Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Fee and Rebate Schedule, 69900-69904 [2013-27905]

Download as PDF 69900 Federal Register / Vol. 78, No. 225 / Thursday, November 21, 2013 / Notices provide Users with the most efficient means of processing customer orders that are sent to the Exchange’s trading and execution system from the data center. The Exchange stated its belief that the proposed LCN 10 Gb LX connection does not raise any novel or unique issues or concerns. The Exchange further stated that it does not anticipate any negative consequence, whether for Users, the investing public or otherwise, as a result of granting a waiver of the operative delay. For the above reasons, the Commission believes waiver of the operative delay is appropriate and hereby grants the Exchange’s request and designates the proposal operative upon filing.20 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. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 21 of the Act to determine whether the proposed rule change 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: tkelley on DSK3SPTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2013–123 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2013–123. This file number should be included on the subject line if email is used. To help the Commission process and review your 20 For purposes only of waiving the 30-day operative delay, the Commission has also considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 21 15 U.S.C. 78s(b)(2)(B). VerDate Mar<15>2010 17:17 Nov 20, 2013 Jkt 232001 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 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 identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NYSEArca–2013–123 and should be submitted on or before December 12, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–27902 Filed 11–20–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70890; File No. SR–NSX– 2013–21] Self-Regulatory Organizations; National Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Fee and Rebate Schedule November 15, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act ’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 1, 2013, National Stock Exchange, Inc. (‘‘NSX®’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule 22 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 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 comment on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of 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(a) in order to: change certain fees and rebates applicable to executions occurring through the ‘‘Auto Ex’’ mode of interaction (‘‘Auto Ex Mode’’) 3 with the NSX’s trading system (the ‘‘System’’); 4 and discontinue charging certain fees to Exchange Equity Trading Permit (‘‘ETP’’) 5 Holders that are approved to use the Order Delivery mode of interaction with the System (‘‘Order Delivery Mode’’).6 The Exchange is also proposing to eliminate the rebate of $0.0045 per executed share for Double Play Orders 7 in five select securities (the ‘‘Select Securities’’) directed to the CBOE Stock Exchange, Inc. (‘‘CBSX’’) and pay the standard rebate of $0.0015 per executed share applicable to Double Play Orders in all other securities priced at $1.00 and above. The Exchange also proposes to make certain non-material changes to the relevant text of the Fee Schedule to make certain terms used therein consistent with terms used in the Exchange’s rules. The text of the proposed rule change is available on the Exchange’s Web site at www.nsx.com, at the Exchange’s principal office, and at the Commission’s Public Reference Room. 3 See Exchange Rule 11.13 (Proprietary and Agency Orders; Modes of Order Interaction), paragraph(b)(1). 4 Under NSX Rule 1.5, the term ‘‘System’’ is defined as the ‘‘the electronic securities communications and trading facility . . .through which orders of Users are consolidated for ranking and execution.’’ 5 NSX Rule defines the term ‘‘ETP’’ as an Equity Trading Permit issued by the Exchange for effecting approved securities transactions on the Exchange’s Trading Facilities. 6 See Exchange Rule 11.13(b)(2). 7 NSX Rule 11.11(c)(10) defines a ‘‘Double Play Order’’ as a market or limit order for which an ETP Holder instructs the System to route to designated away Trading Centers which are approved by the Exchange from time to time without first exposing the order to the NSX Book. A Double Play Order that is not executed in full after routing away receives a new time stamp upon return to the Exchange and is ranked and maintained in the NSX Book in accordance with Rule 11.14(a). E:\FR\FM\21NON1.SGM 21NON1 Federal Register / Vol. 78, No. 225 / Thursday, November 21, 2013 / Notices 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 statutory 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 proposes to amend Section I. (Auto Ex Mode); Section II. (Order Delivery); Section III.A. (Order Routing All Tapes); and Section IV. (Regulatory Fee) of its Fee Schedule to: implement new fees and rebates applicable to executions occurring through Auto Ex Mode; change Section II, Pricing Option A for Order Delivery Mode to discontinue a fee paid by ETP Holders approved to use the Order Delivery Mode (‘‘Order Delivery Users’’) 8 for each Order Delivery Notification in securities priced below $1.00; change Section III.A. to eliminate a rebate of $0.0045 per executed share paid to ETP Holders that direct Double Play Orders in the Select Securities to CBSX; 9 and, change Section IV. to discontinue a fee paid by Order Delivery Users for quotation updates in securities priced under $1.00. The Exchange also proposes to make certain non-material changes to the relevant text of the Fee Schedule to make certain terms used therein consistent with terms used in the Exchange’s rules. tkelley on DSK3SPTVN1PROD with NOTICES Amended Fees and Rebates Applicable to Auto Ex Mode The Exchange is proposing several changes to the fees and rebates applicable under both the Fixed Fee Schedule and the Variable Fee Schedule applicable to executions occurring through the use of the Exchange’s Auto Ex Mode. Specifically, the Exchange is proposing to adjust the volume 8 A ‘‘User’’ is defined in Exchange Rule 1.5 as ‘‘. . . any ETP Holder or Sponsored Participant who is authorized to obtain access to the System. . . .’’ 9 The Select Securities are Apple Inc. (‘‘AAPL’’); Google Inc. (‘‘GOOG’’); Bank of America Corp (‘‘BAC’’); Nokia Corporation (‘‘NOK’’); and Sirius Radio, Inc. (‘‘SIRI’’). VerDate Mar<15>2010 17:17 Nov 20, 2013 Jkt 232001 thresholds that must be met before an ETP Holder can be eligible to pay the lowest fees for adding liquidity under the Fixed Fee Schedule. Currently, an ETP Holder must execute average daily volume (‘‘ADV’’) of at least 50,000 shares of added liquidity during a calendar month to qualify for the lowest fees under the Fixed Fee Schedule. The Exchange is proposing to change this volume threshold to ADV of at least 25,000 executed shares of added liquidity during a calendar month. Along with this change to the qualifying volume threshold, the Exchange is proposing to adjust certain fees and rebates under both the Variable and Fixed Schedules. For ETP Holders with ADV within Tier 1 (up to 500,000 executed shares), the Exchange will reduce the fee for removing liquidity under the Fixed Fee Schedule from $0.0030 to $0.0029. In the Variable Fee Schedule, the Exchange proposes to increase the rebate to add liquidity in Tier 4 (ADV greater