Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule Under Exchange Rule 7018 With Respect to Transactions in Securities Priced at $1 or More per Share and the Exchange's Retail Price Improvement Program, 34758-34763 [2015-14819]
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34758
Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the 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 if
consistent with the protection of
investors and the public interest, the
proposed rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 9 and Rule 19b–4(f)(6)(iii)
thereunder.10
The Exchange has asked the
Commission to waive the 30-day
operative delay so that the proposal may
become operative immediately upon
filing. The Exchange stated that waiver
of this requirement would enable the
Exchange to implement immediately the
approved price protection risk
mechanisms for which the associated
Exchange technology is currently
available or is in the process of
becoming finalized, consistent with the
proposed implementation schedule. The
Commission believes the waiver of the
operative delay is consistent with the
protection of investors and the public
interest. Therefore, the Commission
hereby waives the operative delay and
designates the proposal operative upon
filing.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 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
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6)(iii). As required under
Rule 19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and the text of the proposed rule
change, at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission.
11 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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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 rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2015–45 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–NYSEArca–2015–45. 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
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–
NYSEArca-2015–45, and should be
submitted on or before July 8, 2015.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–14830 Filed 6–16–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75145; File No. SR–BX–
2015–033]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Fee Schedule Under Exchange Rule
7018 With Respect to Transactions in
Securities Priced at $1 or More per
Share and the Exchange’s Retail Price
Improvement Program
June 11, 2015.
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 1,
2015, NASDAQ OMX BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit 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 BX
Rule 7018 with respect to transactions
in securities priced at $1 or more per
share and the Exchange’s Retail Price
Improvement Program.
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
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
12 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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Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
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
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1. Purpose
The Exchange is proposing to amend
the fee schedule under Rule 7018(a),
relating to fees and credits provided for
orders in securities priced and $1 or
more per share that execute on BX, and
is proposing to increase a credit
provided by the Retail Price
Improvement program under Rule
7018(e).
Under Rule 7018(a), the Exchange
provides credits to member firms that
access certain levels of liquidity on BX
per month. The Exchange is proposing
to add two new credit tiers of $0.0017
and $0.0012 per share executed, which
will be provided for orders that access
liquidity, excluding orders with
Midpoint pegging 3 and orders that
receive price improvement and execute
against an order with Midpoint pegging,
entered by a member that accesses
liquidity equal to or exceeding 0.20%
and 0.05% of total Consolidated
Volume 4 during a month, respectively.
In a related change, the Exchange is
amending existing credit tiers that
provide a credit to members with orders
that access liquidity, excluding orders
with Midpoint pegging and orders that
receive price improvement and execute
against an order with Midpoint pegging,
entered by a member that accesses
liquidity equal to or exceeding 0.1%
and 0.015% of total Consolidated
Volume during a month, which
currently provide credits of $0.0010 and
3 A Midpoint Peg order has its priced [sic] based
upon the national best bid and offer, excluding the
effect that the Midpoint Peg Order itself has on the
inside bid or inside offer. Primary Pegged Orders
with an offset amount and Midpoint Pegged Orders
will never be displayed. A Midpoint Pegged Order
may be executed in sub-pennies if necessary to
obtain a midpoint price. A new timestamp is
created for the order each time it is automatically
adjusted.
4 Consolidated Volume is defined as the total
consolidated volume reported to all consolidated
transaction reporting plans by all exchanges and
trade reporting facilities during a month in equity
securities, excluding executed orders with a size of
less than one round lot. For purposes of calculating
Consolidated Volume and the extent of a member’s
trading activity, expressed as a percentage of or
ratio to Consolidated Volume, the date of the
annual reconstitution of the Russell Investments
Indexes shall be excluded from both total
Consolidated Volume and the member’s trading
activity. See Rule 7018(a).
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$0.0008 per share executed,
respectively. The Exchange is proposing
to increase the credit provided under
the 0.1% Consolidated Volume tier from
$0.0010 per share executed to $0.0015
per share executed. The Exchange is
also proposing to increase the total
Consolidated Volume required to
receive the $0.0008 per share executed
credit from 0.015% to 0.02%.
The Exchange is proposing to increase
the credit it provides for all other orders
that remove liquidity from BX and that
do not qualify under another higher
credit from $0.0004 per share executed
to $0.0006 per share executed. In related
changes, the Exchange is eliminating
two credit tiers, which currently
provide credits of $0.0006 per share
executed and both of which are
rendered moot in light of the increased
credit the Exchange is provided for all
other orders that remove liquidity from
BX. Specifically, the Exchange is
proposing to eliminate a $0.0006 per
share executed credit provided to a
member firm for an order that accesses
liquidity, excluding orders with
Midpoint pegging and orders that
receive price improvement and execute
against an order with Midpoint pegging,
entered by a member that provides an
average daily volume of at least 25,000
shares of liquidity during the month.
The Exchange is also proposing to
eliminate the $0.0006 per share
executed credit provided to members
with a BSTG,5 BSCN,6 BMOP,7 BTFY,8
BCRT,9 BDRK 10 or BCST 11 order that
accesses liquidity in the NASDAQ OMX
BX Equities System, excluding orders
with Midpoint pegging and excluding
orders that receive price improvement
and execute against an order with
Midpoint pegging.
The Exchange is also proposing to
modify and eliminate certain charges it
assesses under Rule 7018(a).
Specifically, the Exchange is proposing
to increase the charge assessed for a
Displayed order entered by a Qualified
Market Maker 12 (‘‘QMM’’) from $0.0009
5 See
BX Rule 4758(a)(1)(A)(iii).
BX Rule 4758(a)(1)(A)(iv).
7 See BX Rule 4758(a)(1)(A)(vi).
8 See BX Rule 4758(a)(1)(A)(v).
9 See BX Rule 4758(a)(1)(A)(vii).
10 See BX Rule 4758(a)(1)(A)(viii).
11 See BX Rule 4758(a)(1)(A)(ix).
12 A member firm may become a QMM by
providing through one or more of its NASDAQ
OMX BX Equities System market maker participant
identifier (‘‘MPIDs’’) more than 0.30% of
Consolidated Volume during the month. For a
member qualifying under this method, the member
must have at least one Qualified MPID, that is, an
MPID through which, for at least 200 securities, the
QMM quotes at the NBBO an average of at least
50% of the time during regular market hours (9:30
a.m. through 4:00 p.m.) during the month. The
6 See
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34759
per share executed to $0.0014 per share
executed. The Exchange is also
proposing to adopt a new charge tier of
$0.0014 per share executed assessed a
member that (i) adds liquidity equal to
or exceeding 0.25% of total
Consolidated Volume during a month,
and (ii) adds and accesses liquidity
equal to or exceeding 0.50% of total
Consolidated Volume during a month.
