81 FR 39078 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule Under Section VIII
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 115 (June 15, 2016)
Federal Register Volume 81, Issue 115 (June 15, 2016)
| Page Range | 39078-39081 | |
| FR Document | 2016-14085 |
[Federal Register Volume 81, Number 115 (Wednesday, June 15, 2016)] [Notices] [Pages 39078-39081] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-14085] ======================================================================= ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78027; File No. SR-Phlx-2016-64] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule Under Section VIII June 9, 2016. 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 May 31, 2016, NASDAQ PHLX 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 the Exchange's Pricing Schedule under Section VIII, entitled ``NASDAQ OMX PSX FEES,'' with respect to execution and routing of orders in securities priced at $1 or more per share. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxphlx.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 certain charges and credits for the use of the order execution and routing services of the NASDAQ OMX PSX System (``PSX'') by member organizations for all securities traded at $1 or more per share. The Exchange is proposing to: (1) Add an additional Consolidated Volume \3\ requirement to the existing fee tiers assessed a member organization that enters an order that executes in PSX; (2) add an new default fee assessed a member organization that enters an order that executes in PSX in the security of any Tape \4\ of $0.0030 per share executed; and (3) delete text from the preamble of paragraph (a)(1) of Section VIII, Order Execution and [[Page 39079]] Routing concerning Consolidated Volume. --------------------------------------------------------------------------- \3\ 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 of Section VIII, Order Execution and Routing, paragraph (a)(1). \4\ There are three Tapes, which are based on the listing venue of the security: Tape C securities are Nasdaq-listed; Tape A securities are New York Stock Exchange-listed securities; and Tape B securities are listed on exchanges other than Nasdaq and NYSE. --------------------------------------------------------------------------- First Change The purpose of the first change is to add a new requirement to qualify for each of the existing fee tiers assessed a member organization that enters an order that executes in PSX. The Exchange currently assesses a member organization a fee of $0.0029 per share executed in Nasdaq-listed securities (``Tape C''), and fee of $0.0028 per share executed in NYSE-Listed Securities (``Tape A'') and in securities listed on exchanges other than Nasdaq and NYSE (``Tape B''). These fees currently do not require a member organization to have met a performance measure in return for the fees, but rather are the ``default'' fees assessed for removal of liquidity from PSX. In light of the proposed new $0.0030 default removal fee discussed below, the Exchange is proposing to add a Consolidated Volume-based requirement to the existing fee tiers in order to qualify for the now-lower charges assessed member organizations for removing liquidity. Specifically, the Exchange is proposing to require a member organization to access 0.065% or more of Consolidated Volume during the month to be eligible to receive the lower charges assessed under the fee tiers. Second Change The purpose of the second change is to add a new default fee assessed a member organization that enters an order that executes in PSX in the security of any Tape. Currently, a member organization is assessed a fee of $0.0029 per share executed in Tape C securities, and fee of $0.0028 per share executed in Tape A and Tape B securities. The Exchange is proposing to assess a member organization that enters an order that executes in PSX a fee of $0.0030 per share executed in a security of any Tape. Third Change The purpose of the third change is to delete rule text from the preamble of paragraph (a)(1) of Section VIII, Order Execution and Routing, concerning Consolidated Volume. The rule currently defines Consolidated Volume 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. The Exchange excludes from the calculations of fees and credits that have a Consolidated Volume component all trading that occurs on the date of the annual reconstitution of the Russell Investments. The annual reconstitution represents a day of abnormal trading volume, as the Russell Investment indexes adjust holdings to accurately reflect the current state of equity markets and their market segments.