than 10 [sic] 5 million shares but less than 10 million shares) from $0.0028 under the current schedule to $0.0029. For Tier 5, which the Exchange proposes to amend and redefine as ADV of greater than [sic] 10 million shares executed, the Exchange proposes to increase the rebate for adding liquidity under the Variable Fee Schedule from $0.0029 to $0.0031. The Exchange is further proposing to eliminate Tier 6, defined in the current Fixed and Variable Fee Schedules as ADV in excess of [sic] 20 million shares. The Exchange believes that the proposed amendment to increase the liquidity rebate under Tier 5 in the Variable Fee Schedule provides an appropriate rebate for ETP Holders with ADV in excess of 10 million shares, eliminating the need for the additional Tier 6 pricing. In addition, the Tier 5 ADV amounts are more reflective of the actual volume totals currently executed by ETP Holders. The Exchange submits that eliminating Tier 6 for both the Fixed and Variable Fee Schedules operates to simplify the Fee Schedule and provide a fee and rebate structure that better aligns with actual volume totals. Additionally, the Exchange is proposing that, for Tape B securities 11 10 The Commission notes that the corresponding rule text refers to amounts greater than or equal to for the 5, 10, and 20 million share thresholds referenced herein, and that the rule text is controlling. 11 The term ‘‘Tape B’’ securities refers to the designation assigned in the Consolidated Tape Association (‘‘CTA’’) Plan for reporting trades with respect to securities in Network B, which are securities listed on NYSE MKT, formerly NYSE Amex, and other exchanges. Tape B securities do PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 69901 s only, each ETP Holder that executes ADV of at least 25,000 shares of added liquidity in Auto Ex Mode during a calendar month will receive a rebate of $0.0034 under the Fixed Fee Schedule per executed share, to apply across all ADV tiers of the Fixed Fee schedule. This amendment is intended to provide added incentive to ETP Holders to add liquidity in Tape B symbols on the Exchange, thereby increasing trading volumes and providing better execution opportunities for ETP Holders and their customers while maximizing the rebates available to ETP Holders for posting liquidity on the Exchange. The Exchange believes that the proposed changes to certain fees and rebates applicable to Auto Ex Mode will operate to incentivize ETP Holders to post additional liquidity on the Exchange, increase trading opportunities for ETP Holders and their customers, and enhance the efficiency and cost-effectiveness of trading on the Exchange. Amended Rebate for Double Play Orders in the Select Securities The Exchange is proposing to amend the Fee Schedule to eliminate the enhanced rebate of $0.0045 per executed share that the Exchange currently pays to ETP Holders that direct Double Play Orders in the Select Securities to CBSX. Double Play Orders routed to and executed on CBSX will be subject to the rebate program applicable to all other securities priced at $1.00 and above under Section III.A. of the Fee Schedule, which provides for a rebate of $0.0015 per executed share. The Exchange implemented the enhanced rebate of $0.0045 for executions of Double Play Orders in the Select Securities directed to CBSX as of July 1, 2013.12 As of September 3, 2013, the Exchange amended the Fee Schedule to remove AMD and MU from not include securities listed on the New York Stock Exchange, Inc. or the NASDAQ Stock Market LLC. 12 The Exchange filed for immediate effectiveness amendments to its Fee Schedule, effective July 1, 2013, that: Established the $0.0045 per share rebate for executions of Double Play Orders in the Select Securities on CBSX; clarified that the unexecuted portion of a Double Play Order that is returned to NSX after its initial route to CBSX and subsequently executed on the NSX or routed away in accordance with NSX Rule 11.15(a)(ii) is subject to the standard Fee Schedule; and clarified that the $0.0030 per share routing fee applies only to orders routed by the Exchange in accordance with NSX Rule 11.15(a)(ii). The Select Securities initially identified included Advanced Micro Devices, Inc. (‘‘AMD’’) and Micron Technology, Inc. (‘‘MU’’) in addition to BAC, NOK, and SIRI. See Exchange Act Release No. 34–69941; 78 FR 41966; SR–NSX–2013–14. E:\FR\FM\21NON1.SGM 21NON1 69902 Federal Register / Vol. 78, No. 225 / Thursday, November 21, 2013 / Notices the list of Select Securities and add AAPL and GOOG.13 In its previous filings with respect to the enhanced rebates for Double Play Orders directed to and executed on CBSX, the Exchange noted that CBSX had determined the list of Select Securities and, because the Exchange intended to pass through the rebates to ETP Holders that directed Double Play Orders in the Select Securities to CBSX, it made conforming changes to the NSX Fee Schedule. CBSX has determined that, at present, it will not pay the enhanced rebate of $0.0045 per executed share for any of the symbols that comprise the list of Select Securities. The enhanced per share rebate for executed Double Play Orders in the Select Securities was an attempt to increase liquidity provision in these symbols, but such increased liquidity was not attained. The Exchange is therefore making conforming changes to the Fee Schedule to remove all of the symbols that currently comprise the list of Select Securities and will pay the rebate of $0.0015 per executed share applicable to all other routed orders in securities priced at $1.00 and above under Section III.A. of the Fee Schedule. If in the future the Exchange seeks to identify securities for the Select Securities list and apply a different fee and rebate program, it would do so upon a filing with the Commission pursuant to section 19(b) of the Act. tkelley on DSK3SPTVN1PROD with NOTICES Amended Fees Applicable to Order Delivery Mode The Exchange is further proposing to amend the Fee Schedule with respect to Order Delivery Mode by, first, eliminating securities priced below $1.00 from the monthly volume threshold of 1.5 million delivered Order Delivery Notifications that must be met before an Order Delivery User is no longer subject to the $0.35 fee per Order Delivery Notification fee. As a result, all Order Delivery Notifications in securities priced below $1.00 will not be subject to the Order Delivery Notification fee. Second, the Exchange is proposing to eliminate the quotation update fee in securities priced below $1.00, applicable to both new and existing Order Delivery Users. The Exchange states that it is proposing these changes to better align the fees and rebates applicable to Order Delivery Mode; to provide a more cost-effective structure; and to encourage greater activity in securities priced below $1.00 through the Order Delivery Mode. 13 See Exchange Act Release No. 34–70525; 78 FR 60954; SR–NSX–2013–18. VerDate Mar<15>2010 17:17 Nov 20, 2013 Jkt 232001 Currently, under Section II. Pricing Option A of the Fee Schedule, the Exchange does not pay a transaction rebate or a market data rebate for securities priced under $1.00, but assesses a fee of $0.35 for each Order Delivery Notification, up to 1.5 million Order Delivery Notifications per month, that the System delivers to Order Delivery Users for potential execution against a posted displayed or undisplayed order. The Exchange states that, by proposing to eliminate from this volume threshold securities priced below $1.00 the and charge