Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fee Schedule Under Exchange Rule 7018(a) With Respect to Transactions in Securities Priced at $1 per Share or More, 35194-35196 [2014-14314]
Download as PDF
<![CDATA[
35194
Federal Register / Vol. 79, No. 118 / Thursday, June 19, 2014 / Notices
emcdonald on DSK67QTVN1PROD with NOTICES
DTC filed Amendment No. 1 to the
Proposed Rules.6 On March 10, 2014,
DTC Filed Amendment No 2 to the
Proposed Rules.7 On March 19, 2014,
the Commission published Amendment
Nos. 1 and 2 for comment and instituted
proceedings to determine whether to
approve or disapprove the Proposed
Rules, as modified by Amendment Nos.
1 and 2 (‘‘Order Instituting
Proceedings’’).8 During the course of
these proceedings, the Commission
received six additional comment letters
from five commenters 9 and two letters
in response from DTC.10
Section 19(b)(2) of the Exchange
Act 11 provides that, after initiating
disapproval proceedings, the
Commission shall issue an order
approving or disapproving the proposed
rule change not later than 180 days after
the date of publication of notice of filing
of the proposed rule change. The
Commission may extend the period for
issuing an order approving or
disapproving the proposed rule change,
however, by not more than 60 days if
the Commission determines that a
longer period is appropriate and
publishes the reasons for such
determination. The Proposed Rules
were published for notice and comment
in the Federal Register on December 24,
2013; June 22, 2014 is 180 days from
and Deputy General Counsel, DTCC dated February
10, 2014 (‘‘DTC Letter I’’) and March 3, 2014 (‘‘DTC
Letter II’’).
6 Amendment No. 1 requires DTC to send any
Deposit Chill Notice, as defined herein, and Global
Lock Notice, as defined herein, sent to an issuer to
the issuer’s transfer agent on record with DTC via
overnight courier.
7 Amendment No. 2 makes a variety of changes
to the rule text clarifying the procedures set forth
in the Proposed Rules.
8 See Release No. 34–71745 (March 19, 2014); 79
FR 16392 (March 25, 2014).
9 See Letters to Elizabeth M. Murphy, Secretary,
Commission from: Louis A. Brilleman, Louis A.
Brilleman, P.C. dated April 10, 2014 (‘‘Brilleman
Letter II’’); Charles V. Rossi, Chairman, STA Board
Advisory Committee, Securities Transfer
Association dated April 15, 2014 (‘‘STA Letter II’’);
Daniel Zwiren, President and CEO, Edward
Petraglia, General Counsel, Optigenex Inc. dated
May 5, 2014 (‘‘Optigenex Letter I’’); and Suzanne H.
Shatto dated May 9, 2014 (Shatto Letter II’’). See
Letter to Elizabeth M. Murphy, Secretary,
Commission and Lisa D. Levey, Secretary, the
Depository Trust Company from Daniel Zwiren,
President and CEO, Edward Petraglia, General
Counsel, Optigenex Inc. dated April 15, 2014
(‘‘Optigenex Letter II’’). See Letter to Kevin M.
O’Neill, Deputy Secretary, Commission from Gary
Emmanuel and Harvey Kesner, Sichenzia Ross
Friedman Ference LLP dated April 29, 2014
(‘‘Sichenzia Letter III’’).
10 See Letters to Elizabeth M. Murphy, Secretary,
Commission, from Isaac Montal, Managing Director
and Deputy General Counsel, DTCC dated April 29,
2014 (‘‘DTC Letter III’’) and May 6, 2014 (‘‘DTC
Letter IV’’).
11 15 U.S.C. 78s(b)(2).
VerDate Mar<15>2010
17:25 Jun 18, 2014
Jkt 232001
that date, and August 21, 2014 is 240
days from that date.
The Commission finds it appropriate
to designate a longer period within
which to issue an order approving or
disapproving the Proposed Rules so that
it has sufficient time to consider the
amended proposal, the issues raised in
the comment letters, including comment
letters submitted in response to the
Order Instituting Proceedings, and
DTC’s responses to such comments.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the
Exchange Act,12 designates August 21,
2014, as the date by which the
Commission should either approve or
disapprove the Proposed Rules (SR–
DTC–2013–11).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–14319 Filed 6–18–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72332A; File No. SR–
FINRA–2014–020]
Self-Regulatory Organizations;
Financial Industry Regulatory
Authority, Inc.; Notice of Designation
of a Longer Period for Commission
Action on Proposed Rule Change To
Adopt FINRA Rule 2081, Prohibited
Conditions Relating to Expungement
of Customer Dispute Information;
Correction
June 5, 2014.
