Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Nasdaq Rule 7018, 48487-48490 [2016-17443]
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Federal Register / Vol. 81, No. 142 / Monday, July 25, 2016 / 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 rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.10
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.
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:
mstockstill on DSK3G9T082PROD 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–2016–043 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–2016–043. 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–BX–
2016–043, and should be submitted on
or before August 15, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–17448 Filed 7–22–16; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78354; File No. SR–
NASDAQ–2016–102]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Nasdaq Rule 7018
July 19, 2016.
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 July 13,
2016, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) a 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 the Substance
of the Proposed Rule Change
Nasdaq is proposing changes to
amend Nasdaq Rule 7018(a) to: (i)
Amend the consolidated volume
(‘‘BATS’’) and The NASDAQ Options Market LLC
(‘‘NOM’’).
10 15 U.S.C. 78s(b)(3)(A)(ii).
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11 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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48487
(‘‘Consolidated Volume’’) requirement
for a credit tier for providing liquidity
in securities of all three Tapes; (ii)
delete a credit tier for providing
liquidity in securities of all three Tapes;
and (iii) provide a new credit for
providing liquidity in securities of all
three Tapes.
The text of the proposed rule change
is available at
nasdaq.cchwallstreet.com, at Nasdaq’s
principal office, 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,
Nasdaq included statements concerning
the purpose of, and basis for, the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of those
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to amend certain credits for
the use of the order execution and
routing services of the Nasdaq Market
Center by members for all securities
priced at $1 or more that it trades.
Specifically, the Exchange proposes to
amend Nasdaq Rule 7018(a)(1), (2), and
(3) to: (i) Amend the Consolidated
Volume requirement for a credit tier for
providing liquidity in securities of all
three Tapes; 3 (ii) delete a credit tier for
providing liquidity in securities of all
three Tapes; and (iii) provide a new
credit for providing liquidity in
securities of all three Tapes.
First Change
The purpose of the first change is to
increase the Consolidated Volume
requirement for accessing liquidity in an
existing credit tier. Currently, the credit
tier requires a member to access more
than 0.65% of Consolidated Volume
through one or more of its Nasdaq
Market Center MPIDs, provided that the
member also provides a daily average of
3 There are three Tapes, which are based on the
listing venue of the security: Tape C securities are
Nasdaq-listed; Tape A securities are New York
Stock Exchange (‘‘NYSE’’)-listed; and Tape B
securities are listed on exchanges other than Nasdaq
and NYSE.
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Federal Register / Vol. 81, No. 142 / Monday, July 25, 2016 / Notices
at least 2 million shares of liquidity in
all securities during the month. The
Exchange is proposing to increase the
required Consolidated Volume
requirement to more than 0.80%. The
current credit will remain as $0.0029
per share executed. The Consolidated
Volume requirement will be increased
as stated above for all three Tapes.
Increasing the Consolidated Volume
criteria will require members to access
more liquidity to receive the $0.0029
per share executed credit tier, but the
Exchange believes that the members that
want to avail themselves of this credit
tier will be able to meet the increased
Consolidated Volume requirement.
Increasing the amount of liquidity
accessed should be beneficial to other
members as more of their resting limit
orders may be accessed by members
seeking to attain this credit tier.
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Second Change
The purpose of the second change is
to delete the credit tier of $0.0030 per
share executed for a member with
shares of liquidity provided in all
securities during the month
representing more than 0.20% of
Consolidated Volume during the month,
through one or more of its Nasdaq
Market Center MPIDs and that qualifies
for the additional $0.05 per contract
credit under Note c(3) of Nasdaq
Options Market (‘‘NOM’’) Chapter XV
Section 2(1) in securities of all three
Tapes.
No market participants qualified for
this credit tier recently, thus rendering
it ineffective as acting as an incentive.
However, since the Exchange is limited
in the amount of credits that it can
provide to market participants and even
though no market participants currently
qualify for this credit tier, this can easily
shift from month to month so Nasdaq is
proposing to delete it. Nasdaq must be
selective in providing credits to
members, and allocates credits to where
it believes it will receive the best result
in terms of improvement to market
quality. The Exchange believes that
eliminating this credit tier for all three
Tapes is the only way to ensure that it
will not going forward impact the
overall balance of credits and fees.
