brokers, or dealers.
credit it provides for all other non- particular venue to be excessive, or
First Change displayed orders (other than rebate opportunities available at other
The Exchange believes that the Supplemental Orders) that provide venues to be more favorable. In such an
proposed increase to the credit it liquidity in Tape A and B securities that environment, the Exchange must
provides to members for displayed do not otherwise qualify for the higher continually adjust its fees to remain
liquidity is reasonable because it is tier is reasonable because the Exchange competitive with other exchanges and
designed to further incentivize members must periodically assess the with alternative trading systems that
to improve the market through the effectiveness of the incentives it have been exempted from compliance
provision of shares of liquidity in all provides in the form of reduced fees and with the statutory standards applicable
securities during the month, consistent credits and, in certain cases, change or to exchanges. Because competitors are
with its efforts to draw additional order eliminate those fees and credits once free to modify their own fees in
flow to the Exchange to improve market they are no longer needed. By doing so, response, and because market
quality for all market participants. If the Exchange is able to deploy participants may readily adjust their
effective, the Exchange believes that the incentives in other areas that the order routing practices, the Exchange
increased incentive will improve overall Exchange determines are in need of believes that the degree to which fee
market quality on both the Exchange market improvement. The Exchange changes in this market may impose any
and NOM. The Exchange believes that notes that it currently does not provide burden on competition is extremely
the proposed increased credit is an any credit for such orders in Tape C limited.
equitable allocation and is not unfairly securities. In this instance, the proposed changes
discriminatory because the Exchange The Exchange believes that the to the credits available to member firms
will provide the credit to all members proposed elimination of the credits is for execution of securities of the three
that qualify for it under the rule. equitably allocated and not unfairly Tapes do not impose a burden on
discriminatory because all members will competition because the Exchange’s
Second Change
neither receive a credit nor be assessed execution services are completely
The Exchange believes that modifying a fee under the tier, regardless of the voluntary and subject to extensive
the criteria required to receive the credit listing venue of the security. competition both from other exchanges
for providing non-displayed orders and from off-exchange venues.
(other than Supplemental Orders) that Third Change
The proposed changes to the credits
provide liquidity is reasonable because The Exchange believes that provided to members are reflective of a
the proposed change will more closely eliminating the credit provided to robust and competitive securities
align the level of liquidity provided by members for transactions in ‘‘select market, where trading venues must
the members in comparison to the symbols’’ under Rule 7018(a) is provide incentives to participants in the
market as a whole. reasonable because the Exchange did form of credits to attract order flow and
Specifically, the Exchange is tying the not observe an appreciable adjust those incentives to make them
requirement to Consolidated Volume improvement in market quality in the more competitive or to allow the
provided during the month through select symbols which, as explained, was Exchange to provide other market-
asabaliauskas on DSK3SPTVN1PROD with NOTICES
midpoint orders or other non-displayed the Exchange’s goal in adopting the improving incentives elsewhere.
orders in lieu of the current requirement credit. Moreover, trading venues are free to
that the member have an average daily As noted above, the Exchange must adjust their fees and credits in response
6 See Securities Exchange Act Release No. 73967
periodically assess the effectiveness of to any changes that the Exchange makes
[sic] (October 29, 2015), 80 FR 68377 (November 4,
the incentives it provides in the form of to its fees and credits. If any of the
2015) (SR–NASDAQ–2015–126). reduced fees and credits and, in the case changes proposed herein are [sic]
7 15 U.S.C. 78f(b). of ineffective incentives, eliminate the unattractive to market participants, it is
8 15 U.S.C. 78f(b)(4) and (5). incentive so that the Exchange may likely that the Exchange will lose
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![14500 Federal Register / Vol. 81, No. 52 / Thursday, March 17, 2016 / Notices
market share as a result. Accordingly, submission, all subsequent solicit comments on the proposed rule
the Exchange does not believe that the amendments, all written statements change from interested persons.
proposed changes will impair the ability with respect to the proposed rule
I. Self-Regulatory Organization’s
of members or competing order change that are filed with the
Statement of the Terms of Substance of
execution venues to maintain their Commission, and all written
the Proposed Rule Change
competitive standing in the financial communications relating to the
markets [sic]. proposed rule change between the The Exchange proposes to amend
Commission and any person, other than Rules 7.31P(j) (Orders and Modifiers)
C. Self-Regulatory Organization’s those that may be withheld from the and 7.34P(c) (Trading Sessions) to allow
Statement on Comments on the public in accordance with the Q Orders to participate in the Early
Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be Trading Session and Late Trading
Members, Participants, or Others available for Web site viewing and Session. The proposed rule change is
No written comments were either printing in the Commission’s Public available on the Exchange’s Web site at
solicited or received. Reference Room, 100 F Street NE., www.nyse.com, at the principal office of
