[Federal Register Volume 79, Number 49 (Thursday, March 13, 2014)]
[Notices]
[Pages 14319-14321]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-05453]
[[Page 14319]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71662; File No. SR-NSX-2014-06]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Fee and Rebate Schedule To Reduce a Fee for Orders Routed to
Other Trading Centers
March 7, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on February 28, 2014, National Stock Exchange, Inc.
(``NSX[supreg]'' or the ``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 is proposing to amend its Fee and Rebate Schedule (the
``Fee Schedule'') issued pursuant to Exchange Rule 16.1. Specifically,
the Exchange is seeking to amend Section II. (Other Services),
subsection A. (Order Routing--All Tapes) \3\ to reduce the per share
fee charged to Exchange Equity Trading Permit (``ETP'') \4\ Holders for
orders in securities priced at $1.00 or greater that are routed away
to, and executed on, another Trading Center \5\ from the current rate
of $0.0030 to the proposed rate of $0.0025.
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\3\ The term ``Tapes'' refers to the designation assigned in the
Consolidated Tape Association (``CTA'') Plan for reporting trades
with respect to securities in Networks A, B and C. Tape A securities
are those listed on the New York Stock Exchange, Inc.; Tape B
securities are listed on NYSE MKT, formerly NYSE Amex, and regional
exchanges. Tape C securities are those listed on the NASDAQ Stock
Market LLC.
\4\ Exchange Rule 1.5 defines ``ETP'' as the Equity Trading
Permit issued by the Exchange for effecting approved securities
transactions on the Exchange's trading facilities.
\5\ Exchange Rule 2.11(a) describes ``Trading Centers'' as other
securities exchanges, facilities of securities exchanges, automated
trading systems, electronic communications networks, or other
brokers or dealers.
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The text of the proposed rule change is available on the Exchange's
Web site at http://www.nsx.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 parts 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 is proposing to amend the current Fee Schedule,
Section II.A. to reduce the per share fee charged to ETP Holders for
orders routed to, and executed on, other Trading Centers from the
current rate of $0.0030 to the proposed rate of $0.0025. As proposed,
this rate will apply only to transactions in securities priced at $1.00
or greater. Consistent with this proposed reduction in the transaction
fee for routed order [sic], the Exchange proposes to amend Section
II.A. with respect to the fees applicable to Double Play Orders.\6\ An
ETP Holder that enters a Double Play Order will not be charged a
routing fee under Section II. for the initial routing to a designated
away Trading Center and any unexecuted portion of a Double Play Order
in a security priced at $1.00 and above that is returned and executed
on the Exchange shall be subject to either Section I of the Fee
Schedule, or a fee of $0.0025 per share if the order is subsequently
routed to an away Trading Center in accordance with Exchange Rule
11.15(a)(ii).\7\
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\6\ Exchange Rule 11.11(c)(10) defines a Double Play Order as
``[a] market or limit order for which the ETP Holder instructs the
System to route to designated away Trading Centers which are
approved by the Exchange from time to time without first exposing
the order to the NSX Book. A Double Play Order that is not executed
in full after routing away receives a new timestamp upon return to
the Exchange and is ranked and maintained in the NSX Book in
accordance with Rule 11.14(a).''
\7\ Exchange Rule 11.15 (Order Execution), subparagraph (a)(ii),
Routing to Away Trading Centers, describes the Exchange's process
for routing eligible orders to away Trading Centers.
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The Exchange states that it is making these changes to Section
II.A. of the Fee Schedule as part of its ongoing assessment of the U.S.
equity securities markets and the competitive environment in which it
operates. The Exchange submits that the proposed reduction in the
transaction fee for routed orders in securities priced at $1.00 or
greater from $0.0030 to $0.0025 aligns with the changes to the Fee
Schedule that the Exchange filed with the Commission for effectiveness
as of February 25, 2014.\8\ Specifically, the Exchange believes that
the instant proposal will increase opportunities to enhance the
execution quality experienced by ETP Holders through improved
interaction between liquidity providers and liquidity removers
(respectively described as ``Makers'' and ``Takers'' of liquidity in
the current Fee Schedule). The Exchange believes that, by reducing the
transaction fee per executed share for routed orders in securities
priced at $1.00 or greater, it will further incentivize liquidity
removers to access the Exchange to remove liquidity at lower cost. In
seeking to draw more liquidity, the Exchange aspires to improve the
price discovery process, improve execution quality, and lower costs for
ETP Holders. The Exchange notes that the proposed change will be
available to all ETP Holders with the anticipated result of better
execution quality at lower costs.
