[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63231-63233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22025]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78784; File No. SR-Phlx-2016-91]
Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Relating to the
Exchange's Pricing Schedule Under Section VIII With Respect To
Execution and Routing of Orders in Securities Priced at $1 or More Per
Share
September 8, 2016.
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 August 31, 2016, NASDAQ PHLX LLC (``Phlx'' or the ``Exchange'')
filed with the Securities and Exchange Commission (the ``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 proposes to amend the Exchange's Pricing Schedule
under Section VIII, entitled ``NASDAQ PSX FEES,'' (``Pricing
Schedule'') with respect to execution and routing of orders in
securities priced at $1 or more per share.
While these amendments are effective upon filing, the Exchange has
designated the proposed amendments to be operative on September 1,
2016. The text of the proposed rule change is available on the
Exchange's Web site at http://nasdaqomxphlx.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
[[Page 63232]]
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 purpose of the proposed rule change is to add a credit tier for
order execution and routing applicable to the use of the order
execution and routing services of the NASDAQ PSX System (``PSX
System'') by member organizations for all securities traded at $1 or
more per share.
Specifically, the Exchange proposes to amend its Pricing Schedule
to include a new credit tier for providing liquidity through the PSX
System for displayed quotes/orders. The new credit tier will be for
$0.0027 per share executed for displayed quotes/orders entered by a
member organization that provides and accesses 0.15% or more of
consolidated volume (``Consolidated Volume'') during the month.
The proposed new credit tier is positioned to fall between two
similar existing credit tiers. It will provide a higher credit, $0.0027
per share executed, than an existing credit tier, $0.0025 per share
executed, but it also has a higher threshold of required activity. The
new credit tier requires a member to provide and access 0.15% of
Consolidated Volume during the month versus the existing 0.05% for the
$0.0025 credit tier.
Alternatively the new credit tier will provide a lower credit than
the existing $0.0029 per share executed credit tier, but also has a
lower required Consolidated Volume threshold. The $0.0029 per share
executed credit tier requires a member to provide and access 0.25% of
Consolidated Volume during the month, while the new credit tier only
requires a member to provide and access 0.15% of Consolidated Volume
during the month.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of section 6 of the Act,\3\ in general, and with
section 6(b)(4) and 6(b)(5) of the Act,\4\ 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 the Exchange operates or controls, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\3\ 15 U.S.C. 78f.
\4\ 15 U.S.C. 78f(b)(4) and (5).
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The proposed rule change to the credit tiers under the Exchange's
Pricing Schedule, section VIII, are reflective of the Exchange's
ongoing efforts to use pricing incentive programs to attract order flow
to the Exchange and improve market quality. The goal of these pricing
incentives is to provide meaningful incentives for members to increase
their participation on the Exchange.
The Exchange believes that the new credit tier for displayed
quotes/orders for a member organization providing liquidity through the
PSX System of $0.0027 per share executed in The NASDAQ Stock Market LLC
(``Nasdaq'')--listed securities, securities listed on the New York
Stock Exchange (``NYSE''), and securities listed on exchanges other
than Nasdaq and NYSE is reasonable because it is consistent with other
credits that the Exchange provides to members that access and/or
provide liquidity. As a general principle the Exchange chooses to offer
credits to members in return for market improving behavior. The various
credits the Exchange provides for members require them to significantly
contribute to market quality by accessing and/or providing certain
levels of Consolidated Volume. The proposed credit tier will be
provided to members that provide and access liquidity in all securities
of 0.15% or more of Consolidated Volume during the month.
The Exchange also believes that this proposed rule change is
consistent with an equitable allocation of fees and are not unfairly
discriminatory because the new credit tier for non-displayed orders/
quotes is uniformly available to all members and affects all members
equally and in the same way. Additionally, the proposed new credit tier
will further encourage market participant activity and will also
support price discovery and liquidity provision.
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.\5\
The Exchange notes that it operates in a highly competitive market in
which market participants can readily favor dozens of different
competing exchanges and alternative trading systems if they deem
charges at a particular venue to be excessive, or credit opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its charges and credits to remain
competitive with other exchanges. Because competitors are free to
modify their own charges and credits in response, and because market
participants may readily adjust their order routing practices, the
Exchange believes that the degree to which changes to charges and
credits in this market may impose any burden on competition is
extremely limited.
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\5\ 15 U.S.C. 78f(b)(8).
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In this instance, the proposed new credit tier for member
organizations entering orders in the PSX System for displayed orders
that provide liquidity does not impose a burden on competition because
Exchange membership is optional and is the subject of competition from
other exchanges. These adjustments are reflective of the intent to
increase the order flow on the Exchange. For these reasons, the
Exchange 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. Moreover, because
there are numerous competitive alternatives to the use of the Exchange,
it is likely that the Exchange will lose market share as a result of
the changes if they are unattractive to market participants.
Accordingly, the Exchange does not believe that the proposed rule
change 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
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule 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. If the Commission
takes such action, the
[[Page 63233]]
Commission will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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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-Phlx-2016-91 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-Phlx-2016-91. 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 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-Phlx-2016-91, and should be
submitted on or before October 5, 2016.
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. 2016-22025 Filed 9-13-16; 8:45 am]
BILLING CODE 8011-01-P