83 FR 16410 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7018(a)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 73 (April 16, 2018)
Federal Register Volume 83, Issue 73 (April 16, 2018)
| Page Range | 16410-16411 | |
| FR Document | 2018-07807 |
[Federal Register Volume 83, Number 73 (Monday, April 16, 2018)] [Notices] [Pages 16410-16411] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-07807] [[Page 16410]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83025; File No. SR-NASDAQ-2018-025] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7018(a) April 10, 2018. 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 March 29, 2018, 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. --------------------------------------------------------------------------- Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 7018(a) to modify the system of credits it offers to members that add liquidity in securities that are listed on exchanges other than Nasdaq or the New York Stock Exchange (``NYSE''), as described further below. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on April 2, 2018. The text of the proposed rule change is available on the Exchange's website at http://nasdaq.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. 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. 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 transaction fees at Rule 7018(a) to modify the current system of credits it provides to members that add liquidity in securities that are listed on exchanges other than Nasdaq or NYSE. These changes are described below. The Exchange proposes to modify one and eliminate another one of the volume-based credits that it currently offers for displayed quotes/ orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity on Nasdaq in Tape B Securities. Currently, in addition to other credits that the Exchange offers to members for providing liquidity, the Exchange offers a member a credit of $0.0001 per share executed if the member provides liquidity 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 the member's Nasdaq Market Center MPIDs. Nasdaq proposes to change the threshold for the first credit, so that a member will receive a credit of $0.0001 per share executed if it provides liquidity in securities that are listed on exchanges other than Nasdaq or NYSE during the month representing at least 0.10% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. The proposal will eliminate the upper 0.12% Consolidated Volume threshold for the credit. Second, Nasdaq proposes to eliminate the next credit tier for members that provide liquidity in securities that are listed on exchanges other than Nasdaq or NYSE. Currently, in addition to other credits that the Exchange offers to members for providing liquidity, the Exchange offers a member a credit of $0.0002 per share executed if the member provides liquidity in securities that are listed on exchanges other than Nasdaq or NYSE during the month representing at least 0.12% of Consolidated Volume during the month through one or more of the member's Nasdaq Market Center MPIDs. Again, Nasdaq proposes to eliminate this credit. 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. --------------------------------------------------------------------------- \3\ 15 U.S.C. 78f(b). \4\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ``has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.'' \5\ --------------------------------------------------------------------------- \5\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting Release''). --------------------------------------------------------------------------- Likewise, in NetCoalition v. Securities and Exchange Commission \6\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a cost-based approach.\7\ As the court emphasized, the Commission ``intended in Regulation NMS that `market forces, rather than regulatory requirements' play a role in determining the market data . . . to be made available to investors and at what cost.'' \8\ --------------------------------------------------------------------------- \6\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). \7\ See NetCoalition, at 534-535. \8\ Id. at 537. --------------------------------------------------------------------------- Further, ``[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers'. . . .'' \9\ --------------------------------------------------------------------------- \9\ Id. at 539 (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-21)). --------------------------------------------------------------------------- Nasdaq believes that the proposed changes to the current credits for transactions in Tape B Securities are [[Page 16411]] reasonable, equitable and not unfairly discriminatory. Nasdaq believes that its proposals to eliminate the $0.0002 per share credit and increase the volume threshold for the $0.0001 per share credit are reasonable because the current system of credits has not been effective in achieving its intended objective of incentivizing members to transact greater volume on Nasdaq in Tape B Securities. The Exchange's proposal will not eliminate this incentive program altogether, but it will instead adjust the incentive structure so that the cost of the program is more aligned with the benefit it brings to the market. The Exchange has limited resources available to it to devote to the operation of special pricing programs and as such, it is reasonable and equitable for the Exchange to allocate those resources to those programs that are effective and away from those programs that are ineffective. The proposals are also equitable and not unfairly discriminatory because the proposed changes to the credits will apply uniformly to all similarly situated members. Moreover, all similarly situated members are equally capable of qualifying for the modified credit if they choose to meet the volume requirements, and the same credit will be paid to all members that qualify for it. 