Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Common Ownership, 53473-53475 [2014-21360]
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Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
19(b)(3)(A)(ii) of the Act 6 and
subparagraph (f)(6) of Rule 19b-4
thereunder.7
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved. The
Exchange has provided the Commission
written notice of its 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.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
tkelley on DSK3SPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2014–082 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2014–082. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml).
Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2014–082 and should be
submitted on or before September 30,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–21361 Filed 9–8–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72966; File No. SR–
NASDAQ–2014–083]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Common Ownership
September 3, 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 August
29, 2014 The NASDAQ Stock Market
LLC (‘‘NASDAQ’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by NASDAQ. 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
NASDAQ proposes to harmonize the
treatment of the aggregation of activity
of affiliated members for the purposes of
assessing charges or credits.
The Exchange requests that this filing
become operative on December 1, 2014.
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
6 15
U.S.C. 78s(b)(3)(a)(ii).
7 17 CFR 240.19b-4(f)(6).
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53473
The text of the proposed rule change
is set forth below. Proposed new
language is in italics; deleted text is in
brackets.
*
*
*
*
*
7027. Aggregation of Activity of
Affiliated Members
(a) No Change
(b) No Change
(c) For purposes of this Rule 7027, the
term[s set forth below shall have the
following meanings:]
[(1) An] ‘‘affiliate’’ of a member shall
mean any [wholly owned subsidiary,
parent, or sister of the ]member under
75% common ownership or control of
that [is also a ]member.
[(2) A ‘‘wholly owned subsidiary’’
shall mean a subsidiary of a member,
100% of whose voting stock or
comparable ownership interest is owned
by the member, either directly or
indirectly through other wholly owned
subsidiaries.]
[(3) A ‘‘parent’’ shall mean an entity
that directly or indirectly owns 100% of
the voting stock or comparable
ownership interest of a member.]
[(4) A ‘‘sister’’ shall mean an entity,
100% of whose voting stock or
comparable ownership interest is owned
by a parent that also owns 100% of the
voting stock or comparable ownership
interest of a member.]
*
*
*
*
*
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 Exchange is proposing to amend
Nasdaq Rule 7027 to harmonize the
treatment of the aggregation of activity
of affiliated members for the purposes of
assessing charges or credits by making
it consistent with the definition of
‘‘Common Ownership’’ in Chapter XV
which relates to options pricing. The
aggregation suggested by these rules
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Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
impacts the Rule 7000 series where the
charge assessed, or credit provided, by
Nasdaq depends upon the volume of a
member’s activity. A member may
request that Nasdaq aggregate its activity
with the activity of its affiliates.3
Therefore, for purposes of applying any
provision of the Rule 7000 series where
the charge assessed, or credit provided,
by Nasdaq depends upon the volume of
a member’s activity, references to an
entity (including references to a
‘‘member’’, a ‘‘participant’’, or a
‘‘Nasdaq Quoting Market Participant’’)
shall be deemed to include the entity
and its affiliates that have been
approved for aggregation.4
Currently, Nasdaq Rule 7027 states
that for purposes of applying any
provision of the Rule 7000 Series where
the charge assessed, or credit provided,
by Nasdaq depends upon the volume of
a member’s activity, a member may
request that Nasdaq aggregate its activity
with the activity of its affiliates.5 The
rule further stipulates that an affiliate is
considered to be a wholly-owned
subsidiary, parent, or sister of the
member where the member holds 100
percent of the voting stock or other
comparable ownership interest, either
directly or indirectly, in the wholly
owned subsidiary, parent, or sister
member. The Exchange proposes to
amend Rule 7027 to conform that rule
to that of the NASDAQ Options Market
LLC (‘‘NOM’’) at Chapter XV so that
equities and options members are
treated consistently with respect to
affiliations of members for purposes of
pricing. NOM’s Rule provides,
‘‘Common Ownership’’ shall mean
Participants under 75 percent common
ownership or control.6 The Exchange
desires to take the current standard of
100 percent for equities members and
align that standard to the 75 percent
standard for Options Participants.
Pursuant to Rule 7027(a)(1), a member
requesting aggregation of affiliate
activity shall be required to certify to
3 See
Rule 7027(a)(1).
Rule 7027(b).
