Self-Regulatory Organizations; The NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Further Describe the Application of Fees Assessed for Connectivity to the Carteret Test Environment under Chapter VIII of the Exchange's Pricing Schedule, 1399-1401 [2014-00072]
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Federal Register / Vol. 79, No. 5 / Wednesday, January 8, 2014 / Notices
the elimination of the Program; instead,
the Exchange anticipates that all eDPMs will stay on as Market-Makers
and, on an order-by-order basis, as
PMMs.12 The Exchange believes that the
greater participation entitlement under
the PMM program when an order is
preferred provides a stronger incentive
for TPHs to quote at the NBBO than the
lower participation entitlement for eDPMs, which, according to the
Exchange, helps to encourage narrower
spreads.13
In support of its proposal to
discontinue the e-DPM program, the
Exchange further represented that it
believes that the Program adds an
unnecessary layer of complexity to
CBOE rules, system processes, matching
algorithms, and trading procedures.14
The Exchange does not believe that the
e-DPM Program provides CBOE with
any competitive advantage, and believes
that the elimination of the Program will
provide the Exchange with more
flexibility to consider other methods of
encouraging DPM performance.15
In its filing, the Exchange represented
that, if its proposal is approved by the
Commission, CBOE would announce
the elimination of the Program via a
Regulatory Circular, which will include
an end date for the Program that will be
at least two weeks in advance in order
for current e-DPMs to determine their
course of action following elimination
of the Program.16
III. Discussion and Commission
Findings
After careful review of the proposal,
the Commission finds that the proposed
rule change is consistent with the
requirements of the Act and the rules
and regulations thereunder that are
applicable to a national securities
exchange.17 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(1) of the Act,18 which requires,
among other things, that the Exchange
be so organized and have the capacity
to carry out the purposes of the Act. The
Commission also finds that the
proposed rule change is consistent with
Section 6(b)(5) of the Act,19 which
requires, among other things, that the
rules of a national securities exchange
mstockstill on DSK4VPTVN1PROD with NOTICES
12 See
id.
id.
14 See id.
15 See id.
16 See id.
17 In approving the proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
18 15 U.S.C. 78f(b)(1).
19 15 U.S.C. 78f(b)(5).
be designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
As noted above, CBOE represents that
all e-DPMs are also registered as PMMs.
Accordingly, CBOE does not believe
that elimination of the Program will
harm CBOE’s market quality as it
anticipates current e-DPMs will
continue to serve as market-makers on
the Exchange and as PMMs on orders
that are preferred to them.
Further, because such a high
percentage of CBOE’s order-flow is
preferenced (85% as indicated by
CBOE), and because PMM status
provides a comparably larger
entitlement for preferred orders
compared to e-DPM status, CBOE
believes that the e-DPM program does
not provide an incentive great enough to
warrant the complexity the e-DPM
program brings to the Exchange’s rules,
systems, and processes. CBOE also
noted that other options exchanges do
not have programs similar to the e-DPM
program.20
Based on CBOE’s representations,
discussed above, the Commission
believes that elimination of the e-DPM
Program should not hinder the
Exchange’s capacity to carry out the
purposes of the Act nor should it
impede CBOE’s ability to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,21 that the
proposed rule change (SR–CBOE–2013–
110) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.22
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–00071 Filed 1–7–14; 8:45 am]
BILLING CODE 8011–01–P
13 See
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Jkt 232001
Notice, supra note 3, at 69724.
U.S.C. 78s(b)(2).
22 17 CFR 200.30–3(a)(12).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–71228; File No. SR–Phlx–
2013–128]
Self-Regulatory Organizations; The
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Further
Describe the Application of Fees
Assessed for Connectivity to the
Carteret Test Environment under
Chapter VIII of the Exchange’s Pricing
Schedule
January 2, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
23, 2013, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) a
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.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
The Exchange proposes a rule change
to further describe the application of
fees assessed pursuant to subparagraph
(d) of ‘‘Testing Facilities’’ under Chapter
VIII of the Exchange’s Pricing Schedule.
The Exchange is also eliminating
outdated text relating to the
applicability of the fees assessed for use
and connectivity to the Testing
Facilities.
The text of the proposed rule change
is below. Proposed new language is
italicized. Proposed deletions are in
brackets.
