82_FR_28293 82 FR 28176 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Rule 7018(a)(2)

82 FR 28176 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Rule 7018(a)(2)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 117 (June 20, 2017)

Page Range28176-28178
FR Document2017-12769

Federal Register, Volume 82 Issue 117 (Tuesday, June 20, 2017) 
[Federal Register Volume 82, Number 117 (Tuesday, June 20, 2017)]
[Notices]
[Pages 28176-28178]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-12769]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80928; File No. SR-NASDAQ-2017-056]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Exchange's Transaction Fees at Rule 7018(a)(2)

June 14, 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 June 1, 2017, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's transaction fees at 
Rule 7018(a)(2) to eliminate a $0.0001 per share executed credit 
provided to a member for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) that provide liquidity 
in securities listed on the New York Stock Exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to amend Exchange's 
transaction fees at Rule 7018(a)(2) to eliminate a $0.0001 per share 
executed credit provided to a member for displayed quotes/orders (other 
than Supplemental Orders or Designated Retail Orders) that provide 
liquidity in Tape A securities. Under Rule 7018(a), the Exchange 
assesses fees for the removal of liquidity and provides credits for the 
provision thereof. The Exchange currently provides a $0.0001 per share 
executed credit to a member for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) that provide liquidity 
if the member has shares of liquidity provided in all securities during 
the month representing at least 0.2% of Consolidated Volume during the 
month, through one or more of its Nasdaq Market Center MPIDs. This 
$0.0001 per share executed credit is provided in addition to the 
credits provided for displayed quotes/orders (other than Supplemental 
Orders or Designated Retail Orders) that provide liquidity under Rule 
7018(a)(2).\3\ This credit is also provided in addition to any rebates 
that a member qualifies for under the NBBO, and QMM programs under Rule 
7014. The credit is not additive to DLP rebates under Rule 7014 or 
Designated Retail Order credits under Rule 7018.
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    \3\ The Exchange also provides a $0.0001 per share executed 
credit with identical criteria applicable to Tape B securities. See 
Rule 7018(a)(3).
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    The credit, together with an identical credit applicable to Tape B 
securities, was adopted to provide incentive to market participants to 
increase the level of liquidity provided to the Exchange, in which the 
Exchange had observed a decline in overall volume on the Exchange in 
Tape A and B securities in comparison to Tape C securities.\4\ The 
Exchange has not observed a significant improvement to the volume in 
Tape A securities on the Exchange in relation to the Tape A credit and 
is therefore proposing to eliminate the credit so that it may explore 
other incentives to improve market quality in Tape A securities.
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    \4\ See Securities Exchange Act Release No. 77378 (March 16, 
2016), 81 FR 15358 (March 22, 2016) (SR-NASDAQ-2016-037). The 
Exchange has since replaced the qualification criteria required to 
receive the Tape B $0.0001 per share executed credit. Specifically, 
to now qualify for the $0.0001 per share executed credit in Tape B 
securities, a member must have shares of liquidity provided in 
securities that are listed on exchanges other than NASDAQ or NYSE 
during the month representing at least 0.06% but less than 0.12% of 
Consolidated Volume during the month through one or more of its 
Nasdaq Market Center MPIDs. See Securities Exchange Act Release No. 
78977 (September 29, 2016), 81 FR 69140 (October 5, 2016) (SR-
NASDAQ-2016-132).
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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 any facility, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    Elimination of the $0.0001 per share executed credit provided to a 
member for displayed quotes/orders (other than Supplemental Orders or 
Designated

[[Page 28177]]

