Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Rule 7018(a)(2), 28176-28178 [2017-12769]

Download as PDF 28176 Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices 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 (https://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–NYSE– 2017–27, and should be submitted on or before July 11, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–12884 Filed 6–19–17; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–80928; File No. SR– NASDAQ–2017–056] sradovich on DSK3GMQ082PROD with NOTICES June 14, 2017. 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 June 1, 2017, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. VerDate Sep<11>2014 18:01 Jun 19, 2017 Jkt 241001 The Exchange proposes to amend the Exchange’s transaction fees at Rule 7018(a)(2) to eliminate a $0.0001 per share executed credit provided to a member for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity in securities listed on the New York Stock Exchange. The text of the proposed rule change is available on the Exchange’s Web site at https://nasdaq.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. 1. Purpose Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Transaction Fees at Rule 7018(a)(2) 1 15 I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change SECURITIES AND EXCHANGE COMMISSION 18 17 (‘‘SEC’’ or ‘‘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. The purpose of the proposed rule change is to amend Exchange’s transaction fees at Rule 7018(a)(2) to eliminate a $0.0001 per share executed credit provided to a member for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity in Tape A securities. Under Rule 7018(a), the Exchange assesses fees for the removal of liquidity and provides credits for the provision thereof. The Exchange currently provides a $0.0001 per share executed credit to a member for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity if the member has shares of liquidity provided in all securities during the PO 00000 Frm 00134 Fmt 4703 Sfmt 4703 month representing at least 0.2% of Consolidated Volume during the month, through one or more of its Nasdaq Market Center MPIDs. This $0.0001 per share executed credit is provided in addition to the credits provided for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity under Rule 7018(a)(2).3 This credit is also provided in addition to any rebates that a member qualifies for under the NBBO, and QMM programs under Rule 7014. The credit is not additive to DLP rebates under Rule 7014 or Designated Retail Order credits under Rule 7018. The credit, together with an identical credit applicable to Tape B securities, was adopted to provide incentive to market participants to increase the level of liquidity provided to the Exchange, in which the Exchange had observed a decline in overall volume on the Exchange in Tape A and B securities in comparison to Tape C securities.4 The Exchange has not observed a significant improvement to the volume in Tape A securities on the Exchange in relation to the Tape A credit and is therefore proposing to eliminate the credit so that it may explore other incentives to improve market quality in Tape A securities. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,5 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,6 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Elimination of the $0.0001 per share executed credit provided to a member for displayed quotes/orders (other than Supplemental Orders or Designated 3 The Exchange also provides a $0.0001 per share executed credit with identical criteria applicable to Tape B securities. See Rule 7018(a)(3). 4 See Securities Exchange Act Release No. 77378 (March 16, 2016), 81 FR 15358 (March 22, 2016) (SR–NASDAQ–2016–037). The Exchange has since replaced the qualification criteria required to receive the Tape B $0.0001 per share executed credit. Specifically, to now qualify for the $0.0001 per share executed credit in Tape B securities, a member must have shares of liquidity provided in securities that are listed on exchanges other than NASDAQ or NYSE during the month representing at least 0.06% but less than 0.12% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. See Securities Exchange Act Release No. 78977 (September 29, 2016), 81 FR 69140 (October 5, 2016) (SR– NASDAQ–2016–132). 5 15 U.S.C. 78f(b). 6 15 U.S.C. 78f(b)(4) and (5). E:\FR\FM\20JNN1.SGM 20JNN1 Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Retail Orders) that provide liquidity in Tape A securities under Rule 7018(a)(2) is reasonable because providing a credit in addition to the other credits provided under Rules 7018(a) and 7014, as described above, is no longer necessary. As noted above, the Exchange set the credit at $0.0001 per share executed because it believed that providing such a credit would improve the market in Tape A securities. The credit has not significantly provided such incentive and consequently the Exchange believes that it should eliminate the credit to focus its limited funds on other incentives to improve market quality. Accordingly, the Exchange believes eliminating this additional Tape A credit is reasonable. Elimination of the $0.0001 per share executed credit provided to a member for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity in Tape A securities under Rule 7018(a)(2) is an equitable allocation and is not unfairly discriminatory because it is no longer needed to improve the market in Tape A securities. The Exchange has limited funds to apply in the form of incentives, and thus must deploy those limited funds to incentives that it believes will be the most effective and improve market quality in areas that the Exchange determines are in need of improvement. The Exchange has observed that the credit has not provided the incentive that was necessary to significantly improve the market in Tape A securities by attracting more order flow to the Exchange and is therefore removing the credit so that it may consider other incentives that may improve Tape A market quality. As noted above, the Exchange has limited funds to apply toward incentives, and although an incentive may not significantly achieve its goal of improving market quality, it may nonetheless result in a cost to the Exchange. Eliminating the credit will allow the Exchange deploy its limited funds to incentives in Tape A securities or other areas designed to improve market quality. Accordingly, the Exchange believes that eliminating the credit is an equitable allocation and is not unfairly discriminatory. 