Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule Under Section VIII With Respect to Execution and Routing of Orders in Securities Priced at $1 or More Per Share, 41327-41330 [2014-16498]
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Federal Register / Vol. 79, No. 135 / Tuesday, July 15, 2014 / Notices
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–C2–
2014–014 and should be submitted on
or before August 5, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–16495 Filed 7–14–14; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–72572; File No. SR–Phlx–
2014–43]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Exchange’s Pricing Schedule Under
Section VIII With Respect to Execution
and Routing of Orders in Securities
Priced at $1 or More Per Share
July 9, 2014.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s Pricing Schedule under
Section VIII, entitled ‘‘NASDAQ OMX
PSX FEES,’’ with respect to execution
and routing of orders in securities
priced at $1 or more per share.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 27,
2014, NASDAQ OMX PHLX LLC
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. The
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1. Purpose
The purpose of the proposed rule
change is to amend the certain fees and
rebates for order execution and routing
applicable to the use of the order
execution and routing services of the
NASDAQ OMX PSX System (‘‘PSX’’) by
member organizations for all securities
traded at $1 or more per share.
The Exchange is proposing to
eliminate the distinction in the fees
assessed for order execution and routing
based on security type. Currently, the
Exchange has three separate rule
sections 3 that provide charges and
credits for securities that execute on
PSX, which are divided by whether the
executed security is listed on The
Nasdaq Stock Market (‘‘Nasdaq’’), New
York Stock Exchange (‘‘NYSE’’), or an
exchange other than Nasdaq or NYSE
(collectively, ‘‘Exchange-Listed
Securities’’). The three sections are
largely identical in terms of the
13 17
1 15
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3 NASDAQ OMX PHLX LLC Pricing Schedule,
Section VIII(a)(1)–(3).
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41327
categories for which charges are
assessed and credits given, with the
differences noted in the discussion
below. The Exchange is combining all
three sections into one section, which
will result in a single category of credits
provided and charges assessed on
executions in quotes/orders on PSX.
Amended Fees for Execution of Quotes/
Orders
The Exchange proposes to eliminate
the $0.0030 per share charge currently
assessed for orders in Exchange-Listed
Securities entered through a PSX market
participant identifier (‘‘MPID’’) through
which the member organization
provides an average daily volume of
10,000 or more shares of liquidity
during the month. The Exchange is also
proposing to reduce the charge assessed
for an order that is designated as eligible
for routing in Exchange-Listed
Securities from $0.0030 per share to
$0.0026 per share. Similarly, the
Exchange is proposing to reduce the
charge assessed for all other orders in
Exchange-Listed Securities from
$0.0030 per share to $0.0026 per share.
Amended Credits for Execution of
Quotes/Orders: Displayed Orders
The Exchange is proposing to provide
a new credit for the execution of
displayed quotes and orders in
securities listed on Nasdaq, and to
reduce the related credits currently
provided for execution of displayed
quotes and orders in securities listed on
NYSE and other exchanges. Currently,
for a security listed on NYSE or other
exchanges, the Exchange provides a
credit of $0.0030 per share executed for
Quotes/Orders entered by a member
organization that provides an average
daily volume of 6 million or more
shares of liquidity during the month;
provided that (i) the Quote/Order is
entered through a MPID through which
the member organization displays, on
average over the course of the month,
100 shares or more at the national best
bid and/or national best offer at least
25% of the time during regular market
hours in the security that is the subject
of the Quote/Order, or (ii) the member
organization displays, on average over
the course of the month, 100 shares or
more at the national best bid and/or
national best offer at least 25% of the
time during regular market hours in 500
or more securities. The Exchange is
proposing to reduce this credit to
$0.0025 per share executed. In addition,
the Exchange is extending eligibility for
this credit to execution of securities
listed on Nasdaq. As a consequence, the
$0.0025 per share credit will apply to all
Exchange-Listed Securities.