*
*
*
*
*
NASDAQ OMX PHLX LLC 1 PRICING
SCHEDULE
ALL BILLING DISPUTES MUST BE
SUBMITTED TO THE EXCHANGE IN
WRITING AND MUST BE
ACCOMPANIED BY SUPPORTING
DOCUMENTATION. ALL DISPUTES
MUST BE SUBMITTED NO LATER
THAN SIXTY (60) DAYS AFTER
RECEIPT OF A BILLING INVOICE,
EXCEPT FOR DISPUTES CONCERNING
NASDAQ OMX PSX FEES,
PROPRIETARY DATA FEED FEES AND
CO-LOCATION SERVICES FEES. AS OF
JANUARY 3, 2011, THE EXCHANGE
20 See
21 15
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Sfmt 4703
1399
1 15
2 17
E:\FR\FM\08JAN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
08JAN1
1400
Federal Register / Vol. 79, No. 5 / Wednesday, January 8, 2014 / Notices
WILL CALCULATE FEES ON A TRADE
DATE BASIS.
_________
1 PHLX® is a registered trademark of
The NASDAQ OMX Group, Inc.
*
*
*
*
*
VIII. NASDAQ OMX PSX FEES
*
*
*
*
*
Testing Facilities[†]
The Exchange operates two test
environments. One is located in
Ashburn, Virginia and the other in
Carteret, New Jersey. Unless otherwise
noted, reference to the ‘‘Testing
Facility’’ applies to both environments.
(a)–(c) No change.
(d) Subscribers to the Testing Facility
located in Carteret, New Jersey shall pay
a fee of $1,000 per hand-off, per month
for connection to the Testing Facility.
The hand-off fee includes either a 1Gb
or 10Gb switch port and a cross connect
to the Testing Facility. Subscribers shall
also pay a one-time installation fee of
$1,000 per hand-off, which is waived for
all installations ordered prior to March
31, 2014.
The connectivity provided under this
rule also provides connectivity to the
other test environments of NASDAQ
OMX BX, Inc. and The NASDAQ Stock
Market LLC.
[† Testing Facility fees will be waived
for the period ending on the sixth full
calendar month following the launch of
NASDAQ OMX PSX.]
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
mstockstill on DSK4VPTVN1PROD with NOTICES
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 those
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to amend
the Phlx Pricing Schedule to more fully
describe the application of the newly-
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16:42 Jan 07, 2014
Jkt 232001
adopted fee 3 assessed for direct
connectivity to the Testing Facility 4 test
environment located in Carteret, New
Jersey (‘‘Carteret’’). The Testing Facility
provides subscribers with a virtual
Exchange System test environment that
closely approximates the production
environment and on which they may
test their automated systems that
integrate with the Exchange. The
Exchange recently developed a test
environment located in Carteret that
provides NASDAQ OMX PSX (‘‘PSX’’) 5
equity trade testing functionality. The
new test environment was developed
together with equity test environments
of the Phlx’s sister exchanges, NASDAQ
OMX BX, Inc. and The NASDAQ Stock
Market LLC, also located at Carteret,
New Jersey (collectively with PSX, the
‘‘Equity Markets’’).
The Exchange is proposing to add
language to subparagraph (d) of ‘‘Testing
Facilities’’ under Chapter VIII of the
Exchange’s Pricing Schedule that was
erroneously omitted when the fee was
originally adopted.6 The new rule text
explains that a firm that is a member of
more than one of the Equity Markets
may access the test environments of
each of the Equity Markets of which it
is a member through a single
connectivity subscription under the
rule. The Exchange notes that each of
the Equity Markets has identical
installation and hand-off fees for
Carteret connectivity and these fees
relate to the physical connection to the
hardware infrastructure that houses all
three test environments of the Equity
Markets. Members of the Equity Markets
must separately pay port fees to connect
to the individual test environments of
the Equity Markets of which it is a
member within the hardware
infrastructure housing them.7 Therefore,
a firm that is a member of multiple
Equity Markets is not charged the
Carteret connectivity fees for a hand-off
under each of the identical rules of such
markets, but rather is assessed a single
market’s Carteret connectivity fees.
Consequently, a member organization of
PSX using the Carteret test environment
may be assessed the connectivity fee
under another Equity Markets’ rules of
which it is a member, yet pay the PSX
port fee to connect to the PSX test
3 See Securities Exchange Act Release No. 71036
(December 11, 2013), 78 FR 76350 (December 17,
2013) (SR–Phlx–2013–116).
4 See https://www.nasdaqtrader.com/
Trader.aspx?id=TestingFacility for a description of
the Testing Facility.
5 PSX is the Phlx equity market.
6 Supra note 3.
7 Phlx Pricing Schedule, Chapter VIII Testing
Facilities subparagraph (a), NASDAQ Rule
7030(d)(1)(B), and BX Rule 7030(d)(1).