The Exchange is proposing to increase
the charges assessed under two tiers for
a displayed order that adds liquidity
equal to or exceeding 0.25% and 0.04%
of total Consolidated Volume during a
month, respectively, which are
currently set a $0.0012 per share
executed and $0.0014 per share
executed, respectively. The Exchange is
proposing to increase the charge under
the 0.25% tier to $0.0018 per share
executed, while also decreasing the
minimum liquidity needed to be
provided to qualify under the tier from
0.25% of total Consolidated Volume
during a month to 0.20% of total
Consolidated Volume during a month.
The Exchange is proposing to increase
the charge under the 0.04% tier to
$0.0019 per share executed and is
additionally proposing to increase the
total Consolidated Volume required to
receive the charge from 0.04% to 0.10%.
The Exchange is also proposing to
amend charges it assesses for providing
liquidity in orders with Midpoint
pegging. Specifically, it is proposing to
eliminate the $0.0002 per share
executed charge assessed for an order
with Midpoint pegging entered by a
member that adds 0.03% of total
Consolidated Volume of non-displayed
liquidity. The Exchange is also
proposing to increase the charge
assessed for an order with Midpoint
pegging entered by a member that adds
0.015% of total Consolidated Volume of
non-displayed liquidity from $0.0004
per share executed to $0.0005 per share
executed and is additionally increasing
the total Consolidated Volume
requirement from 0.015% to 0.02%. The
Exchange is proposing to increase the
$0.0010 per share executed charge for
an order with Midpoint pegging entered
by a member that does not qualify for
a lower charge for such an order to
$0.0015 per share executed.
The Exchange is proposing to amend
certain charges relating to nondisplayed orders. Specifically, the
Exchange is proposing to eliminate the
$0.0014 per share executed charge
assessed for a non-displayed order,
other than orders with Midpoint
member must also provide an average daily volume
of 1.5 million shares or more using orders with
Midpoint pegging during the month.
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pegging, entered by a member that adds
0.075% of total Consolidated Volume of
non-displayed liquidity. The Exchange
is also proposing to increase the $0.0019
per share executed charge assessed for
a non-displayed order, other than orders
with Midpoint pegging, entered by a
member that adds 0.055% of total
Consolidated Volume of non-displayed
liquidity to $0.0024 per share executed
and is additionally increasing the total
Consolidated Volume requirement to
0.06%. The Exchange is proposing to
increase the charge assessed for all other
non-displayed orders from $0.0028 per
share executed to $0.0030 per share
executed.
The Exchange is proposing to reduce
the level of Consolidated Volume
required to qualify as a QMM.
Currently, to be considered a QMM a
member firm must provide through one
or more of its NASDAQ OMX BX
Equities System MPIDs more than
0.30% of Consolidated Volume during
the month. To qualify under this
method, the member firm must have at
least one Qualified MPID, that is, an
MPID through which, for at least 200
securities, the QMM quotes at the NBBO
an average of at least 50% of the time
during regular market hours (9:30 a.m.
through 4:00 p.m.) during the month.
The member firm must also provide an
average daily volume of 1.5M shares or
more using orders with Midpoint
pegging during the month. The
Exchange is proposing to reduce the
level of Consolidated Volume under the
rule from 0.30% to 0.15%.
Lastly, the Exchange is proposing to
amend a charge assessed under the
Retail Price Improvement Program of
Rule 7018(e). The Exchange’s Retail
Price Improvement (‘‘RPI’’) program
provides incentives to member firms (or
a division thereof) approved by the
Exchange to participate in the program
(a ‘‘Retail Member Organization’’) to
submit designated ‘‘Retail Orders’’ 13 for
the purpose of seeking price
improvement. The Exchange is
proposing to increase the $0.0012 per
share executed credit provided for a
Retail Order that accesses other
liquidity on the Exchange book to
$0.0017 per share executed. The credit
applies to Retail Orders not covered by
13 A Retail Order is defined in BX Rule 4780(a)(2),
in part, as ‘‘an agency or riskless principal order
that satisfies the criteria of FINRA Rule 5320.03,
that originates from a natural person and is
submitted to the Exchange by a Retail Member
Organization, provided that no change is made to
the terms of the order with respect to price (except
in the case that a market order is changed to a
marketable limit order) or side of market and the
order does not originate from a trading algorithm or
any other computerized methodology.’’
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other credit tiers available for accessing
liquidity under the rule.
2. Statutory Basis
BX believes that the proposed rule
changes are consistent with the
provisions of Section 6 of the Act,14 in
general, and with Sections 6(b)(4) and
6(b)(5) of the Act,15 in particular, in that
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 which the Exchange operates or
controls, and is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest; and
are not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that the
proposed two new credit tiers based on
Consolidated Volume together with the
proposed changes to existing credit tiers
based on Consolidated Volume under
BX Rule 7018(a) are reasonable because
they provide additional opportunities
for market participants to receive credits
for participation on BX. The Exchange
also believes that the proposed changes
to the credit tiers based on the level
Consolidated Volume are reasonable
because the credits tiers are directly tied
to the level of Consolidated Volume a
member firm accesses in a given month,
with the highest credit provided for the
greatest level of Consolidated Volume,
and the lowest credit provided to the
lowest level of Consolidated Volume.
Specifically, the Exchange is proposing
a new $0.0017 per share executed credit
tier, which will require the highest level
of Consolidated Volume in liquidity
removal from the Exchange. The
Exchange is proposing to increase the
credit provided for the next lower tier,
which requires liquidity accessed of
0.1% or more of Consolidated Volume,
to $0.0015 per share executed. The
Exchange is proposing to adopt a new
$0.0012 per share executed credit tier,
which will require adding liquidity
equal to or exceeding 0.05% of total
Consolidated Volume during the month.
Lastly, the Exchange is modifying an
existing credit tier by increasing the
14 15
15 15
PO 00000
U.S.C. 78f.
U.S.C. 78f(b)(4) and (5).
Frm 00155
Fmt 4703
Sfmt 4703
minimum total Consolidated Volume
required from 0.015% to 0.02%. As
such, the Exchange is generally
providing increased credits to provide
incentive to member firms to remove
liquidity, excluding orders with
Midpoint pegging and excluding orders
that receive price improvement and
execute against an order with Midpoint
pegging, from the Exchange. With
respect to the increased Consolidated
Volume required to receive the $0.0008
credit, the Exchange notes that member
firms are being required to provide
increased Consolidated Volume to
receive the credit, which will improve
market quality for all participants. The
Exchange believes that the proposed
credits noted above are both equitably
allocated and are not unfairly
discriminatory as they are provided to
all member firms that achieve the
minimum level of Consolidated Volume
required by the tier, with the member
firms that provide the greatest level of
Consolidated Volume receiving the
greatest credit.