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The Exchange is also proposing to
reduce the credits provided in
Exchange-Listed Securities for Quotes/
Orders entered by a member
organization that provides an average
daily volume of 2 million or more
shares of liquidity during the month;
provided that (i) the Quote/Order is
entered through a MPID through which
the member organization displays, on
average over the course of the month,
100 shares or more at the national best
bid and/or national best offer at least
25% of the time during regular market
hours in the security that is the subject
of the Quote/Order, or (ii) the member
organization displays, on average over
the course of the month, 100 shares or
more at the national best bid and/or
national best offer at least 25% of the
time during regular market hours in 500
or more securities. Currently, the
Exchange provides a credit of $0.0028
per share executed for Nasdaq-listed
securities, and a credit of $0.0029 per
share executed for NYSE listed and
securities listed on other exchanges,
under the applicable rules. The
Exchange is proposing to reduce the
credit provided for all Exchange-Listed
Securities under the consolidated rule
to $0.0024 per share executed.
The Exchange is also proposing to
reduce the credits provided in
Exchange-Listed Securities for Quotes/
Orders entered through a MPID through
which the member organization
provides an average daily volume of
100,000 or more shares of liquidity
during the month. Currently, the
Exchange provides a credit of the
$0.0026 per share executed for
Exchange-Listed Securities. The
Exchange is proposing to reduce the
credit provided for Exchange-Listed
Securities under the consolidated rule
to $0.0021 per share executed.
Lastly, the Exchange is proposing to
reduce the credit provided for all other
displayed Quotes/Orders in ExchangeListed Securities from $0.0020 per share
executed to $0.0015 per share executed.
Amended Credits and New Charges for
Execution of Quotes/Orders: NonDisplayed Orders
The Exchange is proposing to change
the title of the rule section under
Section VIII(a) of the Pricing Schedule
concerning the credits provided for the
execution of non-displayed quotes and
orders to reflect that it no longer
provides only credits, but also charges.
The Exchange is proposing to
eliminate the credit provided to member
organizations for the execution of a
midpoint pegged order or a midpoint
peg post-only order (a ‘‘midpoint
order’’) and instead assess a charge for
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such an execution. Currently, the
Exchange provides a credit of $0.0010
per share executed in Exchange-Listed
Securities. The Exchange is proposing to
replace the credit and instead assess a
charge of $0.0003 per share executed.
In light of the amended title of the
rule, the Exchange is also proposing to
add clarifying rule text concerning the
$0.0005 per share executed credit
provided for other non-displayed orders
in Exchange-Listed Securities.
Specifically, the Exchange is adding the
word ‘‘credit’’ to the rule. The Exchange
is also adding language that makes it
clear that the credit is intended for nondisplayed orders that provide liquidity.
Lastly, the Exchange is proposing to
add a new charge of $0.0003 per share
executed for orders that execute against
resting midpoint order liquidity in
Exchange-Listed Securities.
2. Statutory Basis
The Exchange believes that its
proposal to amend its Pricing Schedule
is consistent with Section 6(b) of the
Act 4 in general, and furthers the
objectives of Sections 6(b)(4) and (b)(5)
of the Act 5 in particular, in that it is an
equitable allocation of reasonable fees
and other charges among Exchange
members and other persons using its
facilities, and it does not unfairly
discriminate between customers,
issuers, brokers or dealers. The
proposed changes are reasonable
because they reflect a modest decrease
in the credits provided in the execution
of certain orders and a modest increase
in the fees assessed for others, which
will allow the Exchange to reduce costs
and increase revenue.
The proposed change with respect to
consolidating the three fee schedules
under Section VIII(a) is reasonable
because it will simplify the presentation
of the fees, which are similar in many
respects currently and will be identical
under the proposed changes. The
change is consistent with an equitable
allocation of fees and not unfairly
discriminatory because it presents the
harmonized charges and credits in a
single schedule of charges and credits.
The proposed change with respect to
the elimination of the $0.0030 per share
charge assessed for quotes and orders
entered through a MPID through which
the member organization provides an
average daily volume of 10,000 or more
shares of liquidity during the month is
reasonable because it eliminates a fee
assessed on providers of liquidity in
order to encourage further participation
on PSX by these market participants.
PO 00000
4 15
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
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The Exchange believes that the
proposed change is consistent with an
equitable allocation of fees and is not
unfairly discriminatory because it
applies to all market participants who
formally met the requirements of the fee
who will now be assessed the same fee
assessed other market participants that
enters orders that execute orders on
PSX. The Exchange notes that the
current rule assesses a fee that is
identical to the other rates that are
assessed for entering orders that execute
in PSX.