Third Change
The purpose of the third change is to
provide an additional credit to members
that provide liquidity. Currently, the
Exchange provides several credits under
Rules 7018(a)(1), (2), and (3), each of
which apply to securities of a different
Tape, in return for market-improving
behavior. The Exchange is proposing to
add a new credit tier of $0.0027 per
share executed for a member that has
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shares of liquidity provided in all
securities during the month
representing more than 0.10% of
Consolidated Volume during the month,
through one or more of its Nasdaq
Market Center MPIDs, and that adds
Customer,4 Professional,5 Firm,6 NonNOM Market Maker 7 and/or BrokerDealer 8 liquidity in Non-Penny Pilot
Options of 0.40% or more of total
industry average daily volume (‘‘ADV’’)
in the customer clearing range for
Equity and exchange-traded fund
(‘‘ETF’’) option contracts per day in a
month on the NOM.
As a general principle, the Exchange
chooses to offer credits to members in
return for market improving behavior.
Under Rule 7018(a), the various credits
the Exchange provides for members
require them to significantly contribute
to market quality by providing certain
levels of Consolidated Volume through
one or more of its Nasdaq Market Center
MPIDs, and volume on NOM. The
Exchange believes that by adding more
in Non-Penny names on NOM that the
market for these options on NOM will
improve and the Exchange seeks to
encourage such behavior.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,9 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,10 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
4 The term ‘‘Customer’’ or (‘‘C’’) applies to any
transaction that is identified by a Participant for
clearing in the Customer range at The Options
Clearing Corporation (‘‘OCC’’) which is not for the
account of broker or dealer or for the account of a
‘‘Professional’’ (as that term is defined in Chapter
I, Section 1(a)(48)).
5 The term ‘‘Professional’’ or (‘‘P’’) means any
person or entity that (i) is not a broker or dealer in
securities, and (ii) places more than 390 orders in
listed options per day on average during a calendar
month for its own beneficial account(s) pursuant to
Chapter I, Section 1(a)(48). All Professional orders
shall be appropriately marked by Participants.
6 The term ‘‘Firm’’ or (‘‘F’’) applies to any
transaction that is identified by a Participant for
clearing in the Firm range at OCC.
7 The term ‘‘NOM Market Maker’’ or (‘‘M’’) is a
Participant that has registered as a Market Maker on
NOM pursuant to Chapter VII, Section 2, and must
also remain in good standing pursuant to Chapter
VII, Section 4. In order to receive NOM Market
Maker pricing in all securities, the Participant must
be registered as a NOM Market Maker in at least one
security.
8 The term ‘‘Broker-Dealer’’ or (‘‘B’’) applies to
any transaction which is not subject to any of the
other transaction fees applicable within a particular
category.
9 15 U.S.C. 78f(b).
10 15 U.S.C. 78f(b)(4) and (5).
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controls, and is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
First Change
The Exchange believes that this
proposed amendment to the
requirements of an existing credit tier
provided in securities of all three Tapes
is reasonable because it amends a
measure of activity with another, both of
which represent a significant
contribution to that market. Specifically,
the Exchange is increasing the
requirement that a member with shares
of liquidity accessed in all securities
through one or more of its Nasdaq
Market Center MPIDs representing more
than 0.65% of Consolidated Volume
during the month. The Exchange is
proposing to increase the monthly
Consolidated Volume requirement from
more than 0.65% to more than 0.80%.
The member must also provide a daily
average of at least 2 million shares of
liquidity in all securities through one or
more of its Nasdaq Market Center MPIDs
during the month along with the
required shares of liquidity accessed.
The Exchange believes that the
proposed amendment to the
requirements of an existing credit tier
provided in securities of all three Tapes
is an equitable allocation and is not
unfairly discriminatory because the
Exchange will apply the same $0.0029
per share executed credit to all similarly
situated members. Thus, if a member
meets the requirements, it will receive
the credit. Also, and as previously
discussed, Nasdaq believes that
although increasing the Consolidated
Volume criteria will require members to
access more liquidity to receive the
$0.0029 per share executed credit tier,
members seeking to achieve this credit
tier will be able to meet the increased
Consolidated Volume requirement.
Increasing the amount of liquidity
accessed should be beneficial to other
members as their resting limit orders
may be accessed by members seeking to
attain this credit tier.
