81 FR 80137 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7014 and the Nasdaq Growth Program
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 220 (November 15, 2016)
Federal Register Volume 81, Issue 220 (November 15, 2016)
| Page Range | 80137-80140 | |
| FR Document | 2016-27375 |
[Federal Register Volume 81, Number 220 (Tuesday, November 15, 2016)] [Notices] [Pages 80137-80140] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-27375] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79270; File No. SR-NASDAQ-2016-153] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7014 and the Nasdaq Growth Program November 8, 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 November 1, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or ``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 Nasdaq Rule 7014, Market Quality Incentive Programs, to modify the volume threshold for the method under which members may currently qualify for the Nasdaq Growth Program (``Program''). The Exchange also proposes to add another method through which members may qualify for the Program, and to modify the manner in which a member's Growth Baseline is updated. 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 Exchange proposes to amend Nasdaq Rule 7014, Market Quality Incentive Programs, to modify the volume threshold for the method under which members may currently qualify for the Program. The Exchange also proposes to add another method through which members may qualify for the Nasdaq Growth Program (``Program''), and to modify the manner in which a member's Growth Baseline is updated. Nasdaq recently introduced the Nasdaq Growth Program.\3\ The purpose of the Program is to provide a credit per share executed for members that meet certain growth criteria. The credit is designed to provide an incentive to members that do not qualify for other credits under Rule 7018 in excess of the Program credit to increase their participation on the Exchange. The Program will provide a member a $0.0025 per share executed credit in securities priced $1 or more per share if the member meets certain criteria. The credit will be provided in lieu of other credits provided to the member for displayed quotes/ orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity under Rule 7018, if the credit under the Nasdaq Growth Program is greater than the credit attained under Rule 7018. To be eligible for the credit a member must: (i) Add greater than 750,000 shares a day on average during the month through one or more of its Nasdaq Market Center MPIDs; and (ii) increase its shares of liquidity provided through one or more of its Nasdaq Market Center MPIDs as a percent of Consolidated Volume by 25% versus the member's Growth Baseline.\4\ --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 78977 (September 29, 2016), 81 FR 69140 (October 5, 2016) (SR-NASDAQ-2016-132). \4\ As part of this proposed rule change, Nasdaq is amending the rule text to add the conjunctive ``and'' between these two conditions to make clear that a member must satisfy both conditions in order to qualify for the Program. --------------------------------------------------------------------------- [[Page 80138]] Rule 7014 defines the Growth Baseline as the member's shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs as a percentage of Consolidated Volume during the last month a member qualified for the Program. If a member has not qualified for a credit under the Program, its August 2016 share of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs as a percent of Consolidated Volume will be used to establish a baseline. As noted above, Nasdaq is proposing to modify the volume requirement that members must satisfy in order to qualify for the Program under the current method. Nasdaq also proposes to add another method through which members may qualify for the Program. Nasdaq is therefore re-numbering Rule 7014(j)(ii) as Rule 7014(j)(ii)(A) and (B) accordingly. Accordingly, Rule 7014(j)(ii)(A) will now state that, in order to be eligible for the rebate, the member must increase its shares of liquidity provided through one or more of its Nasdaq Market Center MPIDs as a percent of Consolidated Volume by 20% versus the member's Growth Baseline. Nasdaq notes that the purpose of the Program is to increase participation on the Exchange by incentivizing members to transact more volume on the Exchange. Nasdaq believes that changing the volume requirement from 25% to 20% will make it easier for members to qualify for the Program, thereby creating a greater incentive for members to increase their activity on the Exchange. New Rule 7014(j)(ii)(B) provides that a member may qualify for the Program if it met the criteria set forth in Rule 7014(j)(ii)(A) in the preceding month and maintained or increased its shares of liquidity provided through one or more of its Nasdaq Market Center MPIDs as a percent of Consolidated Volume compared to the preceding month. Previously, a member would have been required to increase its shares of liquidity by 25% (now 20%) each month versus the member's Growth Baseline in order to qualify for the Program. Assuming the member satisfied the criteria set forth in Rule 7014(j)(ii)(A) in the previous month, Rule 7014(j)(ii)(B) will allow a member to continue