The proposed change with respect to
the reduction of fees assessed for
execution of an order that is designated
as eligible for routing and for other
orders executed on PSX are reasonable
because they create a single, lower
charge assessed for orders that execute
on PSX designed to further attract
liquidity to the market. The Exchange
believes that the proposed changes are
consistent with an equitable allocation
of fees and is not unfairly
discriminatory because they will result
in the same fee assessed on all member
organizations that enter orders that
execute on PSX.
The proposed change with respect to
the new credit for Quotes/Orders
entered by a member organization that
provides an average daily volume of 6
million or more shares of liquidity
during the month; provided that (i) the
Quote/Order is entered through a MPID
through which the member organization
displays, on average over the course of
the month, 100 shares or more at the
national best bid and/or national best
offer at least 25% of the time during
regular market hours in the security that
is the subject of the Quote/Order, or (ii)
the member organization displays, on
average over the course of the month,
100 shares or more at the national best
bid and/or national best offer at least
25% of the time during regular market
hours in 500 or more securities is
reasonable because it provides a new
credit designed to incentivize member
organizations to provide displayed
liquidity in Nasdaq-listed securities.
The Exchange notes that it currently
provides identical categories of
incentive for liquidity provided in
NYSE-listed securities and securities
listed on other exchanges. The Exchange
believes that the proposed changes are
consistent with an equitable allocation
of fees and are not unfairly
discriminatory because they extend the
credits currently provided to member
organizations for the same liquidity in
NYSE-listed securities and securities
listed on other exchanges. Accordingly,
all member organizations will receive
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Federal Register / Vol. 79, No. 135 / Tuesday, July 15, 2014 / Notices
the same credit for providing liquidity
that meets the requirements of the rules.
The Exchange notes that it is reducing
all of the credits under the rule for
providing liquidity in displayed quotes
and orders, regardless of the listing
venue of the security. The Exchange
believes that the proposed reduction in
these credits is reasonable because it
reflects a modest reduction in the
credits provided. Phlx notes that the
credits provided by the rule are given in
lieu of assessing normal fees, and
accordingly provide incentive to market
participants to enter such orders. The
proposed change balances the
Exchange’s desire to provide certain
incentives to market participants with
the costs the Exchange incurs in
providing such incentives, which
ultimately affect the ability to sustain
them. The Exchange believes that the
proposed changes are consistent with an
equitable allocation of fees and is not
unfairly discriminatory because they
will provide the same credits to member
organizations for the same levels of
liquidity provided, regardless of the
listing venue of the security.
The Exchange believes that the
proposed changes to the credits
concerning non-displayed orders are
also consistent with the Act.
Specifically, the believes that the
proposed change from a credit provided
for non-displayed midpoint orders to a
charge is reasonable because it reflects
the Exchange’s need to adjust its credits
and fees in response to the costs and
benefits provided. As discussed above,
credits provided by the Exchange are
given in lieu of assessing normal fees,
and accordingly provide incentive to
market participants to enter such orders.
The proposed change balances the
Exchange’s desire to provide certain
incentives to market participants with
the costs the Exchange incurs in
providing such incentives, which, in the
case of the proposed change, have
outweighed the Exchange’s desire to
incentivize member organizations to
provide such liquidity. The Exchange
believes that the proposed changes are
consistent with an equitable allocation
of fees and is not unfairly
discriminatory because they result in a
uniform charge to member organizations
that provide such non-displayed
liquidity.
The change with respect to the new
charge assessed for orders that remove
liquidity in resting midpoint orders is
reasonable because it imposes a modest
charge for removing midpoint liquidity
from PSX. As discussed above, the
Exchange currently assesses charges for
removing liquidity from PSX and the
proposed new charge is less than the
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standard removal charge, which is
reflective of the price improvement such
orders provide to the market. The
Exchange believes that the proposed
change is consistent with an equitable
allocation of fees and is not unfairly
discriminatory because it applies the
charge for removing liquidity from PSX
in midpoint orders to all member
organizations that remove such
liquidity, regardless of the listing venue
of the security of the order.