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 not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market VerDate Sep<11>2014 18:01 Jun 19, 2017 Jkt 241001 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, the Exchange 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, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the Exchange is proposing to eliminate an incentive provided to market participants, which was designed to improve market quality in Tape A securities. The incentive has not significantly improved market quality in Tape A securities and the Exchange does not believe that continuing to offer the credit is the best use of its limited fund nor would it likely achieve the market improvement for which it was designed. Because the Exchange’s execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues, the proposed elimination of the credit should not impose a burden on competition. If the Exchange is incorrect in concluding that the incentive was not significantly effective, it will likely lose market share in Tape A securities to one of the many other trading venues to the extent market participants believe that those markets are more attractive. Thus, 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 or impose any burden on competition. 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)(ii) of the Act.7 7 15 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00135 Fmt 4703 Sfmt 4703 28177 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 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 (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2017–056) 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–2017–056). 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 (https://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 E:\FR\FM\20JNN1.SGM 20JNN1 28178 Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 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–2017–056, and should be submitted on or before July 11, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–12769 Filed 6–19–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION 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 [Release No. 34–80922; File No. SR–ISE– 2017–49] 1. Purpose Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees To (1) Reduce the Priority Customer Taker Fee for Regular Orders in SPY to $0.35 Per Contract, and (2) Lower the Threshold of Net Zero Complex Contracts The purpose of the proposed rule change is to amend the Schedule of Fees to (1) reduce the Priority Customer 3 taker fee for regular orders in SPY to $0.35 per contract, and (2) lower the threshold of net zero complex contracts from 2,000 contracts to 1,000 contracts. Each of these changes is described in more detail below. June 14, 2017. Priority Customer Taker Fee 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 May 31, 2017, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II, 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. Currently, the Exchange charges a taker fee for regular orders in Select Symbols 4 that is $0.44 per contract for Market Maker 5 orders, $0.45 per contract for Non-Nasdaq ISE Market Maker,6 Firm Proprietary,7 BrokerDealer,8 and Professional Customer orders,9 and $0.40 per contract for Priority Customer orders. The Exchange now proposes to adopt a reduced Priority Customer taker fee of $0.35 per contract for regular orders in SPY, sradovich on DSK3GMQ082PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Schedule of Fees to (1) reduce the Priority Customer taker fee for regular orders in SPY to $0.35 per contract, and (2) lower the threshold of net zero complex contracts from 2,000 contracts to 1,000 contracts. The text of the proposed rule change is available on the Exchange’s Web site at www.ise.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 8 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:01 Jun 19, 2017 Jkt 241001 3 A ‘‘Priority Customer’’ is a person or entity that is not a broker/dealer in securities, and does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s), as defined in Nasdaq ISE Rule 100(a)(37A). 4 ‘‘Select Symbols’’ are options overlying all symbols listed on the Nasdaq ISE that are in the Penny Pilot Program. 5 The term ‘‘Market Makers’’ refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See ISE Rule 100(a)(25). 6 A ‘‘Non-Nasdaq ISE Market Maker’’ is a market maker as defined in Section 3(a)(38) of the Securities Exchange Act of 1934, as amended, registered in the same options class on another options exchange. 7 A ‘‘Firm Proprietary’’ order is an order submitted by a member for its own proprietary account. 8 A ‘‘Broker-Dealer’’ order is an order submitted by a member for a broker-dealer account that is not its own proprietary account. 9 A ‘‘Professional Customer’’ is a person or entity that is not a broker/dealer and is not a Priority Customer. PO 00000 Frm 00136 Fmt 4703 Sfmt 4703 which is the most actively traded name on the Exchange. This taker fee will remain unchanged for Select Symbols other than SPY. The Exchange believes that this reduction in fees will attract additional Priority Customer orders in SPY to the Exchange. Net Zero Complex Orders Currently, the Exchange does not provide Priority Customer rebates for complex orders that that leg in to the regular order book and trade at a net price per contract at or near $0.00 (i.e., net zero complex orders), provided those orders are entered on behalf of originating market participants that execute an ADV of at least 2,000 contracts in net zero complex orders in a given month.10 While these complex orders would generally not find a counterparty in the complex order book, they may leg in to the regular order book where they are typically executed by Market Makers or other market participants on the individual legs who pay a fee to trade with this order flow. The Exchange does not provide rebates for net zero complex orders to prevent members from engaging in rebate arbitrage by entering valueless complex orders solely to recover rebates. For purposes of determining which complex orders qualify as net zero, the Exchange counts all complex orders that leg in to the regular order book and are executed at a net price per contract that is within a range of $0.01 credit and $0.01 debit. The 2,000 contract threshold exists to differentiate market participants that are entering legitimate complex orders from those that are entering net zero complex orders solely to earn a rebate. The Exchange now proposes to lower the threshold of net zero complex contracts from 2,000 contracts to 1,000 contracts per day. As such, net zero priced complex orders that leg into the regular order book and are entered by firms with an ADV in this type of activity of 1,000 contracts or more in a given month will not earn the Priority Customer complex order rebate. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,11 in general, and Section 6(b)(4) of the Act,12 in particular, in that it is designed 10 See Securities Exchange Act Release No. 80219 (March 13, 2017), 82 FR 14249 (March 17, 2017) (SR–ISE–2017–22). Priority Customer complex orders that do not meet the definition of a net zero complex order, or that are entered on behalf of originating market participants that do not reach the 2,000 contract ADV threshold, remain eligible for rebates based on the tier achieved. 11 15 U.S.C. 78f. 12 15 U.S.C. 78f(b)(4). E:\FR\FM\20JNN1.SGM 20JNN1

