[Federal Register Volume 79, Number 178 (Monday, September 15, 2014)]
[Notices]
[Pages 55055-55056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-21871]
[[Page 55055]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73025; File No. SR-NASDAQ-2014-089]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Modify NASDAQ Rule 7018 Fees
September 9, 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 August 28, 2014, The NASDAQ Stock Market LLC (``NASDAQ'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a 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
NASDAQ is proposing to modify NASDAQ Rule 7018 [sic] fees assessed
for execution and routing securities listed on NASDAQ, the New York
Stock Exchange (``NYSE'') and on exchanges other than NASDAQ and NYSE.
The text of the proposed rule change is available at
nasdaq.cchwallstreet.com at NASDAQ's principal office, 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, NASDAQ 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 those 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
NASDAQ is proposing to amend NASDAQ Rule 7018 to modify fees
assessed for execution and routing securities listed on NASDAQ (``Tape
C''), NYSE (``Tape A'') and on exchanges other than NASDAQ and the NYSE
(``Tape B'').
The Exchange is proposing to no longer offer a recently adopted
credit \3\ provided to members that qualify under certain requirements
of the Market Quality Incentive Programs of Rule 7014. Specifically,
NASDAQ will no longer provide a credit of $0.0001 per share executed to
a member that either qualifies for a credit under Rule 7014(c)(3) or
that is designated as a Qualified Market Maker (``QMM'') under Rule
7014(d). The credit currently provided is based on the shares executed
through the qualifying MPID under Rules 7014(c)(3) or 7014(d), and is
provided in addition to any other credit or rebate for which the member
may qualify. NASDAQ believes that the elimination of this program is
warranted since it has failed to increase liquidity in Tape A
securities or to provide members with additional incentive to improve
market quality.
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\3\ See Securities Exchange Act Release No. 72810 (August 11,
2014), 79 FR 48281 (August 15, 2014) (SR-NASDAQ-2014-078).
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Additionally, a member with (i) shares of liquidity provided in all
securities during the month representing more than 0.15% of
Consolidated Volume during the month, through one or more of its Nasdaq
Market Center MPIDs, and (ii) Total Volume, as defined in Chapter XV,
Section 2 of the Nasdaq Options Market rules, of 100,000 or more
contracts per day in a month executed through one or more of its Nasdaq
Option Market MPIDs qualifies for a credit of $0.0029 per share
executed. NASDAQ is proposing to decrease the Consolidated Volume
requirement for this tier from 0.15% to shares representing more than
0.10% of Consolidated Volume. The Exchange believes that the proposed
lower Consolidated Volume requirement will encourage market participant
activity and will also support price discovery and liquidity provision.
2. Statutory Basis
NASDAQ 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 NASDAQ operates or controls, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers. This proposal is reasonable, equitable and not
unfairly discriminatory for the reasons noted below.
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4) and (5).
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NASDAQ believes that eliminating the recently adopted $0.0001 per
share executed credit in NYSE-listed securities provided to members
that either qualify for a credit under Rule 7014(c)(3) or that is [sic]
designated as a QMM under Rule 7014(d) is consistent with an equitable
allocation of a reasonable fee and not unfairly discriminatory.
Specifically, the Exchange believes it is equitable and not unfairly
discriminatory because it is being eliminated for all members that meet
the requirements of either Rule 7014(c)(3) or 7014(d) and that receive
the credit for its [sic] executions in NYSE-listed securities. NASDAQ
also believes that eliminating the credit is reasonable because the
Exchange has determined that although the credit was designed to
increase liquidity in Tape A securities and to provide members with
additional incentive to improve market quality, the program failed to
have such an impact.
NASDAQ also believes the proposed rule change is reasonable since
the Exchange must balance its desire to provide certain incentives with
the costs the Exchange incurs in providing such incentives, which
ultimately affect the ability to sustain them. As a consequence, NASDAQ
must choose carefully the credits it provides, so that it promotes
activity it deems most important while foregoing offering other
credits, which may also improve market quality yet prove too costly.
NASDAQ notes that the credit, in the end, did not suffice as an
additional incentive to members to improve the quality of the market in
NYSE-listed securities on NASDAQ.
NASDAQ believes that the proposed rule changes to the rebate tiers
through which members may earn a $ 0.0029 per share executed rebate are
reasonable because they will make it easier for members to receive a
rebate at that level, by lowering the volume requirements for existing
tiers. In addition, the proposed rule changes are consistent with an
equitable allocation of fees because they reflect an allocation of
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rebates to liquidity providers designed to encourage beneficial market
activity, with greater incentives for market participants to provide
liquidity and the proposed rule changes are not unfairly discriminatory
because they apply uniformly across all markets. Finally, the changes
are not unfairly discriminatory because they increase the availability
of higher rebates without eliminating any of the other means by which a
member may earn a higher rebate under Rule 7018(a).
B. Self-Regulatory Organization's Statement on Burden on Competition
NASDAQ does not believe that the proposed rule changes will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.\6\ NASDAQ 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,
NASDAQ 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, NASDAQ believes that the degree to which fee
changes in this market may impose any burden on competition is
extremely limited. In this instance, the changes to routing fees and
credits do not impose a burden on competition because NASDAQ's routing
services are optional and are the subject of competition from other
exchanges and broker-dealers that offer routing services, as well as
[sic] the ability of members to develop their own routing capabilities.
In sum, if the changes proposed herein are unattractive to market
participants, it is likely that NASDAQ will lose market share as a
result.
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\6\ 15 U.S.C. 78f(b)(8).
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Accordingly, NASDAQ 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
Written comments were neither solicited nor 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)(ii) of the Act.\7\ 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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\7\ 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-NASDAQ-2014-089 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-2014-089. 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 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-NASDAQ-2014-
089, and should be submitted on or before October 6, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-21871 Filed 9-12-14; 8:45 am]
BILLING CODE 8011-01-P