Lastly, the clarifying changes to the
title of the rule section concerning
credits for non-displayed orders and the
text of the credit for other non-displayed
orders are reasonable because they more
accurately reflect the nature of the rule
section and the credit provided, in light
of the changes discussed above. The
Exchange believes that the proposed
changes are consistent with an equitable
allocation of fees and are not unfairly
discriminatory because the changes
apply to all member organizations that
use PSX.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.6
The Exchange notes that it operates in
a highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain competitive with other
exchanges and with alternative trading
systems that have been exempted from
compliance with the statutory standards
applicable to exchanges. Because
competitors are free to modify their own
fees in response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited. In this instance, the changes to
the credits provided and charges
assessed are intended to reduce the
Exchange’s costs, while still continuing
to provide an incentive for members to
execute shares on PSX and make use of
its optional routing functionality.
Because there are numerous competitive
alternatives to PSX, it is likely the
Exchange will lose market share as a
result of the changes if they are
unattractive to market participants.
PO 00000
Accordingly, the Exchange does not
believe the proposed changes will
impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received from
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 7 and paragraph (f) of Rule
19b–4 thereunder.8 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
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 rulecomments@sec.gov. Please include File
Number SR–Phlx–2014–43 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–Phlx–2014–43. 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
7 15
6 15
U.S.C. 78f(b)(8).
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U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
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Federal Register / Vol. 79, No. 135 / Tuesday, July 15, 2014 / Notices
Internet Web site (https://www.sec.gov/
rules/sro.shtml).
Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
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–
2014–43 and should be submitted on or
before August 5, 2014.
ETF under NYSE Arca Equities Rule
8.600. The proposed rule change was
published for comment in the Federal
Register on April 11, 2014.3 The
Commission received no comments on
the proposal. On May 21, 2014,
pursuant to Section 19(b)(2) of the Act,4
the Commission designated a longer
period within which to either approve
the proposed rule change, disapprove
the proposed rule change, or institute
proceedings to determine whether to
disapprove the proposed rule change.5
This order institutes proceedings under
Section 19(b)(2)(B) of the Act 6 to
determine whether to approve or
disapprove the proposed rule change.
The institution of proceedings does not
indicate that the Commission has
reached any conclusions with respect to
any of the issues involved, nor does it
mean that the Commission will
ultimately disapprove the proposed rule
change. Rather, as described in Section
III, below, the Commission seeks and
encourages interested persons to
provide additional comment on the
proposed rule change to inform the
Commission’s analysis of whether to
approve or disapprove the proposed
rule change.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
Kevin M. O’Neill,
Deputy Secretary.
II. Description of the Proposal
The Exchange proposes to list and
trade Shares of the Fund pursuant to
NYSE Arca Equities Rule 8.600, which
governs the listing and trading of
Managed Fund Shares on the Exchange.
The Shares will be offered by the
Exchange Traded Concepts Trust
(‘‘Trust’’), a Delaware statutory trust.
The Trust is registered with the
Commission as an investment
company.7 Exchange Traded Concepts,
LLC will be the investment adviser
(‘‘Adviser’’) to the Fund. HTAA, LLC
[FR Doc. 2014–16498 Filed 7–14–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72571; File No. SR–
NYSEArca–2014–30]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change Relating to the Listing
and Trading of Shares of Hull Tactical
US ETF Under NYSE Arca Equities
Rule 8.600
mstockstill on DSK4VPTVN1PROD with NOTICES
July 9, 2014.
I. Introduction
On March 24, 2014, NYSE Arca, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares of Hull Tactical US
9 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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3 See Securities Exchange Act Release No. 71894
(Apr. 7, 2014), 79 FR 20273 (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 Securities Exchange Act Release No. 72214 (May
21, 2014), 79 FR 30672 (May 28, 2014). The
Commission determined that it was appropriate to
designate a longer period within which to take
action on the proposed rule change so that it would
have sufficient time to consider the proposed rule
change. Accordingly, the Commission designated
July 10, 2014 as the date by which it should
approve, disapprove, or institute proceedings to
determine whether to disapprove the proposed rule
change.
6 15 U.S.C. 78s(b)(2)(B).