Retail Orders) that provide liquidity in Tape A securities under Rule 
7018(a)(2) is reasonable because providing a credit in addition to the 
other credits provided under Rules 7018(a) and 7014, as described 
above, is no longer necessary. As noted above, the Exchange set the 
credit at $0.0001 per share executed because it believed that providing 
such a credit would improve the market in Tape A securities. The credit 
has not significantly provided such incentive and consequently the 
Exchange believes that it should eliminate the credit to focus its 
limited funds on other incentives to improve market quality. 
Accordingly, the Exchange believes eliminating this additional Tape A 
credit is reasonable.
    Elimination of the $0.0001 per share executed credit provided to a 
member for displayed quotes/orders (other than Supplemental Orders or 
Designated Retail Orders) that provide liquidity in Tape A securities 
under Rule 7018(a)(2) is an equitable allocation and is not unfairly 
discriminatory because it is no longer needed to improve the market in 
Tape A securities. The Exchange has limited funds to apply in the form 
of incentives, and thus must deploy those limited funds to incentives 
that it believes will be the most effective and improve market quality 
in areas that the Exchange determines are in need of improvement. The 
Exchange has observed that the credit has not provided the incentive 
that was necessary to significantly improve the market in Tape A 
securities by attracting more order flow to the Exchange and is 
therefore removing the credit so that it may consider other incentives 
that may improve Tape A market quality. As noted above, the Exchange 
has limited funds to apply toward incentives, and although an incentive 
may not significantly achieve its goal of improving market quality, it 
may nonetheless result in a cost to the Exchange. Eliminating the 
credit will allow the Exchange deploy its limited funds to incentives 
in Tape A securities or other areas designed to improve market quality. 
Accordingly, the Exchange believes that eliminating the credit is an 
equitable allocation and is not unfairly discriminatory.

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 Exchange is proposing to eliminate an 
incentive provided to market participants, which was designed to 
improve market quality in Tape A securities. The incentive has not 
significantly improved market quality in Tape A securities and the 
Exchange does not believe that continuing to offer the credit is the 
best use of its limited fund nor would it likely achieve the market 
improvement for which it was designed. 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 
elimination of the credit should not impose a burden on competition. If 
the Exchange is incorrect in concluding that the incentive was not 
significantly effective, it will likely lose market share in Tape A 
securities to one of the many other trading venues to the extent market 
participants believe that those markets are more attractive. Thus, 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 or impose any 
burden on competition.

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.\7\
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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-2017-056) 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-2017-056). 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

[[Page 28178]]

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-2017-056, and should be submitted 
on or before July 11, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Eduardo A. Aleman,
Assistant Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-12769 Filed 6-19-17; 8:45 am]
 BILLING CODE 8011-01-P

