82 FR 55148 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section VIII of the Nasdaq PHLX LLC Pricing Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 222 (November 20, 2017)

[Federal Register Volume 82, Number 222 (Monday, November 20, 2017)]
[Notices]
[Pages 55148-55149]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-25038]



[[Page 55148]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82074; File No. SR-Phlx-2017-90]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Section 
VIII of the Nasdaq PHLX LLC Pricing Schedule

November 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 November 1, 2017, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Section VIII (Nasdaq PSX Fees) of 
the Exchange's Pricing Schedule to decrease both the amount of and the 
Consolidated Volume necessary to qualify for the credit that the 
Exchange pays to member organizations for displayed quotes and orders 
that provide liquidity throughout the Nasdaq PSX System.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.cchwallstreet.com/ 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 Chapter VIII of 
the Exchange's Pricing Schedule to decrease both the amount of and the 
Consolidated Volume necessary to qualify for the credit that the 
Exchange pays to member organizations for displayed quotes and orders 
that provide liquidity throughout the Nasdaq PSX System. Presently, the 
Exchange provides a credit of $0.0031 per share executed for Quotes/
Orders entered by a member organization that provides and accesses 
0.25% or more of Consolidated Volume during the month. The Exchange is 
proposing to decrease the amount of this credit from $0.0031 to $0.0030 
while also decreasing the level of monthly Consolidated Volume that is 
required of a member organization to qualify for the credit from 0.25% 
to 0.20%.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\3\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\4\ 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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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed $0.0030 per share executed 
credit provided to a member organization for displayed quotes and 
orders remains competitive with the fees of other exchanges. For 
example, Rule 7018(a)(1) of the Rules of The Nasdaq Stock Market 
provide for a credit of up to $0.00305 per share executed for displayed 
quotes and orders. Moreover, the effect of the proposed decrease in 
this credit is offset, in part, by a corresponding decrease in the 
Consolidated Volume threshold that is applicable to the credit. The net 
effect of the changes, in other words, will be to increase the universe 
of member organizations that qualify for the credit while decreasing 
the size of the credit.
    Meanwhile, the Exchange believes that the proposed changes are an 
equitable allocation and are not unfairly discriminatory because they 
will apply to all member organizations, any of which may provide the 
level of Consolidated Volume required to qualify for the credit.

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 proposed changes to the credits available to 
member organizations for displayed quotes and orders 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 Exchange has 
determined that the existing credit level and corresponding 
Consolidated Volume threshold has not achieved the desired 
participation on the Exchange. Consequently, the Exchange is decreasing 
to 0.20% the Consolidated Volume threshold required to receive the 
credit while also decreasing the amount of the credit from $0.0031 to 
$0.0030 per share executed credit [sic]. In sum, the Exchange intends 
to make it easier for member organizations to receive a credit in an 
effort to increase participation on the Exchange.
    If the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. The Exchange notes that competing order execution venues are 
free to increase their credits, or decrease qualification criteria 
required to receive credits, in reaction to the proposed changes. 
Accordingly, the Exchange does not believe that the

[[Page 55149]]

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.\5\
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    \5\ 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-Phlx-2017-90 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2017-90. 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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2017-90 and should be 
submitted on or before December 11, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25038 Filed 11-17-17; 8:45 am]
 BILLING CODE 8011-01-P