[Federal Register Volume 79, Number 80 (Friday, April 25, 2014)]
[Notices]
[Pages 23030-23032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-09397]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71983; File No. SR-NSX-2014-11]
Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Fee and Rebate Schedule With Respect to Securities Priced at
$1.00 or Greater
April 21, 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 April 15, 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 the
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 I. (Transaction Fees and
Rebates) pertaining to the fees charged to Exchange Equity Trading
Permit (``ETP'') \3\ Holders for providing liquidity and the rebates
paid to ETP Holders for removing liquidity in securities priced at
$1.00 or more.
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\3\ 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.
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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 I. to: (i) change the fee structure applicable to ETP Holders
providing liquidity on the Exchange in securities priced at $1.00 and
above, retiring the current tiered fee structure and adopting a single
fee amount of $0.0018 per executed share to be paid by ETP Holders for
providing liquidity (a ``Maker'') in any security priced at $1.00 and
above, across all Tapes \4\ and irrespective of the order type used by
the ETP Holder to add liquidity; and (ii) pay a per executed share
rebate of $0.0017 to ETP Holders removing liquidity in any security,
across all Tapes and irrespective of any order types removed by the
liquidity ``Taker.''
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\4\ 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.
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Prior to these proposed changes, the Fee Schedule provided that,
for securities prices at $1.00 and above, the ETP Holder paid a per
share fee for providing liquidity in an amount equal to or surpassing
certain specified percentages of the ETP Holder's total consolidated
volume (``TCV'') in one day.\5\ The term ``TCV'' was defined in the Fee
Schedule as the total consolidated volume calculated as the volume
reported by all exchanges and trade reporting facilities to a
consolidated transaction reporting plan. Under the Fee Schedule prior
to the instant amendment, there was a total of seven fee tiers based on
specified percentages of TCV; the highest fee for adding liquidity was
$0.0018 per executed share, based on the ETP Holder adding less than
0.08% of TCV of liquidity in one day. The six additional tier levels
operated to reduce the per share fee based on successively higher
percentages of TCV adding liquidity in one day. The lowest fee of
$0.0012 per executed share applied to ETP Holders adding 0.52% or more
of TCV of liquidity in one day. The Fee Schedule further provided that
an ETP Holder providing liquidity through the use of certain ``Zero
Display'' order types would pay a fee of $0.0018 per executed share.
With respect to the rebate paid to ETP Holders removing liquidity on
the Exchange (``Takers'') in securities prices at $1.00 and above, the
Fee Schedule prior to the instant amendment provided for a rebate of
$0.0015 per executed share.\6\
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\5\ See Exchange Act Release No. 71641 (March 4, 2014); 79 FR
13353 (March 10, 2014) (SR-NSX-2014-05).
\6\ The former Fee Schedule specifically included a transaction
removing a Zero Display Mid-Point Peg Order and a Zero Display
Market Peg Order from the NSX Book as subject to the $0.0015 rebate
for removing liquidity.
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The Exchange is now proposing to amend its transaction fees and
rebates to adopt one fee in the amount of $0.0018 per executed share,
applicable to executions by ETP Holders adding liquidity in all
securities priced at $1.00 and above traded on the Exchange. The fee of
$0.0018 for adding liquidity will apply without regard to percentages
of TCV or certain ``dark'' order types, which were considerations that
impacted the fees in effect prior to the instant rule change. ETP
Holders removing liquidity in securities priced at or above $1.00 will
receive a uniform rebate of $0.0017 per executed share which will
similarly be paid in all instances and without regard to the
considerations that impacted the rebates paid to ETP Holders under the
prior fee and rebate structure.
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. The Exchange also
believes that offering a simplified fee and rebate structure will
enhance efficiencies on the part of both the Exchange and ETP Holders
and will operate to provide market participants with clarity and
transparency into the Exchange's incentives for attracting liquidity to
its market.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with
[[Page 23031]]
the provisions of Section 6(b) of the Act,\7\ in general and, in
particular, Section 6(b)(4) of the Act,\8\ 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,\9\ which requires, among other things, that
the rules of a national securities exchange not permit 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78(f)(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange submits that its proposal to meets the requirement
under Section 6(b)(4) of the Act that fees assessed by the Exchange be
reasonable. Specifically, the Exchange proposes to adopt a uniform fee
of $0.0018 per executed share applicable to ETP Holders proving
liquidity on the Exchange in securities priced at $1.00 and above. The
Exchange believes that the fee is reasonable. In fact, a fee of $0.0018
per executed share was contained in the pre-amendment tiered fee
structure, applicable to executions constituting added liquidity of
less than 0.08% of the ETP Holder's TCV in one day. The Exchange
believes that, while the prior Fee Schedule provided for lower per
share fees as the ETP Holder's added liquidity increased as a
percentage of TCV, it is reasonable for the Exchange to adopt a single
tier-based fee amount within that structure and apply it to all
executions adding liquidity. The Exchange states that it seeks 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 fee will apply in a non-discriminatory
manner to all ETP Holders that enter an order on the Exchange in any
security priced at or above $1.00.
The Exchange further submits that adopting a single uniform rebate
of $0.0017 per executed share for ETP Holders removing liquidity is a
reasonable rebate and satisfies the requirements of Section 6(b)(4) of
the Act. Specifically, the proposed rebate amount is an attempt by the
Exchange to attract greater order flow by incentivizing ETP Holders to
access the NSX market. Combined with the proposed restructuring of the
fees that will be charged liquidity providers, the Exchange aspires to
increase liquidity and improve price discovery. The Exchange notes that
the proposed structure promotes clarity and transparency into the fees
and rebates to which ETP Holders will be subject, thereby operating to
increase marketplace efficiency and informed decision-making about a
choice of execution venues.
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 continuing to position the Exchange
as a cost-effective trading venue. By adopting a single fee of $0.0018
per executed share for adding liquidity and a single rebate of $0.0017
for removing liquidity, the Exchange seeks to provide a simplified fee
and rebate structure that is transparent to ETP Holders and market
participants. These are factors that operate to enhance rather than
burden competition.
The Exchange submits that adopting a more streamlined fee and
rebate structure for securities priced at or above $1.00 will promote
greater competition in the equity securities markets and incentivize
increased liquidity and improved execution quality on the Exchange
through an equitable allocation of reasonable economic incentives.
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 from ETP Holders or others.
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 \10\ and subparagraph (f)(2) of Rule
19b-4.\11\ 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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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 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-2014-11 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-NSX-2014-11. 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
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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 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-2014-11, and should be submitted on or before May
16, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09397 Filed 4-24-14; 8:45 am]
BILLING CODE 8011-01-P