no fee per Order Delivery Notification for such securities, it is seeking to balance its Fee Schedule to better align the fees and rebates applicable to Order Delivery Notifications in sub-dollar securities. The Exchange states that it is proposing the change to enhance the incentives for an Order Delivery User to post bids and offers in securities priced below $1.00 on the NSX Book 14 since the Order Delivery User will not be charged the Order Delivery Notification fee when notified by the Exchange that its posted orders has been matched by the System for execution against a customer order. The Exchange makes it clear in the Fee Schedule that Order Delivery Notifications delivered to the Order Delivery User in securities priced below $1.00 shall not count toward the 1.5 million Order Delivery Notification fee cap applicable to securities priced at $1.00 and above. The Exchange is also proposing to amend Section IV. of the Fee Schedule to eliminate the quotation update fee in securities priced below $1.00, applicable to both new and existing Order Delivery Users.15 This proposed change is also directed at incentivizing Order Delivery Users to increase their use of Order Delivery Mode for quoting in securities priced below $1.00 by eliminating the fees that they would otherwise pay for quotation updates. The Exchange believes that by providing these incentives to Order Delivery Users, it will encourage more liquidity in securities priced below $1.00 on the Exchange, provide new opportunities for ETP Holders to interact with Order Delivery Users’ quoted interest in 14 Exchange Rule 1.5 defines the term ‘‘NSX Book’’ as ‘‘. . . the System’s electronic file of orders.’’ 15 For securities priced at $1.00 and above, the Exchange will continue to apply a quotation update fee of $0.000467 to an Order Delivery User’s first 150 million quotation updates each calendar month, with no fee applied after this threshold is met. New Order Delivery Users will be charged a reduced fee of $0.000667 per quotation update in securities priced at $1.00 and above for the first three months of operation as an Order Delivery User. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 securities priced below $1.00, and provide for a simpler and more costefficient fee and rebate structure. Finally, the Exchange is also proposing to change the Fee Schedule to substitute references to an ‘‘ETP Holder’’ with the term ‘‘Order Delivery User’’ and describing such User as an ETP Holder approved for Order Delivery Mode. This non-material change will operate to provide clarity in the Fee Schedule and tracks language currently used in the Exchange’s rules. 2. Statutory Basis The Exchange believes that the proposed changes to the Fee Schedule are consistent with the provisions of Section 6(b) of the Act in general,16 and Sections 6(b)(4) 17 and 6(b)(5) 18 of the Act in particular. With respect to the requirements of Section 6(b)(4) of the Act, the Exchange submits that all of the proposed changes, both for Auto Ex Mode and Order Delivery Mode, provide for the equitable allocation of reasonable dues, fees and other charges among ETP Holders, issuers and persons using the Exchange’s facilities. Specifically, the Exchange believes that the proposed fee and rebate changes for executions in Auto Ex Mode under the proposed revisions Section I. of the Fee Schedule are consistent with the provisions of Section 6(b)(4) of the Act in that they constitute an equitable allocation of reasonable dues and fees among ETP Holders and their customers and market participants seeking pools of liquidity. All ETP Holders are eligible to select the proposed pricing model and may do so at their discretion. The Exchange believes that its proposal to change the ADV threshold in the Fixed Fee Schedule from 50,000 shares to 25,000 shares of added liquidity during a calendar month and to adjust the fees for removing liquidity and the rebates for adding liquidity in the Fixed and Variable Fee Schedules, with the amounts varying depending on the volume tiers into which the ETP Holder’s executed volume falls, are consistent with Section 6(b)(5) of the Act in that it is intended to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, protect investors and the public interest, by encouraging greater liquidity on the Exchange, potentially improving execution quality and price-discovery, and promoting an efficient and costeffective means of trading. 16 15 U.S.C. 78f(b). U.S.C. 78f(b)(4). 18 15 U.S.C. 78f(b)(5). 17 15 E:\FR\FM\21NON1.SGM 21NON1 tkelley on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 225 / Thursday, November 21, 2013 / Notices Similarly, the Exchange submits that its proposal to provide a rebate of $0.0034 per executed share to ETP Holders that execute ADV of at least 25,000 shares adding liquidity in Tape B securities, with such rebate to apply across all volume tiers, is intended to attract more volume in those securities to the Exchange, provide additional execution opportunities for ETP Holders seeking to remove that liquidity, and to promote narrower spreads and better execution quality. The Exchange believes that these goals are consistent with Section 6(b)(5) of the Act in that they promote the maintenance of fair and orderly markets, operate to perfect the mechanism of a free and open market and national market system, and are consistent with the protection of investors and the public interest. The Exchange states that its proposed amendment to Section I. of the Fee Schedule to eliminate volume Tier 6 is consistent with the Section 6(b) of the Act and Sections 6(b)(4) and 6(b)(5) in that it better aligns the Fee Schedule with the trading volume of the Exchange, thereby enhancing transparency and clarity, while providing incentives through the proposed amendments to Section I. to promote additional liquidity and increase trading volumes. This change is consistent with both the provisions of Section 6(b)(4) requiring an equitable allocation of reasonable dues and fees among ETP Holders, issuers and other persons using the Exchange’s facilities, and the provisions of section 6(b)(5) requiring that the rules of the Exchange promote just and equitable principles of trade. The Exchange submits that its proposal amend Section III.A. of the Fee Schedule to remove the five symbols that currently comprise the list of Select Securities, and not presently offer an enhanced rebate for any Double Play Orders in Select Securities directed to and executed on CBSX, is consistent with Section 6(b)(4) of the Act in that it is an equitable allocation of reasonable dues and fees among ETP Holders, issuers, and persons using the facilities of the Exchange. The Exchange’s proposed amendment will remove the enhanced rebates applicable to executed Double Play Orders in the Select Securities directed to CBSX. Any such executions in the symbols that formerly comprised the list of Select Securities will now be subject to the fee and rebate schedule applicable to all securities priced at $1.00 and above, which will be assessed equally to all ETP Holders and persons using the facilities of the Exchange. The Exchange believes that it is not inconsistent with Section 6 of the VerDate Mar<15>2010 17:17 Nov 20, 2013 Jkt 232001 Act to eliminate the enhanced rebates for executions in Double Play Orders in the five symbols that comprised the Select Securities list when the desired liquidity that the enhanced rebate was intended to incentivize in those symbols is not attained. The Exchange next