[Federal Register Volume 78, Number 118 (Wednesday, June 19, 2013)]
[Notices]
[Pages 36798-36800]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-14606]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69753; File No. SR-BX-2013-038]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change to Its
Schedule of Fees and Rebates for Execution of Orders for Securities
Priced at $1 or More Under Rule 7018
June 13, 2013.
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 3, 2013, NASDAQ OMX 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.
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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 changes to its schedule of fees and rebates
for execution of orders for securities priced at $1 or more under Rule
7018. These amendments are effective upon filing, and the Exchange has
designated the proposed amendments to be operative on June 3, 2013. The
text of the proposed rule change is also available on the Exchange's
Web site at http://nasdaqomxbx.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 Exchange charges a reduced fee for members providing liquidity
if they meet the criteria of a ``Qualified Liquidity Provider.'' These
criteria include requirements that the member access and provide
volumes of liquidity in excess of certain levels, expressed as a
percentage of Consolidated Volume.\3\ The Exchange has determined that
it would be beneficial to members to exclude the date of the annual
reconstitution of the Russell Investments Indexes (the ``Russell
Reconstitution'') (in 2013, June 28) from calculations of Consolidated
Volume. Trades occurring on that date would be excluded from the
calculation of total Consolidated Volume and from the calculation of
the member's trading activity (i.e., they would be excluded from both
the numerator and the denominator of the calculation of a member's
percentage).
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\3\ ``Consolidated Volume'' is the consolidated volume of shares
reported to all consolidated transaction reporting plans by all
exchanges and trade reporting facilities during a month.
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Trading volumes on the date of the Russell Reconstitution are
generally far in excess of volumes on other days during the month. As a
result, the trading activity of members that are regular daily
participants in BX, expressed as a percentage of Consolidated Volume,
is likely to be lower than their percentage of Consolidated Volume on
other days during the month. Including the date of the Russell
Reconstitution in calculations of Consolidated Volume is therefore
likely to make it more difficult for members to achieve particular
volume levels during the month. Accordingly, excluding the date of the
Russell Reconstitution from these calculations will diminish the
likelihood of a de facto price increase occurring because a member is
not able to reach a volume percentage on that date that it reaches on
other trading days during the month. Moreover, excluding the date is
very unlikely to result in a price increase for any
[[Page 36799]]
members, since a member that was not, on other days during the month,
trading in BX at volume levels that would allow it qualify for the
criteria of a Qualified Liquidity Provider, would be unlikely to
achieve percentage volume levels on the date of the Russell
Reconstitution that would increase its overall monthly percentage to
the required levels, even if it was very active on that date.
2. Statutory Basis
BX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\4\ in general, and with 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 or
system which BX operates or controls, and is not designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
BX believes that the proposed change to exclude the date of the Russell
Reconstitution from calculations of Consolidated Volume is reasonable
because it will diminish the likelihood of a de facto price increase
occurring because a member is not able to reach a volume percentage on
that date that it reaches on other trading days during the month. BX
further believes that the change is consistent with an equitable
allocation of fees and is not unfairly discriminatory. Specifically,
because trading activity on the date of the Russell Reconstitution will
be excluded from determinations of a member's percentage of
Consolidated Volume, BX believes it will be easier for members to
determine the volume required to meet a certain percentage of
participation than would otherwise be the case. To the extent that a
member has been active in BX at a significant level throughout the
month, excluding the date of the Russell Reconstitution, on which its
percentage of Consolidated Volume is likely to be lower than on other
days, will increase its overall percentage for the month. Conversely,
even if a member was more active on the date of Russell Reconstitution
than on other dates, it is unlikely that its activity on one day would
be able to increase its overall monthly percentage to a meaningful
extent. Thus, BX believes that the change will benefit members that are
in a position to achieve volume levels required by the BX pricing
schedule but without harming the ability of any members to reach such
levels. Finally, BX believes that the change does not unfairly burden
competition because it will help to preserve or improve the pricing
status that would apply to members' trading activity in the absence of
the Russell Reconstitution, and therefore will not impact the ability
of such members to compete.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
BX does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. BX 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, BX 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, BX believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited. In
this instance, the change will make it easier for members to achieve a
certain percentage of Consolidated Volume during the month of the
Russell Reconstitution, and therefore it is designed to protect members
from the possibility of a de facto price increase. Accordingly, BX 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\ 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.
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\6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-BX-2013-038 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2013-038. 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 such filing also will be
available for inspection and copying at the principal offices of BX.
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-2013-038,
and should be submitted on or before July 10, 2013.
[[Page 36800]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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\7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-14606 Filed 6-18-13; 8:45 am]
BILLING CODE 8011-01-P