Second Change
The Exchange believes that the
proposed changes to delete a credit tier
for a member with shares of liquidity
provided in all securities during the
month representing more than 0.20% of
Consolidated Volume during the month,
through one or more of its Nasdaq
Market Center MPIDs and that qualifies
for the additional $0.05 per contract
credit under Note c(3) of NOM Chapter
XV Section 2(1) in securities of all three
Tapes is reasonable because the
Exchange must, from time to time,
adjust the level of credits provided, and
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mstockstill on DSK3G9T082PROD with NOTICES
the criteria required to receive them, to
provide the most efficient allocation of
credits in terms of market improving
behavior.
Specifically, with regard to the
eliminated $0.0030 per share executed
credit tier, as discussed previously,
Nasdaq observed that no market
participants qualified for this credit tier
recently, thus rendering it ineffective as
acting as an incentive. The Exchange is
limited in the amount of credits that it
can provide to market participants so
even though no market participants
currently qualified for this credit tier,
this can easily shift from month to
month. Nasdaq must be selective in
providing credits to members, and
allocates credits to where it believes it
will receive the best result in terms of
improvement to market quality. The
Exchange believes that it is reasonable
to eliminate this credit tier as the only
way to ensure that it will not going
forward impact the overall balance of
credits and fees.
The Exchange believes that the
proposed change to delete the credit tier
described above in Rule 7018(a) is an
equitable allocation and is not unfairly
discriminatory because the Exchange
will eliminate the same credit for all
similarly situated members. The credits
Nasdaq provides are designed to
improve market quality for all market
participants, and Nasdaq allocates its
credits in a manner that it believes are
the most likely to achieve that result.
Elimination of the existing credit tier
under the rule is an equitable allocation
and is not unfairly discriminatory
because no participants qualified under
this credit tier, therefore, its elimination
will not impact any members.
Third Change
The Exchange believes that the
proposed rule change to add a new
credit tier of $0.0027 per share executed
is reasonable because it is consistent
with other credits that the Exchange
provides to members that provide
liquidity. As discussed previously, as a
general principle the Exchange chooses
to offer credits to members in return for
market improving behavior. Under Rule
7018(a), the various credits the
Exchange provides for members require
them to significantly contribute to
market quality by providing certain
levels of Consolidated Volume through
one or more of its Nasdaq Market Center
MPIDs, and volume on NOM. The
proposed credit will be provided to
members that not only contribute to the
Exchange by providing more than
0.10% of Consolidated Volume through
one or more of its Nasdaq Market Center
MPIDs during the month, but also adds
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Jkt 238001
Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer
liquidity in Non-Penny Pilot Options of
0.40% or more of total industry ADV in
the customer clearing range for Equity
and ETF option contracts per day in a
month on the NOM.
The Exchange believes that the
proposed new credit tier is reasonable
because although it provides for a lower
credit than some other NOM-linked
credit tiers, it also has a corresponding
lower Consolidated Volume threshold of
0.10%. Also, the proposed new credit
tier specifically requires adding
liquidity in Non-Penny Pilot Options.11
Currently, the credit tier referencing the
NOM fee schedule that is being deleted
in the Second Change (described above)
also has a Non-Penny liquidity
component as part of the criteria, so
using liquidity in Non-Penny Pilot
Options as a tiering criteria is not novel.
The Exchange believes that the
proposed $0.0027 per share executed
credit is an equitable allocation and is
not unfairly discriminatory because the
Exchange will apply the same credit to
all similarly situated members. Thus, if
a member meets the requirements, it
will receive the credit. A member
achieving this credit tier will be
providing liquidity in less liquid
options classes (i.e., Non-Penny names).
The Exchange believes that by adding
more in Non-Penny names on NOM that
the market for these options on NOM
will improve and the Exchange seeks to
encourage such behavior.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. In terms of
inter-market competition, the Exchange
notes that it operates in a highly
competitive market in which market
participants can readily favor competing
venues if they deem fee levels at a
particular venue to be excessive, or
rebate opportunities available at other
venues to be more favorable. In such an
environment, the Exchange must
continually adjust its fees to remain
competitive with other exchanges and
with alternative trading systems that
have been exempted from compliance
with the statutory standards applicable
to exchanges. Because competitors are
free to modify their own fees in
response, and because market
11 See NOM Chapter XV, Note c(3)(b) to Section
2(1), which also supports members to add
Customer, Professional, Firm, Non-NOM Market
Maker and/or Broker-Dealer liquidity in Non-Penny
Pilot Options.