Agencies

[Federal Register Volume 82, Number 117 (Tuesday, June 20, 2017)]
[Notices]
[Pages 28176-28178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12769]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80928; File No. SR-NASDAQ-2017-056]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Exchange's Transaction Fees at Rule 7018(a)(2)

June 14, 2017.
    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 June 1, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 transaction fees at 
Rule 7018(a)(2) to eliminate a $0.0001 per share executed credit 
provided to a member for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) that provide liquidity 
in securities listed on the New York Stock Exchange.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://nasdaq.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 purpose of the proposed rule change is to amend Exchange's 
transaction fees at Rule 7018(a)(2) to eliminate a $0.0001 per share 
executed credit provided to a member for displayed quotes/orders (other 
than Supplemental Orders or Designated Retail Orders) that provide 
liquidity in Tape A securities. Under Rule 7018(a), the Exchange 
assesses fees for the removal of liquidity and provides credits for the 
provision thereof. The Exchange currently provides a $0.0001 per share 
executed credit to a member for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) that provide liquidity 
if the member has shares of liquidity provided in all securities during 
the month representing at least 0.2% of Consolidated Volume during the 
month, through one or more of its Nasdaq Market Center MPIDs. This 
$0.0001 per share executed credit is provided in addition to the 
credits provided for displayed quotes/orders (other than Supplemental 
Orders or Designated Retail Orders) that provide liquidity under Rule 
7018(a)(2).\3\ This credit is also provided in addition to any rebates 
that a member qualifies for under the NBBO, and QMM programs under Rule 
7014. The credit is not additive to DLP rebates under Rule 7014 or 
Designated Retail Order credits under Rule 7018.
---------------------------------------------------------------------------

    \3\ The Exchange also provides a $0.0001 per share executed 
credit with identical criteria applicable to Tape B securities. See 
Rule 7018(a)(3).
---------------------------------------------------------------------------