submits that, with respect to the proposed elimination of the fees for Order Delivery Notifications in securities priced below $1.00, its proposal is consistent with Section 6 of the Act in that it applies equally to all Order Delivery Users with posted interest in such securities on the NSX Book. The Exchange further submits that its proposed elimination of the Order Delivery Notification fee in securities priced below $1.00 is consistent with Section 6(b)(4) in that it is reasonable to differentiate securities priced under $1.00 in determining a reasonable fee and rebate structure. In this instance, the Exchange is proposing an amendment that would eliminate the fee that the Exchange currently charges Order Delivery Users for each Order Delivery Notification in a sub-dollar security, up to 1.5 million notifications per month. Under the current Fee Schedule, this is the same fee that the Exchange charges Order Delivery Users for each order Delivery Notification in a security priced at $1.00 and above, up to 1.5 million notifications per month. Currently, Order Delivery Users receive transaction and market data rebates for securities priced at $1.00 above while no such rebates are available for securities priced below $1.00. The Exchange believes that by eliminating the Order Delivery Notification fee for securities priced below $1.00 it will incentivize Order Delivery Users to post more interest in such securities on the NSX Book, thereby potentially increasing liquidity in such securities and providing more execution opportunities on the Exchange. It will also provide a potentially more advantageous fee and rebate structure for Order Delivery Users, who under the current Fee Schedule are subject to the same fees and volume thresholds for securities priced at or above $1.00 and those priced under $1.00, but without the ability to receive the rebates offered by the Exchange for securities priced at $1.00 and above. For securities priced at $1.00 and above, the 1.5 million Order Delivery Notification fee cap will remain in place. The Exchange submits that the proposed fee structure for Order Delivery Notifications and quotation updates by Order Delivery Users in securities priced below $1.00 is consistent with Section 6(b)(5) of the PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 69903 Act in that it does not permit unfair discrimination between ETP Holders, issuers and customers. The Exchange is proposing the amendments with the goals of providing a balanced fee and rebate structure for order Delivery Users and incentivizing Order Delivery Users to post more liquidity in securities priced under $1.00 on the Exchange. There are other markets and execution venues with different pricing mechanisms offered to attract liquidity to those venues. The Exchange submits that in this highly competitive environment, its proposal to eliminate the Order Delivery Notification and quotation update fees in securities priced under $1.00, applicable to Order Delivery Users, provides alternatives to ETP Holders and their customers, while striving to increase liquidity in securities priced under $1.00 on the Exchange. 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 Act. The Exchange submits that its proposals to enhance the rebates available to ETP Holders using Auto Ex Mode; and eliminate fees paid by Order Delivery Users for Order Delivery Notifications and quotation updates in securities priced below $1.00, are reasonable approaches to incentivize additional order flow in a highly competitive environment and therefore does not present a burden on competition. The proposed rule change to remove the five securities from the list of Select Securities will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed changes will subject the five symbols on the list to the same fee and rebate structure that is now applied to all other securities in which orders are routed. Moreover, the Exchange is seeking to provide a fee and rebate structure that appropriately addresses the balance between fees and rebates and provides an economical and cost-effective means for executing transactions in the Exchange’s market. To this extent, the Exchange submits that the proposed amendments to the Fee Schedule operate to enhance competition among competing trading venues and provide more choices for ETP Holders and their customers. E:\FR\FM\21NON1.SGM 21NON1 69904 Federal Register / Vol. 78, No. 225 / Thursday, November 21, 2013 / Notices C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. 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 Exchange Act 19 and subparagraph (f)(2) of Rule 19b–4.20 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. 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: tkelley on DSK3SPTVN1PROD with NOTICES Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NSX–2013–21 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NSX–2013–21. 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–NSX– 2013–21, and should be submitted on or before December 12, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.21 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–27905 Filed 11–20–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70886; File No. SR– NYSEMKT–2013–92] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Expanding Co-location Services to Provide for a LowerLatency 10 Gigabit Liquidity Center Network Connection in the Exchange’s Data Center November 15, 2013. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on November 7, 2013, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 21 17 CFR 200.30–3(a)(12). U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 19 15 20 17 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4. VerDate Mar<15>2010 17:17 Nov 20, 2013 Jkt 232001 PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to expand its co-location services to provide for a lower-latency 10 gigabit (‘‘Gb’’) Liquidity Center Network (‘‘LCN’’) connection in the Exchange’s data center. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.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 self-regulatory organization 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to expand its co-location services to provide for a new lower-latency 10 Gb LCN connection, referred to as the ‘‘LCN 10 Gb LX,’’ in the Exchange’s data center.4 The Exchange will propose applicable fees for the proposed LCN 10 Gb LX connection via a separate proposed rule change. The LCN is a local area network that is available in the data center and that provides Users with access to the Exchange’s trading and execution systems and to the Exchange’s proprietary market data products.5 LCN 4 The Securities and Exchange Commission (‘‘Commission’’) initially approved the Exchange’s co-location services in Securities Exchange Act Release No. 62961 (September 21, 2010), 75 FR 59299 (September 27, 2010) (SR–NYSEAmex–2010– 80) (the ‘‘Original Co-location Approval’’). The Exchange operates a data center in Mahwah, New Jersey (the ‘‘data center’’) from which it provides co-location services to Users. The Exchange’s colocation services allow Users to rent space in the data center so they may locate their electronic servers in close physical proximity to the Exchange’s trading and execution system. See id. at 59299. 5 For purposes of the Exchange’s co-location services, the term ‘‘User’’ includes (i) member organizations, as that term is defined in the definitions section of the General and Floor Rules E:\FR\FM\21NON1.SGM 21NON1