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48489
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
In this instance, the changes to the
credits provided for the use of the order
execution and routing services of the
Nasdaq Market Center by members for
all securities priced at $1 or more that
it trades are reflective of the intense
competition among trading venues in
capturing order flow. Moreover, the
proposed changes do not impose a
burden on competition because
Exchange membership is optional and is
also the subject of competition from
other trading venues. 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
the Exchange will lose market share as
a result of the changes if they are
unattractive to market participants.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.12 At any time
within 60 days of the filing of the
proposed rule change, the Commission
summarily may temporarily suspend
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
12 15
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U.S.C. 78s(b)(3)(A)(ii).
25JYN1
48490
Federal Register / Vol. 81, No. 142 / Monday, July 25, 2016 / Notices
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2016–102 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–2016–102. 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–
NASDAQ–2016–102, and should be
submitted on or before August 15, 2016.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–17443 Filed 7–22–16; 8:45 am]
BILLING CODE 8011–01–P
This is a Notice of the
Presidential declaration of a major
disaster for Public Assistance Only for
the State of Oklahoma (FEMA–4274–
DR), dated 07/15/2016.
Incident: Severe Storms and Flooding.
Incident Period: 06/11/2016 through
06/13/2016.
Effective Date: 07/15/2016.
Physical Loan Application Deadline
Date: 09/13/2016.
Economic Injury (EIDL) Loan
Application Deadline Date: 04/17/2017.
SUMMARY:
Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
ADDRESSES:
Notice is
hereby given that as a result of the
President’s major disaster declaration on
07/15/2016, Private Non-Profit
organizations that provide essential
services of governmental nature may file
disaster loan applications at the address
listed above or other locally announced
locations.
The following areas have been
determined to be adversely affected by
the disaster:
SUPPLEMENTARY INFORMATION:
Primary Counties: Caddo; Comanche;
Cotton; Garvin; Grady; Stephens.
The Interest Rates are:
Percent
For Physical Damage:
Non-Profit Organizations With
Credit Available Elsewhere:
Non-Profit Organizations Without Credit Available Elsewhere:
For Economic Injury:
Non-Profit Organizations Without Credit Available Elsewhere:
2.625
2.625
2.625
Oklahoma Disaster # OK–00105
(Catalog of Federal Domestic Assistance
Numbers 59002 and 59008)
U.S. Small Business
Administration.
ACTION: Notice.
Lisa Lopez-Suarez,
Acting Associate Administrator for Disaster
Assistance.
mstockstill on DSK3G9T082PROD with NOTICES
[FR Doc. 2016–17454 Filed 7–22–16; 8:45 am]
13 17
CFR 200.30–3(a)(12).
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18:27 Jul 22, 2016
BILLING CODE 8025–01–P
Jkt 238001
In accordance with the Code of
Federal Regulations 13—Business Credit
and Assistance § 123.512, the following
interest rate is effective for Military
Reservist Economic Injury Disaster
Loans approved on or after July 22,
2016.
Military Reservist Loan Program
4.000%.
Dated: July 15, 2016.
Lisa Lopez Suarez,
Acting Associate Administrator for Disaster
Assistance.
[FR Doc. 2016–17467 Filed 7–22–16; 8:45 am]
BILLING CODE P
A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW., Suite 6050,
Washington, DC 20416.
[Disaster Declaration # 14775 and # 14776]
AGENCY:
Military Reservist Economic Injury
Disaster Loans Interest Rate for Fourth
Quarter FY 2016
FOR FURTHER INFORMATION CONTACT:
The number assigned to this disaster
for physical damage is 14775B and for
economic injury is 14776B.
SMALL BUSINESS ADMINISTRATION
SMALL BUSINESS ADMINISTRATION
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
[Summary Notice No. 2016–85]
Petition for Exemption; Summary of
Petition Received; Florida Air
Transport
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice.
AGENCY:
This notice contains a
summary of a petition seeking relief
from specified requirements of Title 14
of the Code of Federal Regulations. The
purpose of this notice is to improve the
public’s awareness of, and participation
in, the FAA’s exemption process.