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. The proposed changes to the existing credits for transactions in Tape B Securities do not impose a burden on competition because the Exchange's execution services are completely voluntary. All similarly situated members are equally capable of qualifying for modified credit if they choose to meet the volume requirements, and the same credit will be paid to all members that qualify for it. 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.\10\ --------------------------------------------------------------------------- \10\ 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 rule-comments@sec.gov. Please include File Number SR-NASDAQ-2018-025 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-2018-025. 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-NASDAQ-2018-025, and should be submitted on or before May 7, 2018. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\11\ --------------------------------------------------------------------------- \11\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-07807 Filed 4-13-18; 8:45 am] BILLING CODE 8011-01-P
![16410 Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Notices
SECURITIES AND EXCHANGE Self-Regulatory Organization’s of the Act,3 in general, and furthers the
COMMISSION Statement of the Purpose of, and objectives of Sections 6(b)(4) and 6(b)(5)
Statutory Basis for, the Proposed Rule of the Act,4 in particular, in that it
[Release No. 34–83025; File No. SR– Change provides for the equitable allocation of
NASDAQ–2018–025] reasonable dues, fees and other charges
1. Purpose
among members and issuers and other
Self-Regulatory Organizations; The The purpose of the proposed rule persons using any facility, and is not
Nasdaq Stock Market LLC; Notice of change is to amend the Exchange’s designed to permit unfair
Filing and Immediate Effectiveness of transaction fees at Rule 7018(a) to discrimination between customers,
Proposed Rule Change To Amend Rule modify the current system of credits it issuers, brokers, or dealers.
7018(a) provides to members that add liquidity The Commission and the courts have
in securities that are listed on exchanges repeatedly expressed their preference
April 10, 2018. other than Nasdaq or NYSE. These for competition over regulatory
Pursuant to Section 19(b)(1) of the changes are described below. intervention in determining prices,
Securities Exchange Act of 1934 The Exchange proposes to modify one products, and services in the securities
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 and eliminate another one of the markets. In Regulation NMS, while
notice is hereby given that on March 29, volume-based credits that it currently adopting a series of steps to improve the
2018, The Nasdaq Stock Market LLC offers for displayed quotes/orders (other current market model, the Commission
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the than Supplemental Orders or highlighted the importance of market
Securities and Exchange Commission Designated Retail Orders) that provide forces in determining prices and SRO
(‘‘SEC’’ or ‘‘Commission’’) the proposed liquidity on Nasdaq in Tape B revenues and, also, recognized that
rule change as described in Items I, II, Securities. Currently, in addition to current regulation of the market system
and III, below, which Items have been other credits that the Exchange offers to ‘‘has been remarkably successful in
prepared by the Exchange. The members for providing liquidity, the promoting market competition in its
Commission is publishing this notice to Exchange offers a member a credit of broader forms that are most important to
solicit comments on the proposed rule $0.0001 per share executed if the investors and listed companies.’’ 5
change from interested persons. member provides liquidity in securities Likewise, in NetCoalition v. Securities
that are listed on exchanges other than and Exchange Commission 6
Self-Regulatory Organization’s (‘‘NetCoalition’’) the D.C. Circuit upheld
Statement of the Terms of Substance of Nasdaq or NYSE during the month
representing at least 0.06% but less than the Commission’s use of a market-based
the Proposed Rule Change approach in evaluating the fairness of
0.12% of Consolidated Volume during
The Exchange proposes to amend the month through one or more of the market data fees against a challenge
Rule 7018(a) to modify the system of claiming that Congress mandated a cost-
member’s Nasdaq Market Center MPIDs.
credits it offers to members that add based approach.7 As the court
Nasdaq proposes to change the
emphasized, the Commission ‘‘intended
liquidity in securities that are listed on threshold for the first credit, so that a
in Regulation NMS that ‘market forces,
exchanges other than Nasdaq or the member will receive a credit of $0.0001
rather than regulatory requirements’
New York Stock Exchange (‘‘NYSE’’), as per share executed if it provides
play a role in determining the market
described further below. While these liquidity in securities that are listed on
data . . . to be made available to
amendments are effective upon filing, exchanges other than Nasdaq or NYSE
investors and at what cost.’’ 8
the Exchange has designated the during the month representing at least Further, ‘‘[n]o one disputes that
proposed amendments to be operative 0.10% of Consolidated Volume during competition for order flow is ‘fierce.’
on April 2, 2018. the month through one or more of its . . . As the SEC explained, ‘[i]n the U.S.