Agencies

[Federal Register Volume 78, Number 225 (Thursday, November 21, 2013)]
[Notices]
[Pages 69900-69904]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27905]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70890; File No. SR-NSX-2013-21]


Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Fee and Rebate Schedule

November 15, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act '' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ 
notice is hereby given that on November 1, 2013, National Stock 
Exchange, Inc. (``NSX[supreg]'' 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 comment 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 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(a) in order to: 
change certain fees and rebates applicable to executions occurring 
through the ``Auto Ex'' mode of interaction (``Auto Ex Mode'') \3\ with 
the NSX's trading system (the ``System''); \4\ and discontinue charging 
certain fees to Exchange Equity Trading Permit (``ETP'') \5\ Holders 
that are approved to use the Order Delivery mode of interaction with 
the System (``Order Delivery Mode'').\6\ The Exchange is also proposing 
to eliminate the rebate of $0.0045 per executed share for Double Play 
Orders \7\ in five select securities (the ``Select Securities'') 
directed to the CBOE Stock Exchange, Inc. (``CBSX'') and pay the 
standard rebate of $0.0015 per executed share applicable to Double Play 
Orders in all other securities priced at $1.00 and above. The Exchange 
also proposes to make certain non-material changes to the relevant text 
of the Fee Schedule to make certain terms used therein consistent with 
terms used in the Exchange's rules.
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    \3\ See Exchange Rule 11.13 (Proprietary and Agency Orders; 
Modes of Order Interaction), paragraph(b)(1).
    \4\ Under NSX Rule 1.5, the term ``System'' is defined as the 
``the electronic securities communications and trading facility . . 
.through which orders of Users are consolidated for ranking and 
execution.''
    \5\ NSX Rule defines the term ``ETP'' as an Equity Trading 
Permit issued by the Exchange for effecting approved securities 
transactions on the Exchange's Trading Facilities.
    \6\ See Exchange Rule 11.13(b)(2).
    \7\ NSX Rule 11.11(c)(10) defines a ``Double Play Order'' as a 
market or limit order for which an ETP Holder instructs the System 
to route to designated away Trading Centers which are approved by 
the Exchange from time to time without first exposing the order to 
the NSX Book. A Double Play Order that is not executed in full after 
routing away receives a new time stamp upon return to the Exchange 
and is ranked and maintained in the NSX Book in accordance with Rule 
11.14(a).
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    The text of the proposed rule change is available on the Exchange's 
Web site at www.nsx.com, at the Exchange's principal office, and at the 
Commission's Public Reference Room.

[[Page 69901]]

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 statutory 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 proposes to amend Section I. (Auto Ex Mode); Section 
II. (Order Delivery); Section III.A. (Order Routing All Tapes); and 
Section IV. (Regulatory Fee) of its Fee Schedule to: implement new fees 
and rebates applicable to executions occurring through Auto Ex Mode; 
change Section II, Pricing Option A for Order Delivery Mode to 
discontinue a fee paid by ETP Holders approved to use the Order 
Delivery Mode (``Order Delivery Users'') \8\ for each Order Delivery 
Notification in securities priced below $1.00; change Section III.A. to 
eliminate a rebate of $0.0045 per executed share paid to ETP Holders 
that direct Double Play Orders in the Select Securities to CBSX; \9\ 
and, change Section IV. to discontinue a fee paid by Order Delivery 
Users for quotation updates in securities priced under $1.00. The 
Exchange also proposes to make certain non-material changes to the 
relevant text of the Fee Schedule to make certain terms used therein 
consistent with terms used in the Exchange's rules.
---------------------------------------------------------------------------

    \8\ A ``User'' is defined in Exchange Rule 1.5 as ``. . . any 
ETP Holder or Sponsored Participant who is authorized to obtain 
access to the System. . . .''
    \9\ The Select Securities are Apple Inc. (``AAPL''); Google Inc. 
(``GOOG''); Bank of America Corp (``BAC''); Nokia Corporation 
(``NOK''); and Sirius Radio, Inc. (``SIRI'').
---------------------------------------------------------------------------

Amended Fees and Rebates Applicable to Auto Ex Mode
    The Exchange is proposing several changes to the fees and rebates 
applicable under both the Fixed Fee Schedule and the Variable Fee 
Schedule applicable to executions occurring through the use of the 
Exchange's Auto Ex Mode. Specifically, the Exchange is proposing to 
adjust the volume thresholds that must be met before an ETP Holder can 
be eligible to pay the lowest fees for adding liquidity under the Fixed 
Fee Schedule. Currently, an ETP Holder must execute average daily 
volume (``ADV'') of at least 50,000 shares of added liquidity during a 
calendar month to qualify for the lowest fees under the Fixed Fee 
Schedule. The Exchange is proposing to change this volume threshold to 
ADV of at least 25,000 executed shares of added liquidity during a 
calendar month.
    Along with this change to the qualifying volume threshold, the 
Exchange is proposing to adjust certain fees and rebates under both the 
Variable and Fixed Schedules. For ETP Holders with ADV within Tier 1 
(up to 500,000 executed shares), the Exchange will reduce the fee for 
removing liquidity under the Fixed Fee Schedule from $0.0030 to 
$0.0029. In the Variable Fee Schedule, the Exchange proposes to 
increase the rebate to add liquidity in Tier 4 (ADV greater than \10\ 
[sic] 5 million shares but less than 10 million shares) from $0.0028 
under the current schedule to $0.0029. For Tier 5, which the Exchange 
proposes to amend and redefine as ADV of greater than [sic] 10 million 
shares executed, the Exchange proposes to increase the rebate for 
adding liquidity under the Variable Fee Schedule from $0.0029 to 
$0.0031.
---------------------------------------------------------------------------