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Frm 00039
Fmt 4703
Sfmt 4703
environment. Similarly, a member
organization may subscribe to Carteret
connectivity under the Phlx Pricing
Schedule and not have an obligation to
pay the same fee under the rules of the
other Equity Markets of which it is a
member, but have an obligation to pay
those markets’ port fees. The Exchange
notes that, in adopting the identical fee
for Carteret connectivity, NASDAQ
OMX BX, Inc. included rule text
consistent with the rule text proposed
herein.8 Accordingly, the Exchange is
adding rule text to Carteret connectivity
fee rule to reflect that the connectivity
provided by the rule also provides
access to the test environments of
NASDAQ OMX BX, Inc. and The
NASDAQ Stock Market LLC.
The Exchange is also eliminating text
from the Testing Facilities rule that
relates to a general waiver of fees under
the rule, which was effective with the
launch of PSX and ended six months
thereafter. PSX launched in October
2010,9 and consequently the fee waiver
period has expired. Accordingly, the
Exchange is removing the text relating
to this fee waiver period.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 10 in general, and with
Section 6(b)(5) of the Act,11 in
particular. The Exchange believes the
proposal furthers the objectives of
Section 6(b)(5) of the Act 12 in that it is
designed to promote just and equitable
principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general to protect investors and the
public interest and is not designed to
permit unfair discrimination between
customer, issuers, brokers and dealers.
The Exchange is proposing to add
clarifying language to the rule, which
was erroneously omitted when the rule
was adopted and further describes the
application of the rule. Moreover, the
proposed new rule text is consistent
with the identical rule of NASDAQ
OMX BX, Inc. and how fees are assessed
under that rule. Last, the Exchange is
proposing to eliminate outdated rule
text from the rule, which serves no
purpose. Accordingly, the Exchange
believes that it is consistent with the
protection of investors and the public
8 See Securities Exchange Act Release No. 71035
(December 11, 2013), 78 FR 76344 (December 17,
2013) (SR–BX–2013–058).
9 See https://www.nasdaqtrader.com/
Tradernews.aspx?id=eta2010-56.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
12 Id.
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08JAN1
Federal Register / Vol. 79, No. 5 / Wednesday, January 8, 2014 / Notices
interest to avoid potential market
participant confusion that may be
caused by the omission of the proposed
rule text and the inclusion of outdated
rule text.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
The proposed rule change clarifies how
fees will be assessed to a firm that is a
member of more than one of the Equity
Markets and makes clear that a member
organization may gain access to the test
environments of the other Equity
Markets through a subscription under
the rule. Members of multiple Equity
Markets are assessed the same fee for
Carteret connectivity and must pay the
port fees of each of the Equity Markets
to gain access to such markets’ test
environments. In addition, the proposed
change eliminates rule text that relates
to a fee waiver that has since expired.
As a consequence, the Exchange does
not believe that the proposed rule
change is impactful to competition in
any respect.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) 14 thereunder. Because the
foregoing proposed rule change does
not: (i) Significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 15 and
mstockstill on DSK4VPTVN1PROD with NOTICES
13 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires the Exchange to give the
Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
15 15 U.S.C. 78s(b)(3)(A).
subparagraph (f)(6) of Rule 19b–4
thereunder.16
A proposed rule change filed under
Rule 19b–4(f)(6) 17 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),18 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest.
The Exchange has asked the
Commission to waive the 30-day
operative delay. The Exchange notes
that such waiver will allow the
Exchange to immediately add language
to its rule text that was incorrectly
omitted from a previous rule change,
thereby clarifying its rules and avoiding
potential market participant
confusion.19 The Commission believes
that waiving the 30-day operative delay
is consistent with the protection of
investors and the public interest as the
proposal is designed to avoid potential
investor confusion regarding the
Exchange’s rules and provide
clarification to the public. For these
reasons, the Commission hereby waives
the 30-day operative delay and
designates the proposal operative upon
filing.20
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
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:
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–
Phlx–2013–128 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–Phlx–2013–128. 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 such
filing also will be available for
inspection and copying at the principal
offices of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–Phlx–
2013–128, and should be submitted on
or before January 29, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–00072 Filed 1–7–14; 8:45 am]
BILLING CODE 8011–01–P
14 17
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16 17
CFR 240.19b–4(f)(6).
17 Id.
CFR 240.19b–4(f)(6)(iii).
SR–Phlx–2013–128, Item 7.
20 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
18 17
19 See
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CFR 200.30–3(a)(12).
08JAN1
]]>Agencies
[Federal Register Volume 79, Number 5 (Wednesday, January 8, 2014)]
[Notices]
[Pages 1399-1401]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-00072]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-71228; File No. SR-Phlx-2013-128]
Self-Regulatory Organizations; The NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Further
Describe the Application of Fees Assessed for Connectivity to the
Carteret Test Environment under Chapter VIII of the Exchange's Pricing
Schedule
January 2, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 23, 2013, NASDAQ OMX PHLX LLC (``Phlx'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a 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.