7 The Trust is registered under the Investment
Company Act of 1940 (‘‘1940 Act’’). The Exchange
states that on July 26, 2013, the Trust filed with the
Commission a post-effective amendment to its
registration statement on Form N–1A relating to the
Fund (File Nos. 333–156529 and 811–22263)
(‘‘Registration Statement’’). In addition, the
Exchange states that the Commission has issued an
order granting certain exemptive relief to the Trust
under the1940 Act. See Investment Company Act
Release No.30445 (Apr. 2, 2013) (File No. 812–
13969) (‘‘Exemptive Order’’).
PO 00000
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will be the sub-adviser to the Fund
(‘‘Sub-Adviser’’).8 SEI Investments Co.
will serve as the administrator of the
Fund. JP Morgan Chase Bank N.A. will
serve as the custodian, transfer agent
and dividend disbursing agent of the
Fund. SEI Investments Distribution Co.
will serve as the distributor for the
Trust.
The Exchange has made the following
representations and statements in
describing the Fund and its investment
strategies, including other portfolio
holdings and investment restrictions.9
General
The investment objective of the Fund
will be to seek long-term capital
appreciation. The Fund will be actively
managed.
Under normal market conditions,10
the Fund will seek to achieve its
investment objective by taking long and
short positions 11 in one or more
exchange traded funds (‘‘ETFs’’) 12 that
8 The Exchange states that neither the Adviser nor
the Sub-Adviser is or is affiliated with a brokerdealer. The Exchange states that, in the event (a) the
Adviser or Sub-Adviser becomes, or becomes newly
affiliated with, a broker-dealer, or (b) any new
manager, adviser or sub-adviser is, or becomes
affiliated with, a broker-dealer, the adviser or subadviser will implement a fire wall with respect to
its relevant personnel or broker-dealer affiliate, as
applicable, regarding access to information
concerning the composition of or changes to the
portfolio, and that adviser or sub-adviser will be
subject to procedures designed to prevent the use
and dissemination of material non-public
information regarding such portfolio.
9 The Commission notes that additional
information regarding the Trust, the Fund, and the
Shares, including investment strategies, risks, net
asset value (‘‘NAV’’) calculation, creation and
redemption procedures, fees, Fund holdings
disclosure policies, distributions, and taxes, among
other information, is included in the Notice and the
Registration Statement, as applicable. See Notice
and Registration Statement, supra notes 3 and 7,
respectively.
10 The term ‘‘under normal market conditions’’
includes, but is not limited to, the absence of
adverse market, economic, political or other
conditions, including extreme volatility or trading
halts in the equity markets or the financial markets
generally; operational issues causing dissemination
of inaccurate market information; and force majeure
type events such as systems failure, natural or manmade disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption, or any similar
intervening circumstance.
11 Short sales are transactions in which the Fund
sells a security it does not own. To complete the
transaction, the Fund must borrow or otherwise
obtain the security to make delivery to the buyer.
The Fund is then obligated to replace the security
borrowed by purchasing the security at the market
price at the time of replacement. The Fund may use
repurchase agreements to satisfy delivery
obligations in short sales transactions. The Fund
may use up to 100% of its net assets to engage in
short sales transactions and collateralize its open
short positions.
12 ETFs are securities registered under the 1940
Act such as those listed and traded on the Exchange
under NYSE Arca Equities Rules 5.2(j)(3)
(Investment Company Units), 8.100 (Portfolio
Depositary Receipts) and 8.600 (Managed Fund
Shares).
E:\FR\FM\15JYN1.SGM
15JYN1
]]>Agencies
[Federal Register Volume 79, Number 135 (Tuesday, July 15, 2014)]
[Notices]
[Pages 41327-41330]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16498]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72572; File No. SR-Phlx-2014-43]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Pricing Schedule Under Section VIII With Respect to
Execution and Routing of Orders in Securities Priced at $1 or More Per
Share
July 9, 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 June 27, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I and II below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's Pricing Schedule
under Section VIII, entitled ``NASDAQ OMX PSX FEES,'' with respect to
execution and routing of orders in securities priced at $1 or more per
share.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the certain
fees and rebates for order execution and routing applicable to the use
of the order execution and routing services of the NASDAQ OMX PSX
System (``PSX'') by member organizations for all securities traded at
$1 or more per share.