The Exchange believes that
elimination of the two $0.0006 per share
executed credit tiers is reasonable
because the Exchange has increased the
credit it provides for all orders that do
not otherwise receive a higher credit,
which the Exchange is increasing to
$0.0006 per share executed. This
increased ‘‘default’’ credit is reasonable
because the Exchange desires to further
incentivize member firms to participate
in the Exchange by removing liquidity,
generally. The Exchange believes that
the proposed elimination of the two
$0.0006 per share executed credit tiers,
and the proposed increase in the
‘‘default’’ credit to $0.0006 per share
executed are both an equitable
allocation and are not unfairly
discriminatory because more member
firms will have the opportunity to
qualify for a higher credit based on their
participation in BX by removing
liquidity.
The Exchange believes that the
proposed change to increase the charge
assessed a QMM for entering a
displayed order is reasonable because
the exchange must balance the cost of
credits provided for orders removing
liquidity and the desire to provide
QMMs with incentives to provide
displayed orders. The Exchange notes
that the proposed charge continues to be
lower than the default charge assessed
for all other displayed orders that do not
otherwise qualify for a lower charge,
and as such continues to act as an
incentive to market participants to
provide such liquidity. Moreover, the
Exchange will continue to provide a
reduced charge in return for the
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provision of market improving order
activity. The Exchange believes that the
proposed change is both equitably
allocated and is not unfairly
discriminatory because the increased
charge applies uniformly to all member
firms that previously had qualified to
receive such a credit.
The Exchange believes that the
proposed new $0.0014 per share
executed charge available to a member
firm that adds liquidity equal to or
exceeding 0.25% of total Consolidated
Volume during a month and adds and
accesses liquidity equal to or exceeding
0.50% of total Consolidated Volume
during a month, is reasonable because it
provides a new means by which a
member firm may qualify for a lower
charge than the default charge applied
to liquidity-providing displayed orders.
The Exchange provides incentives to
member firms to enter displayed orders
on BX and, in the present case, it is
providing a reduced charge to a member
that enters such an order, but also
provides market improving liquidity in
the form of significant levels of
Consolidated Volume of adding and
accessing liquidity during the month.
The Exchange believes that the
proposed change is both equitably
allocated and is not unfairly
discriminatory because the new charge
applies uniformly to all member firms
that qualify under the tier’s
requirements, which requires beneficial
market activity by the member firm in
return for the lower charge.
The Exchange believes that the
proposed increase to the $0.0012 per
share executed and $0.0014 per share
executed charge tiers assessed for
Displayed orders entered by a member
firm that adds liquidity equal to or
exceeding 0.25% and 0.04% of total
Consolidated Volume during a month,
respectively, is reasonable because it
reflects a small increase to the charges
assessed for such orders by qualifying
members, while each continue to
remain lower than the default charge
assessed for providing liquidity in
displayed orders. As such, the proposed
charges will continue [sic] act as an
incentive to market participants to
provide displayed orders. The Exchange
also believes that decreasing the level of
Consolidated Volume required to
receive the proposed $0.0018 per share
executed charge from 0.025% to 0.020%
is reasonable because it lowers the total
Consolidated Volume requirement,
which the Exchange has observed was
set too high to effectively provide
incentive to market participants to
improve the market. The Exchange also
believes that it is reasonable to increase
the level of Consolidated Volume
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required to receive the $0.0019 per
share executed charge from 0.04% to
0.10% because the Exchange believes
that increasing the level may result in
improved market quality in the form of
additional total Consolidated Volume in
return for the reduced charge. The
Exchange believes that the proposed
changes to the $0.0012 charge tier is
both an equitable allocation and is not
unfairly discriminatory because the
increased charge applies uniformly to
all member firms that qualify under the
tier’s revised, lower Consolidated
Volume requirement, which will
continue to provide a charge lower than
the default charge assessed for
displayed orders. The Exchange also
believes that the proposed changes to
the $0.0014 charge tier is both an
equitable allocation and is not unfairly
discriminatory because the increased
charge applies uniformly to all member
firms that qualify under the tier’s
revised, higher Consolidated Volume
requirement, which will continue to
provide a charge lower than the default
charge assessed for displayed orders.
The Exchange believes that
elimination of the $0.0002 per share
executed charge provided for an order
with Midpoint pegging entered by a
member firm that adds 0.03% of total
Consolidated Volume of non-displayed
liquidity is reasonable because the
Exchange will continue to provide
opportunity for member firms to receive
a reduced charge for such non-displayed
liquidity based on a certain level of total
Consolidated Volume. Specifically, the
Exchange will provide a member firm
with a reduced charge for non-displayed
liquidity if it achieves 0.02% of total
Consolidated Volume during a month.
The Exchange believes that the 0.03%
total Consolidated Volume tier is no
longer needed to provide incentive to
market participant [sic] to provide such
Midpoint pegging orders. The Exchange
believes that the proposed change is
both equitably allocated and is not
unfairly discriminatory because member
firms will continue to receive a charge
lower than the default charge assessed
for non-displayed orders in return for
providing beneficial liquidity in the
form of Midpoint pegging orders, albeit
at an increased charge.
The Exchange believes that the
proposed increase to the charge assessed
for an order with Midpoint pegging
entered by a member firm that adds
0.015% of total Consolidated Volume
from $0.0004 per share executed to
$0.0005 per share executed is
reasonable because it represents a
modest increase to the charge assessed
for such orders, while remaining lower
than the default charge assessed for
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34761
other non-displayed orders. Moreover,
the Exchange believes that the proposed
increased charge will continue [sic] act
as an incentive to market participants to
provide orders with Midpoint pegging.
The Exchange believes that the
proposed change is both equitably
allocated and is not unfairly
discriminatory because member firms
will continue to receive a charge lower
than the default charge assessed for
orders in return for providing beneficial
liquidity in the form of Midpoint
pegging orders, albeit at an increased
charge. The Exchange also believes that
the proposed increase to the charge is
equitably allocated and not unfairly
discriminatory because all members
entering orders with Midpoint pegging
that meet the criteria of the tier will be
assessed the proposed charge.
The Exchange believes that the
increase the [sic] charge for Midpoint
pegging orders that do not otherwise
qualify for a lower charge from $0.0010
per share executed to $0.0015 per share
executed is reasonable because it
represents a modest increase to the
charge assessed for such orders, while
remaining lower than the default charge
assessed for non-displayed orders.