28176 Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices subject line if email is used. To help the (‘‘SEC’’ or ‘‘Commission’’) the proposed month representing at least 0.2% of Commission process and review your rule change as described in Items I, II, Consolidated Volume during the month, comments more efficiently, please use and III below, which Items have been through one or more of its Nasdaq only one method. The Commission will prepared by the Exchange. The Market Center MPIDs. This $0.0001 per post all comments on the Commission’s Commission is publishing this notice to share executed credit is provided in Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule addition to the credits provided for rules/sro.shtml). Copies of the change from interested persons. displayed quotes/orders (other than submission, all subsequent Supplemental Orders or Designated amendments, all written statements I. Self-Regulatory Organization’s Retail Orders) that provide liquidity with respect to the proposed rule Statement of the Terms of the Substance under Rule 7018(a)(2).3 This credit is change that are filed with the of the Proposed Rule Change also provided in addition to any rebates Commission, and all written The Exchange proposes to amend the that a member qualifies for under the communications relating to the Exchange’s transaction fees at Rule NBBO, and QMM programs under Rule proposed rule change between the 7018(a)(2) to eliminate a $0.0001 per 7014. The credit is not additive to DLP Commission and any person, other than share executed credit provided to a rebates under Rule 7014 or Designated those that may be withheld from the member for displayed quotes/orders Retail Order credits under Rule 7018. public in accordance with the (other than Supplemental Orders or The credit, together with an identical provisions of 5 U.S.C. 552, will be Designated Retail Orders) that provide credit applicable to Tape B securities, available for Web site viewing and liquidity in securities listed on the New was adopted to provide incentive to printing in the Commission’s Public York Stock Exchange. market participants to increase the level Reference Room, 100 F Street NE., The text of the proposed rule change of liquidity provided to the Exchange, in Washington, DC 20549 on official is available on the Exchange’s Web site which the Exchange had observed a business days between the hours of at http://nasdaq.cchwallstreet.com, at decline in overall volume on the 10:00 a.m. and 3:00 p.m. Copies of such the principal office of the Exchange, and Exchange in Tape A and B securities in filing also will be available for at the Commission’s Public Reference comparison to Tape C securities.4 The inspection and copying at the principal Room. Exchange has not observed a significant office of the Exchange. All comments improvement to the volume in Tape A received will be posted without change; II. Self-Regulatory Organization’s securities on the Exchange in relation to the Commission does not edit personal Statement of the Purpose of, and the Tape A credit and is therefore identifying information from Statutory Basis for, the Proposed Rule proposing to eliminate the credit so that submissions. You should submit only Change it may explore other incentives to information that you wish to make In its filing with the Commission, the improve market quality in Tape A available publicly. All submissions Exchange included statements securities. should refer to File Number SR–NYSE– concerning the purpose of and basis for 2. Statutory Basis 2017–27, and should be submitted on or the proposed rule change and discussed before July 11, 2017. any comments it received on the The Exchange believes that its proposed rule change. The text of these proposal is consistent with Section 6(b) For the Commission, by the Division of Trading and Markets, pursuant to delegated statements may be examined at the of the Act,5 in general, and furthers the authority.18 places specified in Item IV below. The objectives of Sections 6(b)(4) and 6(b)(5) Eduardo A. Aleman, Exchange has prepared summaries, set of the Act,6 in particular, in that it forth in sections A, B, and C below, of provides for the equitable allocation of Assistant Secretary. the most significant aspects of such reasonable dues, fees and other charges [FR Doc. 2017–12884 Filed 6–19–17; 8:45 am] among members and issuers and other BILLING CODE 8011–01–P statements. persons using any facility, and is not A. Self-Regulatory Organization’s designed to permit unfair Statement of the Purpose of, and discrimination between customers, SECURITIES AND EXCHANGE Statutory Basis for, the Proposed Rule issuers, brokers, or dealers. COMMISSION Elimination of the $0.0001 per share Change [Release No. 34–80928; File No. SR– executed credit provided