82 FR 18798 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Rule 7018
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 76 (April 21, 2017)
Federal Register Volume 82, Issue 76 (April 21, 2017)
| Page Range | 18798-18800 | |
| FR Document | 2017-08063 |
[Federal Register Volume 82, Number 76 (Friday, April 21, 2017)] [Notices] [Pages 18798-18800] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-08063] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80475; File No. SR-BX-2017-020] Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Rule 7018 April 17, 2017. 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 April 11, 2017, NASDAQ BX, Inc. (``BX'' 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 the Exchange's transaction fees at Rule 7018 to limit the availability of credits provided for removing non-displayed liquidity. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqbx.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 [[Page 18799]] 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 limit the credits provided for removing liquidity on BX under Rule 7018(a).\3\ The Exchange operates on the ``taker-maker'' model, whereby it pays rebates to members that take liquidity and charges fees to members that provide liquidity. Under Rule 7018(a), the Exchange assesses fees for adding liquidity, and provides credits for removing liquidity, applied to the use of the Order \4\ execution and routing services of the NASDAQ OMX BX Equities System by members for all securities priced at $1 or more per share that it trades. Currently, the Exchange will provide a credit under Rule 7018(a) to a member that removes liquidity when its Order is priced-improved by the System. Specifically, an Order (excluding Orders with Midpoint pegging \5\ and excluding Orders that receive price improvement and execute against an Order with Midpoint pegging) that accesses liquidity may receive a credit of $0.0006, $0.0015 or $0.0016 per share executed. Such Orders include Orders that receive price improvement, other than those that execute against an Order with Midpoint pegging. --------------------------------------------------------------------------- \3\ The Exchange initially filed the proposed rule change on April 3, 2017 (SR-BX-2017-019). On April 11, 2017, the Exchange withdrew that filing and submitted this filing. \4\ As defined by Rule 4702(a). \5\ Pegging is an Order Attribute that allows an Order to have its price automatically set with reference to the NBBO. Midpoint pegging means Pegging with reference to the midpoint between the Inside Bid and the Inside Offer (the ``Midpoint''). An Order with Midpoint Pegging is not displayed. See Rule 4703(d). --------------------------------------------------------------------------- The Exchange excludes liquidity removing Orders that execute against resting Orders with Midpoint pegging from receiving a credit because the member received the benefit of receiving price improvement from executing against an Order that is priced better than the NBBO. Moreover, the member receiving the price improvement did not undertake any additional risk to receive the benefit, but was rather a beneficiary of the midpoint liquidity. For similar reasons, the Exchange is proposing to expand the applicability of the zero credit tier to include a liquidity removing Order that is price improved by other resting orders with Non-display prices. Thus, in addition to Orders with Midpoint Pegging, other Orders that may have a non-display price are: Price to Comply Orders,\6\ Non-Displayed Orders,\7\ Post- Only Orders,\8\ and Orders with a Reserve Size \9\ attribute. --------------------------------------------------------------------------- \6\ See Rule 4702(b)(1). \7\ See Rule 4702(b)(3). \8\ See Rule 4702(b)(4). \9\ See Rule 4703(h). --------------------------------------------------------------------------- As an example, if the NBBO is $10 x $10.02, with Market A showing a bid of 100 shares at $10, Market B showing an offer of 100 shares at $10.02 and the Exchange displaying a best bid of $9.99 and offer of $10.03, a member that enters an Order with a Non-display attribute to buy 100 shares at $10.01 would not have a marketable Order and would post to the Exchange book as a Non-displayed Order at $10.01. If a second member enters an Order to sell 100 shares at $10, the Order would execute against the Non-displayed Order to buy at $10.01 resting on the Exchange Book. Such an execution would represent price improvement to the second member without taking on any additional risk or market-improving behavior. Accordingly, the Exchange does not believe that it is necessary also to pay a rebate to encourage the submission of such Orders. Rather, the execution of such Orders will be free of charge. Last, the Exchange is proposing to make conforming changes to two credits under Rule 7018(a) that currently exclude orders that receive price improvement and execute against an order with Midpoint pegging from the eligibility criteria of the credit. Specifically, under the $0.0016 and $0.0015 per executed share credits of Rule 7018(a) the Exchange is proposing to replace references to orders that receive price improvement and execute against an order with Midpoint pegging to make it clear that orders with a Non-Displayed price are excluded from the rule. Thus, the exclusion under these two credits will continue to remain consistent with the proposed amended zero credit tier. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\10\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b). \11\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that offering Orders that remove liquidity and receive price improvement at no cost is reasonable because the execution of such Orders is free of charge. Generally, the Exchange offers reduced transaction fees and credits in return for market- improving behavior. The Exchange determined to not provide a credit to members for Orders that remove liquidity when the Order receives price improvement by executing against a Mid-point Order, since the member removing liquidity is benefitting from the price improvement. Likewise, the Exchange is expanding the existing credit tier to include all Orders with a Non-Displayed price that provide price improvement. The Exchange believes that offering Orders that remove liquidity and receive price improvement at no cost is consistent with an equitable allocation of fees and is not unfairly discriminatory because such Orders invariably receive price improvement of at least $0.005 per share, and therefore do not need an additional rebate of $0.0006 to $0.0016 to encourage their submission to the Exchange. Moreover, the Exchange believes that the change is not unfairly discriminatory because the price improvement provided to these Orders provides a rational basis for treating them differently from other Orders that access liquidity at the Exchange. 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 [[Page 18800]] burden on competition is extremely limited. In this instance, the proposed changes to the charges assessed and credits available to members for execution of securities in securities of all three Tapes do not impose a burden on competition because the Exchange's execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. The proposed expansion of the zero credit tier is not a burden on competition because the Exchange has limited resources to apply as credits and such resources must be applied in a manner that the Exchange believes will best improve market quality thereon. The Exchange believes that providing credits to members that are already receiving price improvement is not the most efficient allocation of such limited resources, since such Orders do not need to be incentivized. As a consequence, the Exchange believes that offering such executions at no cost will not place a burden on competition, but rather will allow the Exchange to apply its limited resources to other areas wherein it can promote market-improving behavior by its participants. Thus, the proposed changes have the potential to make the Exchange a more attractive trading venue, and consequently may promote competition among markets. In sum, if the changes proposed herein are 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 changes 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.\12\ --------------------------------------------------------------------------- \12\ 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-BX-2017-020 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-BX-2017-020. 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-2017-020 and should be submitted on or before May 12, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\13\ --------------------------------------------------------------------------- \13\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Brent J. Fields, Secretary. [FR Doc. 2017-08063 Filed 4-20-17; 8:45 am] BILLING CODE 8011-01-P
![18798 Federal Register / Vol. 82, No. 76 / Friday, April 21, 2017 / Notices
those fees. The Exchange believes it’s under Section 19(b)(2)(B) 8 of the Act to For the Commission, by the Division of
reasonable, equitable and not unfairly determine whether the proposed rule Trading and Markets, pursuant to delegated
discriminatory because it applies change should be approved or authority.9
uniformly to the applicable market disapproved. Brent J. Fields,
participants (i.e., applies to all Routing Secretary.
IV. Solicitation of Comments
Intermediaries and TPHs that make the [FR Doc. 2017–08060 Filed 4–20–17; 8:45 am]
PULSe workstations available to non- Interested persons are invited to BILLING CODE 8011–01–P
TPHs). submit written data, views, and
arguments concerning the foregoing,
B. Self-Regulatory Organization’s including whether the proposed rule SECURITIES AND EXCHANGE
Statement on Burden on Competition change is consistent with the Act. COMMISSION
The Exchange does not believe that Comments may be submitted by any of [Release No. 34–80475; File No. SR–BX–
the proposed rule changes will impose the following methods: 2017–020]
any burdens on competition that are not
necessary or appropriate in furtherance Electronic Comments
Self-Regulatory Organizations;
of the purposes of the Act. The • Use the Commission’s Internet NASDAQ BX, Inc.; Notice of Filing and
Exchange does not believe that the comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed
proposed rule change will impose any rules/sro.shtml); or Rule Change To Amend the
burden on intramarket competition that • Send an email to rule-comments@ Exchange’s Transaction Fees at Rule
is not necessary or appropriate in sec.gov. Please include File Number SR– 7018
furtherance of the purposes of the Act CBOE–2017–028 on the subject line.
because the proposed rule change to April 17, 2017.