Moreover, the Exchange believes that
the proposed increased charge will
continue [sic] act as an incentive to
market participants provide orders with
Midpoint pegging. The Exchange
believes that the proposed change is
both equitably allocated and is not
unfairly discriminatory because member
firms will continue to receive a charge
lower than the default charge assessed
for non-displayed orders in return for
providing beneficial liquidity in the
form of Midpoint pegging orders, albeit
at an increased charge. The Exchange
also believes that the proposed increase
to the charge is equitably allocated and
not unfairly discriminatory because all
members entering orders with Midpoint
pegging that do not otherwise qualify for
a lower charge under another tier will
be assessed the proposed charge.
The Exchange believes that
elimination of the $0.0014 per share
executed charge assessed for nondisplayed orders, other than orders with
Midpoint pegging, entered by a member
firm that adds 0.075% of total
Consolidated Volume of non-displayed
liquidity is reasonable because the
Exchange will continue to offer member
firms opportunity to receive a reduced
charge for such orders, albeit at a higher
charge under a separate tier. The
Exchange notes that, while the proposed
charge under the remaining tier is
$0.0024 per share executed, member
firms will only be required to provide a
minimum of 0.06% of total
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Consolidated Volume of non-displayed
liquidity. The Exchange believes that
this charge tier will continue [sic] act as
an incentive to market participants to
provide non-displayed liquidity. The
Exchange believes that the proposed
change is both equitably allocated and
is not unfairly discriminatory because
member firms will continue to receive a
charge lower than the default charge
assessed for non-displayed orders that
qualify under the deleted tier in return
for providing non-displayed liquidity,
albeit at an increased charge under the
remaining tier.
The Exchange believes that increasing
the charge assessed and total
Consolidated Volume required for nondisplayed orders, other than orders with
Midpoint pegging, entered by a member
firm that adds 0.055% of total
Consolidated Volume of non-displayed
liquidity is reasonable because the
charge continues to be lower than the
charge assessed for other non-displayed
orders, thereby continuing to serve as an
incentive to market participants to
provide non-displayed liquidity, and
the modest increase in required total
Consolidated Volume will encourage
members to provide additional nondisplayed liquidity. The Exchange notes
that non-displayed liquidity is not as
beneficial to market quality as other
forms of displayed liquidity and,
accordingly, the Exchange assesses a
higher charge for such liquidity. The
Exchange believes that the proposed
change is both equitably allocated and
is not unfairly discriminatory because
member firms will continue to receive a
charge lower than the default charge
assessed for non-displayed orders that
qualify under the tier in return for
providing non-displayed liquidity at a
level slightly higher than is currently
required, which will apply to all
member firms that qualify under the
tier. Additionally, the Exchange believes
that the proposed change is equitably
allocated and not unfairly
discriminatory because all members can
add liquidity to BX and the more
liquidity a member adds the lower the
charge because the member is
improving the quality of the market by
providing this additional liquidity.
The Exchange believes that the
proposed increase to the default charge
assessed for non-displayed orders that
do not otherwise qualify for a lower
charge from $0.0028 per share executed
to $0.0030 per share executed is
reasonable because it is reflective of the
Exchange’s need to balance the fees
assessed with the desire to improve
market quality. The Exchange believes
that non-displayed liquidity on BX is
sufficient that it can support a minor
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18:47 Jun 16, 2015
Jkt 235001
increase to the charge assessed, thus
allowing the Exchange to apply other
discounted charges and offer credits
designed to further increase
participation on the Exchange. The
Exchange also believes that the
proposed increase to the default charge
is equitably allocated and not unfairly
discriminatory because all members
entering non-displayed orders on BX
that do not qualify for a reduced charge
will be assessed the proposed charge.
The Exchange believes the proposed
reduction in the level of Consolidated
Volume required to qualify as a QMM
from 0.30% to 0.15% is reasonable
because it will provide a greater
incentive to market participants to
participate in the program, which is
designed to improve the market by
providing member firms with incentive
to participate in the market in return for
reduced charge for providing Displayed
Orders. The Exchange also believes that
the proposed reduction in Consolidated
Volume required to qualify as a QMM
is equitably allocated and not unfairly
discriminatory because all member
firms that qualify under the amended
QMM eligibility standard will be
considered QMMs, and therefore be
eligible for the reduced charge. As
noted, the proposed change is designed
to expand participation in the program,
which will benefit all market
participants in the form of improved
liquidity.
The Exchange believes the proposed
increased credit provided for a Retail
Order that accesses other liquidity on
the Exchange book from $0.0012 per
share executed to $0.0017 per share
executed is reasonable because it will
provide a greater incentive to market
participants to participate in the
program, which is designed to improve
the market for retail order flow. The
Exchange also believes that the
proposed increase to the credit is
equitably allocated and not unfairly
discriminatory because all members
entering a Retail Order that accesses
other liquidity on the Exchange book
will receive the credit.
Finally, BX 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. In such an environment, BX
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. The changes
reflect this environment because
although they reflect both increases in
credits and fees, with the price increases
PO 00000
Frm 00157
Fmt 4703
Sfmt 4703
being minor and lower than the default
charges assessed under the fee schedule,
while the increased credits are designed
to incentivize changes in market
participant behavior to the benefit of the
market overall.
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.16 BX notes that it operates in
a highly competitive market in which
market participants can readily favor
dozens of 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 changes to fees
and credits do not impose a burden on
competition because participation in the
Exchange is optional and is the subject
of competition from other exchanges.
The proposed changes to the credits and
charges are reflective of the Exchange’s
overall efforts to provide greater
incentives to market participants in the
form of credits and reduced charges for
market participation it believes needs
improvement to the benefit of all
participants. For these reasons, the
Exchange does not believe that any of
the proposed changes will impair the
ability of members or competing order
execution venues to maintain their
competitive standing in the financial
markets. 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.
16 15
E:\FR\FM\17JNN1.SGM
U.S.C. 78f(b)(8).
17JNN1
Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / 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 17 and paragraph (f) of Rule
19b–4 18 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:
asabaliauskas on DSK5VPTVN1PROD 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–
BX–2015–033 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–2015–033. 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
17 15
18 17
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
VerDate Sep<11>2014
18:47 Jun 16, 2015
Jkt 235001
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–
2015–033, and should be submitted on
or before July 8, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–14819 Filed 6–16–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75152; File No. SR–MIAX–
2015–19)
Self-Regulatory Organizations; Miami
International Securities Exchange LLC;
Order Approving a Proposed Rule
Change To Amend Exchange Rule 515
June 11, 2015.
I. Introduction
On April 13, 2015, Miami
International Securities Exchange LLC
(‘‘MIAX’’ or ‘‘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
amend Exchange Rule 515 regarding the
functionality of Customer Cross Order
and Qualified Contingent Cross Order
types. The proposed rule change was
published for comment in the Federal
Register on April 30, 2015.3 The
Commission did not receive any
comments on the proposal. This order
approves the proposed rule change.
