81 FR 39984 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7018(a)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 118 (June 20, 2016)

[Federal Register Volume 81, Number 118 (Monday, June 20, 2016)]
[Notices]
[Pages 39984-39985]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-14448]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78064; File No. SR-BX-2016-029]


Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Rule 
7018(a)

June 14, 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 June 1, 2016, NASDAQ BX, Inc. (``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 Rule 7018(a) to delete text from 
the preamble [sic] the rule concerning Consolidated Volume.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxbx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to delete rule text from 
the preamble of Rule 7018(a) 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.\3\ 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'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 the Exchange 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 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.
---------------------------------------------------------------------------

    \3\ 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 \4\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act \5\ 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.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that deleting rule text from the preamble of 
Rule 7018(a) concerning Consolidated Volume is reasonable because it 
will help clarify how credit and fee tiers that

[[Page 39985]]

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 
Rule 7018(a) 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. The proposed rule change is 
being made to clarify the rule and avoid potential market participant 
confusion that may be caused by the existing rule text. As such, the 
Exchange does not believe that the proposed change places any burden on 
competition whatsoever.

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.\6\
---------------------------------------------------------------------------

    \6\ 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 Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BX-2016-029 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-BX-2016-029. 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-BX-2016-029 and 
should be submitted on or before July 11, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14448 Filed 6-17-16; 8:45 am]
 BILLING CODE 8011-01-P