    \10\ The Commission notes that the corresponding rule text 
refers to amounts greater than or equal to for the 5, 10, and 20 
million share thresholds referenced herein, and that the rule text 
is controlling.
---------------------------------------------------------------------------

    The Exchange is further proposing to eliminate Tier 6, defined in 
the current Fixed and Variable Fee Schedules as ADV in excess of [sic] 
20 million shares. The Exchange believes that the proposed amendment to 
increase the liquidity rebate under Tier 5 in the Variable Fee Schedule 
provides an appropriate rebate for ETP Holders with ADV in excess of 10 
million shares, eliminating the need for the additional Tier 6 pricing. 
In addition, the Tier 5 ADV amounts are more reflective of the actual 
volume totals currently executed by ETP Holders. The Exchange submits 
that eliminating Tier 6 for both the Fixed and Variable Fee Schedules 
operates to simplify the Fee Schedule and provide a fee and rebate 
structure that better aligns with actual volume totals.
    Additionally, the Exchange is proposing that, for Tape B securities 
\11\ s only, each ETP Holder that executes ADV of at least 25,000 
shares of added liquidity in Auto Ex Mode during a calendar month will 
receive a rebate of $0.0034 under the Fixed Fee Schedule per executed 
share, to apply across all ADV tiers of the Fixed Fee schedule. This 
amendment is intended to provide added incentive to ETP Holders to add 
liquidity in Tape B symbols on the Exchange, thereby increasing trading 
volumes and providing better execution opportunities for ETP Holders 
and their customers while maximizing the rebates available to ETP 
Holders for posting liquidity on the Exchange.
---------------------------------------------------------------------------

    \11\ The term ``Tape B'' securities refers to the designation 
assigned in the Consolidated Tape Association (``CTA'') Plan for 
reporting trades with respect to securities in Network B, which are 
securities listed on NYSE MKT, formerly NYSE Amex, and other 
exchanges. Tape B securities do not include securities listed on the 
New York Stock Exchange, Inc. or the NASDAQ Stock Market LLC.
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes to certain fees and 
rebates applicable to Auto Ex Mode will operate to incentivize ETP 
Holders to post additional liquidity on the Exchange, increase trading 
opportunities for ETP Holders and their customers, and enhance the 
efficiency and cost-effectiveness of trading on the Exchange.
Amended Rebate for Double Play Orders in the Select Securities
    The Exchange is proposing to amend the Fee Schedule to eliminate 
the enhanced rebate of $0.0045 per executed share that the Exchange 
currently pays to ETP Holders that direct Double Play Orders in the 
Select Securities to CBSX. Double Play Orders routed to and executed on 
CBSX will be subject to the rebate program applicable to all other 
securities priced at $1.00 and above under Section III.A. of the Fee 
Schedule, which provides for a rebate of $0.0015 per executed share.
    The Exchange implemented the enhanced rebate of $0.0045 for 
executions of Double Play Orders in the Select Securities directed to 
CBSX as of July 1, 2013.\12\ As of September 3, 2013, the Exchange 
amended the Fee Schedule to remove AMD and MU from

[[Page 69902]]

the list of Select Securities and add AAPL and GOOG.\13\
---------------------------------------------------------------------------

    \12\ The Exchange filed for immediate effectiveness amendments 
to its Fee Schedule, effective July 1, 2013, that: Established the 
$0.0045 per share rebate for executions of Double Play Orders in the 
Select Securities on CBSX; clarified that the unexecuted portion of 
a Double Play Order that is returned to NSX after its initial route 
to CBSX and subsequently executed on the NSX or routed away in 
accordance with NSX Rule 11.15(a)(ii) is subject to the standard Fee 
Schedule; and clarified that the $0.0030 per share routing fee 
applies only to orders routed by the Exchange in accordance with NSX 
Rule 11.15(a)(ii). The Select Securities initially identified 
included Advanced Micro Devices, Inc. (``AMD'') and Micron 
Technology, Inc. (``MU'') in addition to BAC, NOK, and SIRI. See 
Exchange Act Release No. 34-69941; 78 FR 41966; SR-NSX-2013-14.
    \13\ See Exchange Act Release No. 34-70525; 78 FR 60954; SR-NSX-
2013-18.
---------------------------------------------------------------------------