The text of the proposed rule change Nasdaq Market Center MPIDs. The national market system, buyers and
is available on the Exchange’s website at proposal will eliminate the upper 0.12% sellers of securities, and the broker-
http://nasdaq.cchwallstreet.com/, at the Consolidated Volume threshold for the dealers that act as their order-routing
principal office of the Exchange, and at credit. agents, have a wide range of choices of
the Commission’s Public Reference Second, Nasdaq proposes to eliminate where to route orders for execution’;
Room. the next credit tier for members that [and] ‘no exchange can afford to take its
provide liquidity in securities that are market share percentages for granted’
Self-Regulatory Organization’s listed on exchanges other than Nasdaq
Statement of the Purpose of, and because ‘no exchange possesses a
or NYSE. Currently, in addition to other monopoly, regulatory or otherwise, in
Statutory Basis for, the Proposed Rule credits that the Exchange offers to
Change the execution of order flow from broker
members for providing liquidity, the dealers’. . . .’’ 9
In its filing with the Commission, the Exchange offers a member a credit of Nasdaq believes that the proposed
Exchange included statements $0.0002 per share executed if the changes to the current credits for
concerning the purpose of and basis for member provides liquidity in securities transactions in Tape B Securities are
the proposed rule change and discussed that are listed on exchanges other than
any comments it received on the Nasdaq or NYSE during the month 3 15 U.S.C. 78f(b).
proposed rule change. The text of these representing at least 0.12% of 4 15 U.S.C. 78f(b)(4) and (5).
5 Securities Exchange Act Release No. 51808
statements may be examined at the Consolidated Volume during the month
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
places specified in Item IV below. The through one or more of the member’s
srobinson on DSK3G9T082PROD with NOTICES
(‘‘Regulation NMS Adopting Release’’).
Exchange has prepared summaries, set Nasdaq Market Center MPIDs. Again, 6 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
forth in sections A, B, and C below, of Nasdaq proposes to eliminate this 2010).
the most significant aspects of such credit. 7 See NetCoalition, at 534–535.
8 Id. at 537.
statements. 2. Statutory Basis 9 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
1 15 U.S.C. 78s(b)(1). The Exchange believes that its 74770, 74782–83 (December 9, 2008) (SR–
2 17 CFR 240.19b–4. proposal is consistent with Section 6(b) NYSEArca–2006–21)).
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![Federal Register / Vol. 83, No. 73 / Monday, April 16, 2018 / Notices 16411
reasonable, equitable and not unfairly burden on competition is extremely Electronic Comments
discriminatory. Nasdaq believes that its limited.
• Use the Commission’s internet
proposals to eliminate the $0.0002 per The proposed changes to the existing comment form (http://www.sec.gov/
share credit and increase the volume credits for transactions in Tape B rules/sro.shtml); or
threshold for the $0.0001 per share Securities do not impose a burden on • Send an email to rule-comments@
credit are reasonable because the competition because the Exchange’s sec.gov. Please include File Number SR–
current system of credits has not been execution services are completely NASDAQ–2018–025 on the subject line.
effective in achieving its intended voluntary. All similarly situated
objective of incentivizing members to members are equally capable of Paper Comments
transact greater volume on Nasdaq in qualifying for modified credit if they • Send paper comments in triplicate
Tape B Securities. The Exchange’s choose to meet the volume to Secretary, Securities and Exchange
proposal will not eliminate this requirements, and the same credit will Commission, 100 F Street NE,
incentive program altogether, but it will be paid to all members that qualify for Washington, DC 20549–1090.
instead adjust the incentive structure so it.