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\8\ See SR-NSX-2014-05. The Exchange filed with the Commission
amendments to the Fee Schedule effective as of February 25, 2014
that, among other changes, adopted a new pricing model that provided
for fees for adding liquidity and rebates for removing liquidity (a
``taker/maker'' pricing model) and made certain other conforming
amendments. These included eliminating the separate fee and rebate
structure for the Automatic Execution and Order Delivery modes of
order interaction and eliminating certain execution-based rebates
available in some instances.
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The Exchange submits that the instant proposal furthers its goals
of maximizing the effectiveness of its business model, offering
economic incentives to ETP Holders to access the Exchange and providing
a high-quality and cost-effective execution venue.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6(b) of the Act,\9\ in general and, in
particular, Section 6(b)(4) of the Act,\10\ which requires that the
rules of a national securities exchange provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other persons using its facilities, and with
Section 6(b)(5) of the Act,\11\ which requires, among other things,
that the rules of a national securities exchange not permit
[[Page 14320]]
unfair discrimination between customers, issuers, brokers, or dealers,
and be designed to promote just and equitable principles of trade, and
to remove impediments to and perfect the mechanism of a free and open
market and a national market system.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78(f)(b)(4).
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange submits that its proposal to reduce the per share fee
for transactions in routed orders in securities priced at $1.00 or
greater from $0.0030 to $0.0025 is consistent with Section 6(b)(4) of
the Act in that it is equitably allocated. The reduced fee will be
available to all ETP Holders entering orders in securities priced at
$1.00 or greater that result in a route to another Trading Center and a
subsequent transaction. The Exchange believes that the proposal also
meets the requirement under Section 6(b)(4) of the Act that fees
assessed by the Exchange be reasonable. Specifically, the Exchange
proposes to lower the current fee from $0.0030 to $0.0025 as a means to
incentivize increased activity by ETP Holders. The Exchange submits
that the proposed reduction of $0.0005 in the fee for shares routed
away and executed on another Trading Center and the adoption of a new
fee of $0.0025 constitutes a reasonable fee that aspires to encourage
more activity by liquidity providers, which in turn will result in more
ETP Holders accessing the Exchange to remove liquidity. As noted by the
Exchange, the reduced fee will apply to all ETP Holders that enter an
order on the Exchange in a security priced at $1.00 or greater that is
subsequently routed, in whole or in part, and results in a transaction
on another Trading Center. The Exchange proposes a parallel change to
the fee applicable to any unexecuted portion of a Double Play Order in
a security priced at or above $1.00 that is returned to the Exchange
after the initial route to the designated away Trading Center, and
subsequently routed out to another Trading Center for purposes of
compliance with trading rules. Such an order will be subject to the
proposed fee of $0.0025 per executed share. This pricing change with
respect to Double Play Orders will be equitably applied to all ETP
Holders entering Double Play Orders and is reasonable to assure that
such orders do not receive disparate pricing.
The Exchange further submits that its proposal meets the
requirements of Section 6(b)(5) of the Act. By seeking to attract more
liquidity to the NSX market through the proposed amendment, the
Exchange is seeking to improve execution quality, price discovery and
cost-effectiveness. The Exchange believes that this amendment will,
therefore, further the purposes of Section 6(b)(5) in that it does not
permit unfair competition between customers, issuers, brokers or
dealers and is designed to promote just and equitable principles of
trade, and remove impediments to and perfect the mechanism of a free
and open market and a national market system.
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 that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. The Exchange
believes, in fact, that the proposed change will operate to enhance
rather than burden competition by aspiring to increase liquidity and
improve execution quality on the Exchange through an equitable
allocation of a reasonable economic incentive. The Exchange submits
that its belief that the instant change will enhance competition is
supported by the fact that the proposed fee rate of $0.0025 per
executed share for orders routed by the Exchange to other Trading
Centers is within the range of fees assessed by other national
securities exchanges for executions in routed orders.\12\
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\12\ See, e.g., NASDAQ OMX Price List at http://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2; BATS BZX
Exchange Fee Schedule at http://cdn.batstrading.com/resources/regulation/rule_book/BATS-Exchanges_Fee_Schedules.pdf.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has not solicited or received written comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change has taken effect upon filing pursuant to
Section 19(b)(3)(A)(ii) of the Act \13\ and subparagraph (f)(2) of Rule
19b-4.\14\ At any time within 60 days of the filing of such 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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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
\14\ 17 CFR.240.19b-4.
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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-NSX-2014-06 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-NSX-2014-06. 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; 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-NSX-2014-06 and should be
submitted on or before April 3, 2014.
[[Page 14321]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-05453 Filed 3-12-14; 8:45 am]
BILLING CODE 8011-01-P