\5\ Consequently, the Exchange excludes the date of the Russell Investment reconstitution in all calculations of fees and credits because it is not reflective of a member organization's normal trading. The Exchange expresses this under the rule by stating that, ``[f]or 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.'' The Exchange believes that the text stating ``expressed as a percentage of, or ratio to, Consolidated Volume'' may be confusing to market participants in understanding how the Exchange excludes trading activity on the day of the Russell Investment reconstitution should the Exchange ever adopt a fee or credit tier based on a different measure of Consolidated Volume. Specifically, the Exchange seeks to clarify that all trading activity on the date of the Russell Investment reconstitution (including trading activity not based on a percentage or ratio of Consolidated Volume) is excluded from a member's trading activity for determining credit and fee tiers. This proposed change has no impact on PSX at this time, as all tiers under the rule are currently expressed as a percentage of Consolidated Volume; however, if the Exchange adopted a new metric, such as a certain nominal level of share volume (e.g., a requirement to add 5 million shares), the Exchange wants to ensure that member organizations understand that all trading activity on the day of the Russell Investment reconstitution would be excluded for purposes of determining what fees and credits a member qualifies for. --------------------------------------------------------------------------- \5\ See https://www.ftserussell.com/research-insights/russell-reconstitution. --------------------------------------------------------------------------- 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 proposed increases to the credits and charges in the fee schedule under the Exchange's Pricing Schedule under Section VIII are reflective of the Exchange's ongoing efforts to use pricing incentives to attract order flow to the Exchange and improve market quality, while also providing a profit to the Exchange through the operation of its market. First Change The Exchange believes that the proposed new requirement to qualify for each of the existing fee tiers assessed a member organization that enters an order that executes in PSX is reasonable because the Exchange is providing member organizations the ability to continue to have the ability to qualify for current lower removal fees. The Exchange uses credits and reduced fees to provide incentive to market participants to improve the markets. In the present case, the Exchange is adding to each of the existing fee tiers under the rule a new requirement that a member organization access 0.065% or more of Consolidated Volume during the month. Removal of liquidity adds to the price discovery process and therefore benefits all market participants. Consequently, the Exchange believes that requiring member organizations to improve the market through the removal of liquidity by a certain level of Consolidated Volume in return for lower liquidity removal fees is reasonable. The Exchange believes that the proposed new requirement to qualify for each of the lower fee tiers assessed a member organization that enters an order that executes in PSX is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same fee to all similarly situated members. The Exchange is not proposing to adjust the fee assessed for removal of the securities of each Tape, but rather is adding a new Consolidated Volume-based requirement in light of the proposed new $0.0030 per share executed fee, which will be the new ``default'' rate assessed member organizations for removal of liquidity. Thus, to qualify for a reduced fee in any of the amended fee tiers, a member organization must accesses 0.065% or more of Consolidated Volume during the month. [[Page 39080]] Second Change The Exchange believes that the new base removal fee is reasonable because although it will increase the fee assessed to access liquidity on the Exchange, it is identical to the fee assessed by The NASDAQ Stock Market LLC (``Nasdaq'') for removing liquidity in the securities of any Tape from the Nasdaq Market Center.\8\ As a general principle, the Exchange must, from time to time, adjust the level of fees and credits provided to most efficiently allocate such fees and credits in terms of market-improving behavior. In this regard, the Exchange is limited in how far it may reduce fees and in the amount of credits that it can provide to market participants. In the present case, the Exchange has observed high levels of liquidity removal on PSX sufficient to allow the Exchange to increase removal fees, which will allow the Exchange to offer credits for market-improving behavior, and to realize a greater profit. --------------------------------------------------------------------------- \8\ See Nasdaq Rules 7018(a)(1)-(3). --------------------------------------------------------------------------- The Exchange believes that the increased removal fee is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same fee to all similarly situated members. In this regard, the Exchange notes that the fee is uniform across the securities of all three Tapes. In addition, the Exchange will offer reduced fees for removal of liquidity, but in return for market improving behavior. Last, the Exchange believes that increasing the fee assessed does not discriminate unfairly because it is a modest increase that is consistent with the fee assessed for removing liquidity at other exchanges. Third Change The Exchange believes that deleting rule text from the preamble of paragraph (a)(1) of Section VIII, Order Execution and Routing, concerning Consolidated Volume is reasonable because it will help clarify how credit and fee tiers that rely on a