Correction
In FR Vol. 79, No. 112 beginning on
page 33625 for Wednesday, June 11,
2014, the self-regulatory organization’s
name was incorrectly stated in the title.
The correct name is Financial Industry
Regulatory Authority, Inc.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–14318 Filed 6–18–14; 8:45 am]
BILLING CODE 8011–01–P
12 Id.
13 17
PO 00000
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72386; File No. SR–BX–
2014–031]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
Fee Schedule Under Exchange Rule
7018(a) With Respect to Transactions
in Securities Priced at $1 per Share or
More
June 13, 2014.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 6,
2014, NASDAQ OMX BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
fee schedule under Exchange Rule
7018(a) with respect to transactions in
securities priced at $1 per share or
more.
The text of the proposed rule change
is also available on the Exchange’s Web
site at https://
nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
CFR 200.30–3(a)(57).
Frm 00047
Fmt 4703
Sfmt 4703
2 17
E:\FR\FM\19JNN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
19JNN1
Federal Register / Vol. 79, No. 118 / Thursday, June 19, 2014 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing three
changes to its fees and rebates
applicable to transactions in securities
priced at $1 or more under BX Rule
7018(a).
First, the Exchange proposes to
increase for all members the credit for
an order that executes against a
midpoint pegged order from $0 to
$0.0003 per share executed. Next, the
Exchange proposes to create a new fee
tier for members that add 3.5 million or
more shares (but less than 5 million
shares) of non-displayed liquidity per
day of $0.0024 per share executed.
The Exchange also proposes to lower
one of the parameters for a member with
(i) shares of liquidity provided and (ii)
total shares of liquidity accessed and
provided in all securities through one or
more of its NASDAQ OMX BX Equities
System market participant identifiers
(‘‘MPIDs’’) that represent more than
0.35% (proposed to be lowered to
0.30%) and 0.45%, respectively, of
consolidated volume 3 (‘‘Consolidated
Volume’’) during the month.
The Exchange believes that the
proposed price cut for taking midpoint
liquidity will encourage firms to access
more resting midpoint liquidity before
routing to other destinations for price
improvement opportunities.
Additionally, the Exchange believes that
the proposed new tier for non-displayed
liquidity will encourage additional
liquidity adding activity from nondisplay participants. Also, relaxing the
standard to qualify as Qualified Market
Maker (‘‘QMM’’) (Tier 1) will enable
more firms to be able to avail
themselves of the more advantageous
QMM credits and overall pricing.
emcdonald on DSK67QTVN1PROD with NOTICES
2. Statutory Basis
BX believes that the proposed rule
change is consistent with the provisions
of Section 6 of the Act,4 in general, and
Sections 6(b)(4) and (b)(5) of the Act,5 in
particular, because it provides for the
equitable allocation of reasonable dues,
fees and other charges among members
and issuers and other persons using any
facility or system that the Exchange
operates or controls, and it does not
3 Consolidated Volume is the consolidated
volume reported to all consolidated transaction
reporting plans by all exchanges and trade reporting
facilities. See BX Rule 7018(a)(1).
4 15 U.S.C. 78f.
5 15 U.S.C. 78f(b)(4), (5).
VerDate Mar<15>2010
17:25 Jun 18, 2014
Jkt 232001
unfairly discriminate between
customers, issuers, brokers or dealers.
The proposed rule changes, in part,
are reflective of the Exchange’s ongoing
efforts to use rebates and discounted
execution fees to attract orders that the
Exchange believes will improve market
quality. Generally, the Exchange seeks
to provide members with discounts that
they deem helpful, and to eliminate
those that they do not. By offering a
credit for members that take liquidity at
the midpoint and by offering reduced
execution fees for members that add a
certain level of non-displayed shares per
day, the Exchange believes it will be
able to further promote these goals by
providing better targeted incentives for
market participants. Also, relaxing the
standard to qualify as QMM (Tier 1) will
enable more firms to be able to avail
themselves of the more advantageous
QMM credits and overall pricing. Each
of the proposed changes is a procompetitive price reduction designed to
enhance the Exchange’s position in the
marketplace and broaden the execution
opportunities for BX members.
Furthermore, the proposed rule
changes are consistent with statutory
requirements, as the proposed rule
changes discussed herein are not
unfairly discriminatory, do not place an
unnecessary burden on competition,
and represent an equitable allocation of
fees for the reasons set forth below.
The proposed credit increase of $0 to
$0.0003 per share executed for orders
that execute against a midpoint pegged
order is consistent with an equitable
allocation of fees and is not unfairly
discriminatory because this rebate
applies uniformly across all members.