---------------------------------------------------------------------------
\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 a rule change to further describe the
application of fees assessed pursuant to subparagraph (d) of ``Testing
Facilities'' under Chapter VIII of the Exchange's Pricing Schedule. The
Exchange is also eliminating outdated text relating to the
applicability of the fees assessed for use and connectivity to the
Testing Facilities.
The text of the proposed rule change is below. Proposed new
language is italicized. Proposed deletions are in brackets.
* * * * *
NASDAQ OMX PHLX LLC \1\ PRICING SCHEDULE
ALL BILLING DISPUTES MUST BE SUBMITTED TO THE EXCHANGE IN WRITING
AND MUST BE ACCOMPANIED BY SUPPORTING DOCUMENTATION. ALL DISPUTES MUST
BE SUBMITTED NO LATER THAN SIXTY (60) DAYS AFTER RECEIPT OF A BILLING
INVOICE, EXCEPT FOR DISPUTES CONCERNING NASDAQ OMX PSX FEES,
PROPRIETARY DATA FEED FEES AND CO-LOCATION SERVICES FEES. AS OF JANUARY
3, 2011, THE EXCHANGE
[[Page 1400]]
WILL CALCULATE FEES ON A TRADE DATE BASIS.
------------------
\1\ PHLX[supreg] is a registered trademark of The NASDAQ OMX Group,
Inc.
* * * * *
VIII. NASDAQ OMX PSX FEES
* * * * *
Testing Facilities[[dagger]]
The Exchange operates two test environments. One is located in
Ashburn, Virginia and the other in Carteret, New Jersey. Unless
otherwise noted, reference to the ``Testing Facility'' applies to both
environments.
(a)-(c) No change.
(d) Subscribers to the Testing Facility located in Carteret, New
Jersey shall pay a fee of $1,000 per hand-off, per month for connection
to the Testing Facility. The hand-off fee includes either a 1Gb or 10Gb
switch port and a cross connect to the Testing Facility. Subscribers
shall also pay a one-time installation fee of $1,000 per hand-off,
which is waived for all installations ordered prior to March 31, 2014.
The connectivity provided under this rule also provides connectivity to
the other test environments of NASDAQ OMX BX, Inc. and The NASDAQ Stock
Market LLC.
[[dagger] Testing Facility fees will be waived for the period ending on
the sixth full calendar month following the launch of NASDAQ OMX PSX.]
* * * * *
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 those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend the Phlx Pricing Schedule to
more fully describe the application of the newly-adopted fee \3\
assessed for direct connectivity to the Testing Facility \4\ test
environment located in Carteret, New Jersey (``Carteret''). The Testing
Facility provides subscribers with a virtual Exchange System test
environment that closely approximates the production environment and on
which they may test their automated systems that integrate with the
Exchange. The Exchange recently developed a test environment located in
Carteret that provides NASDAQ OMX PSX (``PSX'') \5\ equity trade
testing functionality. The new test environment was developed together
with equity test environments of the Phlx's sister exchanges, NASDAQ
OMX BX, Inc. and The NASDAQ Stock Market LLC, also located at Carteret,
New Jersey (collectively with PSX, the ``Equity Markets'').
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 71036 (December 11,
2013), 78 FR 76350 (December 17, 2013) (SR-Phlx-2013-116).
\4\ See https://www.nasdaqtrader.com/Trader.aspx?id=TestingFacility for a description of the Testing
Facility.
\5\ PSX is the Phlx equity market.
---------------------------------------------------------------------------
The Exchange is proposing to add language to subparagraph (d) of
``Testing Facilities'' under Chapter VIII of the Exchange's Pricing
Schedule that was erroneously omitted when the fee was originally
adopted.\6\ The new rule text explains that a firm that is a member of
more than one of the Equity Markets may access the test environments of
each of the Equity Markets of which it is a member through a single
connectivity subscription under the rule. The Exchange notes that each
of the Equity Markets has identical installation and hand-off fees for
Carteret connectivity and these fees relate to the physical connection
to the hardware infrastructure that houses all three test environments
of the Equity Markets. Members of the Equity Markets must separately
pay port fees to connect to the individual test environments of the
Equity Markets of which it is a member within the hardware
infrastructure housing them.\7\ Therefore, a firm that is a member of
multiple Equity Markets is not charged the Carteret connectivity fees
for a hand-off under each of the identical rules of such markets, but
rather is assessed a single market's Carteret connectivity fees.