calculation of Consolidated Volume will be handled by the Exchange during the annual Russell Indexes reconstitution. Currently, the rule text could be interpreted to apply to only a member organization's trading activity under a fee or credit tier that is expressed as a ratio or percentage of Consolidated Volume. The Exchange believes that, should it ever adopt a credit or fee tier based on another measure of Consolidated Volume, such an interpretation would undermine the Exchange's intent to exclude the abnormal trading activity that occurs on that day. Accordingly, the Exchange believes that it is reasonable to remove the potentially confusing rule text. The Exchange believes that deleting rule text from the preamble of paragraph (a)(1) of Section VIII, Order Execution and Routing, concerning Consolidated Volume is an equitable allocation and is not unfairly discriminatory because the proposed change only serves to clarify the application of the rule and does not alter how Consolidated Volume is calculated. Thus, the Exchange will apply the same process to all similarly situated member organizations that seek to qualify under a fee or credit tier under the rule that relies on a calculation of Consolidated Volume. 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 changes to the fees assessed for removing liquidity do not impose a burden on competition because the Exchange membership is optional and is the subject of competition from other exchanges. The increased charges are reflective of the intent to balance the fees that it assesses with the order flow it receives. For these reasons, the Exchange does not believe that any of the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. Moreover, because there are numerous competitive alternatives to the use of the Exchange, it is likely that the Exchange will lose market share as a result of the changes if they are unattractive to market participants. As noted above, the proposed changes are consistent with similar fees assessed members of other 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 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-Phlx-2016-64 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-Phlx-2016-64. 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 [[Page 39081]] 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-Phlx-2016-64 and should be submitted on or before July 6, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\10\ --------------------------------------------------------------------------- \10\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-14085 Filed 6-14-16; 8:45 am] BILLING CODE 8011-01-P
![39078 Federal Register / Vol. 81, No. 115 / Wednesday, June 15, 2016 / Notices
observation data, model output, and 10. The first National Plan identified PSX FEES,’’ with respect to execution
derived information products. eight Supporting Actions (pp. 20–27) and routing of orders in securities
4. One important policy goal for required to maximize the benefits priced at $1 or more per share.
Federal agencies has been to improve derived from the Nation’s Earth The text of the proposed rule change
external users’ ability to find, access, observations. In priority order, they are: is available on the Exchange’s Web site
and use Earth observation data and Action 1: Coordinate and Integrate at http://
information products. In which of these Observations nasdaqomxphlx.cchwallstreet.com/, at
three areas (finding, accessing, or using) Action 2: Improve Data Access, the principal office of the Exchange, and
have you witnessed improvements, if Management, and Interoperability at the Commission’s Public Reference
any? Please provide specific examples. Action 3: Increase Efficiency and Cost Room.
5. In the areas listed below, what Savings II. Self-Regulatory Organization’s
could the Federal Government do to Action 4: Improve Observation Density Statement of the Purpose of, and
improve the Earth observations that you and Sampling Statutory Basis for, the Proposed Rule
rely on? Please provide specific Action 5: Maintain and Support
Change
examples. You do not need to provide Infrastructure
responses to all listed areas—please Action 6: Explore Commercial Solutions In its filing with the Commission, the
focus on those most relevant to your Action 7: Maintain and Strengthen Exchange included statements
work. International Collaboration concerning the purpose of and basis for
a. Maintain current observing Action 8: Engage in Stakeholder-Driven the proposed rule change and discussed
systems. Data Innovation any comments it received on the
b. Incrementally improve or upgrade Of the actions listed above most proposed rule change. The text of these
current observing systems. relevant to your work, where has the statements may be examined at the
c. Develop new observing systems Federal Government been the most, or places specified in Item IV below. The
with significantly enhanced least, successful, and why? Please Exchange has prepared summaries, set
measurement capabilities. provide specific examples. forth in sections A, B, and C below, of
d. Develop new agency practices to the most significant aspects of such
Ted Wackler, statements.
improve the discoverability, Deputy Chief of Staff and Assistant Director.