II. Description of the Proposal
The Exchange proposes amendments
to MIAX Rule 515(h) to provide that
trading interest that is subject to an
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 74809
(April 24, 2015), 80 FR 24297 (SR–MIAX–2015–19)
(‘‘Notice’’).
1 15
PO 00000
Frm 00158
Fmt 4703
Sfmt 4703
34763
ongoing timer or auction will maintain
priority over a new incoming Customer
Cross Order or Qualified Contingent
Cross Order. MIAX Rule 515(h)(1)
provides that Customer Cross Orders 4
are automatically executed upon entry
provided that the execution (i) is at or
between the best bid and offer on the
Exchange; (ii) is not at the same price as
a Priority Customer Order on the
Exchange’s Book; and (iii) will not trade
at a price inferior to the national best
bid or offer (‘‘NBBO’’). Customer Cross
Orders are automatically canceled if
they cannot be executed.5 Customer
Cross Orders may only be entered in the
minimum trading increments applicable
to the options class under Rule 510.6
MIAX Rule 515(h)(2) provides that
Qualified Contingent Cross Orders 7 are
automatically executed upon entry
provided that the execution (i) is not at
the same price as a Priority Customer
Order on the Exchange’s Book; and (ii)
is at or between the NBBO. Qualified
Contingent Cross Orders are
automatically canceled if they cannot be
executed.8 Qualified Contingent Cross
Orders may only be entered in the
minimum trading increments applicable
to the options class under MIAX Rule
510.9
Although neither the Customer Cross
Order nor the Qualified Contingent
Cross Order may be executed at a price
inferior to the NBBO, the Exchange
notes that there are situations at the
Exchange during which trading interest
may exist in the Exchange’s System that
could be executable at prices up to the
NBBO but is not automatically executed
because the Exchange is either
attempting to obtain additional price
improvement for the order or additional
liquidity to trade against the order on
the Exchange. The Exchange states that
it employs a variety of timers and
auctions to provide market participants
with an opportunity to obtain additional
price improvement for their order or to
access additional liquidity to trade
against the order on the Exchange.
Specifically, during the liquidity refresh
pause or managed interest process
4 See MIAX Rules 515(h)(1) and 516(i). The
Commission notes that the Customer Cross Order
type is currently not available for use on the
Exchange. See MIAX Options Regulatory Circular,
RC–2015–05.
5 See Notice, supra note 3, at 24297.
6 See MIAX Rule 515(h)(1).
7 See MIAX Rules 515(h)(2) and 516(j). See also
MIAX Rule 516, Interpretations and Policies .01.
The Qualified Contingent Cross Order is currently
not deployed; however, the Exchange represents
that it intends to make the order type available
pending Commission approval of the proposed rule
change. See Notice, supra note 3, at 24297.
8 See Notice, supra note 3, at 24297.
9 See MIAX Rule 515(h)(2).
E:\FR\FM\17JNN1.SGM
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]]>Agencies
[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)]
[Notices]
[Pages 34758-34763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14819]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75145; File No. SR-BX-2015-033]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
the Fee Schedule Under Exchange Rule 7018 With Respect to Transactions
in Securities Priced at $1 or More per Share and the Exchange's Retail
Price Improvement Program
June 11, 2015.
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 1, 2015, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit 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 BX Rule 7018 with respect to
transactions in securities priced at $1 or more per share and the
Exchange's Retail Price Improvement Program.
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
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
[[Page 34759]]
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 the fee schedule under Rule
7018(a), relating to fees and credits provided for orders in securities
priced and $1 or more per share that execute on BX, and is proposing to
increase a credit provided by the Retail Price Improvement program
under Rule 7018(e).
Under Rule 7018(a), the Exchange provides credits to member firms
that access certain levels of liquidity on BX per month. The Exchange
is proposing to add two new credit tiers of $0.0017 and $0.0012 per
share executed, which will be provided for orders that access
liquidity, excluding orders with Midpoint pegging \3\ and orders that
receive price improvement and execute against an order with Midpoint
pegging, entered by a member that accesses liquidity equal to or
exceeding 0.20% and 0.05% of total Consolidated Volume \4\ during a
month, respectively.
---------------------------------------------------------------------------
\3\ A Midpoint Peg order has its priced [sic] based upon the
national best bid and offer, excluding the effect that the Midpoint
Peg Order itself has on the inside bid or inside offer. Primary
Pegged Orders with an offset amount and Midpoint Pegged Orders will
never be displayed. A Midpoint Pegged Order may be executed in sub-
pennies if necessary to obtain a midpoint price. A new timestamp is
created for the order each time it is automatically adjusted.
\4\ Consolidated Volume is defined as the total consolidated
volume reported to all consolidated transaction reporting plans by
all exchanges and trade reporting facilities during a month in
equity securities, excluding executed orders with a size of less
than one round lot. For purposes of calculating Consolidated Volume
and the extent of a member's trading activity, expressed as a
percentage of or ratio to Consolidated Volume, the date of the
annual reconstitution of the Russell Investments Indexes shall be
excluded from both total Consolidated Volume and the member's
trading activity. See Rule 7018(a).
---------------------------------------------------------------------------
In a related change, the Exchange is amending existing credit tiers
that provide a credit to members with orders that access liquidity,
excluding orders with Midpoint pegging and orders that receive price
improvement and execute against an order with Midpoint pegging, entered
by a member that accesses liquidity equal to or exceeding 0.1% and
0.015% of total Consolidated Volume during a month, which currently
provide credits of $0.0010 and $0.0008 per share executed,
respectively. The Exchange is proposing to increase the credit provided
under the 0.1% Consolidated Volume tier from $0.0010 per share executed
to $0.0015 per share executed. The Exchange is also proposing to
increase the total Consolidated Volume required to receive the $0.0008
per share executed credit from 0.015% to 0.02%.
The Exchange is proposing to increase the credit it provides for
all other orders that remove liquidity from BX and that do not qualify
under another higher credit from $0.0004 per share executed to $0.0006
per share executed. In related changes, the Exchange is eliminating two
credit tiers, which currently provide credits of $0.0006 per share
executed and both of which are rendered moot in light of the increased
credit the Exchange is provided for all other orders that remove
liquidity from BX. Specifically, the Exchange is proposing to eliminate
a $0.0006 per share executed credit provided to a member firm for an
order that accesses liquidity, excluding orders with Midpoint pegging
and orders that receive price improvement and execute against an order
with Midpoint pegging, entered by a member that provides an average
daily volume of at least 25,000 shares of liquidity during the month.
The Exchange is also proposing to eliminate the $0.0006 per share
executed credit provided to members with a BSTG,\5\ BSCN,\6\ BMOP,\7\
BTFY,\8\ BCRT,\9\ BDRK \10\ or BCST \11\ order that accesses liquidity
in the NASDAQ OMX BX Equities System, excluding orders with Midpoint
pegging and excluding orders that receive price improvement and execute
against an order with Midpoint pegging.
