[Federal Register Volume 79, Number 11 (Thursday, January 16, 2014)]
[Notices]
[Pages 2922-2924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-00691]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71286; File No. SR-BX-2013-065]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Fee Schedule Under Exchange Rule 7018(a) With Respect to Transactions
in Securities Priced at $1 per Share or More
January 10, 2014.
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 December 30, 2013, NASDAQ OMX BX, Inc. (``BX'' 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 fee schedule under Exchange Rule
7018(a) with respect to transactions in securities priced at $1 per
share or more. The Exchange will implement the proposed rule change on
January 2, 2014.
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.
[[Page 2923]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to adopt a new tier with respect to the
rebates it pays for orders that access liquidity in securities priced
at $1 or more. The new tier applies to members that are active in both
the NASDAQ OMX BX Equities System (the ``BX Equities System'') and BX
Options. As such, the tier is similar to various tiers that have
previously been introduced by the NASDAQ Stock Market for members of
that exchange that are active in both the NASDAQ Market Center and the
NASDAQ Options Market, as well as a tier with respect to charges of
providing liquidity that was introduced by the Exchange in December
2013.\3\ Under the proposed tier, a member will receive a credit of
$0.0013 per share executed when accessing liquidity \4\ if the member
(i) has a daily average volume of liquidity accessed in all securities
during the month of 6 million or more shares through one or more of its
BX Equities System market participant identifiers (``MPIDs''), and (ii)
adds and/or removes liquidity of 40,000 or more contracts per day
during the month through BX Options.
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\3\ See NASDAQ Rule 7018(a); Securities Exchange Act Release No.
71055 (December 12, 2013), 78 FR 76689 (December 18, 2013) (SR-BX-
2013-059).
\4\ As with other rebate tiers, the proposed tier does not apply
to an order that executes against a midpoint pegged order, because
the accessing order receives price improvement.
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The proposed tier recognizes the prevalence of trading in which
members simultaneously trade different asset classes within the same
strategy. Because cash equities and options markets are linked, with
liquidity and trading patterns on one market affecting those on the
other, the Exchange believes that a pricing incentive that encourages
market participant activity in BX Options will also support price
discovery and liquidity provision in the BX Equities System.
2. Statutory Basis
BX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\5\ in general, and Sections 6(b)(4)
and (b)(5) of the Act,\6\ in particular, because 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 that
the Exchange operates or controls, and it does not unfairly
discriminate between customers, issuers, brokers or dealers.
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\5\ 15 U.S.C. 78f.
\6\ 15 U.S.C. 78f(b)(4), (5).
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The change with respect to a new tier for members active in both
the BX Equities System and BX Options is reasonable because it reflects
the availability of a price reduction for members that support
liquidity on both markets. The change is consistent with an equitable
allocation of fees because the pricing tier requires significant levels
of activity in both markets, and is therefore consistent with
volumetric pricing tiers at BX and many other exchanges, which offer
better pricing to members that make significant use of an Exchange's
services. The change is also consistent with an equitable allocation of
fees because activity in BX Options also supports price discovery and
liquidity provision in the BX Equities System due to the increasing
propensity of market participants to be active in both markets and the
influence of each market on the pricing of securities in the other.
Moreover, the new tier has the potential to reduce fees for a wider
range of market participants by introducing a new means of qualifying
for a higher credit for accessing liquidity. The change is not
unreasonably discriminatory because market participants may qualify for
a comparable credit without participating in BX Options through another
volumetric pricing tier that BX offers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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.\7\
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 with respect to a new pricing tier for
members active in the Exchange's cash equities and options markets
enhances the Exchange's competitiveness by reducing fees. However,
because competitors may readily change their own prices in response, 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.
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\7\ 15 U.S.C. 78f(b)(8).
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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 change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\
thereunder. 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 necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f).
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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-2013-065 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-2013-065. 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
[[Page 2924]]
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 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-2013-065 and
should be submitted on or before February 6, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-00691 Filed 1-15-14; 8:45 am]
BILLING CODE 8011-01-P