that the cost of the program is more All submissions should refer to File
aligned with the benefit it brings to the In sum, if the changes proposed Number SR–NASDAQ–2018–025. This
market. The Exchange has limited herein are unattractive to market file number should be included on the
resources available to it to devote to the participants, it is likely that the subject line if email is used. To help the
operation of special pricing programs Exchange will lose market share as a Commission process and review your
and as such, it is reasonable and result. Accordingly, the Exchange does comments more efficiently, please use
equitable for the Exchange to allocate not believe that the proposed changes only one method. The Commission will
those resources to those programs that will impair the ability of members or post all comments on the Commission’s
are effective and away from those competing order execution venues to internet website (http://www.sec.gov/
programs that are ineffective. The maintain their competitive standing in rules/sro.shtml). Copies of the
proposals are also equitable and not the financial markets. submission, all subsequent
unfairly discriminatory because the amendments, all written statements
C. Self-Regulatory Organization’s with respect to the proposed rule
proposed changes to the credits will Statement on Comments on the
apply uniformly to all similarly situated change that are filed with the
Proposed Rule Change Received From Commission, and all written
members. Moreover, all similarly Members, Participants, or Others
situated members are equally capable of communications relating to the
qualifying for the modified credit if they No written comments were either proposed rule change between the
choose to meet the volume solicited or received. Commission and any person, other than
requirements, and the same credit will those that may be withheld from the
be paid to all members that qualify for III. Date of Effectiveness of the public in accordance with the
it. Proposed Rule Change and Timing for provisions of 5 U.S.C. 552, will be
Commission Action available for website viewing and
B. Self-Regulatory Organization’s printing in the Commission’s Public
Statement on Burden on Competition The foregoing rule change has become Reference Room, 100 F Street NE,
effective pursuant to Section Washington, DC 20549 on official
The Exchange does not believe that 19(b)(3)(A)(ii) of the Act.10 business days between the hours of
the proposed rule change will impose
At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of the
any burden on competition not
filing of the proposed rule change, the filing also will be available for
necessary or appropriate in furtherance
Commission summarily may inspection and copying at the principal
of the purposes of the Act. In terms of
temporarily suspend such rule change if office of the Exchange. All comments
inter-market competition, the Exchange
it appears to the Commission that such received will be posted without change.
notes that it operates in a highly
action is: (i) Necessary or appropriate in Persons submitting comments are
competitive market in which market
the public interest; (ii) for the protection cautioned that we do not redact or edit
participants can readily favor competing
of investors; or (iii) otherwise in personal identifying information from
venues if they deem fee levels at a
furtherance of the purposes of the Act. comment submissions. You should
particular venue to be excessive, or
If the Commission takes such action, the submit only information that you wish
rebate opportunities available at other
Commission shall institute proceedings to make available publicly. All
venues to be more favorable. In such an
to determine whether the proposed rule submissions should refer to File
environment, the Exchange must
should be approved or disapproved. Number SR–NASDAQ–2018–025, and
continually adjust its fees to remain
should be submitted on or before May
competitive with other exchanges and IV. Solicitation of Comments 7, 2018.
with alternative trading systems that
have been exempted from compliance Interested persons are invited to For the Commission, by the Division of
with the statutory standards applicable submit written data, views, and Trading and Markets, pursuant to delegated
to exchanges. Because competitors are arguments concerning the foregoing, authority.11
free to modify their own fees in including whether the proposed rule Eduardo A. Aleman,
response, and because market change is consistent with the Act. Assistant Secretary.
srobinson on DSK3G9T082PROD with NOTICES
participants may readily adjust their Comments may be submitted by any of [FR Doc. 2018–07807 Filed 4–13–18; 8:45 am]
order routing practices, the Exchange the following methods: BILLING CODE 8011–01–P
believes that the degree to which fee
changes in this market may impose any 10 15 U.S.C. 78s(b)(3)(A)(ii). 11 17 CFR 200.30–3(a)(12).
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Document Created: 2018-04-14 02:19:25
Document Modified: 2018-04-14 02:19:25
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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| FR Citation | 83 FR 16410 |
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