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\5\ See BX Rule 4758(a)(1)(A)(iii).
\6\ See BX Rule 4758(a)(1)(A)(iv).
\7\ See BX Rule 4758(a)(1)(A)(vi).
\8\ See BX Rule 4758(a)(1)(A)(v).
\9\ See BX Rule 4758(a)(1)(A)(vii).
\10\ See BX Rule 4758(a)(1)(A)(viii).
\11\ See BX Rule 4758(a)(1)(A)(ix).
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The Exchange is also proposing to modify and eliminate certain
charges it assesses under Rule 7018(a). Specifically, the Exchange is
proposing to increase the charge assessed for a Displayed order entered
by a Qualified Market Maker \12\ (``QMM'') from $0.0009 per share
executed to $0.0014 per share executed. The Exchange is also proposing
to adopt a new charge tier of $0.0014 per share executed assessed a
member that (i) adds liquidity equal to or exceeding 0.25% of total
Consolidated Volume during a month, and (ii) adds and accesses
liquidity equal to or exceeding 0.50% of total Consolidated Volume
during a month.
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\12\ A member firm may become a QMM by providing through one or
more of its NASDAQ OMX BX Equities System market maker participant
identifier (``MPIDs'') more than 0.30% of Consolidated Volume during
the month. For a member qualifying under this method, the member
must have at least one Qualified MPID, that is, an MPID through
which, for at least 200 securities, the QMM quotes at the NBBO an
average of at least 50% of the time during regular market hours
(9:30 a.m. through 4:00 p.m.) during the month. The member must also
provide an average daily volume of 1.5 million shares or more using
orders with Midpoint pegging during the month.
---------------------------------------------------------------------------
The Exchange is proposing to increase the charges assessed under
two tiers for a displayed order that adds liquidity equal to or
exceeding 0.25% and 0.04% of total Consolidated Volume during a month,
respectively, which are currently set a $0.0012 per share executed and
$0.0014 per share executed, respectively. The Exchange is proposing to
increase the charge under the 0.25% tier to $0.0018 per share executed,
while also decreasing the minimum liquidity needed to be provided to
qualify under the tier from 0.25% of total Consolidated Volume during a
month to 0.20% of total Consolidated Volume during a month. The
Exchange is proposing to increase the charge under the 0.04% tier to
$0.0019 per share executed and is additionally proposing to increase
the total Consolidated Volume required to receive the charge from 0.04%
to 0.10%.
The Exchange is also proposing to amend charges it assesses for
providing liquidity in orders with Midpoint pegging. Specifically, it
is proposing to eliminate the $0.0002 per share executed charge
assessed for an order with Midpoint pegging entered by a member that
adds 0.03% of total Consolidated Volume of non-displayed liquidity. The
Exchange is also proposing to increase the charge assessed for an order
with Midpoint pegging entered by a member that adds 0.015% of total
Consolidated Volume of non-displayed liquidity from $0.0004 per share
executed to $0.0005 per share executed and is additionally increasing
the total Consolidated Volume requirement from 0.015% to 0.02%. The
Exchange is proposing to increase the $0.0010 per share executed charge
for an order with Midpoint pegging entered by a member that does not
qualify for a lower charge for such an order to $0.0015 per share
executed.
The Exchange is proposing to amend certain charges relating to non-
displayed orders. Specifically, the Exchange is proposing to eliminate
the $0.0014 per share executed charge assessed for a non-displayed
order, other than orders with Midpoint
[[Page 34760]]
pegging, entered by a member that adds 0.075% of total Consolidated
Volume of non-displayed liquidity. The Exchange is also proposing to
increase the $0.0019 per share executed charge assessed for a non-
displayed order, other than orders with Midpoint pegging, entered by a
member that adds 0.055% of total Consolidated Volume of non-displayed
liquidity to $0.0024 per share executed and is additionally increasing
the total Consolidated Volume requirement to 0.06%. The Exchange is
proposing to increase the charge assessed for all other non-displayed
orders from $0.0028 per share executed to $0.0030 per share executed.
The Exchange is proposing to reduce the level of Consolidated
Volume required to qualify as a QMM. Currently, to be considered a QMM
a member firm must provide through one or more of its NASDAQ OMX BX
Equities System MPIDs more than 0.30% of Consolidated Volume during the
month. To qualify under this method, the member firm must have at least
one Qualified MPID, that is, an MPID through which, for at least 200
securities, the QMM quotes at the NBBO an average of at least 50% of
the time during regular market hours (9:30 a.m. through 4:00 p.m.)
during the month. The member firm must also provide an average daily
volume of 1.5M shares or more using orders with Midpoint pegging during
the month. The Exchange is proposing to reduce the level of
Consolidated Volume under the rule from 0.30% to 0.15%.
Lastly, the Exchange is proposing to amend a charge assessed under
the Retail Price Improvement Program of Rule 7018(e). The Exchange's
Retail Price Improvement (``RPI'') program provides incentives to
member firms (or a division thereof) approved by the Exchange to
participate in the program (a ``Retail Member Organization'') to submit
designated ``Retail Orders'' \13\ for the purpose of seeking price
improvement. The Exchange is proposing to increase the $0.0012 per
share executed credit provided for a Retail Order that accesses other
liquidity on the Exchange book to $0.0017 per share executed. The
credit applies to Retail Orders not covered by other credit tiers
available for accessing liquidity under the rule.
---------------------------------------------------------------------------
\13\ A Retail Order is defined in BX Rule 4780(a)(2), in part,
as ``an agency or riskless principal order that satisfies the
criteria of FINRA Rule 5320.03, that originates from a natural
person and is submitted to the Exchange by a Retail Member
Organization, provided that no change is made to the terms of the
order with respect to price (except in the case that a market order
is changed to a marketable limit order) or side of market and the
order does not originate from a trading algorithm or any other
computerized methodology.''
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2. Statutory Basis
BX believes that the proposed rule changes are consistent with the
provisions of Section 6 of the Act,\14\ in general, and with Sections
6(b)(4) and 6(b)(5) of the Act,\15\ in particular, in that 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 which the Exchange operates or controls, and is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest; and are not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78f.