to qualify for the program as long as it maintains or increases its shares of liquidity in the current month. Since Rule 7014(j)(ii)(B) requires that the member met the criteria in Rule 7014(j)(ii)(A) in the preceding month, a member would not be able to use Rule 7014(j)(ii)(B) in successive months. Third, Nasdaq proposes to modify the calculation of a member's baseline. As noted above, the Growth Baseline is defined as the member's shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs as a percent of Consolidated Volume during the last month a member qualified for the Nasdaq Growth Program. If a member has not qualified for a credit under the Program, its August 2016 share of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs as a percent of Consolidated Volume will be used to establish a baseline. Once the member qualifies for the Program, the August 2016 baseline is replaced by the volume of that qualifying month, which becomes the member's updated baseline. Nasdaq is proposing to add language to the definition of the Growth Baseline to reflect the fact that a member's baseline will only be updated when a member qualifies for the rebate under Rule 7014(j)(ii)(A). A member may only qualify for the rebate under Rule 7014(j)(ii)(A) if it increases its volume by 20% over its baseline, whereas a member would qualify for the rebate under Rule 7014(j)(ii)(B) if it maintained or increased its volume in comparison to the previous month. Nasdaq believes that adjusting the member's baseline when the growth of the member's monthly volume meets or exceeds 20% is appropriate because this is a clearly defined threshold. Nasdaq also notes that members cannot qualify for the rebate under Rule 7014(j)(ii)(B) in successive months, so Nasdaq does not anticipate a scenario where a member qualifies for a rebate for several months without having its baseline adjusted accordingly. The following example illustrates the proposed changes:In August 2016, the firm's shares of liquidity as a percentage of Consolidated Volume is 0.03%. This is the firm's Growth Baseline. In September 2016, the firm's shares of liquidity as a percentage of Consolidated Volume is 0.035%. The member does not qualify for an applicable rebate, and the member's Growth Baseline remains 0.03% (its August 2016 volume). In October 2016, the firm's shares of liquidity as a percentage of Consolidated Volume is 0.04%. Since the firm has increased its volume by more than 20% in comparison to its Growth Baseline, the firm qualifies for the credit. Since the firm has qualified for the credit, its Growth Baseline is now 0.04%. In November 2016, the firm's shares of liquidity as a percentage of Consolidated Volume is 0.041%. Although the firm did not increase its volume by 20% in comparison to its Growth Baseline, it still qualifies for the credit, since Rule 7014(j)(ii)(B) allows a member to continue to qualify for the Program if it met the criteria in Rule 7014(j)(ii)(A) in the previous month, and if it maintains or increases its shares of liquidity in the current month. Since the firm qualified for the credit under Rule 7014(j)(ii)(B), the Growth Baseline does not update. A member may only qualify for the rebate under Rule 7014(j)(ii)(B) if it satisfied the criteria of Rule 7014(j)(ii)(A) in the preceding month. In order to be eligible for the December 2016 rebate, the firm would therefore have to increase its volume by more than 20% in comparison to its Growth Baseline (which is October 2016). 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\5\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\6\ 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 its facilities which the Exchange operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \5\ 15 U.S.C. 78f(b). \6\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange notes that the amount of the credits provided under the Program is unchanged.\7\ Nasdaq believes that the proposed changes are equitably allocated among members, and are not designed to permit unfair discrimination. Nasdaq notes that, in decreasing the volume threshold from 25% to 20% in order to qualify for the Program under Rule 7014(j)(ii)(A), and in proposing an alternate method under which members may qualify for the Program, Nasdaq is making the Program and its associated credits more accessible to members. At the same time, the purpose of the Program is to increase members' participation on the Exchange by offering a credit to members that meet the volume requirements. Nasdaq believes that the proposed changes strike an appropriate and equitable balance by expanding the number of members that may be eligible for the Program while continuing to [[Page 80139]] incentivize other members that may not currently qualify for the Program to transact greater volume in order to become eligible for the Program. --------------------------------------------------------------------------- \7\ See Securities Exchange Act Release No. 78977 (September 29, 2016), 81 FR 69140 (October 5, 2016) (SR-NASDAQ-2016-132) (establishing the Nasdaq Growth Program and its credit structure). --------------------------------------------------------------------------- In amending Rule 7014(j)(ii)(A) so that members may qualify for the Program by increasing their volume in