5 An ‘‘affiliate’’ of a member shall mean any
wholly owned subsidiary, parent, or sister of the
member that is also a member. See Rule 7027(c)(1).
A ‘‘wholly owned subsidiary’’ shall mean a
subsidiary of a member, 100 percent of whose
voting stock or comparable ownership interest is
owned by the member, either directly or indirectly
through other wholly owned subsidiaries. See Rule
7027(c)(2). A ‘‘parent’’ shall mean an entity that
directly or indirectly owns 100 percent of the voting
stock or comparable ownership interest of a
member. See Rule 7027(c)(3). A ‘‘sister’’ shall mean
an entity, 100 percent of whose voting stock or
comparable ownership interest is owned by a
parent that also owns 100 percent of the voting
stock or comparable ownership interest of a
member. See Rule 7027(c)(4).
6 See NOM Rules at Chapter XV.
tkelley on DSK3SPTVN1PROD with NOTICES
4 See
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Nasdaq the affiliate status of entities
whose activity it seeks to aggregate prior
to receiving approval for aggregation,
and shall be required to inform Nasdaq
immediately of any event that causes an
entity to cease to be an affiliate. Nasdaq
shall review available information
regarding the entities, and reserves the
right to request additional information
to verify the affiliate status of an entity.
Nasdaq shall approve a request unless it
determines that the certification is not
accurate. Pursuant to Rule 7027(a)(2), if
two or more members become affiliated
on or prior to the sixteenth day of a
month, and submit the required request
for aggregation on or prior to the twentysecond day of the month, an approval of
the request by Nasdaq shall be deemed
to be effective as of the first day of that
month. If two or more members become
affiliated after the sixteenth day of a
month, or submit a request for
aggregation after the twenty-second day
of the month, an approval of the request
by Nasdaq shall be deemed to be
effective as of the first day of the next
calendar month.
The Exchange intends to amend the
NOM options rules to similarly require
the certifications and approvals as noted
herein. The Exchange intends that this
rule change and the options rule
changes noted herein harmonize the
process by which the Exchange gathers
information related to affiliated
members and then in turn, for purposes
of pricing, treat both equities and
options members alike with respect to
the application of aggregated pricing.
The Exchange proposes to apply this
pricing as of December 1, 2014 and
issue a Trader Alert to its members.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 7 in general, and with
Sections 6(b)(4) and (b)(5) of the Act,8 in
particular, in that the proposal will
harmonize the treatment of the
aggregation of activity of affiliated
members for the purposes of assessing
charges or credits with the treatment of
the aggregation of activity of affiliated
members in relation to options pricing
so that more members will be able to
benefit from lower charges and/or
increased credits. The proposal will
further serve to reduce disparity of
treatment between members with
regards to the pricing of different
services and reduce any potential for
confusion in how activity can be
aggregated. The Exchange believes the
rule change avoids disparate treatment
7 15
8 15
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
Frm 00069
Fmt 4703
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of members that have divided their
various business activities between
separate corporate entities as compared
to members that operate those business
activities within a single corporate
entity. By way of example, subject to
appropriate information barriers, many
firms that are members of the Exchange
operate both a market making desk and
a public customer business within the
same corporate entity. In contrast, other
members may be part of a corporate
structure that separates those business
lines into different corporate affiliates,
either for business, compliance or
historical reasons, and those affiliates
are not also considered wholly owned
affiliates. Those corporate affiliates, in
turn, are required to maintain separate
memberships with the Exchange.
Absent the proposed change, such
corporate affiliates that cannot be
considered wholly owned but are under
common control would not receive the
same treatment as members who are
considered wholly owned affiliates.
Accordingly, the Exchange believes that
its proposed policy is fair and equitable,
and not unreasonably discriminatory in
permitting both wholly owned and
common control. In addition to ensuring
fair and equal treatment of its members,
the Exchange does not want to create
incentives for its members to restructure
their business operations or compliance
functions simply due to the Exchange’s
pricing structure.