to a member NASDAQ–2017–056] 1. Purpose for displayed quotes/orders (other than The purpose of the proposed rule Supplemental Orders or Designated Self-Regulatory Organizations; The change is to amend Exchange’s NASDAQ Stock Market LLC; Notice of transaction fees at Rule 7018(a)(2) to 3 The Exchange also provides a $0.0001 per share Filing and Immediate Effectiveness of eliminate a $0.0001 per share executed executed credit with identical criteria applicable to Proposed Rule Change To Amend the Tape B securities. See Rule 7018(a)(3). credit provided to a member for 4 See Securities Exchange Act Release No. 77378 Exchange’s Transaction Fees at Rule displayed quotes/orders (other than (March 16, 2016), 81 FR 15358 (March 22, 2016) 7018(a)(2) Supplemental Orders or Designated (SR–NASDAQ–2016–037). The Exchange has since Retail Orders) that provide liquidity in replaced the qualification criteria required to June 14, 2017. receive the Tape B $0.0001 per share executed Pursuant to Section 19(b)(1) of the Tape A securities. Under Rule 7018(a), credit. Specifically, to now qualify for the $0.0001 Securities Exchange Act of 1934 the Exchange assesses fees for the per share executed credit in Tape B securities, a (‘‘Act’’) 1, and Rule 19b–4 thereunder,2 removal of liquidity and provides member must have shares of liquidity provided in credits for the provision thereof. The securities that are listed on exchanges other than sradovich on DSK3GMQ082PROD with NOTICES notice is hereby given that on June 1, NASDAQ or NYSE during the month representing 2017, The NASDAQ Stock Market LLC Exchange currently provides a $0.0001 at least 0.06% but less than 0.12% of Consolidated (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the per share executed credit to a member Volume during the month through one or more of for displayed quotes/orders (other than its Nasdaq Market Center MPIDs. See Securities Securities and Exchange Commission Exchange Act Release No. 78977 (September 29, Supplemental Orders or Designated 2016), 81 FR 69140 (October 5, 2016) (SR– 18 17 CFR 200.30–3(a)(12). Retail Orders) that provide liquidity if NASDAQ–2016–132). 1 15 U.S.C. 78s(b)(1). the member has shares of liquidity 5 15 U.S.C. 78f(b). 2 17 CFR 240.19b–4. provided in all securities during the 6 15 U.S.C. 78f(b)(4) and (5). 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Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices 28177 Retail Orders) that provide liquidity in participants can readily favor competing At any time within 60 days of the Tape A securities under Rule 7018(a)(2) venues if they deem fee levels at a filing of the proposed rule change, the is reasonable because providing a credit particular venue to be excessive, or Commission summarily may in addition to the other credits provided rebate opportunities available at other temporarily suspend such rule change if under Rules 7018(a) and 7014, as venues to be more favorable. In such an it appears to the Commission that such described above, is no longer necessary. environment, the Exchange must action is: (i) Necessary or appropriate in As noted above, the Exchange set the continually adjust its fees to remain the public interest; (ii) for the protection credit at $0.0001 per share executed competitive with other exchanges and of investors; or (iii) otherwise in because it believed that providing such with alternative trading systems that furtherance of the purposes of the Act. a credit would improve the market in have been exempted from compliance If the Commission takes such action, the Tape A securities. The credit has not with the statutory standards applicable Commission shall institute proceedings significantly provided such incentive to exchanges. Because competitors are to determine whether the proposed rule and consequently the Exchange believes free to modify their own fees in should be approved or disapproved. that it should eliminate the credit to response, and because market IV. Solicitation of Comments focus its limited funds on other participants may readily adjust their incentives to improve market quality. order routing practices, the Exchange Interested persons are invited to Accordingly, the Exchange believes believes that the degree to which fee submit written data, views, and eliminating this additional Tape A changes in this market may impose any arguments concerning the foregoing, credit is reasonable. burden on competition is extremely including whether the proposed rule Elimination of the $0.0001 per share limited. change is consistent with the Act. executed credit provided to a member Comments may be submitted by any of In this instance, the Exchange is for displayed quotes/orders (other than the following methods: proposing to eliminate an incentive Supplemental Orders or