\15\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange believes that the proposed two new credit tiers based
on Consolidated Volume together with the proposed changes to existing
credit tiers based on Consolidated Volume under BX Rule 7018(a) are
reasonable because they provide additional opportunities for market
participants to receive credits for participation on BX. The Exchange
also believes that the proposed changes to the credit tiers based on
the level Consolidated Volume are reasonable because the credits tiers
are directly tied to the level of Consolidated Volume a member firm
accesses in a given month, with the highest credit provided for the
greatest level of Consolidated Volume, and the lowest credit provided
to the lowest level of Consolidated Volume. Specifically, the Exchange
is proposing a new $0.0017 per share executed credit tier, which will
require the highest level of Consolidated Volume in liquidity removal
from the Exchange. The Exchange is proposing to increase the credit
provided for the next lower tier, which requires liquidity accessed of
0.1% or more of Consolidated Volume, to $0.0015 per share executed. The
Exchange is proposing to adopt a new $0.0012 per share executed credit
tier, which will require adding liquidity equal to or exceeding 0.05%
of total Consolidated Volume during the month. Lastly, the Exchange is
modifying an existing credit tier by increasing the minimum total
Consolidated Volume required from 0.015% to 0.02%. As such, the
Exchange is generally providing increased credits to provide incentive
to member firms to remove liquidity, excluding orders with Midpoint
pegging and excluding orders that receive price improvement and execute
against an order with Midpoint pegging, from the Exchange. With respect
to the increased Consolidated Volume required to receive the $0.0008
credit, the Exchange notes that member firms are being required to
provide increased Consolidated Volume to receive the credit, which will
improve market quality for all participants. The Exchange believes that
the proposed credits noted above are both equitably allocated and are
not unfairly discriminatory as they are provided to all member firms
that achieve the minimum level of Consolidated Volume required by the
tier, with the member firms that provide the greatest level of
Consolidated Volume receiving the greatest credit.
The Exchange believes that elimination of the two $0.0006 per share
executed credit tiers is reasonable because the Exchange has increased
the credit it provides for all orders that do not otherwise receive a
higher credit, which the Exchange is increasing to $0.0006 per share
executed. This increased ``default'' credit is reasonable because the
Exchange desires to further incentivize member firms to participate in
the Exchange by removing liquidity, generally. The Exchange believes
that the proposed elimination of the two $0.0006 per share executed
credit tiers, and the proposed increase in the ``default'' credit to
$0.0006 per share executed are both an equitable allocation and are not
unfairly discriminatory because more member firms will have the
opportunity to qualify for a higher credit based on their participation
in BX by removing liquidity.
The Exchange believes that the proposed change to increase the
charge assessed a QMM for entering a displayed order is reasonable
because the exchange must balance the cost of credits provided for
orders removing liquidity and the desire to provide QMMs with
incentives to provide displayed orders. The Exchange notes that the
proposed charge continues to be lower than the default charge assessed
for all other displayed orders that do not otherwise qualify for a
lower charge, and as such continues to act as an incentive to market
participants to provide such liquidity. Moreover, the Exchange will
continue to provide a reduced charge in return for the
[[Page 34761]]
provision of market improving order activity. The Exchange believes
that the proposed change is both equitably allocated and is not
unfairly discriminatory because the increased charge applies uniformly
to all member firms that previously had qualified to receive such a
credit.
The Exchange believes that the proposed new $0.0014 per share
executed charge available to a member firm that adds liquidity equal to
or exceeding 0.25% of total Consolidated Volume during a month and adds
and accesses liquidity equal to or exceeding 0.50% of total
Consolidated Volume during a month, is reasonable because it provides a
new means by which a member firm may qualify for a lower charge than
the default charge applied to liquidity-providing displayed orders. The
Exchange provides incentives to member firms to enter displayed orders
on BX and, in the present case, it is providing a reduced charge to a
member that enters such an order, but also provides market improving
liquidity in the form of significant levels of Consolidated Volume of
adding and accessing liquidity during the month. The Exchange believes
that the proposed change is both equitably allocated and is not
unfairly discriminatory because the new charge applies uniformly to all
member firms that qualify under the tier's requirements, which requires
beneficial market activity by the member firm in return for the lower
charge.
The Exchange believes that the proposed increase to the $0.0012 per
share executed and $0.0014 per share executed charge tiers assessed for
Displayed orders entered by a member firm that adds liquidity equal to
or exceeding 0.25% and 0.04% of total Consolidated Volume during a
month, respectively, is reasonable because it reflects a small increase
to the charges assessed for such orders by qualifying members, while
each continue to remain lower than the default charge assessed for
providing liquidity in displayed orders. As such, the proposed charges
will continue [sic] act as an incentive to market participants to
provide displayed orders. The Exchange also believes that decreasing
the level of Consolidated Volume required to receive the proposed
$0.0018 per share executed charge from 0.025% to 0.020% is reasonable
because it lowers the total Consolidated Volume requirement, which the
Exchange has observed was set too high to effectively provide incentive
to market participants to improve the market. The Exchange also
believes that it is reasonable to increase the level of Consolidated
Volume required to receive the $0.0019 per share executed charge from
0.04% to 0.10% because the Exchange believes that increasing the level
may result in improved market quality in the form of additional total
Consolidated Volume in return for the reduced charge. The Exchange
believes that the proposed changes to the $0.0012 charge tier is both
an equitable allocation and is not unfairly discriminatory because the
increased charge applies uniformly to all member firms that qualify
under the tier's revised, lower Consolidated Volume requirement, which
will continue to provide a charge lower than the default charge
assessed for displayed orders. The Exchange also believes that the
proposed changes to the $0.0014 charge tier is both an equitable
allocation and is not unfairly discriminatory because the increased
charge applies uniformly to all member firms that qualify under the
tier's revised, higher Consolidated Volume requirement, which will
continue to provide a charge lower than the default charge assessed for
displayed orders.
The Exchange believes that elimination of the $0.0002 per share
executed charge provided for an order with Midpoint pegging entered by
a member firm that adds 0.03% of total Consolidated Volume of non-
displayed liquidity is reasonable because the Exchange will continue to
provide opportunity for member firms to receive a reduced charge for
such non-displayed liquidity based on a certain level of total
Consolidated Volume. Specifically, the Exchange will provide a member
firm with a reduced charge for non-displayed liquidity if it achieves
0.02% of total Consolidated Volume during a month. The Exchange
believes that the 0.03% total Consolidated Volume tier is no longer
needed to provide incentive to market participant [sic] to provide such
Midpoint pegging orders. The Exchange believes that the proposed change
is both equitably allocated and is not unfairly discriminatory because
member firms will continue to receive a charge lower than the default
charge assessed for non-displayed orders in return for providing
beneficial liquidity in the form of Midpoint pegging orders, albeit at
an increased charge.