The Exchange believes that this
proposed rule change may enable
additional equity members to aggregate
pricing because the standard will be
reduced from 100 percent to 75 percent
for these members. There are no current
equity members that would no longer be
entitled to the aggregation as a result of
this rule change. Further, the Exchange
seeks to harmonize the manner in which
aggregated pricing is treated on its three
markets, NASDAQ, NASDAQ OMX
PHLX LLC and NASDAQ OMX BX, Inc.
and as between equities and options, by
developing one standard for aggregated
pricing and one method for collecting
such information on aggregated pricing
to ensure proper validation of that
pricing in the manner in which it is
occurring on Nasdaq for equity members
today.
Today, BATS Exchange, Inc.
(‘‘BATS’’) equity members are permitted
to aggregate share volume calculations
for wholly owned affiliates. BATS
allows a member to aggregate volume
with other members that control, are
controlled by, or are under common
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Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
control with such member.9 To the
extent two or more affiliated companies
maintain separate Nasdaq memberships
and can demonstrate their affiliation by
showing they control, are controlled by,
or are under common control with each
other, Nasdaq will permit such members
to count overall volume of the affiliates
in calculating volume. BATS does not
specify a specific percentage for such
aggregation in its rule. Nasdaq is
specifying 75 percent, similar to the
percentage applied to Options
Participants.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq 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. The Exchange is
merely seeking to harmonize the
treatment of the aggregation of activity
of affiliated members for the purposes of
assessing charges or credits with those
rules contained in Chapter XV which
relate to options pricing. The Exchange
also believes that certain market
participants may be able to aggregate
because the standard is decreasing from
100 percent to 75 percent.
tkelley on DSK3SPTVN1PROD 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
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)(ii) of the Act 10 and
subparagraph (f)(6) of Rule 19b-4
thereunder.11
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
9 See Securities Exchange Act Release No. 64211
(April 6, 2011), 76 FR 20414 (April 12, 2014) [sic]
(SR–BATS–2011–012).
10 15 U.S.C. 78s(b)(3)(a)(ii).
11 17 CFR 240.19b-4(f)(6).
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If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved. The
Exchange has provided the Commission
written notice of its 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.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2014–083 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2014–083. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml).
Copies of the submission, all
subsequent amendments, all written
statements with respect to the proposed
rule change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
PO 00000
Frm 00070
Fmt 4703
Sfmt 4703
53475
available publicly. All submissions
should refer to File Number SR–
NASDAQ–2014–083 and should be
submitted on or before September 30,
2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Kevin M. O’ Neill,
Deputy Secretary.
[FR Doc. 2014–21360 Filed 9–8–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72960; File No. SR–NYSE–
2014–46]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Amending Its
Price List To Increase Certain Fees for
Executions at the Close; Simplify the
‘‘Tier Adding Credits’’ for Non-Floor
Brokers and Increase the Credit for
One Tier; Decrease the Fee and
Increase the Credit for Midpoint
Passive Liquidity Orders; Eliminate the
Transaction Rate for Floor Broker
Volume That ‘‘Steps Up’’ Over a
Baseline Month and Increase a Related
Fee for Floor Broker Transactions;
Eliminate a Volume Tier and Decrease
a Credit Related to Executions of
Orders Sent to the Floor Broker That
Add Liquidity on the Exchange;
Increase a Volume Requirement and
Corresponding Credit for
Supplemental Liquidity Providers
When Adding Liquidity in Assigned
Securities; and Adjust the Pricing
Related to the Retail Liquidity Program
Under Rule 107C
September 3, 2014.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on August
20, 2014, New York Stock Exchange
LLC (‘‘NYSE’’ 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 selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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]]>Agencies
[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53473-53475]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21360]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72966; File No. SR-NASDAQ-2014-083]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Common Ownership
September 3, 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 August 29, 2014 The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by NASDAQ.
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
NASDAQ proposes to harmonize the treatment of the aggregation of
activity of affiliated members for the purposes of assessing charges or
credits.
The Exchange requests that this filing become operative on December
1, 2014.
The text of the proposed rule change is set forth below. Proposed
new language is in italics; deleted text is in brackets.
* * * * *
7027. Aggregation of Activity of Affiliated Members
(a) No Change
(b) No Change
(c) For purposes of this Rule 7027, the term[s set forth below
shall have the following meanings:]
[(1) An] ``affiliate'' of a member shall mean any [wholly owned
subsidiary, parent, or sister of the ]member under 75% common ownership
or control of that [is also a ]member.