Neither publication of this notice nor
the inclusion or omission of information
in the summary is intended to affect the
legal status of the petition or its final
disposition.
SUMMARY:
Comments on this petition must
identify the petition docket number and
must be received on or before August
15, 2016.
ADDRESSES: Send comments identified
by docket number FAA–2016–7045
using any of the following methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov and follow
the online instructions for sending your
comments electronically.
• Mail: Send comments to Docket
Operations, M–30; U.S. Department of
Transportation (DOT), 1200 New Jersey
Avenue SE., Room W12–140, West
Building Ground Floor, Washington, DC
20590–0001.
• Hand Delivery or Courier: Take
comments to Docket Operations in
Room W12–140 of the West Building
DATES:
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Agencies
[Federal Register Volume 81, Number 142 (Monday, July 25, 2016)]
[Notices]
[Pages 48487-48490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17443]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-78354; File No. SR-NASDAQ-2016-102]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Nasdaq Rule 7018
July 19, 2016.
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 July 13, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') a 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq is proposing changes to amend Nasdaq Rule 7018(a) to: (i)
Amend the consolidated volume (``Consolidated Volume'') requirement for
a credit tier for providing liquidity in securities of all three Tapes;
(ii) delete a credit tier for providing liquidity in securities of all
three Tapes; and (iii) provide a new credit for providing liquidity in
securities of all three Tapes.
The text of the proposed rule change is available at
nasdaq.cchwallstreet.com, at Nasdaq's principal office, 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, Nasdaq included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of those statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend certain credits
for the use of the order execution and routing services of the Nasdaq
Market Center by members for all securities priced at $1 or more that
it trades.
Specifically, the Exchange proposes to amend Nasdaq Rule
7018(a)(1), (2), and (3) to: (i) Amend the Consolidated Volume
requirement for a credit tier for providing liquidity in securities of
all three Tapes; \3\ (ii) delete a credit tier for providing liquidity
in securities of all three Tapes; and (iii) provide a new credit for
providing liquidity in securities of all three Tapes.
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\3\ There are three Tapes, which are based on the listing venue
of the security: Tape C securities are Nasdaq-listed; Tape A
securities are New York Stock Exchange (``NYSE'')-listed; and Tape B
securities are listed on exchanges other than Nasdaq and NYSE.
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First Change
The purpose of the first change is to increase the Consolidated
Volume requirement for accessing liquidity in an existing credit tier.
Currently, the credit tier requires a member to access more than 0.65%
of Consolidated Volume through one or more of its Nasdaq Market Center
MPIDs, provided that the member also provides a daily average of
[[Page 48488]]
at least 2 million shares of liquidity in all securities during the
month. The Exchange is proposing to increase the required Consolidated
Volume requirement to more than 0.80%. The current credit will remain
as $0.0029 per share executed. The Consolidated Volume requirement will
be increased as stated above for all three Tapes.
Increasing the Consolidated Volume criteria will require members to
access more liquidity to receive the $0.0029 per share executed credit
tier, but the Exchange believes that the members that want to avail
themselves of this credit tier will be able to meet the increased
Consolidated Volume requirement. Increasing the amount of liquidity
accessed should be beneficial to other members as more of their resting
limit orders may be accessed by members seeking to attain this credit
tier.
Second Change
The purpose of the second change is to delete the credit tier of
$0.0030 per share executed for a member with shares of liquidity
provided in all securities during the month representing more than
0.20% of Consolidated Volume during the month, through one or more of
its Nasdaq Market Center MPIDs and that qualifies for the additional
$0.05 per contract credit under Note c(3) of Nasdaq Options Market
(``NOM'') Chapter XV Section 2(1) in securities of all three Tapes.
No market participants qualified for this credit tier recently,
thus rendering it ineffective as acting as an incentive. However, since
the Exchange is limited in the amount of credits that it can provide to
market participants and even though no market participants currently
qualify for this credit tier, this can easily shift from month to month
so Nasdaq is proposing to delete it. Nasdaq must be selective in
providing credits to members, and allocates credits to where it
believes it will receive the best result in terms of improvement to
market quality. The Exchange believes that eliminating this credit tier
for all three Tapes is the only way to ensure that it will not going
forward impact the overall balance of credits and fees.
