82 FR 60237 - Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter VIII of the Phlx Pricing Schedule To Waive Port Fees for New PSX Participants for a Limited Time

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 242 (December 19, 2017)

[Federal Register Volume 82, Number 242 (Tuesday, December 19, 2017)]
[Notices]
[Pages 60237-60238]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27233]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82314; File No. SR-Phlx-2017-100]


Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Chapter 
VIII of the Phlx Pricing Schedule To Waive Port Fees for New PSX 
Participants for a Limited Time

December 13, 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 29, 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 the Exchange's connectivity fees at 
Chapter VIII of the Phlx Pricing Schedule to provide a waiver of all 
connectivity fees to new PSX Participants for a limited time
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqphlx.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 the Exchange's 
connectivity fees under ``Port Fees'' at Chapter VIII of the Nasdaq 
PHLX LLC Pricing Schedule to provide a waiver of all such fees to new 
PSX Participants for a limited time. Port fees include the choices for 
connecting to PSX and receipt of data therefrom, together with the fees 
assessed for that connectivity. Specifically, the Exchange is proposing 
to waive all Port Fees for every Participant that is a ``new PSX 
Participant'' through December 31, 2018. The Exchange is defining a 
``new PSX Participant'' as a Participant that was not a Participant 
before September 1, 2017. The Exchange believes that the proposed fee 
waiver will make PSX a more attractive venue for prospective 
Participants. The Exchange notes that its proposal is similar to one 
that it implemented previously to attract new Participants.\3\
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    \3\ See Securities Exchange Act Release No. 34-78665 (Aug. 24, 
2016), 81 FR 59693 (Aug. 30, 2016) (SR-Phlx-2016-85) (waiving port 
fees through August 1, 2017 for those who were not Participants 
after July 1, 2016).
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2. Statutory Basis

    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\5\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed change is reasonable 
because it will limit the overall costs incurred by new Participants in 
connecting to the Exchange, which may as a consequence attract new 
Participants. Attracting new Participants will benefit all market 
participants on PSX by ensuring that PSX remains deep and liquid. The 
Exchange believes that the proposed change is an equitable allocation 
and is not unfairly discriminatory because the Exchange will uniformly 
apply the same fee to all similarly situated Participants. In this 
regard, the Exchange is proposing to apply the fee waiver to new PSX 
Participants, which the Exchange proposes to define as a

[[Page 60238]]

Participant that was not a Participant prior to September 1, 2017.
    Limiting eligibility for the fee waiver, as described, will ensure 
that the waiver is tailored to and effective in its purpose of 
attracting new Participants. Waiving the fees for new Participants will 
ease the burden of participating on PSX, which may be a significant 
reason that such market participants have historically declined to 
become Participants. Thus, to the extent this waiver is successful, the 
proposed change will broaden participation on PSX, which will benefit 
all Participants by providing more liquidity.

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 generally reduce the fee 
burdens on Participants in an effort to attract and retain 
Participants, which benefits all market participants on PSX to the 
extent the incentives are effective.
    The Exchange notes that participation on PSX is completely 
voluntary and subject to extensive competition both from other 
exchanges and from off-exchange venues. Thus, to the extent that the 
proposed changes to the connectivity fees proposed herein are 
unattractive to market participants, it is likely that the Exchange 
will lose market share and Participants 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.\6\
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    \6\ 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-2017-100 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-Phlx-2017-100. 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 website (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 website 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-2017-100 and should be submitted on 
or before January 9, 2018.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-27233 Filed 12-18-17; 8:45 am]
 BILLING CODE 8011-01-P