a given month by 20% over their baseline, Nasdaq also notes that this proposed change merely changes the member's trading volume necessary to qualify for the program under Rule 7014(j)(ii)(A), and does not otherwise differentiate among members who may qualify for the Program. Nasdaq also believes that Rule 7014(j)(ii)(B) is equitably allocated and not unfairly discriminatory. In adopting Rule 7014(j)(ii)(B), Nasdaq is providing all members that otherwise qualify for the Program with an alternate way in which they may qualify for the Program's rebate in a given month by permitting members to either maintain or increase their volume in comparison to the preceding month. Given, however, that the purpose of the Program is to increase a member's trading activity on the Exchange, Nasdaq believes that it is equitable and not unfairly discriminatory to only permit members to qualify for the rebate in this manner if they have qualified for the rebate in the preceding month under Rule 7014(j)(ii)(A) (increasing their volume by 20% or more in comparison to the Growth Baseline). Similarly, the member will be required to satisfy the criteria in Rule 7014(j)(ii)(A) in order to qualify for the rebate in the following month, which means that it will be required to increase its volume by 20% in comparison to its Growth Baseline. Nasdaq believes this requirement is equitable and not unfairly discriminatory because it furthers the aims of the Program by encouraging increased volume on the Exchange. Nasdaq also notes that these requirements will apply equally to all members. Nasdaq believes that updating a member's Growth Baseline when the member has qualified for the rebate pursuant to Rule 7014(j)(ii)(A) by increasing its volume by 20% over its previous Growth Baseline is equitable and not unfairly discriminatory because this is a clearly defined threshold that applies equally to all members that qualify for the rebate under Rule 7014(j)(ii)(A). Nasdaq also notes that members cannot qualify for the rebate under Rule 7014(j)(ii)(B) in successive months, so Nasdaq does not anticipate a scenario where a member qualifies for a rebate for several months without having its baseline adjusted accordingly. Finally, Nasdaq notes that participation in the Program is voluntary, and that the proposed changes apply to all members that otherwise qualify for the Program, e.g., [sic] members that add greater than 750,000 shares a day on average during the month through one or more of its [sic] Nasdaq Market Center MPIDs. B. Self-Regulatory Organization's Statement on Burden on Competition The proposed rule change will not result in a burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended.\8\ In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or credit opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and credits to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. --------------------------------------------------------------------------- \8\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In addition, the Exchange believes that the competition among exchanges and other venues will help to drive price improvement and overall execution quality higher for end retail investors. In this instance, participation in the Program is voluntary. The proposed changes will lower the volume threshold for the current method of qualifying for the Program, and will provide members with another way in which they may qualify for the Program. These changes will apply equally to all members who otherwise qualify for the Program. Similarly, the proposed method of updating the Growth Baseline will be uniformly applied across members. In sum, if the change proposed herein is unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed change will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others 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 Comments Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-NASDAQ-2016-153 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-2016-153. 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 [[Page 80140]] 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-2016-153 and should be submitted on or before December 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). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2016-27375 Filed 11-14-16; 8:45 am] BILLING CODE 8011-01-P
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furtherance of the purposes of the Act. For the Commission, by the Division of concerning the purpose of and basis for
If the Commission takes such action, the Trading and Markets, pursuant to delegated the proposed rule change and discussed
Commission shall institute proceedings authority.15 any comments it received on the
to determine whether the proposed rule Brent J. Fields, proposed rule change. The text of these
should be approved or disapproved. Secretary. statements may be examined at the
[FR Doc. 2016–27366 Filed 11–14–16; 8:45 am] places specified in Item IV below. The
IV. Solicitation of Comments
BILLING CODE 8011–01–P Exchange has prepared summaries, set
Interested persons are invited to forth in sections A, B, and C below, of
submit written data, views, and the most significant aspects of such
arguments concerning the foregoing, SECURITIES AND EXCHANGE statements.