accessibility, and usability of Earth [FR Doc. 2016–14186 Filed 6–14–16; 8:45 am]
A. Self-Regulatory Organization’s
observation data. Statement of the Purpose of, and
BILLING CODE 3270–F6–P
6. On what emerging technologies, Statutory Basis for, the Proposed Rule
techniques, and management practices Change
should the Federal Government focus
SECURITIES AND EXCHANGE 1. Purpose
attention in the next few years to
enhance public services, research in the COMMISSION The purpose of the proposed rule
public interest, and fundamental [Release No. 34–78027; File No. SR–Phlx– change is to amend certain charges and
scientific inquiry? 2016–64] credits for the use of the order execution
7. What types of partnerships with and routing services of the NASDAQ
Federal agencies, such as those listed Self-Regulatory Organizations; OMX PSX System (‘‘PSX’’) by member
below, show the most promise to NASDAQ PHLX LLC; Notice of Filing organizations for all securities traded at
address current gaps in Earth and Immediate Effectiveness of $1 or more per share. The Exchange is
observation coverage and related service Proposed Rule Change To Amend the proposing to: (1) Add an additional
provision? Please provide specific Exchange’s Pricing Schedule Under Consolidated Volume 3 requirement to
examples. You do not need to provide Section VIII the existing fee tiers assessed a member
responses to all listed areas—please organization that enters an order that
June 9, 2016.
focus on those most relevant to your executes in PSX; (2) add an new default
Pursuant to Section 19(b)(1) of the fee assessed a member organization that
work. You are also free to discuss other Securities Exchange Act of 1934
types of partnerships that are not listed enters an order that executes in PSX in
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 the security of any Tape 4 of $0.0030 per
below. notice is hereby given that on May 31,
a. Cooperative research and share executed; and (3) delete text from
2016, NASDAQ PHLX LLC the preamble of paragraph (a)(1) of
development agreements. (‘‘Exchange’’) filed with the Securities
b. Challenges and prizes. Section VIII, Order Execution and
and Exchange Commission (‘‘SEC’’ or
c. Joint ventures for Earth observation ‘‘Commission’’) the proposed rule 3 Consolidated Volume is defined as the total
system development and operations. change as described in Items I, II, and consolidated volume reported to all consolidated
d. Citizen science and crowdsourced III, below, which Items have been transaction reporting plans by all exchanges and
observations. prepared by the Exchange. The trade reporting facilities during a month in equity
8. Is your organization concerned Commission is publishing this notice to securities, excluding executed orders with a size of
about a potential shortage of workers in less than one round lot. For purposes of calculating
solicit comments on the proposed rule Consolidated Volume and the extent of a member’s
the United States who are trained to change from interested persons. trading activity, expressed as a percentage of, or
develop, understand, or use Earth ratio to, Consolidated Volume, the date of the
observation data and geospatial I. Self-Regulatory Organization’s annual reconstitution of the Russell Investments
information? Please provide specific Statement of the Terms of Substance of Indexes shall be excluded from both total
the Proposed Rule Change Consolidated Volume and the member’s trading
ehiers on DSK5VPTVN1PROD with NOTICES
concerns. activity. See of Section VIII, Order Execution and
9. What, if any, do you believe were The Exchange proposes to amend the Routing, paragraph (a)(1).
the key accomplishments of the first Exchange’s Pricing Schedule under 4 There are three Tapes, which are based on the
National Plan and what impact did the listing venue of the security: Tape C securities are
Section VIII, entitled ‘‘NASDAQ OMX Nasdaq-listed; Tape A securities are New York
National Plan have, if any, on your Stock Exchange-listed securities; and Tape B
organization? Please provide specific 1 15 U.S.C. 78s(b)(1). securities are listed on exchanges other than Nasdaq
examples. 2 17 CFR 240.19b–4. and NYSE.