    The credit, together with an identical credit applicable to Tape B 
securities, was adopted to provide incentive to market participants to 
increase the level of liquidity provided to the Exchange, in which the 
Exchange had observed a decline in overall volume on the Exchange in 
Tape A and B securities in comparison to Tape C securities.\4\ The 
Exchange has not observed a significant improvement to the volume in 
Tape A securities on the Exchange in relation to the Tape A credit and 
is therefore proposing to eliminate the credit so that it may explore 
other incentives to improve market quality in Tape A securities.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 77378 (March 16, 
2016), 81 FR 15358 (March 22, 2016) (SR-NASDAQ-2016-037). The 
Exchange has since replaced the qualification criteria required to 
receive the Tape B $0.0001 per share executed credit. Specifically, 
to now qualify for the $0.0001 per share executed credit in Tape B 
securities, a member must have shares of liquidity provided in 
securities that are listed on exchanges other than NASDAQ or NYSE 
during the month representing at least 0.06% but less than 0.12% of 
Consolidated Volume during the month through one or more of its 
Nasdaq Market Center MPIDs. See Securities Exchange Act Release No. 
78977 (September 29, 2016), 81 FR 69140 (October 5, 2016) (SR-
NASDAQ-2016-132).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\6\ 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, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    Elimination of the $0.0001 per share executed credit provided to a 
member for displayed quotes/orders (other than Supplemental Orders or 
Designated

[[Page 28177]]

Retail Orders) that provide liquidity in Tape A securities under Rule 
7018(a)(2) is reasonable because providing a credit in addition to the 
other credits provided under Rules 7018(a) and 7014, as described 
above, is no longer necessary. As noted above, the Exchange set the 
credit at $0.0001 per share executed because it believed that providing 
such a credit would improve the market in Tape A securities. The credit 
has not significantly provided such incentive and consequently the 
Exchange believes that it should eliminate the credit to focus its 
limited funds on other incentives to improve market quality. 
Accordingly, the Exchange believes eliminating this additional Tape A 
credit is reasonable.
    Elimination of the $0.0001 per share executed credit provided to a 
member for displayed quotes/orders (other than Supplemental Orders or 
Designated Retail Orders) that provide liquidity in Tape A securities 
under Rule 7018(a)(2) is an equitable allocation and is not unfairly 
discriminatory because it is no longer needed to improve the market in 
Tape A securities. The Exchange has limited funds to apply in the form 
of incentives, and thus must deploy those limited funds to incentives 
that it believes will be the most effective and improve market quality 
in areas that the Exchange determines are in need of improvement. The 
Exchange has observed that the credit has not provided the incentive 
that was necessary to significantly improve the market in Tape A 
securities by attracting more order flow to the Exchange and is 
therefore removing the credit so that it may consider other incentives 
that may improve Tape A market quality. As noted above, the Exchange 
has limited funds to apply toward incentives, and although an incentive 
may not significantly achieve its goal of improving market quality, it 
may nonetheless result in a cost to the Exchange. Eliminating the 
credit will allow the Exchange deploy its limited funds to incentives 
in Tape A securities or other areas designed to improve market quality. 
Accordingly, the Exchange believes that eliminating the credit is an 
equitable allocation and is not unfairly discriminatory.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. In terms of inter-market 
competition, the Exchange 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, the Exchange 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, 
the Exchange believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited.
    In this instance, the Exchange is proposing to eliminate an 
incentive provided to market participants, which was designed to 
improve market quality in Tape A securities. The incentive has not 
significantly improved market quality in Tape A securities and the 
Exchange does not believe that continuing to offer the credit is the 
best use of its limited fund nor would it likely achieve the market 
improvement for which it was designed. Because the Exchange's execution 
services are completely voluntary and subject to extensive competition 
both from other exchanges and from off-exchange venues, the proposed 
elimination of the credit should not impose a burden on competition. If 
the Exchange is incorrect in concluding that the incentive was not 
significantly effective, it will likely lose market share in Tape A 
securities to one of the many other trading venues to the extent market 
participants believe that those markets are more attractive. Thus, 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 or impose any 
burden on competition.

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)(ii) of the Act.\7\
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2017-056) 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-2017-056). 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 (https://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

[[Page 28178]]

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-2017-056, and should be submitted 
on or before July 11, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Eduardo A. Aleman,
Assistant Secretary.
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    \8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-12769 Filed 6-19-17; 8:45 am]
 BILLING CODE 8011-01-P
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