including whether the proposed rule COMMISSION
A. Self-Regulatory Organization’s
change is consistent with the Act. [Release No. 34–79270; File No. SR– Statement of the Purpose of, and
Comments may be submitted by any of NASDAQ–2016–153] Statutory Basis for, the Proposed Rule
the following methods: Change
Self-Regulatory Organizations; The
Electronic Comments 1. Purpose
NASDAQ Stock Market LLC; Notice of
• Use the Commission’s Internet Filing and Immediate Effectiveness of The Exchange proposes to amend
comment form (http://www.sec.gov/ Proposed Rule Change To Amend Rule Nasdaq Rule 7014, Market Quality
rules/sro.shtml); or 7014 and the Nasdaq Growth Program Incentive Programs, to modify the
• Send an email to rule-comments@ November 8, 2016. volume threshold for the method under
sec.gov. Please include File Number SR– Pursuant to Section 19(b)(1) of the which members may currently qualify
Phlx–2016–110 on the subject line. Securities Exchange Act of 1934 for the Program. The Exchange also
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 proposes to add another method
Paper Comments through which members may qualify for
notice is hereby given that on November
• Send paper comments in triplicate 1, 2016, The NASDAQ Stock Market the Nasdaq Growth Program
to Secretary, Securities and Exchange LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed (‘‘Program’’), and to modify the manner
Commission, 100 F Street NE., with the Securities and Exchange in which a member’s Growth Baseline is
Washington, DC 20549–1090. Commission (‘‘SEC’’ or ‘‘Commission’’) updated.
the proposed rule change as described Nasdaq recently introduced the
All submissions should refer to File Nasdaq Growth Program.3 The purpose
Number SR–Phlx–2016–110. This file in Items I, II, and III, below, which Items
have been prepared by the Exchange. of the Program is to provide a credit per
number should be included on the share executed for members that meet
subject line if email is used. To help the The Commission is publishing this
notice to solicit comments on the certain growth criteria. The credit is
Commission process and review your designed to provide an incentive to
comments more efficiently, please use proposed rule change from interested
persons. members that do not qualify for other
only one method. The Commission will credits under Rule 7018 in excess of the
post all comments on the Commission’s I. Self-Regulatory Organization’s Program credit to increase their
Internet Web site (http://www.sec.gov/ Statement of the Terms of Substance of participation on the Exchange. The
rules/sro.shtml). Copies of the the Proposed Rule Change Program will provide a member a
submission, all subsequent $0.0025 per share executed credit in
amendments, all written statements The Exchange proposes to amend
Nasdaq Rule 7014, Market Quality securities priced $1 or more per share if
with respect to the proposed rule the member meets certain criteria. The
change that are filed with the Incentive Programs, to modify the
volume threshold for the method under credit will be provided in lieu of other
Commission, and all written credits provided to the member for
communications relating to the which members may currently qualify
for the Nasdaq Growth Program displayed quotes/orders (other than
proposed rule change between the Supplemental Orders or Designated
Commission and any person, other than (‘‘Program’’). The Exchange also
proposes to add another method Retail Orders) that provide liquidity
those that may be withheld from the under Rule 7018, if the credit under the
public in accordance with the through which members may qualify for
the Program, and to modify the manner Nasdaq Growth Program is greater than
provisions of 5 U.S.C. 552, will be the credit attained under Rule 7018. To
available for Web site viewing and in which a member’s Growth Baseline is
updated. be eligible for the credit a member must:
printing in the Commission’s Public (i) Add greater than 750,000 shares a
Reference Room, 100 F Street NE., The text of the proposed rule change
is available on the Exchange’s Web site day on average during the month
Washington, DC 20549, on official through one or more of its Nasdaq
business days between the hours of at http://nasdaq.cchwallstreet.com, at
the principal office of the Exchange, and Market Center MPIDs; and (ii) increase
10:00 a.m. and 3:00 p.m. Copies of the its shares of liquidity provided through
filing also will be available for at the Commission’s Public Reference
Room. one or more of its Nasdaq Market Center
inspection and copying at the principal MPIDs as a percent of Consolidated
office of the Exchange. All comments II. Self-Regulatory Organization’s Volume by 25% versus the member’s
received will be posted without change; Statement of the Purpose of, and Growth Baseline.4
the Commission does not edit personal Statutory Basis for, the Proposed Rule
mstockstill on DSK3G9T082PROD with NOTICES
identifying information from Change 3 See Securities Exchange Act Release No. 78977
submissions. You should submit only (September 29, 2016), 81 FR 69140 (October 5,
In its filing with the Commission, the
information that you wish to make 2016) (SR–NASDAQ–2016–132).
Exchange included statements
available publicly. All submissions 4 As part of this proposed rule change, Nasdaq is
should refer to File Number SR–Phlx– amending the rule text to add the conjunctive
15 17 CFR 200.30–3(a)(12). ‘‘and’’ between these two conditions to make clear
2016–110, and should be submitted on 1 15 U.S.C. 78s(b)(1). that a member must satisfy both conditions in order
or before December 6, 2016. 2 17 CFR 240.19b–4. to qualify for the Program.