eliminate certain PULSe fees applies to Paper Comments Pursuant to Section 19(b)(1) of the
all applicable users of the Pulse [sic] • Send paper comments in triplicate Securities Exchange Act of 1934
workstation. The Exchange does not to Brent J. Fields, Secretary, Securities (‘‘Act’’),1 and Rule 19b–4 thereunder,2
believe that the proposed change will and Exchange Commission, 100 F Street notice is hereby given that on April 11,
cause any unnecessary burden on NE., Washington, DC 20549–1090. 2017, NASDAQ BX, Inc. (‘‘BX’’ or
intermarket competition because the All submissions should refer to File ‘‘Exchange’’) filed with the Securities
proposed relates to use of an Exchange- Number SR–CBOE–2017–028. This file and Exchange Commission (‘‘SEC’’ or
provided order entry system. To the number should be included on the ‘‘Commission’’) the proposed rule
extent that any proposed change makes subject line if email is used. To help the change as described in Items I, II, and
the Exchange a more attractive Commission process and review your III, below, which Items have been
marketplace for market participants at comments more efficiently, please use prepared by the Exchange. The
other exchanges, such market only one method. The Commission will Commission is publishing this notice to
participants are welcome to become post all comments on the Commission’s solicit comments on the proposed rule
Exchange market participants. Internet Web site (http://www.sec.gov/ change from interested persons.
C. Self-Regulatory Organization’s rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s
Statement on Comments on the submission, all subsequent Statement of the Terms of Substance of
Proposed Rule Change Received From amendments, all written statements the Proposed Rule Change
Members, Participants, or Others with respect to the proposed rule
The Exchange proposes to amend the
change that are filed with the
The Exchange neither solicited nor Exchange’s transaction fees at Rule 7018
Commission, and all written
received comments on the proposed to limit the availability of credits
communications relating to the
rule change. provided for removing non-displayed
proposed rule change between the
liquidity.
III. Date of Effectiveness of the Commission and any person, other than
The text of the proposed rule change
Proposed Rule Change and Timing for those that may be withheld from the
is available on the Exchange’s Web site
Commission Action public in accordance with the
at http://nasdaqbx.cchwallstreet.com/,
The foregoing rule change is effective provisions of 5 U.S.C. 552, will be
at the principal office of the Exchange,
upon filing pursuant to Section available for Web site viewing and
and at the Commission’s Public
19(b)(3)(A) 6 of the Act and printing in the Commission’s Public
Reference Room.
subparagraph (f)(2) of Rule 19b–4 7 Reference Room, 100 F Street NE.,
thereunder, because it establishes a due, Washington, DC 20549, on official II. Self-Regulatory Organization’s
fee, or other charge imposed by the business days between the hours of Statement of the Purpose of, and
Exchange. 10:00 a.m. and 3:00 p.m. Copies of the Statutory Basis for, the Proposed Rule
At any time within 60 days of the filing also will be available for Change
filing of such proposed rule change, the inspection and copying at the principal In its filing with the Commission, the
Commission summarily may office of the Exchange. All comments Exchange included statements
temporarily suspend such rule change if received will be posted without change; concerning the purpose of and basis for
it appears to the Commission that such the Commission does not edit personal the proposed rule change and discussed
action is necessary or appropriate in the identifying information from any comments it received on the
submissions. You should submit only
sradovich on DSK3GMQ082PROD with NOTICES
public interest, for the protection of proposed rule change. The text of these
investors, or otherwise in furtherance of information that you wish to make statements may be examined at the
the purposes of the Act. If the available publicly. All submissions places specified in Item IV below. The
Commission takes such action, the should refer to File Number SR–CBOE– Exchange has prepared summaries, set
Commission shall institute proceedings 2017–028 and should be submitted on
or before May 12, 2017. 9 17 CFR 200.30–3(a)(12).
6 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
7 17 CFR 240.19b–4(f)(2). 8 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4.
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![18800 Federal Register / Vol. 82, No. 76 / Friday, April 21, 2017 / Notices
burden on competition is extremely of investors; or (iii) otherwise in 2017–020 and should be submitted on
limited. furtherance of the purposes of the Act. or before May 12, 2017.
In this instance, the proposed changes If the Commission takes such action, the For the Commission, by the Division of
to the charges assessed and credits Commission shall institute proceedings Trading and Markets, pursuant to delegated
available to members for execution of to determine whether the proposed rule authority.13
securities in securities of all three Tapes should be approved or disapproved.
do not impose a burden on competition Brent J. Fields,
because the Exchange’s execution IV. Solicitation of Comments Secretary.
services are completely voluntary and Interested persons are invited to [FR Doc. 2017–08063 Filed 4–20–17; 8:45 am]
subject to extensive competition both submit written data, views, and BILLING CODE 8011–01–P
from other exchanges and from off- arguments concerning the foregoing,
exchange venues. The proposed
including whether the proposed rule
expansion of the zero credit tier is not SECURITIES AND EXCHANGE
change is consistent with the Act.