Designated provided to market participants, which Electronic Comments Retail Orders) that provide liquidity in was designed to improve market quality Tape A securities under Rule 7018(a)(2) • Use the Commission’s Internet in Tape A securities. The incentive has comment form (http://www.sec.gov/ is an equitable allocation and is not not significantly improved market unfairly discriminatory because it is no rules/sro.shtml); or longer needed to improve the market in quality in Tape A securities and the • Send an email to rule-comments@ Exchange does not believe that sec.gov. Please include File Number SR– Tape A securities. The Exchange has continuing to offer the credit is the best limited funds to apply in the form of NASDAQ–2017–056) on the subject use of its limited fund nor would it line. incentives, and thus must deploy those likely achieve the market improvement limited funds to incentives that it Paper Comments for which it was designed. Because the believes will be the most effective and Exchange’s execution services are • Send paper comments in triplicate improve market quality in areas that the completely voluntary and subject to to Secretary, Securities and Exchange Exchange determines are in need of extensive competition both from other Commission, 100 F Street NE., improvement. The Exchange has exchanges and from off-exchange Washington, DC 20549–1090. observed that the credit has not venues, the proposed elimination of the All submissions should refer to File provided the incentive that was credit should not impose a burden on Number SR–NASDAQ–2017–056). This necessary to significantly improve the market in Tape A securities by attracting competition. If the Exchange is incorrect file number should be included on the more order flow to the Exchange and is in concluding that the incentive was not subject line if email is used. To help the therefore removing the credit so that it significantly effective, it will likely lose Commission process and review your may consider other incentives that may market share in Tape A securities to one comments more efficiently, please use improve Tape A market quality. As of the many other trading venues to the only one method. The Commission will noted above, the Exchange has limited extent market participants believe that post all comments on the Commission’s funds to apply toward incentives, and those markets are more attractive. Thus, Internet Web site (http://www.sec.gov/ although an incentive may not the Exchange does not believe that the rules/sro.shtml). Copies of the significantly achieve its goal of proposed changes will impair the ability submission, all subsequent improving market quality, it may of members or competing order amendments, all written statements nonetheless result in a cost to the execution venues to maintain their with respect to the proposed rule Exchange. Eliminating the credit will competitive standing in the financial change that are filed with the allow the Exchange deploy its limited markets or impose any burden on Commission, and all written funds to incentives in Tape A securities competition. communications relating to the or other areas designed to improve C. Self-Regulatory Organization’s proposed rule change between the market quality. Accordingly, the Statement on Comments on the Commission and any person, other than Exchange believes that eliminating the Proposed Rule Change Received From those that may be withheld from the credit is an equitable allocation and is Members, Participants, or Others public in accordance with the not unfairly discriminatory. provisions of 5 U.S.C. 552, will be No written comments were either available for Web site viewing and B. Self-Regulatory Organization’s solicited or received. printing in the Commission’s Public Statement on Burden on Competition Reference Room, 100 F Street NE., III. Date of Effectiveness of the The Exchange does not believe that Washington, DC 20549 on official sradovich on DSK3GMQ082PROD with NOTICES Proposed Rule Change and Timing for the proposed rule change will impose Commission Action business days between the hours of any burden on competition not 10:00 a.m. and 3:00 p.m. Copies of the necessary or appropriate in furtherance The foregoing rule change has become filing also will be available for of the purposes of the Act. In terms of effective pursuant to Section inspection and copying at the principal inter-market competition, the Exchange 19(b)(3)(A)(ii) of the Act.7 office of the Exchange. All comments notes that it operates in a highly received will be posted without change; competitive market in which market 7 15 U.S.C. 78s(b)(3)(A)(ii). the Commission does not edit personal VerDate Sep<11>2014 18:01 Jun 19, 2017 Jkt 241001 PO 00000 Frm 00135 Fmt 4703 Sfmt 4703 E:\FR\FM\20JNN1.SGM 20JNN1