Consequently, a member organization of PSX using the Carteret test
environment may be assessed the connectivity fee under another Equity
Markets' rules of which it is a member, yet pay the PSX port fee to
connect to the PSX test environment. Similarly, a member organization
may subscribe to Carteret connectivity under the Phlx Pricing Schedule
and not have an obligation to pay the same fee under the rules of the
other Equity Markets of which it is a member, but have an obligation to
pay those markets' port fees. The Exchange notes that, in adopting the
identical fee for Carteret connectivity, NASDAQ OMX BX, Inc. included
rule text consistent with the rule text proposed herein.\8\
Accordingly, the Exchange is adding rule text to Carteret connectivity
fee rule to reflect that the connectivity provided by the rule also
provides access to the test environments of NASDAQ OMX BX, Inc. and The
NASDAQ Stock Market LLC.
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\6\ Supra note 3.
\7\ Phlx Pricing Schedule, Chapter VIII Testing Facilities
subparagraph (a), NASDAQ Rule 7030(d)(1)(B), and BX Rule 7030(d)(1).
\8\ See Securities Exchange Act Release No. 71035 (December 11,
2013), 78 FR 76344 (December 17, 2013) (SR-BX-2013-058).
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The Exchange is also eliminating text from the Testing Facilities
rule that relates to a general waiver of fees under the rule, which was
effective with the launch of PSX and ended six months thereafter. PSX
launched in October 2010,\9\ and consequently the fee waiver period has
expired. Accordingly, the Exchange is removing the text relating to
this fee waiver period.
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\9\ See https://www.nasdaqtrader.com/Tradernews.aspx?id=eta2010-56.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \10\ in general, and with Section 6(b)(5) of the
Act,\11\ in particular. The Exchange believes the proposal furthers the
objectives of Section 6(b)(5) of the Act \12\ in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest and is not designed to permit unfair discrimination between
customer, issuers, brokers and dealers. The Exchange is proposing to
add clarifying language to the rule, which was erroneously omitted when
the rule was adopted and further describes the application of the rule.
Moreover, the proposed new rule text is consistent with the identical
rule of NASDAQ OMX BX, Inc. and how fees are assessed under that rule.
Last, the Exchange is proposing to eliminate outdated rule text from
the rule, which serves no purpose. Accordingly, the Exchange believes
that it is consistent with the protection of investors and the public
[[Page 1401]]
interest to avoid potential market participant confusion that may be
caused by the omission of the proposed rule text and the inclusion of
outdated rule text.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
\12\ Id.
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
proposed rule change clarifies how fees will be assessed to a firm that
is a member of more than one of the Equity Markets and makes clear that
a member organization may gain access to the test environments of the
other Equity Markets through a subscription under the rule. Members of
multiple Equity Markets are assessed the same fee for Carteret
connectivity and must pay the port fees of each of the Equity Markets
to gain access to such markets' test environments. In addition, the
proposed change eliminates rule text that relates to a fee waiver that
has since expired. As a consequence, the Exchange does not believe that
the proposed rule change is impactful to competition in any respect.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) \14\ thereunder.
Because the foregoing proposed rule change does not: (i) Significantly
affect the protection of investors or the public interest; (ii) impose
any significant burden on competition; and (iii) become operative for
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, it has become effective pursuant to
Section 19(b)(3)(A) of the Act \15\ and subparagraph (f)(6) of Rule
19b-4 thereunder.\16\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
\15\ 15 U.S.C. 78s(b)(3)(A).
\16\ 17 CFR 240.19b-4(f)(6).
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A proposed rule change filed under Rule 19b-4(f)(6) \17\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\18\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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\17\ Id.
\18\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange has asked the Commission to waive the 30-day operative
delay. The Exchange notes that such waiver will allow the Exchange to
immediately add language to its rule text that was incorrectly omitted
from a previous rule change, thereby clarifying its rules and avoiding
potential market participant confusion.\19\ The Commission believes
that waiving the 30-day operative delay is consistent with the
protection of investors and the public interest as the proposal is
designed to avoid potential investor confusion regarding the Exchange's
rules and provide clarification to the public. For these reasons, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\20\
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\19\ See SR-Phlx-2013-128, Item 7.
\20\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings 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:
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-Phlx-2013-128 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-Phlx-2013-128. 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 such filing also will be available
for inspection and copying at the principal offices of the Exchange.
All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to File Number SR-Phlx-2013-128,
and should be submitted on or before January 29, 2014.
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\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. 2014-00072 Filed 1-7-14; 8:45 am]
BILLING CODE 8011-01-P