a burden on competition because the COMMISSION
Comments may be submitted by any of
Exchange has limited resources to apply
the following methods:
as credits and such resources must be [Release No. 34–80467; File No. SR–CHX–
applied in a manner that the Exchange Electronic Comments 2017–06]
believes will best improve market
quality thereon. The Exchange believes • Use the Commission’s Internet
Self-Regulatory Organizations;
that providing credits to members that comment form (http://www.sec.gov/
rules/sro.shtml); or Chicago Stock Exchange, Inc.; Notice
are already receiving price improvement of Filing of Proposed Rule Change To
is not the most efficient allocation of • Send an email to rule-comments@ Shorten the Standard Settlement Cycle
such limited resources, since such sec.gov. Please include File Number SR– From Three Business Days After the
Orders do not need to be incentivized. BX–2017–020 on the subject line. Trade Date to Two Business Days After
As a consequence, the Exchange
believes that offering such executions at Paper Comments the Trade Date
no cost will not place a burden on • Send paper comments in triplicate April 17, 2017.
competition, but rather will allow the to Secretary, Securities and Exchange
Exchange to apply its limited resources Pursuant to Section 19(b)(1) of the
Commission, 100 F Street NE., Securities Exchange Act of 1934
to other areas wherein it can promote Washington, DC 20549–1090.
market-improving behavior by its (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
participants. Thus, the proposed All submissions should refer to File notice is hereby given that on April 6,
changes have the potential to make the Number SR–BX–2017–020. This file 2017, the Chicago Stock Exchange, Inc.
Exchange a more attractive trading number should be included on the (‘‘CHX’’ or ‘‘Exchange’’) filed with the
venue, and consequently may promote subject line if email is used. To help the Securities and Exchange Commission
competition among markets. In sum, if Commission process and review your (the ‘‘Commission’’) the proposed rule
the changes proposed herein are comments more efficiently, please use change as described in Items I, II and III
unattractive to market participants, it is only one method. The Commission will below, which Items have been prepared
likely that the Exchange will lose post all comments on the Commission’s by the self-regulatory organization. The
market share as a result. Accordingly, Internet Web site (http://www.sec.gov/ Commission is publishing this notice to
the Exchange does not believe that the rules/sro.shtml). solicit comments on the proposed rule
proposed changes will impair the ability Copies of the submission, all change from interested persons.
of members or competing Order subsequent amendments, all written
execution venues to maintain their I. Self-Regulatory Organization’s
statements with respect to the proposed
competitive standing in the financial rule change that are filed with the Statement of the Terms of Substance of
markets. Commission, and all written the Proposed Rule Change
C. Self-Regulatory Organization’s communications relating to the CHX proposes to amend Articles 1
Statement on Comments on the proposed rule change between the and 9 of the Rules of the Exchange
Proposed Rule Change Received From Commission and any person, other than (‘‘CHX Rules’’) to conform to an
Members, Participants, or Others those that may be withheld from the amendment to Securities Exchange Act
public in accordance with the
No written comments were either Rule 15c6–1(a) 3 to shorten the standard
provisions of 5 U.S.C. 552, will be
solicited or received. settlement cycle from three business
available for Web site viewing and
printing in the Commission’s Public days after the trade date (‘‘T+3’’) to two
III. Date of Effectiveness of the
Proposed Rule Change and Timing for Reference Room, 100 F Street NE., business days after the trade date
Commission Action Washington, DC 20549, on official (‘‘T+2’’). The text of this proposed rule
business days between the hours of change is available on the Exchange’s
The foregoing rule change has become Web site at http://www.chx.com/
effective pursuant to Section 10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for regulatory-operations/rule-filings/, at
19(b)(3)(A)(ii) of the Act.12
inspection and copying at the principal the principal office of the Exchange, and
At any time within 60 days of the
office of the Exchange. All comments at the Commission’s Public Reference
sradovich on DSK3GMQ082PROD with NOTICES
filing of the proposed rule change, the
Commission summarily may received will be posted without change; Room.
temporarily suspend such rule change if the Commission does not edit personal
it appears to the Commission that such identifying information from
action is: (i) Necessary or appropriate in submissions. You should submit only 13 17 CFR 200.30–3(a)(12).
the public interest; (ii) for the protection information that you wish to make 1 15 U.S.C. 78s(b)(1).
available publicly. All submissions 2 17 CFR 240.19b–4.
12 15 U.S.C. 78s(b)(3)(A)(ii). should refer to File Number SR–BX– 3 17 CFR 240.15c6–1(a).
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Document Created: 2017-04-21 01:19:16
Document Modified: 2017-04-21 01:19:16
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| Section | Notices | |
| FR Citation | 82 FR 18798 |
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