28178 Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices identifying information from II. Self-Regulatory Organization’s which is the most actively traded name submissions. You should submit only Statement of the Purpose of, and on the Exchange. This taker fee will information that you wish to make Statutory Basis for, the Proposed Rule remain unchanged for Select Symbols available publicly. All submissions Change other than SPY. The Exchange believes should refer to File Number SR– In its filing with the Commission, the that this reduction in fees will attract NASDAQ–2017–056, and should be Exchange included statements additional Priority Customer orders in submitted on or before July 11, 2017. SPY to the Exchange. concerning the purpose of and basis for For the Commission, by the Division of the proposed rule change and discussed Net Zero Complex Orders Trading and Markets, pursuant to delegated any comments it received on the Currently, the Exchange does not authority.8 proposed rule change. The text of these provide Priority Customer rebates for Eduardo A. Aleman, statements may be examined at the complex orders that that leg in to the Assistant Secretary. places specified in Item IV below. The regular order book and trade at a net [FR Doc. 2017–12769 Filed 6–19–17; 8:45 am] Exchange has prepared summaries, set price per contract at or near $0.00 (i.e., BILLING CODE 8011–01–P forth in sections A, B, and C below, of net zero complex orders), provided the most significant aspects of such those orders are entered on behalf of statements. originating market participants that SECURITIES AND EXCHANGE A. Self-Regulatory Organization’s execute an ADV of at least 2,000 COMMISSION Statement of the Purpose of, and contracts in net zero complex orders in Statutory Basis for, the Proposed Rule a given month.10 While these complex [Release No. 34–80922; File No. SR–ISE– Change orders would generally not find a 2017–49] counterparty in the complex order book, 1. Purpose they may leg in to the regular order book Self-Regulatory Organizations; Nasdaq The purpose of the proposed rule where they are typically executed by ISE, LLC; Notice of Filing and change is to amend the Schedule of Fees Market Makers or other market Immediate Effectiveness of Proposed to (1) reduce the Priority Customer 3 participants on the individual legs who Rule Change To Amend Its Schedule of taker fee for regular orders in SPY to pay a fee to trade with this order flow. Fees To (1) Reduce the Priority $0.35 per contract, and (2) lower the The Exchange does not provide rebates Customer Taker Fee for Regular threshold of net zero complex contracts for net zero complex orders to prevent Orders in SPY to $0.35 Per Contract, from 2,000 contracts to 1,000 contracts. members from engaging in rebate and (2) Lower the Threshold of Net Each of these changes is described in arbitrage by entering valueless complex Zero Complex Contracts more detail below. orders solely to recover rebates. For purposes of determining which complex June 14, 2017. Priority Customer Taker Fee orders qualify as net zero, the Exchange Pursuant to Section 19(b)(1) of the Currently, the Exchange charges a counts all complex orders that leg in to Securities Exchange Act of 1934 taker fee for regular orders in Select the regular order book and are executed (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Symbols 4 that is $0.44 per contract for at a net price per contract that is within notice is hereby given that on May 31, Market Maker 5 orders, $0.45 per a range of $0.01 credit and $0.01 debit. 2017, Nasdaq ISE, LLC (‘‘ISE’’ or contract for Non-Nasdaq ISE Market The 2,000 contract threshold exists to ‘‘Exchange’’) filed with the Securities Maker,6 Firm Proprietary,7 Broker- differentiate market participants that are and Exchange Commission Dealer,8 and Professional Customer entering legitimate complex orders from (‘‘Commission’’) the proposed rule orders,9 and $0.40 per contract for those that are entering net zero complex change as described in Items I and II, Priority Customer orders. The Exchange orders solely to earn a rebate. The below, which Items have been prepared now proposes to adopt a reduced Exchange now proposes to lower the by the Exchange. The Commission is Priority Customer taker fee of $0.35 per threshold of net zero complex contracts publishing this notice to solicit contract for regular orders in SPY, from 2,000 contracts to 1,000 contracts comments on the proposed rule change per day. As such, net zero priced from interested persons. 3 A ‘‘Priority Customer’’ is a person or entity that complex orders that leg into the regular is not a broker/dealer in securities, and does not order book and are entered by firms I. Self-Regulatory Organization’s place more than 390 orders in listed options per day with an ADV in this type of activity of Statement of the Terms of Substance of on average during a calendar month for its own 1,000 contracts or more in a given beneficial account(s), as defined in Nasdaq ISE Rule the Proposed Rule Change 100(a)(37A). month will not earn the Priority 4 ‘‘Select Symbols’’ are options overlying all Customer complex order rebate. The Exchange proposes to amend its symbols listed on the Nasdaq ISE that are in the Schedule of Fees to (1) reduce the Penny Pilot Program. 2. Statutory Basis Priority Customer taker fee for regular 5 The term ‘‘Market Makers’’ refers to The Exchange believes that the orders in SPY to $0.35 per contract, and ‘‘Competitive Market Makers’’ and ‘‘Primary Market proposed rule change is consistent with Makers’’ collectively. See ISE Rule 100(a)(25). (2) lower the threshold of net zero 6 A ‘‘Non-Nasdaq ISE Market Maker’’ is a market the provisions of Section 6 of the Act,11 complex contracts from 2,000 contracts maker as defined in Section 3(a)(38) of the in general, and Section 6(b)(4) of the to 1,000 contracts. Securities Exchange Act of 1934, as amended, Act,12 in particular, in that it is designed registered in the same options class on another The text of the proposed rule change options exchange. 10 See Securities Exchange Act Release No. 80219 sradovich on DSK3GMQ082PROD with NOTICES is available on the Exchange’s Web site 7 A ‘‘Firm Proprietary’’ order is an order (March 13, 2017), 82 FR 14249 (March 17, 2017) at www.ise.com, at the principal office submitted by a member for its own proprietary (SR–ISE–2017–22). Priority Customer complex of the Exchange, and at the account. orders that do not meet the definition of a net zero 8 A ‘‘Broker-Dealer’’ order is an order submitted complex order, or that are entered on behalf of Commission’s Public Reference Room. by a member for a broker-dealer account that is not originating market participants that do not reach the its own proprietary account. 2,000 contract ADV threshold, remain eligible for 8 17 CFR 200.30–3(a)(12). 9 A ‘‘Professional Customer’’ is a person or entity rebates based on the tier achieved. 1 15 U.S.C. 78s(b)(1). 11 15 U.S.C. 78f. that is not a broker/dealer and is not a Priority 2 17 CFR 240.19b–4. Customer. 12 15 U.S.C. 78f(b)(4). VerDate Sep<11>2014 18:01 Jun 19, 2017 Jkt 241001 PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 E:\FR\FM\20JNN1.SGM 20JNN1


Document Created: 2017-06-20 02:21:18
Document Modified: 2017-06-20 02:21:18
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 28176 
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