VerDate Sep<11>2014 15:15 Jun 14, 2016 Jkt 238001 PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 E:\FR\FM\15JNN1.SGM 15JNN1](https://thefederalregister.org/doc/81_FR_39193/page/1.svg)
![Federal Register / Vol. 81, No. 115 / Wednesday, June 15, 2016 / Notices 39079
Routing concerning Consolidated annual reconstitution of the Russell among members and issuers and other
Volume. Investments. The annual reconstitution persons using any facility or system
represents a day of abnormal trading which the Exchange operates or
First Change
volume, as the Russell Investment controls, and is not designed to permit
The purpose of the first change is to indexes adjust holdings to accurately unfair discrimination between
add a new requirement to qualify for reflect the current state of equity customers, issuers, brokers, or dealers.
each of the existing fee tiers assessed a markets and their market segments.5
member organization that enters an The proposed increases to the credits
Consequently, the Exchange excludes
order that executes in PSX. The the date of the Russell Investment and charges in the fee schedule under
Exchange currently assesses a member reconstitution in all calculations of fees the Exchange’s Pricing Schedule under
organization a fee of $0.0029 per share and credits because it is not reflective of Section VIII are reflective of the
executed in Nasdaq-listed securities a member organization’s normal trading. Exchange’s ongoing efforts to use
(‘‘Tape C’’), and fee of $0.0028 per share The Exchange expresses this under the pricing incentives to attract order flow
executed in NYSE-Listed Securities rule by stating that, ‘‘[f]or purposes of to the Exchange and improve market
(‘‘Tape A’’) and in securities listed on calculating Consolidated Volume and quality, while also providing a profit to
exchanges other than Nasdaq and NYSE the extent of a member’s trading the Exchange through the operation of
(‘‘Tape B’’). These fees currently do not activity, expressed as a percentage of, or its market.
require a member organization to have ratio to, Consolidated Volume, the date
met a performance measure in return for First Change
of the annual reconstitution of the
the fees, but rather are the ‘‘default’’ fees Russell Investments Indexes shall be The Exchange believes that the
assessed for removal of liquidity from excluded from both total Consolidated proposed new requirement to qualify for
PSX. In light of the proposed new Volume and the member’s trading each of the existing fee tiers assessed a
$0.0030 default removal fee discussed activity.’’ The Exchange believes that member organization that enters an
below, the Exchange is proposing to add the text stating ‘‘expressed as a order that executes in PSX is reasonable
a Consolidated Volume-based percentage of, or ratio to, Consolidated because the Exchange is providing
requirement to the existing fee tiers in Volume’’ may be confusing to market member organizations the ability to
order to qualify for the now-lower participants in understanding how the continue to have the ability to qualify
charges assessed member organizations Exchange excludes trading activity on for current lower removal fees. The
for removing liquidity. Specifically, the the day of the Russell Investment Exchange uses credits and reduced fees
Exchange is proposing to require a reconstitution should the Exchange ever
member organization to access 0.065% to provide incentive to market
adopt a fee or credit tier based on a participants to improve the markets. In
or more of Consolidated Volume during different measure of Consolidated
the month to be eligible to receive the the present case, the Exchange is adding
Volume. Specifically, the Exchange to each of the existing fee tiers under the
lower charges assessed under the fee seeks to clarify that all trading activity
tiers. rule a new requirement that a member
on the date of the Russell Investment organization access 0.065% or more of
Second Change reconstitution (including trading Consolidated Volume during the month.
activity not based on a percentage or Removal of liquidity adds to the price
The purpose of the second change is ratio of Consolidated Volume) is
to add a new default fee assessed a discovery process and therefore benefits
excluded from a member’s trading
member organization that enters an all market participants. Consequently,
activity for determining credit and fee
order that executes in PSX in the the Exchange believes that requiring
tiers. This proposed change has no
security of any Tape. Currently, a member organizations to improve the
impact on PSX at this time, as all tiers
member organization is assessed a fee of market through the removal of liquidity
under the rule are currently expressed
$0.0029 per share executed in Tape C as a percentage of Consolidated Volume; by a certain level of Consolidated
securities, and fee of $0.0028 per share however, if the Exchange adopted a new Volume in return for lower liquidity
executed in Tape A and Tape B metric, such as a certain nominal level removal fees is reasonable.