[(2) A ``wholly owned subsidiary'' shall mean a subsidiary of a
member, 100% of whose voting stock or comparable ownership interest is
owned by the member, either directly or indirectly through other wholly
owned subsidiaries.]
[(3) A ``parent'' shall mean an entity that directly or indirectly
owns 100% of the voting stock or comparable ownership interest of a
member.]
[(4) A ``sister'' shall mean an entity, 100% of whose voting stock
or comparable ownership interest is owned by a parent that also owns
100% of the voting stock or comparable ownership interest of a member.]
* * * * *
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 Exchange is proposing to amend Nasdaq Rule 7027 to harmonize
the treatment of the aggregation of activity of affiliated members for
the purposes of assessing charges or credits by making it consistent
with the definition of ``Common Ownership'' in Chapter XV which relates
to options pricing. The aggregation suggested by these rules
[[Page 53474]]
impacts the Rule 7000 series where the charge assessed, or credit
provided, by Nasdaq depends upon the volume of a member's activity. A
member may request that Nasdaq aggregate its activity with the activity
of its affiliates.\3\ Therefore, for purposes of applying any provision
of the Rule 7000 series where the charge assessed, or credit provided,
by Nasdaq depends upon the volume of a member's activity, references to
an entity (including references to a ``member'', a ``participant'', or
a ``Nasdaq Quoting Market Participant'') shall be deemed to include the
entity and its affiliates that have been approved for aggregation.\4\
---------------------------------------------------------------------------
\3\ See Rule 7027(a)(1).
\4\ See Rule 7027(b).
---------------------------------------------------------------------------
Currently, Nasdaq Rule 7027 states that for purposes of applying
any provision of the Rule 7000 Series where the charge assessed, or
credit provided, by Nasdaq depends upon the volume of a member's
activity, a member may request that Nasdaq aggregate its activity with
the activity of its affiliates.\5\ The rule further stipulates that an
affiliate is considered to be a wholly-owned subsidiary, parent, or
sister of the member where the member holds 100 percent of the voting
stock or other comparable ownership interest, either directly or
indirectly, in the wholly owned subsidiary, parent, or sister member.
The Exchange proposes to amend Rule 7027 to conform that rule to that
of the NASDAQ Options Market LLC (``NOM'') at Chapter XV so that
equities and options members are treated consistently with respect to
affiliations of members for purposes of pricing. NOM's Rule provides,
``Common Ownership'' shall mean Participants under 75 percent common
ownership or control.\6\ The Exchange desires to take the current
standard of 100 percent for equities members and align that standard to
the 75 percent standard for Options Participants.
---------------------------------------------------------------------------
\5\ An ``affiliate'' of a member shall mean any wholly owned
subsidiary, parent, or sister of the member that is also a member.
See Rule 7027(c)(1). A ``wholly owned subsidiary'' shall mean a
subsidiary of a member, 100 percent of whose voting stock or
comparable ownership interest is owned by the member, either
directly or indirectly through other wholly owned subsidiaries. See
Rule 7027(c)(2). A ``parent'' shall mean an entity that directly or
indirectly owns 100 percent of the voting stock or comparable
ownership interest of a member. See Rule 7027(c)(3). A ``sister''
shall mean an entity, 100 percent of whose voting stock or
comparable ownership interest is owned by a parent that also owns
100 percent of the voting stock or comparable ownership interest of
a member. See Rule 7027(c)(4).
\6\ See NOM Rules at Chapter XV.
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Pursuant to Rule 7027(a)(1), a member requesting aggregation of
affiliate activity shall be required to certify to Nasdaq the affiliate
status of entities whose activity it seeks to aggregate prior to
receiving approval for aggregation, and shall be required to inform
Nasdaq immediately of any event that causes an entity to cease to be an
affiliate. Nasdaq shall review available information regarding the
entities, and reserves the right to request additional information to
verify the affiliate status of an entity. Nasdaq shall approve a
request unless it determines that the certification is not accurate.
Pursuant to Rule 7027(a)(2), if two or more members become affiliated
on or prior to the sixteenth day of a month, and submit the required
request for aggregation on or prior to the twenty-second day of the
month, an approval of the request by Nasdaq shall be deemed to be
effective as of the first day of that month. If two or more members
become affiliated after the sixteenth day of a month, or submit a
request for aggregation after the twenty-second day of the month, an
approval of the request by Nasdaq shall be deemed to be effective as of
the first day of the next calendar month.