    In its previous filings with respect to the enhanced rebates for 
Double Play Orders directed to and executed on CBSX, the Exchange noted 
that CBSX had determined the list of Select Securities and, because the 
Exchange intended to pass through the rebates to ETP Holders that 
directed Double Play Orders in the Select Securities to CBSX, it made 
conforming changes to the NSX Fee Schedule. CBSX has determined that, 
at present, it will not pay the enhanced rebate of $0.0045 per executed 
share for any of the symbols that comprise the list of Select 
Securities. The enhanced per share rebate for executed Double Play 
Orders in the Select Securities was an attempt to increase liquidity 
provision in these symbols, but such increased liquidity was not 
attained. The Exchange is therefore making conforming changes to the 
Fee Schedule to remove all of the symbols that currently comprise the 
list of Select Securities and will pay the rebate of $0.0015 per 
executed share applicable to all other routed orders in securities 
priced at $1.00 and above under Section III.A. of the Fee Schedule. If 
in the future the Exchange seeks to identify securities for the Select 
Securities list and apply a different fee and rebate program, it would 
do so upon a filing with the Commission pursuant to section 19(b) of 
the Act.
Amended Fees Applicable to Order Delivery Mode
    The Exchange is further proposing to amend the Fee Schedule with 
respect to Order Delivery Mode by, first, eliminating securities priced 
below $1.00 from the monthly volume threshold of 1.5 million delivered 
Order Delivery Notifications that must be met before an Order Delivery 
User is no longer subject to the $0.35 fee per Order Delivery 
Notification fee. As a result, all Order Delivery Notifications in 
securities priced below $1.00 will not be subject to the Order Delivery 
Notification fee. Second, the Exchange is proposing to eliminate the 
quotation update fee in securities priced below $1.00, applicable to 
both new and existing Order Delivery Users. The Exchange states that it 
is proposing these changes to better align the fees and rebates 
applicable to Order Delivery Mode; to provide a more cost-effective 
structure; and to encourage greater activity in securities priced below 
$1.00 through the Order Delivery Mode.
    Currently, under Section II. Pricing Option A of the Fee Schedule, 
the Exchange does not pay a transaction rebate or a market data rebate 
for securities priced under $1.00, but assesses a fee of $0.35 for each 
Order Delivery Notification, up to 1.5 million Order Delivery 
Notifications per month, that the System delivers to Order Delivery 
Users for potential execution against a posted displayed or undisplayed 
order. The Exchange states that, by proposing to eliminate from this 
volume threshold securities priced below $1.00 the and charge no fee 
per Order Delivery Notification for such securities, it is seeking to 
balance its Fee Schedule to better align the fees and rebates 
applicable to Order Delivery Notifications in sub-dollar securities. 
The Exchange states that it is proposing the change to enhance the 
incentives for an Order Delivery User to post bids and offers in 
securities priced below $1.00 on the NSX Book \14\ since the Order 
Delivery User will not be charged the Order Delivery Notification fee 
when notified by the Exchange that its posted orders has been matched 
by the System for execution against a customer order. The Exchange 
makes it clear in the Fee Schedule that Order Delivery Notifications 
delivered to the Order Delivery User in securities priced below $1.00 
shall not count toward the 1.5 million Order Delivery Notification fee 
cap applicable to securities priced at $1.00 and above.
---------------------------------------------------------------------------

    \14\ Exchange Rule 1.5 defines the term ``NSX Book'' as ``. . . 
the System's electronic file of orders.''
---------------------------------------------------------------------------

    The Exchange is also proposing to amend Section IV. of the Fee 
Schedule to eliminate the quotation update fee in securities priced 
below $1.00, applicable to both new and existing Order Delivery 
Users.\15\ This proposed change is also directed at incentivizing Order 
Delivery Users to increase their use of Order Delivery Mode for quoting 
in securities priced below $1.00 by eliminating the fees that they 
would otherwise pay for quotation updates. The Exchange believes that 
by providing these incentives to Order Delivery Users, it will 
encourage more liquidity in securities priced below $1.00 on the 
Exchange, provide new opportunities for ETP Holders to interact with 
Order Delivery Users' quoted interest in securities priced below $1.00, 
and provide for a simpler and more cost-efficient fee and rebate 
structure.
---------------------------------------------------------------------------

    \15\ For securities priced at $1.00 and above, the Exchange will 
continue to apply a quotation update fee of $0.000467 to an Order 
Delivery User's first 150 million quotation updates each calendar 
month, with no fee applied after this threshold is met. New Order 
Delivery Users will be charged a reduced fee of $0.000667 per 
quotation update in securities priced at $1.00 and above for the 
first three months of operation as an Order Delivery User.
---------------------------------------------------------------------------

    Finally, the Exchange is also proposing to change the Fee Schedule 
to substitute references to an ``ETP Holder'' with the term ``Order 
Delivery User'' and describing such User as an ETP Holder approved for 
Order Delivery Mode. This non-material change will operate to provide 
clarity in the Fee Schedule and tracks language currently used in the 
Exchange's rules.
2. Statutory Basis
    The Exchange believes that the proposed changes to the Fee Schedule 
are consistent with the provisions of Section 6(b) of the Act in 
general,\16\ and Sections 6(b)(4) \17\ and 6(b)(5) \18\ of the Act in 
particular. With respect to the requirements of Section 6(b)(4) of the 
Act, the Exchange submits that all of the proposed changes, both for 
Auto Ex Mode and Order Delivery Mode, provide for the equitable 
allocation of reasonable dues, fees and other charges among ETP 
Holders, issuers and persons using the Exchange's facilities.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4).
    \18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Exchange believes that the proposed fee and 
rebate changes for executions in Auto Ex Mode under the proposed 
revisions Section I. of the Fee Schedule are consistent with the 
provisions of Section 6(b)(4) of the Act in that they constitute an 
equitable allocation of reasonable dues and fees among ETP Holders and 
their customers and market participants seeking pools of liquidity. All 
ETP Holders are eligible to select the proposed pricing model and may 
do so at their discretion. The Exchange believes that its proposal to 
change the ADV threshold in the Fixed Fee Schedule from 50,000 shares 
to 25,000 shares of added liquidity during a calendar month and to 
adjust the fees for removing liquidity and the rebates for adding 
liquidity in the Fixed and Variable Fee Schedules, with the amounts 
varying depending on the volume tiers into which the ETP Holder's 
executed volume falls, are consistent with Section 6(b)(5) of the Act 
in that it is intended to remove impediments to and perfect the 
mechanism of a free and open market and a national market system and, 
in general, protect investors and the public interest, by encouraging 
greater liquidity on the Exchange, potentially improving execution 
quality and price-discovery, and promoting an efficient and cost-
effective means of trading.