The Exchange is proposing to eliminate the distinction in the fees
assessed for order execution and routing based on security type.
Currently, the Exchange has three separate rule sections \3\ that
provide charges and credits for securities that execute on PSX, which
are divided by whether the executed security is listed on The Nasdaq
Stock Market (``Nasdaq''), New York Stock Exchange (``NYSE''), or an
exchange other than Nasdaq or NYSE (collectively, ``Exchange-Listed
Securities''). The three sections are largely identical in terms of the
categories for which charges are assessed and credits given, with the
differences noted in the discussion below. The Exchange is combining
all three sections into one section, which will result in a single
category of credits provided and charges assessed on executions in
quotes/orders on PSX.
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\3\ NASDAQ OMX PHLX LLC Pricing Schedule, Section VIII(a)(1)-
(3).
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Amended Fees for Execution of Quotes/Orders
The Exchange proposes to eliminate the $0.0030 per share charge
currently assessed for orders in Exchange-Listed Securities entered
through a PSX market participant identifier (``MPID'') through which
the member organization provides an average daily volume of 10,000 or
more shares of liquidity during the month. The Exchange is also
proposing to reduce the charge assessed for an order that is designated
as eligible for routing in Exchange-Listed Securities from $0.0030 per
share to $0.0026 per share. Similarly, the Exchange is proposing to
reduce the charge assessed for all other orders in Exchange-Listed
Securities from $0.0030 per share to $0.0026 per share.
Amended Credits for Execution of Quotes/Orders: Displayed Orders
The Exchange is proposing to provide a new credit for the execution
of displayed quotes and orders in securities listed on Nasdaq, and to
reduce the related credits currently provided for execution of
displayed quotes and orders in securities listed on NYSE and other
exchanges. Currently, for a security listed on NYSE or other exchanges,
the Exchange provides a credit of $0.0030 per share executed for
Quotes/Orders entered by a member organization that provides an average
daily volume of 6 million or more shares of liquidity during the month;
provided that (i) the Quote/Order is entered through a MPID through
which the member organization displays, on average over the course of
the month, 100 shares or more at the national best bid and/or national
best offer at least 25% of the time during regular market hours in the
security that is the subject of the Quote/Order, or (ii) the member
organization displays, on average over the course of the month, 100
shares or more at the national best bid and/or national best offer at
least 25% of the time during regular market hours in 500 or more
securities. The Exchange is proposing to reduce this credit to $0.0025
per share executed. In addition, the Exchange is extending eligibility
for this credit to execution of securities listed on Nasdaq. As a
consequence, the $0.0025 per share credit will apply to all Exchange-
Listed Securities.
[[Page 41328]]
The Exchange is also proposing to reduce the credits provided in
Exchange-Listed Securities for Quotes/Orders entered by a member
organization that provides an average daily volume of 2 million or more
shares of liquidity during the month; provided that (i) the Quote/Order
is entered through a MPID through which the member organization
displays, on average over the course of the month, 100 shares or more
at the national best bid and/or national best offer at least 25% of the
time during regular market hours in the security that is the subject of
the Quote/Order, or (ii) the member organization displays, on average
over the course of the month, 100 shares or more at the national best
bid and/or national best offer at least 25% of the time during regular
market hours in 500 or more securities. Currently, the Exchange
provides a credit of $0.0028 per share executed for Nasdaq-listed
securities, and a credit of $0.0029 per share executed for NYSE listed
and securities listed on other exchanges, under the applicable rules.
The Exchange is proposing to reduce the credit provided for all
Exchange-Listed Securities under the consolidated rule to $0.0024 per
share executed.
The Exchange is also proposing to reduce the credits provided in
Exchange-Listed Securities for Quotes/Orders entered through a MPID
through which the member organization provides an average daily volume
of 100,000 or more shares of liquidity during the month. Currently, the
Exchange provides a credit of the $0.0026 per share executed for
Exchange-Listed Securities. The Exchange is proposing to reduce the
credit provided for Exchange-Listed Securities under the consolidated
rule to $0.0021 per share executed.
Lastly, the Exchange is proposing to reduce the credit provided for
all other displayed Quotes/Orders in Exchange-Listed Securities from
$0.0020 per share executed to $0.0015 per share executed.