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incentivize other members that may not Finally, Nasdaq notes that competitive standing in the financial
currently qualify for the Program to participation in the Program is markets.
transact greater volume in order to voluntary, and that the proposed
C. Self-Regulatory Organization’s
become eligible for the Program. changes apply to all members that
Statement on Comments on the
In amending Rule 7014(j)(ii)(A) so otherwise qualify for the Program, e.g.,
[sic] members that add greater than Proposed Rule Change Received From
that members may qualify for the Members, Participants, or Others
Program by increasing their volume in 750,000 shares a day on average during
a given month by 20% over their the month through one or more of its No written comments were either
baseline, Nasdaq also notes that this [sic] Nasdaq Market Center MPIDs. solicited or received.
proposed change merely changes the B. Self-Regulatory Organization’s III. Date of Effectiveness of the
member’s trading volume necessary to Statement on Burden on Competition Proposed Rule Change and Timing for
qualify for the program under Rule Commission Action
7014(j)(ii)(A), and does not otherwise The proposed rule change will not
differentiate among members who may result in a burden on competition that The foregoing rule change has become
qualify for the Program. is not necessary or appropriate in effective pursuant to Section
furtherance of the purposes of the Act, 19(b)(3)(A)(ii) of the Act.9
Nasdaq also believes that Rule
as amended.8 In terms of inter-market At any time within 60 days of the
7014(j)(ii)(B) is equitably allocated and
competition, the Exchange notes that it filing of the proposed rule change, the
not unfairly discriminatory. In adopting
operates in a highly competitive market Commission summarily may
Rule 7014(j)(ii)(B), Nasdaq is providing
in which market participants can temporarily suspend such rule change if
all members that otherwise qualify for
readily favor competing venues if they it appears to the Commission that such
the Program with an alternate way in
deem fee levels at a particular venue to action is: (i) Necessary or appropriate in
which they may qualify for the
be excessive, or credit opportunities the public interest; (ii) for the protection
Program’s rebate in a given month by
available at other venues to be more of investors; or (iii) otherwise in
permitting members to either maintain
favorable. In such an environment, the furtherance of the purposes of the Act.
or increase their volume in comparison Exchange must continually adjust its If the Commission takes such action, the
to the preceding month. Given, fees and credits to remain competitive Commission shall institute proceedings
however, that the purpose of the with other exchanges and with to determine whether the proposed rule
Program is to increase a member’s alternative trading systems that have should be approved or disapproved.
trading activity on the Exchange, been exempted from compliance with
Nasdaq believes that it is equitable and the statutory standards applicable to IV. Solicitation of Comments
not unfairly discriminatory to only exchanges. Interested persons are invited to
permit members to qualify for the rebate Because competitors are free to submit written data, views, and
in this manner if they have qualified for modify their own fees and credits in arguments concerning the foregoing,
the rebate in the preceding month under response, and because market including whether the proposed rule
Rule 7014(j)(ii)(A) (increasing their participants may readily adjust their change is consistent with the Act.
volume by 20% or more in comparison order routing practices, the Exchange Comments may be submitted by any of
to the Growth Baseline). Similarly, the believes that the degree to which fee the following methods:
member will be required to satisfy the changes in this market may impose any
criteria in Rule 7014(j)(ii)(A) in order to Electronic Comments
burden on competition is extremely
qualify for the rebate in the following limited. In addition, the Exchange • Use the Commission’s Internet
month, which means that it will be believes that the competition among comment form (http://www.sec.gov/
required to increase its volume by 20% exchanges and other venues will help to rules/sro.shtml); or
in comparison to its Growth Baseline. drive price improvement and overall • Send an email to rule-comments@
Nasdaq believes this requirement is execution quality higher for end retail sec.gov. Please include File Number SR–
equitable and not unfairly investors. NASDAQ–2016–153 on the subject line.
discriminatory because it furthers the In this instance, participation in the
aims of the Program by encouraging Paper Comments
Program is voluntary. The proposed
increased volume on the Exchange. changes will lower the volume • Send paper comments in triplicate
Nasdaq also notes that these threshold for the current method of to Secretary, Securities and Exchange
requirements will apply equally to all qualifying for the Program, and will Commission, 100 F Street NE.,
members. provide members with another way in Washington, DC 20549–1090.