The Exchange believes that this credit
will incentivize members to execute
against midpoint liquidity and this, in
turn, will lead to an increase in price
improvement liquidity and price
improvement generally benefits the
investing public. Also, it is reasonable
and equitable because it reflects the
availability of what is in effect a price
reduction for all members that execute
against a midpoint pegged order.
Additionally, the proposed rule
change to create a new tier for members
that add 3.5 million or more shares (but
less than 5 million shares) of nondisplayed liquidity per day of $0.0024
per share executed is consistent with an
equitable allocation of fees and is not
unfairly discriminatory because the
Exchange believes that this new tier will
incentivize members to add more nondisplayed shares and this, in turn, will
lead to an increase in price
improvement liquidity and price
improvement generally benefits the
investing public and BX members have
PO 00000
Frm 00048
Fmt 4703
Sfmt 4703
35195
an equal opportunity to avail
themselves of this tier should they
desire to do so. It is reasonable in that
it affects similarly situated members in
the same way and because it encourages
additional liquidity adding activity from
participants that want to add nondisplayed liquidity.
Also, the proposed rule change to
relax the standard to qualify as QMM
(Tier 1) by modifying one of the
parameters for a member with (i) shares
of liquidity provided and (ii) total
shares of liquidity accessed and
provided in all securities through one or
more of its NASDAQ OMX BX Equities
MPIDs that represent more than 0.35%
(proposed to be lowered to 0.30%) and
0.45%, respectively, of Consolidated
Volume during the month is consistent
with an equitable allocation of fees and
is not unfairly discriminatory because
the Exchange believes that this will
enable more firms to be able to avail
themselves of the more advantageous
QMM credits and overall pricing should
they wish to pursue this opportunity to
reduce trading costs, and because the
opportunity will apply uniformly across
all members. It is reasonable in that it
affects similarly situated firms in the
same way and because it encourages
firms to take advantage of the more
advantageous QMM credits and overall
pricing.
The proposed pricing changes are, in
part, reflective of BX’s ongoing efforts to
use responsive pricing to attract orders
that BX believes will improve market
quality.
Finally, BX notes that it operates in a
highly competitive market in which
market participants can easily and
readily favor competing venues if they
deem fee levels at a particular venue to
be excessive or rebate opportunities to
be insufficient. In such an environment,
BX must continually adjust its fees or
rebates to remain competitive with other
exchanges. BX believes that the
proposed rule changes reflect this very
competitive environment because the
proposed rule changes are designed to
ensure that the charges and credits for
participation on BX reflect its desire to
attract order flow that improves the
market for all participants.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule changes will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.6
BX notes that it operates in a highly
competitive market in which market
6 15
E:\FR\FM\19JNN1.SGM
U.S.C. 78f(b)(8).
19JNN1
35196
Federal Register / Vol. 79, No. 118 / Thursday, June 19, 2014 / Notices
participants can readily favor over 40
different competing exchanges and
alternative trading systems if they deem
fee levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, BX
must continually adjust its fees to
remain competitive with other
exchanges. Because competitors are free
to modify their own fees in response,
and because market participants may
readily adjust their order routing
practices, BX believes that the degree to
which fee changes in this market may
impose any burden on competition is
extremely limited. In this instance, the
increase to the credit for an order that
executes against a midpoint pegged
order and the new tier for members that
add 3.5 million or more shares (but less
than 5 million shares) of non-displayed
liquidity per day, plus the easing of the
standards to qualify as QMM (Tier 1)
enhances the Exchange’s
competitiveness by introducing a credit
for some and reducing fees for others.
Moreover, because there are numerous
competitive alternatives to the use of the
Exchange, it is likely that BX will lose
market share as a result of the changes
if they are unattractive to market
participants. Accordingly, BX does not
believe that the proposed rule changes
will impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
emcdonald on DSK67QTVN1PROD with NOTICES
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 7 and paragraph (f) of Rule
19b–4 8 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
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 No. SR–BX–
2014–031 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2014–031. 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–BX–
2014–031, and should be submitted on
or before July 10, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–14314 Filed 6–18–14; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72392; File No. SR–CFE–
2014–002]
Self-Regulatory Organizations; CBOE
Futures Exchange, LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change Relating to
the Notification and Reporting
Provisions for Exchange of Contract
for Related Position Transactions and
Block Trades
June 13, 2014.
Pursuant to Section 19(b)(7) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
May 21, 2014 CBOE Futures Exchange,
LLC (‘‘CFE’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change described in
Items I, II, and III below, which Items
have been prepared by CFE. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons. CFE
also has filed this proposed rule change
with the Commodity Futures Trading
Commission (‘‘CFTC’’). CFE filed a
written certification with the CFTC
under Section 5c(c) of the Commodity
Exchange Act (‘‘CEA’’) 2 on May 21,
2014.