Washington, DC 20549, on official the Exchange, and at the Commission’s
III. Date of Effectiveness of the Public Reference Room.
business days between the hours of
Proposed Rule Change and Timing for
10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s
Commission Action
filing also will be available for Statement of the Purpose of, and
The foregoing rule change has become inspection and copying at the principal Statutory Basis for, the Proposed Rule
effective pursuant to Section office of the Exchange. All comments Change
19(b)(3)(A)(ii) of the Act.9 received will be posted without change;
At any time within 60 days of the the Commission does not edit personal In its filing with the Commission, the
filing of the proposed rule change, the identifying information from self-regulatory organization included
Commission summarily may submissions. You should submit only statements concerning the purpose of,
temporarily suspend such rule change if information that you wish to make and basis for, the proposed rule change
it appears to the Commission that such available publicly. All submissions and discussed any comments it received
action is: (i) Necessary or appropriate in should refer to File Number SR– on the proposed rule change. The text
the public interest; (ii) for the protection NASDAQ–2016–031 and should be of those statements may be examined at
of investors; or (iii) otherwise in submitted on or before April 7, 2016. the places specified in Item IV below.
furtherance of the purposes of the Act. The Exchange has prepared summaries,
For the Commission, by the Division of set forth in sections A, B, and C below,
If the Commission takes such action, the Trading and Markets, pursuant to delegated
Commission shall institute proceedings authority.10
of the most significant parts of such
to determine whether the proposed rule statements.
Lynn M. Powalski,
should be approved or disapproved. Deputy Secretary. A. Self-Regulatory Organization’s
IV. Solicitation of Comments [FR Doc. 2016–05989 Filed 3–16–16; 8:45 am] Statement of the Purpose of, and
BILLING CODE 8011–01–P
Statutory Basis for, the Proposed Rule
Interested persons are invited to Change
submit written data, views and
arguments concerning the foregoing, 1. Purpose
SECURITIES AND EXCHANGE
including whether the proposed rule COMMISSION The Exchange proposes to amend
change is consistent with the Act. Rules 7.31P(j) and 7.34P(c), which
Comments may be submitted by any of [Release No. 34–77349; File No. SR– govern the operation of Q Orders on the
the following methods: NYSEArca–2016–43] Exchange’s Pillar trading platform. A Q
Electronic Comments Order is a limit order submitted to the
Self-Regulatory Organizations; NYSE
NYSE Arca Marketplace by a Market
• Use the Commission’s Internet Arca, Inc.; Notice of Filing and
Maker, and designated by a Market
comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed
Maker as a ‘‘Q Order’’ through such
rules/sro.shtml); or Rule Change Amending Rules 7.31P(j)
means as the Corporation shall specify.4
• Send an email to rule-comments@ and 7.34P(c) To Allow Q Orders To
Rule 7.34(b)(1) describes the
sec.gov. Please include File Number SR– Participate in the Early Trading
operation of Q orders on the current, or
NASDAQ–2016–031 on the subject line. Session and Late Trading Session
legacy, platform and states that Q
Paper Comments March 11, 2016. Orders may be entered beginning at the
Pursuant to Section 19(b)(1) 1 of the start of the Core Trading Session or at
• Send paper comments in triplicate such earlier time during the Opening
Securities Exchange Act of 1934 (the
to Secretary, Securities and Exchange Session as determined from time to time
‘‘Act’’),2 and Rule 19b–4 thereunder,3
Commission, 100 F Street NE., by the Corporation, and continuing until
notice is hereby given that on March 9,
Washington, DC 20549–1090. the end of the Core Trading Session.
2016, NYSE Arca, Inc. (the ‘‘Exchange’’
All submissions should refer to File or ‘‘NYSE Arca’’) filed with the Further, Rule 7.34(d)(1), which
Number SR–NASDAQ–2016–031. This Securities and Exchange Commission describes which orders are permitted in
file number should be included on the (the ‘‘Commission’’) the proposed rule
subject line if email is used. To help the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
4 See Rule 7.31P(j). The term ‘‘NYSE Arca
change as described in Items I and II
Commission process and review your Marketplace’’ is defined in Rule 1.1(e) as the
below, which Items have been prepared electronic securities communications and trading
comments more efficiently, please use by the self-regulatory organization. The facility designated by the Board of Directors
only one method. The Commission will Commission is publishing this notice to through which orders of Users are consolidated for
post all comments on the Commission’s execution and/or display. The term ‘‘Market Maker’’
Internet Web site (http://www.sec.gov/ 10 17
is defined in Rule 1.1(v) as an ETP Holder that acts
CFR 200.30–3(a)(12). as a Market Maker pursuant to Rule 7, which
rules/sro.shtml). Copies of the 1 15 U.S.C. 78s(b)(1). includes Lead Market Makers. The term
2 15 U.S.C. 78a.
‘‘Corporation’’ is defined in Rule 1.1(k) to mean
9 15 U.S.C. 78s(b)(3)(A)(ii). 3 17 CFR 240.19b–4. NYSE Arca Equities.
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Document Created: 2016-03-17 00:58:20
Document Modified: 2016-03-17 00:58:20
| 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 | 81 FR 14497 |
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