Nasdaq believes that updating a which they may qualify for the Program. All submissions should refer to File
member’s Growth Baseline when the These changes will apply equally to all Number SR–NASDAQ–2016–153. This
member has qualified for the rebate members who otherwise qualify for the file number should be included on the
pursuant to Rule 7014(j)(ii)(A) by Program. Similarly, the proposed subject line if email is used. To help the
increasing its volume by 20% over its method of updating the Growth Baseline Commission process and review your
previous Growth Baseline is equitable will be uniformly applied across comments more efficiently, please use
and not unfairly discriminatory because members. only one method. The Commission will
this is a clearly defined threshold that In sum, if the change proposed herein post all comments on the Commission’s
applies equally to all members that is unattractive to market participants, it Internet Web site (http://www.sec.gov/
qualify for the rebate under Rule is likely that the Exchange will lose rules/sro.shtml). Copies of the
mstockstill on DSK3G9T082PROD with NOTICES
7014(j)(ii)(A). Nasdaq also notes that market share as a result. Accordingly, submission, all subsequent
members cannot qualify for the rebate the Exchange does not believe that the amendments, all written statements
under Rule 7014(j)(ii)(B) in successive proposed change will impair the ability with respect to the proposed rule
months, so Nasdaq does not anticipate of members or competing order change that are filed with the
a scenario where a member qualifies for execution venues to maintain their Commission, and all written
a rebate for several months without
having its baseline adjusted accordingly. 8 15 U.S.C. 78f(b)(8). 9 15 U.S.C. 78s(b)(3)(A)(ii).
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communications relating to the I. Self-Regulatory Organization’s procedure rules and those of NASD and
proposed rule change between the Statement of the Terms of Substance of now FINRA. As a consequence, the
Commission and any person, other than the Proposed Rule Change Exchange adopted Rules 9556 and 9800
those that may be withheld from the The Exchange proposes to adopt to mirror the then-NASD rules to
public in accordance with the Rules 9556 and 9800, which were operate as a pilot in conjunction with
provisions of 5 U.S.C. 552, will be previously adopted as a pilot the term the related NASD pilot.4
available for Web site viewing and of which has since expired, and to make On June 23, 2009, the Exchange’s Rule
printing in the Commission’s Public related changes to the 9100, 9200, 9300, 9556 and 9800 pilot programs expired,
9550, and 9800 Rule Series. at which time those rules and certain
Reference Room, 100 F Street NE.,
The text of the proposed rule change references thereto became obsolete,
Washington, DC 20549, on official
is available on the Exchange’s Web site notwithstanding that they remained in
business days between the hours of the rulebook. The FINRA pilot program,
10:00 a.m. and 3:00 p.m. Copies of the at http://nasdaq.cchwallstreet.com, at
the principal office of the Exchange, and however, continued and was approved
filing also will be available for on July 14, 2009 on a permanent basis.5
inspection and copying at the principal at the Commission’s Public Reference
Neither the Exchange nor FINRA,
office of the Exchange. All comments Room.
acting on behalf of the Exchange
received will be posted without change; II. Self-Regulatory Organization’s pursuant to agreement, have [sic] used
the Commission does not edit personal Statement of the Purpose of, and the cease and desist authority under
identifying information from Statutory Basis for, the Proposed Rule Rules 9556 and 9800 during the time
submissions. You should submit only Change that the rules were effective.
information that you wish to make In its filing with the Commission, the Nonetheless, the Exchange believes that,
available publicly. All submissions Exchange included statements in addition to maintaining similar
should refer to File Number SR– concerning the purpose of and basis for disciplinary rules, adoption of Rules
NASDAQ–2016–153 and should be the proposed rule change and discussed 9556 and 9800 is important to the
submitted on or before December 6, any comments it received on the Exchange’s disciplinary program. The
2016. proposed rule change. The text of these authority under these rules will provide
statements may be examined at the the Exchange and FINRA, operating on
For the Commission, by the Division of behalf of the Exchange, with a
Trading and Markets, pursuant to delegated places specified in Item IV below. The
Exchange has prepared summaries, set mechanism to take appropriate remedial
authority.10 action against a member or an
forth in sections A, B, and C below, of
Brent J. Fields, associated person that has engaged (or is
the most significant aspects of such
Secretary. statements. engaging) in violative conduct that
[FR Doc. 2016–27375 Filed 11–14–16; 8:45 am] could cause continuing harm to the
A. Self-Regulatory Organization’s investing public if not addressed
BILLING CODE 8011–01–P
Statement of the Purpose of, and the expeditiously, such as dissipation or
Statutory Basis for, the Proposed Rule conversion of assets. It must be
SECURITIES AND EXCHANGE Change emphasized, however, that the cease
COMMISSION 1. Purpose and desist provisions contain numerous
procedural protections for respondents
The Exchange is proposing to adopt to ensure that the proceedings are fair.