I. Self-Regulatory Organization’s
Description of the Proposed Rule
Change
CFE proposes to revise the
notification and reporting provisions
contained in CFE Rules 414 (Exchange
of Contract for Related Position)
(‘‘ECRP’’) and 415 (Block Trading).
The scope of this filing is limited
solely to the application of the rule
changes to security futures traded on
CFE. The only security futures currently
traded on CFE are traded under Chapter
16 of CFE’s Rulebook which is
applicable to Individual Stock Based
and Exchange-Traded Fund Based
Volatility Index (‘‘Volatility Index’’)
security futures.
The text of the proposed rule change
is attached as Exhibit 4 to the filing
submitted by the Exchange but is not
attached to the published notice of the
filing.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, CFE
included statements concerning the
BILLING CODE 8011–01–P
7 15
U.S.C. 78s(b)(3)(A).
8 17 CFR 240.19b–4(f).
VerDate Mar<15>2010
18:13 Jun 18, 2014
1 15
9 17
Jkt 232001
PO 00000
CFR 200.30–3(a)(12).
Frm 00049
Fmt 4703
27
Sfmt 4703
U.S.C. 78s(b)(7).
U.S.C. 7a–2(c).
E:\FR\FM\19JNN1.SGM
19JNN1
]]>Agencies
[Federal Register Volume 79, Number 118 (Thursday, June 19, 2014)]
[Notices]
[Pages 35194-35196]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14314]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72386; File No. SR-BX-2014-031]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Fee Schedule Under Exchange Rule 7018(a) With Respect to Transactions
in Securities Priced at $1 per Share or More
June 13, 2014.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on June 6, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III 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.
---------------------------------------------------------------------------
\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 proposes to amend the fee schedule under Exchange Rule
7018(a) with respect to transactions in securities priced at $1 per
share or more.
The text of the proposed rule change is also available on the
Exchange's Web site at https://nasdaqomxbx.cchwallstreet.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
[[Page 35195]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing three changes to its fees and rebates
applicable to transactions in securities priced at $1 or more under BX
Rule 7018(a).
First, the Exchange proposes to increase for all members the credit
for an order that executes against a midpoint pegged order from $0 to
$0.0003 per share executed. Next, the Exchange proposes to create a new
fee tier for members that add 3.5 million or more shares (but less than
5 million shares) of non-displayed liquidity per day of $0.0024 per
share executed.
The Exchange also proposes to lower one of the parameters for a
member with (i) shares of liquidity provided and (ii) total shares of
liquidity accessed and provided in all securities through one or more
of its NASDAQ OMX BX Equities System market participant identifiers
(``MPIDs'') that represent more than 0.35% (proposed to be lowered to
0.30%) and 0.45%, respectively, of consolidated volume \3\
(``Consolidated Volume'') during the month.
---------------------------------------------------------------------------
\3\ Consolidated Volume is the consolidated volume reported to
all consolidated transaction reporting plans by all exchanges and
trade reporting facilities. See BX Rule 7018(a)(1).
---------------------------------------------------------------------------
The Exchange believes that the proposed price cut for taking
midpoint liquidity will encourage firms to access more resting midpoint
liquidity before routing to other destinations for price improvement
opportunities. Additionally, the Exchange believes that the proposed
new tier for non-displayed liquidity will encourage additional
liquidity adding activity from non-display participants. Also, relaxing
the standard to qualify as Qualified Market Maker (``QMM'') (Tier 1)
will enable more firms to be able to avail themselves of the more
advantageous QMM credits and overall pricing.
2. Statutory Basis
BX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\4\ in general, and Sections 6(b)(4)
and (b)(5) of the Act,\5\ in particular, because it provides for the
equitable allocation of reasonable dues, fees and other charges among
members and issuers and other persons using any facility or system that
the Exchange operates or controls, and it does not unfairly
discriminate between customers, issuers, brokers or dealers.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------
The proposed rule changes, in part, are reflective of the
Exchange's ongoing efforts to use rebates and discounted execution fees
to attract orders that the Exchange believes will improve market
quality. Generally, the Exchange seeks to provide members with
discounts that they deem helpful, and to eliminate those that they do
not. By offering a credit for members that take liquidity at the
midpoint and by offering reduced execution fees for members that add a
certain level of non-displayed shares per day, the Exchange believes it
will be able to further promote these goals by providing better
targeted incentives for market participants. Also, relaxing the
standard to qualify as QMM (Tier 1) will enable more firms to be able
to avail themselves of the more advantageous QMM credits and overall
pricing. Each of the proposed changes is a pro-competitive price
reduction designed to enhance the Exchange's position in the
marketplace and broaden the execution opportunities for BX members.