Third Change
The purpose of the third change is to provide an additional credit
to members that provide liquidity. Currently, the Exchange provides
several credits under Rules 7018(a)(1), (2), and (3), each of which
apply to securities of a different Tape, in return for market-improving
behavior. The Exchange is proposing to add a new credit tier of $0.0027
per share executed for a member that has shares of liquidity provided
in all securities during the month representing more than 0.10% of
Consolidated Volume during the month, through one or more of its Nasdaq
Market Center MPIDs, and that adds Customer,\4\ Professional,\5\
Firm,\6\ Non-NOM Market Maker \7\ and/or Broker-Dealer \8\ liquidity in
Non-Penny Pilot Options of 0.40% or more of total industry average
daily volume (``ADV'') in the customer clearing range for Equity and
exchange-traded fund (``ETF'') option contracts per day in a month on
the NOM.
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\4\ The term ``Customer'' or (``C'') applies to any transaction
that is identified by a Participant for clearing in the Customer
range at The Options Clearing Corporation (``OCC'') which is not for
the account of broker or dealer or for the account of a
``Professional'' (as that term is defined in Chapter I, Section
1(a)(48)).
\5\ The term ``Professional'' or (``P'') means any person or
entity that (i) is not a broker or dealer in securities, and (ii)
places more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s) pursuant
to Chapter I, Section 1(a)(48). All Professional orders shall be
appropriately marked by Participants.
\6\ The term ``Firm'' or (``F'') applies to any transaction that
is identified by a Participant for clearing in the Firm range at
OCC.
\7\ The term ``NOM Market Maker'' or (``M'') is a Participant
that has registered as a Market Maker on NOM pursuant to Chapter
VII, Section 2, and must also remain in good standing pursuant to
Chapter VII, Section 4. In order to receive NOM Market Maker pricing
in all securities, the Participant must be registered as a NOM
Market Maker in at least one security.
\8\ The term ``Broker-Dealer'' or (``B'') applies to any
transaction which is not subject to any of the other transaction
fees applicable within a particular category.
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As a general principle, the Exchange chooses to offer credits to
members in return for market improving behavior. Under Rule 7018(a),
the various credits the Exchange provides for members require them to
significantly contribute to market quality by providing certain levels
of Consolidated Volume through one or more of its Nasdaq Market Center
MPIDs, and volume on NOM. The Exchange believes that by adding more in
Non-Penny names on NOM that the market for these options on NOM will
improve and the Exchange seeks to encourage such behavior.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ 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 not designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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First Change
The Exchange believes that this proposed amendment to the
requirements of an existing credit tier provided in securities of all
three Tapes is reasonable because it amends a measure of activity with
another, both of which represent a significant contribution to that
market. Specifically, the Exchange is increasing the requirement that a
member with shares of liquidity accessed in all securities through one
or more of its Nasdaq Market Center MPIDs representing more than 0.65%
of Consolidated Volume during the month. The Exchange is proposing to
increase the monthly Consolidated Volume requirement from more than
0.65% to more than 0.80%. The member must also provide a daily average
of at least 2 million shares of liquidity in all securities through one
or more of its Nasdaq Market Center MPIDs during the month along with
the required shares of liquidity accessed.
The Exchange believes that the proposed amendment to the
requirements of an existing credit tier provided in securities of all
three Tapes is an equitable allocation and is not unfairly
discriminatory because the Exchange will apply the same $0.0029 per
share executed credit to all similarly situated members. Thus, if a
member meets the requirements, it will receive the credit. Also, and as
previously discussed, Nasdaq believes that although increasing the
Consolidated Volume criteria will require members to access more
liquidity to receive the $0.0029 per share executed credit tier,
members seeking to achieve this credit tier will be able to meet the
increased Consolidated Volume requirement. Increasing the amount of
liquidity accessed should be beneficial to other members as their
resting limit orders may be accessed by members seeking to attain this
credit tier.