[Release No. 34–79259; File No. SR– new Rules 9556 and 9800, which were Consequently, the Exchange believes
NASDAQ–2016–148] previously adopted as a pilot the term that adoption of these rules is important
of which has since expired, and to make to its regulatory program,
Self-Regulatory Organizations; The related changes to the 9100, 9200, 9300, notwithstanding that it anticipates
NASDAQ Stock Market LLC; Notice of 9550, and 9800 Rule Series. In May exercising the authority provided by the
Filing and Immediate Effectiveness of 2003, the Commission approved, on a rules sparingly.
Proposed Rule Change To Adopt pilot basis, a rule change to adopt NASD The Exchange is proposing to delete
Cease and Desist Authority Rules Rules 9556 and 9800 that gave NASD, Rules 9556 and 9800 (and related
now known as FINRA, authority to issue references in other rules 6) because the
November 8, 2016.
temporary cease and desist orders and pilot period for these rules has expired
Pursuant to Section 19(b)(1) of the made explicit NASD’s ability to impose rendering them void, and adopt new
Securities Exchange Act of 1934 permanent cease and desist orders as a
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 remedy in disciplinary cases.3 Because 4 See Securities Exchange Act Release No. 53128
NASD was, and now FINRA is, the (January 13, 2006), 71 FR 3550 (January 23, 2006).
notice is hereby given that on October See also Securities Exchange Act Release No. 56120
27, 2016, The NASDAQ Stock Market Exchange’s regulatory services provider (July 24, 2007), 72 FR 41561 (July 30, 2007) (SR–
LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed and administers the Exchange’s NASDAQ–2007–060) (extending the pilot to June
with the Securities and Exchange disciplinary program under contract, the 23, 2009 and making conforming changes); and
Exchange seeks to maintain Securities Exchange Act Release No. 58069 (June
Commission (‘‘Commission’’) the 30, 2008), 73 FR 39360 (July 9, 2008) (SR–
proposed rule change as described in comparability between its disciplinary NASDAQ–2008–054) (making non-substantive
Items I and II below, which Items have changes).
3 See Securities Exchange Act Release No. 47925 5 Securities Exchange Act Release No. 60306 (July
been prepared by the Exchange. The (May 23, 2003) (File No. SR–NASD–98–80), 68 FR 14, 2009), 74 FR 36292 (July 22, 2009) (SR–FINRA–
mstockstill on DSK3G9T082PROD with NOTICES
Commission is publishing this notice to 33548 (June 4, 2003). See also Securities Exchange 2009–035). The Exchange notes that FINRA, in its
solicit comments on the proposed rule Act Release No. 51860 (June 16, 2005), 70 FR 36427 rule change proposal to make its pilot program
(June 23, 2005) (SR–NASD–2005–061) (extending permanent, noted that it had used the authority
change from interested persons. the pilot to June 23, 2007 and making non- under Rules 9556 and 9800 sparingly. Id. at 36293.
substantive changes); and Securities Exchange Act 6 The Exchange is deleting text from related
10 17
Release No. 55819 (May 25, 2007), 72 FR 30895 provisions of Rules 8310, IM–8310–3(c)(1), 9120(r),
CFR 200.30–3(a)(12).
(June 4, 2007) (SR–NASD–2007–033) (extending the 9241(c), 9290, 9311(b), 9312(b), and 9360 that also
1 15 U.S.C. 78s(b)(1). pilot to June 23, 2009 and making non-substantive expired on June 23, 2009 and is inserting new text
2 17 CFR 240.19b–4. changes). identical to what was deleted.
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Document Created: 2016-11-15 00:47:58
Document Modified: 2016-11-15 00:47:58
| 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 80137 |
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