Amended Credits and New Charges for Execution of Quotes/Orders: Non-
Displayed Orders
The Exchange is proposing to change the title of the rule section
under Section VIII(a) of the Pricing Schedule concerning the credits
provided for the execution of non-displayed quotes and orders to
reflect that it no longer provides only credits, but also charges.
The Exchange is proposing to eliminate the credit provided to
member organizations for the execution of a midpoint pegged order or a
midpoint peg post-only order (a ``midpoint order'') and instead assess
a charge for such an execution. Currently, the Exchange provides a
credit of $0.0010 per share executed in Exchange-Listed Securities. The
Exchange is proposing to replace the credit and instead assess a charge
of $0.0003 per share executed.
In light of the amended title of the rule, the Exchange is also
proposing to add clarifying rule text concerning the $0.0005 per share
executed credit provided for other non-displayed orders in Exchange-
Listed Securities. Specifically, the Exchange is adding the word
``credit'' to the rule. The Exchange is also adding language that makes
it clear that the credit is intended for non-displayed orders that
provide liquidity.
Lastly, the Exchange is proposing to add a new charge of $0.0003
per share executed for orders that execute against resting midpoint
order liquidity in Exchange-Listed Securities.
2. Statutory Basis
The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \4\ in general, and
furthers the objectives of Sections 6(b)(4) and (b)(5) of the Act \5\
in particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities, and it does not unfairly discriminate between customers,
issuers, brokers or dealers. The proposed changes are reasonable
because they reflect a modest decrease in the credits provided in the
execution of certain orders and a modest increase in the fees assessed
for others, which will allow the Exchange to reduce costs and increase
revenue.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4) and (5).
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The proposed change with respect to consolidating the three fee
schedules under Section VIII(a) is reasonable because it will simplify
the presentation of the fees, which are similar in many respects
currently and will be identical under the proposed changes. The change
is consistent with an equitable allocation of fees and not unfairly
discriminatory because it presents the harmonized charges and credits
in a single schedule of charges and credits.
The proposed change with respect to the elimination of the $0.0030
per share charge assessed for quotes and orders entered through a MPID
through which the member organization provides an average daily volume
of 10,000 or more shares of liquidity during the month is reasonable
because it eliminates a fee assessed on providers of liquidity in order
to encourage further participation on PSX by these market participants.
The Exchange believes that the proposed change is consistent with an
equitable allocation of fees and is not unfairly discriminatory because
it applies to all market participants who formally met the requirements
of the fee who will now be assessed the same fee assessed other market
participants that enters orders that execute orders on PSX. The
Exchange notes that the current rule assesses a fee that is identical
to the other rates that are assessed for entering orders that execute
in PSX.
The proposed change with respect to the reduction of fees assessed
for execution of an order that is designated as eligible for routing
and for other orders executed on PSX are reasonable because they create
a single, lower charge assessed for orders that execute on PSX designed
to further attract liquidity to the market. The Exchange believes that
the proposed changes are consistent with an equitable allocation of
fees and is not unfairly discriminatory because they will result in the
same fee assessed on all member organizations that enter orders that
execute on PSX.
The proposed change with respect to the new credit for Quotes/
Orders entered by a member organization that provides an average daily
volume of 6 million or more shares of liquidity during the month;
provided that (i) the Quote/Order is entered through a MPID through
which the member organization displays, on average over the course of
the month, 100 shares or more at the national best bid and/or national
best offer at least 25% of the time during regular market hours in the
security that is the subject of the Quote/Order, or (ii) the member
organization displays, on average over the course of the month, 100
shares or more at the national best bid and/or national best offer at
least 25% of the time during regular market hours in 500 or more
securities is reasonable because it provides a new credit designed to
incentivize member organizations to provide displayed liquidity in
Nasdaq-listed securities. The Exchange notes that it currently provides
identical categories of incentive for liquidity provided in NYSE-listed
securities and securities listed on other exchanges. The Exchange
believes that the proposed changes are consistent with an equitable
allocation of fees and are not unfairly discriminatory because they
extend the credits currently provided to member organizations for the
same liquidity in NYSE-listed securities and securities listed on other
exchanges. Accordingly, all member organizations will receive
[[Page 41329]]
the same credit for providing liquidity that meets the requirements of
the rules.