The Exchange intends to amend the NOM options rules to similarly
require the certifications and approvals as noted herein. The Exchange
intends that this rule change and the options rule changes noted herein
harmonize the process by which the Exchange gathers information related
to affiliated members and then in turn, for purposes of pricing, treat
both equities and options members alike with respect to the application
of aggregated pricing.
The Exchange proposes to apply this pricing as of December 1, 2014
and issue a Trader Alert to its members.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and with Sections 6(b)(4) and (b)(5) of
the Act,\8\ in particular, in that the proposal will harmonize the
treatment of the aggregation of activity of affiliated members for the
purposes of assessing charges or credits with the treatment of the
aggregation of activity of affiliated members in relation to options
pricing so that more members will be able to benefit from lower charges
and/or increased credits. The proposal will further serve to reduce
disparity of treatment between members with regards to the pricing of
different services and reduce any potential for confusion in how
activity can be aggregated. The Exchange believes the rule change
avoids disparate treatment of members that have divided their various
business activities between separate corporate entities as compared to
members that operate those business activities within a single
corporate entity. By way of example, subject to appropriate information
barriers, many firms that are members of the Exchange operate both a
market making desk and a public customer business within the same
corporate entity. In contrast, other members may be part of a corporate
structure that separates those business lines into different corporate
affiliates, either for business, compliance or historical reasons, and
those affiliates are not also considered wholly owned affiliates. Those
corporate affiliates, in turn, are required to maintain separate
memberships with the Exchange. Absent the proposed change, such
corporate affiliates that cannot be considered wholly owned but are
under common control would not receive the same treatment as members
who are considered wholly owned affiliates. Accordingly, the Exchange
believes that its proposed policy is fair and equitable, and not
unreasonably discriminatory in permitting both wholly owned and common
control. In addition to ensuring fair and equal treatment of its
members, the Exchange does not want to create incentives for its
members to restructure their business operations or compliance
functions simply due to the Exchange's pricing structure.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes that this proposed rule change may enable
additional equity members to aggregate pricing because the standard
will be reduced from 100 percent to 75 percent for these members. There
are no current equity members that would no longer be entitled to the
aggregation as a result of this rule change. Further, the Exchange
seeks to harmonize the manner in which aggregated pricing is treated on
its three markets, NASDAQ, NASDAQ OMX PHLX LLC and NASDAQ OMX BX, Inc.
and as between equities and options, by developing one standard for
aggregated pricing and one method for collecting such information on
aggregated pricing to ensure proper validation of that pricing in the
manner in which it is occurring on Nasdaq for equity members today.
Today, BATS Exchange, Inc. (``BATS'') equity members are permitted
to aggregate share volume calculations for wholly owned affiliates.
BATS allows a member to aggregate volume with other members that
control, are controlled by, or are under common
[[Page 53475]]
control with such member.\9\ To the extent two or more affiliated
companies maintain separate Nasdaq memberships and can demonstrate
their affiliation by showing they control, are controlled by, or are
under common control with each other, Nasdaq will permit such members
to count overall volume of the affiliates in calculating volume. BATS
does not specify a specific percentage for such aggregation in its
rule. Nasdaq is specifying 75 percent, similar to the percentage
applied to Options Participants.
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\9\ See Securities Exchange Act Release No. 64211 (April 6,
2011), 76 FR 20414 (April 12, 2014) [sic] (SR-BATS-2011-012).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq 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. The Exchange is merely seeking to harmonize
the treatment of the aggregation of activity of affiliated members for
the purposes of assessing charges or credits with those rules contained
in Chapter XV which relate to options pricing. The Exchange also
believes that certain market participants may be able to aggregate
because the standard is decreasing from 100 percent to 75 percent.
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
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)(ii) of the Act \10\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(a)(ii).
\11\ 17 CFR 240.19b-4(f)(6).
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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: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved. The Exchange has
provided the Commission written notice of its 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2014-083 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2014-083. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2014-083 and should
be submitted on or before September 30, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O' Neill,
Deputy Secretary.
[FR Doc. 2014-21360 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P