securities. The Exchange is proposing to of share volume (e.g., a requirement to The Exchange believes that the
assess a member organization that enters add 5 million shares), the Exchange proposed new requirement to qualify for
an order that executes in PSX a fee of wants to ensure that member each of the lower fee tiers assessed a
$0.0030 per share executed in a security organizations understand that all member organization that enters an
of any Tape. trading activity on the day of the Russell order that executes in PSX is an
Third Change Investment reconstitution would be equitable allocation and is not unfairly
The purpose of the third change is to excluded for purposes of determining discriminatory because the Exchange
delete rule text from the preamble of what fees and credits a member will apply the same fee to all similarly
paragraph (a)(1) of Section VIII, Order qualifies for. situated members. The Exchange is not
Execution and Routing, concerning 2. Statutory Basis proposing to adjust the fee assessed for
Consolidated Volume. The rule removal of the securities of each Tape,
The Exchange believes that its but rather is adding a new Consolidated
currently defines Consolidated Volume proposal is consistent with Section 6(b)
as the total consolidated volume Volume-based requirement in light of
of the Act 6 in general, and furthers the the proposed new $0.0030 per share
reported to all consolidated transaction
objectives of Sections 6(b)(4) and 6(b)(5) executed fee, which will be the new
reporting plans by all exchanges and
of the Act 7 in particular, in that it ‘‘default’’ rate assessed member
ehiers on DSK5VPTVN1PROD with NOTICES
trade reporting facilities during a month
provides for the equitable allocation of organizations for removal of liquidity.
in equity securities, excluding executed
reasonable dues, fees and other charges
orders with a size of less than one round Thus, to qualify for a reduced fee in any
lot. The Exchange excludes from the 5 See https://www.ftserussell.com/research-
of the amended fee tiers, a member
calculations of fees and credits that have insights/russell-reconstitution. organization must accesses 0.065% or
a Consolidated Volume component all 6 15 U.S.C. 78f(b). more of Consolidated Volume during
trading that occurs on the date of the 7 15 U.S.C. 78f(b)(4) and (5). the month.
VerDate Sep<11>2014 15:15 Jun 14, 2016 Jkt 238001 PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 E:\FR\FM\15JNN1.SGM 15JNN1](https://thefederalregister.org/doc/81_FR_39193/page/2.svg)
![Federal Register / Vol. 81, No. 115 / Wednesday, June 15, 2016 / Notices 39081
Commission, and all written solicit comments on the proposed rule 2214 and the content and disclosure
communications relating to the change from interested persons. requirements in FINRA Rule 2213.
proposed rule change between the
I. Self-Regulatory Organization’s Proposed Amendments
Commission and any person, other than
Statement of the Terms of Substance of New Member Communications
those that may be withheld from the
the Proposed Rule Change
public in accordance with the FINRA Rule 2210(c)(1)(A) currently
provisions of 5 U.S.C. 552, will be FINRA is proposing amendments that
requires new FINRA members to file
available for Web site viewing and would revise the filing requirements in
with FINRA retail communications used
printing in the Commission’s Public FINRA Rule 2210 (Communications
in any electronic or other public media
Reference Room, 100 F Street NE., with the Public) and FINRA Rule 2214
at least 10 business days prior to use.
Washington, DC 20549, on official (Requirements for the Use of Investment
This requirement extends for one year
business days between the hours of Analysis Tools) and the content and
from the effective date of the firm’s
10:00 a.m. and 3:00 p.m. Copies of the disclosure requirements in FINRA Rule
membership. This new firm filing
filing also will be available for 2213 (Requirements for the Use of Bond
requirement only applies to broadly
inspection and copying at the principal Mutual Fund Volatility Ratings).
disseminated retail communications,
office of the Exchange. All comments The text of the proposed rule change
such as generally accessible Web sites,
received will be posted without change; is available on FINRA’s Web site at
print media communications, and
the Commission does not edit personal http://www.finra.org, at the principal
television and radio commercials.