Furthermore, the proposed rule changes are consistent with
statutory requirements, as the proposed rule changes discussed herein
are not unfairly discriminatory, do not place an unnecessary burden on
competition, and represent an equitable allocation of fees for the
reasons set forth below.
The proposed credit increase of $0 to $0.0003 per share executed
for orders that execute against a midpoint pegged order is consistent
with an equitable allocation of fees and is not unfairly discriminatory
because this rebate applies uniformly across all members. The Exchange
believes that this credit will incentivize members to execute against
midpoint liquidity and this, in turn, will lead to an increase in price
improvement liquidity and price improvement generally benefits the
investing public. Also, it is reasonable and equitable because it
reflects the availability of what is in effect a price reduction for
all members that execute against a midpoint pegged order.
Additionally, the proposed rule change to create a new tier for
members that add 3.5 million or more shares (but less than 5 million
shares) of non-displayed liquidity per day of $0.0024 per share
executed is consistent with an equitable allocation of fees and is not
unfairly discriminatory because the Exchange believes that this new
tier will incentivize members to add more non-displayed shares and
this, in turn, will lead to an increase in price improvement liquidity
and price improvement generally benefits the investing public and BX
members have an equal opportunity to avail themselves of this tier
should they desire to do so. It is reasonable in that it affects
similarly situated members in the same way and because it encourages
additional liquidity adding activity from participants that want to add
non-displayed liquidity.
Also, the proposed rule change to relax the standard to qualify as
QMM (Tier 1) by modifying one of the parameters for a member with (i)
shares of liquidity provided and (ii) total shares of liquidity
accessed and provided in all securities through one or more of its
NASDAQ OMX BX Equities MPIDs that represent more than 0.35% (proposed
to be lowered to 0.30%) and 0.45%, respectively, of Consolidated Volume
during the month is consistent with an equitable allocation of fees and
is not unfairly discriminatory because the Exchange believes that this
will enable more firms to be able to avail themselves of the more
advantageous QMM credits and overall pricing should they wish to pursue
this opportunity to reduce trading costs, and because the opportunity
will apply uniformly across all members. It is reasonable in that it
affects similarly situated firms in the same way and because it
encourages firms to take advantage of the more advantageous QMM credits
and overall pricing.
The proposed pricing changes are, in part, reflective of BX's
ongoing efforts to use responsive pricing to attract orders that BX
believes will improve market quality.
Finally, BX notes that it operates in a highly competitive market
in which market participants can easily and readily favor competing
venues if they deem fee levels at a particular venue to be excessive or
rebate opportunities to be insufficient. In such an environment, BX
must continually adjust its fees or rebates to remain competitive with
other exchanges. BX believes that the proposed rule changes reflect
this very competitive environment because the proposed rule changes are
designed to ensure that the charges and credits for participation on BX
reflect its desire to attract order flow that improves the market for
all participants.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule changes will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended.\6\
BX notes that it operates in a highly competitive market in which
market
[[Page 35196]]
participants can readily favor over 40 different competing exchanges
and alternative trading systems if they deem fee levels at a particular
venue to be excessive, or rebate opportunities available at other
venues to be more favorable. In such an environment, BX must
continually adjust its fees to remain competitive with other exchanges.
Because competitors are free to modify their own fees in response, and
because market participants may readily adjust their order routing
practices, BX believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited. In
this instance, the increase to the credit for an order that executes
against a midpoint pegged order and the new tier for members that add
3.5 million or more shares (but less than 5 million shares) of non-
displayed liquidity per day, plus the easing of the standards to
qualify as QMM (Tier 1) enhances the Exchange's competitiveness by
introducing a credit for some and reducing fees for others. Moreover,
because there are numerous competitive alternatives to the use of the
Exchange, it is likely that BX will lose market share as a result of
the changes if they are unattractive to market participants.
Accordingly, BX does not believe that the proposed rule changes will
impair the ability of members or competing order execution venues to
maintain their competitive standing in the financial markets.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing change has become effective pursuant to Section
19(b)(3)(A) of the Act \7\ and paragraph (f) of Rule 19b-4 \8\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------
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 No. SR-BX-2014-031 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2014-031. 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-BX-2014-031, and should be
submitted on or before July 10, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
---------------------------------------------------------------------------
\9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14314 Filed 6-18-14; 8:45 am]
BILLING CODE 8011-01-P