Second Change
The Exchange believes that the proposed changes to delete a credit
tier for a member with shares of liquidity provided in all securities
during the month representing more than 0.20% of Consolidated Volume
during the month, through one or more of its Nasdaq Market Center MPIDs
and that qualifies for the additional $0.05 per contract credit under
Note c(3) of NOM Chapter XV Section 2(1) in securities of all three
Tapes is reasonable because the Exchange must, from time to time,
adjust the level of credits provided, and
[[Page 48489]]
the criteria required to receive them, to provide the most efficient
allocation of credits in terms of market improving behavior.
Specifically, with regard to the eliminated $0.0030 per share
executed credit tier, as discussed previously, Nasdaq observed that no
market participants qualified for this credit tier recently, thus
rendering it ineffective as acting as an incentive. The Exchange is
limited in the amount of credits that it can provide to market
participants so even though no market participants currently qualified
for this credit tier, this can easily shift from month to month. Nasdaq
must be selective in providing credits to members, and allocates
credits to where it believes it will receive the best result in terms
of improvement to market quality. The Exchange believes that it is
reasonable to eliminate this credit tier as the only way to ensure that
it will not going forward impact the overall balance of credits and
fees.
The Exchange believes that the proposed change to delete the credit
tier described above in Rule 7018(a) is an equitable allocation and is
not unfairly discriminatory because the Exchange will eliminate the
same credit for all similarly situated members. The credits Nasdaq
provides are designed to improve market quality for all market
participants, and Nasdaq allocates its credits in a manner that it
believes are the most likely to achieve that result. Elimination of the
existing credit tier under the rule is an equitable allocation and is
not unfairly discriminatory because no participants qualified under
this credit tier, therefore, its elimination will not impact any
members.
Third Change
The Exchange believes that the proposed rule change to add a new
credit tier of $0.0027 per share executed is reasonable because it is
consistent with other credits that the Exchange provides to members
that provide liquidity. As discussed previously, as a general principle
the Exchange chooses to offer credits to members in return for market
improving behavior. Under Rule 7018(a), the various credits the
Exchange provides for members require them to significantly contribute
to market quality by providing certain levels of Consolidated Volume
through one or more of its Nasdaq Market Center MPIDs, and volume on
NOM. The proposed credit will be provided to members that not only
contribute to the Exchange by providing more than 0.10% of Consolidated
Volume through one or more of its Nasdaq Market Center MPIDs during the
month, but also adds Customer, Professional, Firm, Non-NOM Market Maker
and/or Broker-Dealer liquidity in Non-Penny Pilot Options of 0.40% or
more of total industry ADV in the customer clearing range for Equity
and ETF option contracts per day in a month on the NOM.
The Exchange believes that the proposed new credit tier is
reasonable because although it provides for a lower credit than some
other NOM-linked credit tiers, it also has a corresponding lower
Consolidated Volume threshold of 0.10%. Also, the proposed new credit
tier specifically requires adding liquidity in Non-Penny Pilot
Options.\11\ Currently, the credit tier referencing the NOM fee
schedule that is being deleted in the Second Change (described above)
also has a Non-Penny liquidity component as part of the criteria, so
using liquidity in Non-Penny Pilot Options as a tiering criteria is not
novel.
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\11\ See NOM Chapter XV, Note c(3)(b) to Section 2(1), which
also supports members to add Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer liquidity in Non-Penny Pilot
Options.
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The Exchange believes that the proposed $0.0027 per share executed
credit is an equitable allocation and is not unfairly discriminatory
because the Exchange will apply the same credit to all similarly
situated members. Thus, if a member meets the requirements, it will
receive the credit. A member achieving this credit tier will be
providing liquidity in less liquid options classes (i.e., Non-Penny
names). The Exchange believes that by adding more in Non-Penny names on
NOM that the market for these options on NOM will improve and the
Exchange seeks to encourage such behavior.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
In this instance, the changes to the credits provided for the use
of the order execution and routing services of the Nasdaq Market Center
by members for all securities priced at $1 or more that it trades are
reflective of the intense competition among trading venues in capturing
order flow. Moreover, the proposed changes do not impose a burden on
competition because Exchange membership is optional and is also the
subject of competition from other trading venues. 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 the Exchange will lose market share as a
result of the changes if they are unattractive to market participants.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\12\ 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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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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
[[Page 48490]]
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2016-102 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-2016-102. 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-NASDAQ-2016-102, and should
be submitted on or before August 15, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-17443 Filed 7-22-16; 8:45 am]
BILLING CODE 8011-01-P