The Exchange notes that it is reducing all of the credits under the
rule for providing liquidity in displayed quotes and orders, regardless
of the listing venue of the security. The Exchange believes that the
proposed reduction in these credits is reasonable because it reflects a
modest reduction in the credits provided. Phlx notes that the credits
provided by the rule are given in lieu of assessing normal fees, and
accordingly provide incentive to market participants to enter such
orders. The proposed change balances the Exchange's desire to provide
certain incentives to market participants with the costs the Exchange
incurs in providing such incentives, which ultimately affect the
ability to sustain them. The Exchange believes that the proposed
changes are consistent with an equitable allocation of fees and is not
unfairly discriminatory because they will provide the same credits to
member organizations for the same levels of liquidity provided,
regardless of the listing venue of the security.
The Exchange believes that the proposed changes to the credits
concerning non-displayed orders are also consistent with the Act.
Specifically, the believes that the proposed change from a credit
provided for non-displayed midpoint orders to a charge is reasonable
because it reflects the Exchange's need to adjust its credits and fees
in response to the costs and benefits provided. As discussed above,
credits provided by the Exchange are given in lieu of assessing normal
fees, and accordingly provide incentive to market participants to enter
such orders. The proposed change balances the Exchange's desire to
provide certain incentives to market participants with the costs the
Exchange incurs in providing such incentives, which, in the case of the
proposed change, have outweighed the Exchange's desire to incentivize
member organizations to provide such liquidity. The Exchange believes
that the proposed changes are consistent with an equitable allocation
of fees and is not unfairly discriminatory because they result in a
uniform charge to member organizations that provide such non-displayed
liquidity.
The change with respect to the new charge assessed for orders that
remove liquidity in resting midpoint orders is reasonable because it
imposes a modest charge for removing midpoint liquidity from PSX. As
discussed above, the Exchange currently assesses charges for removing
liquidity from PSX and the proposed new charge is less than the
standard removal charge, which is reflective of the price improvement
such orders provide to the market. The Exchange believes that the
proposed change is consistent with an equitable allocation of fees and
is not unfairly discriminatory because it applies the charge for
removing liquidity from PSX in midpoint orders to all member
organizations that remove such liquidity, regardless of the listing
venue of the security of the order.
Lastly, the clarifying changes to the title of the rule section
concerning credits for non-displayed orders and the text of the credit
for other non-displayed orders are reasonable because they more
accurately reflect the nature of the rule section and the credit
provided, in light of the changes discussed above. The Exchange
believes that the proposed changes are consistent with an equitable
allocation of fees and are not unfairly discriminatory because the
changes apply to all member organizations that use PSX.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act, as amended.\6\ The Exchange
notes that it operates in a highly competitive market in which market
participants can readily favor competing venues if they deem fee levels
at a particular venue to be excessive, or rebate opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its fees to remain competitive
with other exchanges and with alternative trading systems that have
been exempted from compliance with the statutory standards applicable
to exchanges. Because competitors are free to modify their own fees in
response, and because market participants may readily adjust their
order routing practices, the Exchange believes that the degree to which
fee changes in this market may impose any burden on competition is
extremely limited. In this instance, the changes to the credits
provided and charges assessed are intended to reduce the Exchange's
costs, while still continuing to provide an incentive for members to
execute shares on PSX and make use of its optional routing
functionality. Because there are numerous competitive alternatives to
PSX, it is likely the Exchange will lose market share as a result of
the changes if they are unattractive to market participants.
Accordingly, the Exchange does not believe the proposed changes will
impair the ability of members or competing order execution venues to
maintain their competitive standing in the financial markets.
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\6\ 15 U.S.C. 78f(b)(8).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \7\ and paragraph (f) of Rule 19b-4
thereunder.\8\ 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 should be approved or disapproved.
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\7\ 15 U.S.C. 78s(b)(3)(A).
\8\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-Phlx-2014-43 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-Phlx-2014-43. 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
[[Page 41330]]
Internet Web site (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal 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-2014-43 and should be
submitted on or before August 5, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-16498 Filed 7-14-14; 8:45 am]
BILLING CODE 8011-01-P