[[Page 69903]]

    Similarly, the Exchange submits that its proposal to provide a 
rebate of $0.0034 per executed share to ETP Holders that execute ADV of 
at least 25,000 shares adding liquidity in Tape B securities, with such 
rebate to apply across all volume tiers, is intended to attract more 
volume in those securities to the Exchange, provide additional 
execution opportunities for ETP Holders seeking to remove that 
liquidity, and to promote narrower spreads and better execution 
quality. The Exchange believes that these goals are consistent with 
Section 6(b)(5) of the Act in that they promote the maintenance of fair 
and orderly markets, operate to perfect the mechanism of a free and 
open market and national market system, and are consistent with the 
protection of investors and the public interest.
    The Exchange states that its proposed amendment to Section I. of 
the Fee Schedule to eliminate volume Tier 6 is consistent with the 
Section 6(b) of the Act and Sections 6(b)(4) and 6(b)(5) in that it 
better aligns the Fee Schedule with the trading volume of the Exchange, 
thereby enhancing transparency and clarity, while providing incentives 
through the proposed amendments to Section I. to promote additional 
liquidity and increase trading volumes. This change is consistent with 
both the provisions of Section 6(b)(4) requiring an equitable 
allocation of reasonable dues and fees among ETP Holders, issuers and 
other persons using the Exchange's facilities, and the provisions of 
section 6(b)(5) requiring that the rules of the Exchange promote just 
and equitable principles of trade.
    The Exchange submits that its proposal amend Section III.A. of the 
Fee Schedule to remove the five symbols that currently comprise the 
list of Select Securities, and not presently offer an enhanced rebate 
for any Double Play Orders in Select Securities directed to and 
executed on CBSX, is consistent with Section 6(b)(4) of the Act in that 
it is an equitable allocation of reasonable dues and fees among ETP 
Holders, issuers, and persons using the facilities of the Exchange. The 
Exchange's proposed amendment will remove the enhanced rebates 
applicable to executed Double Play Orders in the Select Securities 
directed to CBSX. Any such executions in the symbols that formerly 
comprised the list of Select Securities will now be subject to the fee 
and rebate schedule applicable to all securities priced at $1.00 and 
above, which will be assessed equally to all ETP Holders and persons 
using the facilities of the Exchange. The Exchange believes that it is 
not inconsistent with Section 6 of the Act to eliminate the enhanced 
rebates for executions in Double Play Orders in the five symbols that 
comprised the Select Securities list when the desired liquidity that 
the enhanced rebate was intended to incentivize in those symbols is not 
attained.
    The Exchange next submits that, with respect to the proposed 
elimination of the fees for Order Delivery Notifications in securities 
priced below $1.00, its proposal is consistent with Section 6 of the 
Act in that it applies equally to all Order Delivery Users with posted 
interest in such securities on the NSX Book. The Exchange further 
submits that its proposed elimination of the Order Delivery 
Notification fee in securities priced below $1.00 is consistent with 
Section 6(b)(4) in that it is reasonable to differentiate securities 
priced under $1.00 in determining a reasonable fee and rebate 
structure. In this instance, the Exchange is proposing an amendment 
that would eliminate the fee that the Exchange currently charges Order 
Delivery Users for each Order Delivery Notification in a sub-dollar 
security, up to 1.5 million notifications per month. Under the current 
Fee Schedule, this is the same fee that the Exchange charges Order 
Delivery Users for each order Delivery Notification in a security 
priced at $1.00 and above, up to 1.5 million notifications per month. 
Currently, Order Delivery Users receive transaction and market data 
rebates for securities priced at $1.00 above while no such rebates are 
available for securities priced below $1.00.
    The Exchange believes that by eliminating the Order Delivery 
Notification fee for securities priced below $1.00 it will incentivize 
Order Delivery Users to post more interest in such securities on the 
NSX Book, thereby potentially increasing liquidity in such securities 
and providing more execution opportunities on the Exchange. It will 
also provide a potentially more advantageous fee and rebate structure 
for Order Delivery Users, who under the current Fee Schedule are 
subject to the same fees and volume thresholds for securities priced at 
or above $1.00 and those priced under $1.00, but without the ability to 
receive the rebates offered by the Exchange for securities priced at 
$1.00 and above. For securities priced at $1.00 and above, the 1.5 
million Order Delivery Notification fee cap will remain in place.
    The Exchange submits that the proposed fee structure for Order 
Delivery Notifications and quotation updates by Order Delivery Users in 
securities priced below $1.00 is consistent with Section 6(b)(5) of the 
Act in that it does not permit unfair discrimination between ETP 
Holders, issuers and customers. The Exchange is proposing the 
amendments with the goals of providing a balanced fee and rebate 
structure for order Delivery Users and incentivizing Order Delivery 
Users to post more liquidity in securities priced under $1.00 on the 
Exchange. There are other markets and execution venues with different 
pricing mechanisms offered to attract liquidity to those venues. The 
Exchange submits that in this highly competitive environment, its 
proposal to eliminate the Order Delivery Notification and quotation 
update fees in securities priced under $1.00, applicable to Order 
Delivery Users, provides alternatives to ETP Holders and their 
customers, while striving to increase liquidity in securities priced 
under $1.00 on the Exchange.

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 Act. The Exchange submits that 
its proposals to enhance the rebates available to ETP Holders using 
Auto Ex Mode; and eliminate fees paid by Order Delivery Users for Order 
Delivery Notifications and quotation updates in securities priced below 
$1.00, are reasonable approaches to incentivize additional order flow 
in a highly competitive environment and therefore does not present a 
burden on competition.
    The proposed rule change to remove the five securities from the 
list of Select Securities will not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act because the proposed changes will subject the five symbols on 
the list to the same fee and rebate structure that is now applied to 
all other securities in which orders are routed.
    Moreover, the Exchange is seeking to provide a fee and rebate 
structure that appropriately addresses the balance between fees and 
rebates and provides an economical and cost-effective means for 
executing transactions in the Exchange's market. To this extent, the 
Exchange submits that the proposed amendments to the Fee Schedule 
operate to enhance competition among competing trading venues and 
provide more choices for ETP Holders and their customers.

[[Page 69904]]

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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 Exchange Act \19\ and subparagraph 
(f)(2) of Rule 19b-4.\20\ 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.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 rule-comments@sec.gov. Please include 
File Number SR-NSX-2013-21 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NSX-2013-21. 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-NSX-2013-21, and should be 
submitted on or before December 12, 2013.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets, pursuant 
to delegated authority.\21\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27905 Filed 11-20-13; 8:45 am]
BILLING CODE 8011-01-P