identifying information from office of FINRA and at the
Commission’s Public Reference Room. While FINRA believes that the
submissions. You should submit only requirement for new members to file
information that you wish to make II. Self-Regulatory Organization’s their broadly disseminated retail
available publicly. Statement of the Purpose of, and communications serves a useful
All submissions should refer to File Statutory Basis for, the Proposed Rule purpose, since new members may not be
Number SR–Phlx–2016–64 and should Change as familiar with the standards that apply
be submitted on or before July 6, 2016. to retail communications as more
In its filing with the Commission,
For the Commission, by the Division of FINRA included statements concerning established members, the requirement to
Trading and Markets, pursuant to delegated the purpose of and basis for the file these communications at least 10
authority.10 business days prior to use can delay
proposed rule change and discussed any
Robert W. Errett, comments it received on the proposed members’ abilities to communicate with
Deputy Secretary. rule change. The text of these statements the public in a timely manner according
[FR Doc. 2016–14085 Filed 6–14–16; 8:45 am] may be examined at the places specified to FINRA. For example, if a new
BILLING CODE 8011–01–P in Item IV below. FINRA has prepared member wishes to update its public
summaries, set forth in sections A, B, Web site with new information, the
and C below, of the most significant member must first file the proposed
SECURITIES AND EXCHANGE aspects of such statements. update with FINRA and wait at least 10
COMMISSION business days before it can post this
A. Self-Regulatory Organization’s update on its Web site. FINRA believes
Statement of the Purpose of, and that such a delay may hinder its ability
[Release No. 34–78026; File No. SR–FINRA–
2016–018]
Statutory Basis for, the Proposed Rule to communicate important information
Change to its existing and prospective
Self-Regulatory Organizations; 1. Purpose customers.
Financial Industry Regulatory FINRA believes it can continue to
Authority, Inc.; Notice of Filing of a Background protect investors from potential harm
Proposed Rule Change To Amend In April 2014, FINRA launched a without imposing this time delay on
FINRA Rules 2210 (Communications retrospective review of its new members by reviewing new
With the Public), 2213 (Requirements communications with the public rules members’ communications on a post-
for the Use of Bond Mutual Fund to assess their effectiveness and use, rather than a pre-use, basis. FINRA
Volatility Ratings), and 2214 efficiency. In December 2014, FINRA has found a post-use filing requirement
(Requirements for the Use of published a report on the assessment to be an effective investor protection
Investment Analysis Tools) phase of the review.3 The report approach for retail communications
concluded that, while the rules have with similar risk profiles as FINRA
June 9, 2016.
met their intended investor protection typically sees from new members.
Pursuant to Section 19(b)(1) of the objectives, they could benefit from some Accordingly, FINRA proposes to revise
Securities Exchange Act of 1934 updating to better align the investor the new member filing requirement to
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 protection benefits and the economic require new members to file retail
notice is hereby given that on May 25, impacts. To this end, FINRA communications used in electronic or
2016, Financial Industry Regulatory recommended consideration of a other public media within 10 business
Authority, Inc. (‘‘FINRA’’) filed with the combination of rule proposals, guidance days of first use for a one-year period,
Securities and Exchange Commission and administrative measures, to rather than requiring these filings at
(‘‘SEC’’ or ‘‘Commission’’) the proposed enhance the efficiency of the rules with least 10 business days prior to use.4
rule change as described in Items I, II, no reduction in investor protection.
ehiers on DSK5VPTVN1PROD with NOTICES
and III below, which Items have been Pursuant to these recommendations, 4 See proposed amendments to FINRA Rule
substantially prepared by FINRA. The FINRA initially is proposing 2210(c)(1)(A). This proposed change also would
Commission is publishing this notice to amendments to the filing requirements delete as redundant current rule text that permits
a new member to file a retail communication that
in FINRA Rule 2210 and FINRA Rule is a free writing prospectus filed with the SEC
10 17 CFR 200.30–3(a)(12). pursuant to Securities Act Rule 433(d)(1)(ii), within
1 15 U.S.C. 78s(b)(1). 3 See Retrospective Rule Report, Communications 10 business days of first use rather than at least 10
2 17 CFR 240.19b–4. with the Public, December 2014. business days prior to first use.
VerDate Sep<11>2014 15:15 Jun 14, 2016 Jkt 238001 PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 E:\FR\FM\15JNN1.SGM 15JNN1](https://thefederalregister.org/doc/81_FR_39193/page/4.svg)
Document Created: 2016-06-15 02:21:01
Document Modified: 2016-06-15 02:21:01
| 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 39078 |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR