[Federal Register Volume 79, Number 214 (Wednesday, November 5, 2014)]
[Notices]
[Pages 65738-65739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26228]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-73470; File No. SR-BX-2014-053]
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
October 30, 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 October 23, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``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 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. While the changes proposed herein are effective upon
filing, the Exchange has designated that the amendments be operative on
November 3, 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.
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 increase a credit provided to member
firms applicable to transactions in securities priced at $1 or more
under BX Rule 7018(a). Specifically, the Exchange proposes to increase
the credit provided to all members that enter an order that executes
against a midpoint pegged order. Currently, the Exchange provides a
credit of $0.0003 per share executed for such an order. The Exchange is
proposing to increase the credit provided to $0.0005 per share
executed. The Exchange believes that the proposed increase in the
credit provided to member firms for removing midpoint liquidity will
encourage firms to access more resting midpoint liquidity before
routing to other destinations for price improvement opportunities.
2. Statutory Basis
BX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\3\ in general, and Sections 6(b)(4)
and (b)(5) of the Act,\4\ 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. The
proposed rule change is reflective of the Exchange's ongoing efforts to
use rebates and discounted execution fees to attract orders that the
Exchange believes will improve market quality. Generally, the Exchange
seeks to provide members with discounts that they deem helpful, and to
eliminate those that they do not.
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\3\ 15 U.S.C. 78f.
\4\ 15 U.S.C. 78f(b)(4), (5).
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The Exchange believes that the proposed change is reasonable
because it promotes these goals by providing an increased credit to
member firms that remove liquidity at the midpoint. In this regard, the
Exchange believes that this credit will incentivize member firms to
execute against midpoint liquidity and this, in turn, will lead to an
increase in price improvement and liquidity, which generally benefits
the investing public. Moreover, the proposed change is reasonable as it
is a pro-competitive price reduction designed to enhance the Exchange's
position in the marketplace and broaden the execution opportunities for
BX members. The Exchange also believes that the proposed increase in
the credit is reasonable because it reflects the availability of what
is, in effect, a price reduction for all members that execute against a
midpoint pegged order.
The Exchange believes that the proposed credit increase is
consistent with an equitable allocation of fees and is not unfairly
discriminatory because the rebate applies uniformly across all members
[sic] firms and is provided to those firms that elect to execute
against midpoint pegged orders. BX notes that it operates in a highly
competitive market in which market participants can easily and readily
favor competing venues if they deem fee levels at a particular venue to
be excessive or rebate opportunities to be insufficient. In such an
environment, BX must continually adjust its fees or rebates to remain
competitive with other exchanges. BX believes that the proposed rule
change reflects this very competitive environment because it is
designed to ensure that the credits for participation on BX attract
order flow that improves the market for all participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange 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.\5\
BX notes that it operates in a highly competitive market in which
market participants can readily favor over 40
[[Page 65739]]
different competing exchanges and alternative trading systems 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. 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 increase to the
credit for an order that executes against a midpoint pegged order
enhances the Exchange's competitiveness by increasing a credit for a
type of order activity that the Exchange seeks to encourage, thereby
improving market liquidity and attracting market participants.
Moreover, because there are numerous competitive alternatives to the
use of the Exchange, it is likely that BX will lose market share as a
result of the changes if they are unattractive to market participants.
Accordingly, BX does not believe that the proposed rule 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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\5\ 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 \6\ and paragraph (f) of Rule 19b-4 \7\
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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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 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-2014-053 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-BX-2014-053. 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-BX-2014-053,
and should be submitted on or before November 26, 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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Brent J. Fields,
Secretary.
[FR Doc. 2014-26228 Filed 11-4-14; 8:45 am]
BILLING CODE 8011-01-P