The Exchange believes that the proposed increase to the charge
assessed for an order with Midpoint pegging entered by a member firm
that adds 0.015% of total Consolidated Volume from $0.0004 per share
executed to $0.0005 per share executed is reasonable because it
represents a modest increase to the charge assessed for such orders,
while remaining lower than the default charge assessed for other non-
displayed orders. Moreover, the Exchange believes that the proposed
increased charge will continue [sic] act as an incentive to market
participants to provide orders with Midpoint pegging. The Exchange
believes that the proposed change is both equitably allocated and is
not unfairly discriminatory because member firms will continue to
receive a charge lower than the default charge assessed for orders in
return for providing beneficial liquidity in the form of Midpoint
pegging orders, albeit at an increased charge. The Exchange also
believes that the proposed increase to the charge is equitably
allocated and not unfairly discriminatory because all members entering
orders with Midpoint pegging that meet the criteria of the tier will be
assessed the proposed charge.
The Exchange believes that the increase the [sic] charge for
Midpoint pegging orders that do not otherwise qualify for a lower
charge from $0.0010 per share executed to $0.0015 per share executed is
reasonable because it represents a modest increase to the charge
assessed for such orders, while remaining lower than the default charge
assessed for non-displayed orders. Moreover, the Exchange believes that
the proposed increased charge will continue [sic] act as an incentive
to market participants provide orders with Midpoint pegging. The
Exchange believes that the proposed change is both equitably allocated
and is not unfairly discriminatory because member firms will continue
to receive a charge lower than the default charge assessed for non-
displayed orders in return for providing beneficial liquidity in the
form of Midpoint pegging orders, albeit at an increased charge. The
Exchange also believes that the proposed increase to the charge is
equitably allocated and not unfairly discriminatory because all members
entering orders with Midpoint pegging that do not otherwise qualify for
a lower charge under another tier will be assessed the proposed charge.
The Exchange believes that elimination of the $0.0014 per share
executed charge assessed for non-displayed orders, other than orders
with Midpoint pegging, entered by a member firm that adds 0.075% of
total Consolidated Volume of non-displayed liquidity is reasonable
because the Exchange will continue to offer member firms opportunity to
receive a reduced charge for such orders, albeit at a higher charge
under a separate tier. The Exchange notes that, while the proposed
charge under the remaining tier is $0.0024 per share executed, member
firms will only be required to provide a minimum of 0.06% of total
[[Page 34762]]
Consolidated Volume of non-displayed liquidity. The Exchange believes
that this charge tier will continue [sic] act as an incentive to market
participants to provide non-displayed liquidity. The Exchange believes
that the proposed change is both equitably allocated and is not
unfairly discriminatory because member firms will continue to receive a
charge lower than the default charge assessed for non-displayed orders
that qualify under the deleted tier in return for providing non-
displayed liquidity, albeit at an increased charge under the remaining
tier.
The Exchange believes that increasing the charge assessed and total
Consolidated Volume required for non-displayed orders, other than
orders with Midpoint pegging, entered by a member firm that adds 0.055%
of total Consolidated Volume of non-displayed liquidity is reasonable
because the charge continues to be lower than the charge assessed for
other non-displayed orders, thereby continuing to serve as an incentive
to market participants to provide non-displayed liquidity, and the
modest increase in required total Consolidated Volume will encourage
members to provide additional non-displayed liquidity. The Exchange
notes that non-displayed liquidity is not as beneficial to market
quality as other forms of displayed liquidity and, accordingly, the
Exchange assesses a higher charge for such liquidity. The Exchange
believes that the proposed change is both equitably allocated and is
not unfairly discriminatory because member firms will continue to
receive a charge lower than the default charge assessed for non-
displayed orders that qualify under the tier in return for providing
non-displayed liquidity at a level slightly higher than is currently
required, which will apply to all member firms that qualify under the
tier. Additionally, the Exchange believes that the proposed change is
equitably allocated and not unfairly discriminatory because all members
can add liquidity to BX and the more liquidity a member adds the lower
the charge because the member is improving the quality of the market by
providing this additional liquidity.
The Exchange believes that the proposed increase to the default
charge assessed for non-displayed orders that do not otherwise qualify
for a lower charge from $0.0028 per share executed to $0.0030 per share
executed is reasonable because it is reflective of the Exchange's need
to balance the fees assessed with the desire to improve market quality.
The Exchange believes that non-displayed liquidity on BX is sufficient
that it can support a minor increase to the charge assessed, thus
allowing the Exchange to apply other discounted charges and offer
credits designed to further increase participation on the Exchange. The
Exchange also believes that the proposed increase to the default charge
is equitably allocated and not unfairly discriminatory because all
members entering non-displayed orders on BX that do not qualify for a
reduced charge will be assessed the proposed charge.
The Exchange believes the proposed reduction in the level of
Consolidated Volume required to qualify as a QMM from 0.30% to 0.15% is
reasonable because it will provide a greater incentive to market
participants to participate in the program, which is designed to
improve the market by providing member firms with incentive to
participate in the market in return for reduced charge for providing
Displayed Orders. The Exchange also believes that the proposed
reduction in Consolidated Volume required to qualify as a QMM is
equitably allocated and not unfairly discriminatory because all member
firms that qualify under the amended QMM eligibility standard will be
considered QMMs, and therefore be eligible for the reduced charge. As
noted, the proposed change is designed to expand participation in the
program, which will benefit all market participants in the form of
improved liquidity.
The Exchange believes the proposed increased credit provided for a
Retail Order that accesses other liquidity on the Exchange book from
$0.0012 per share executed to $0.0017 per share executed is reasonable
because it will provide a greater incentive to market participants to
participate in the program, which is designed to improve the market for
retail order flow. The Exchange also believes that the proposed
increase to the credit is equitably allocated and not unfairly
discriminatory because all members entering a Retail Order that
accesses other liquidity on the Exchange book will receive the credit.
Finally, BX 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. In such an
environment, BX 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. The changes reflect this environment because although
they reflect both increases in credits and fees, with the price
increases being minor and lower than the default charges assessed under
the fee schedule, while the increased credits are designed to
incentivize changes in market participant behavior to the benefit of
the market overall.
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.\16\
BX notes that it operates in a highly competitive market in which
market participants can readily favor dozens of 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.
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\16\ 15 U.S.C. 78f(b)(8).
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In this instance, the changes to fees and credits do not impose a
burden on competition because participation in the Exchange is optional
and is the subject of competition from other exchanges. The proposed
changes to the credits and charges are reflective of the Exchange's
overall efforts to provide greater incentives to market participants in
the form of credits and reduced charges for market participation it
believes needs improvement to the benefit of all participants. For
these reasons, the Exchange does not believe that any of the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
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.
[[Page 34763]]
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 \17\ and paragraph (f) of Rule 19b-4 \18\
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.
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 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-BX-2015-033 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-2015-033. 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-2015-033,
and should be submitted on or before July 8, 2015.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-14819 Filed 6-16-15; 8:45 am]
BILLING CODE 8011-01-P
