Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7018, 7907-7911 [2017-01295]

Download as PDF Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices that the Tier 1 maker rebate remains competitive and will continue to incentivize members to send order flow to the Exchange. The Exchange further believes that the proposed fee change is not unfairly discriminatory as it provides equal rebates to Non-ISE Gemini Market Maker, Firm Proprietary, Broker-Dealer, and Professional Customer orders. In addition, although Priority Customer 12 and Market Maker 13 orders will be entitled to more favorable maker rebates, the Exchange does not believe that this is unfairly discriminatory. As has historically been the case, Priority Customer orders remain entitled to more favorable maker rebates in order to encourage this order flow. A Priority Customer is by definition not a broker or dealer in securities, and does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). This limitation does not apply to participants whose behavior is substantially similar to that of market professionals, including Professional Customers, who will generally submit a higher number of orders than Priority Customers. Similarly, the Exchange believes that it is not unfairly discriminatory to offer higher maker rebates to Market Makers as Market Makers are subject to additional requirements and obligations (such as quoting requirements) that other market participants are not. B. Self-Regulatory Organization’s Statement on Burden on Competition mstockstill on DSK3G9T082PROD with NOTICES In accordance with Section 6(b)(8) of the Act,14 the Exchange does not believe that the proposed rule change will impose any burden on intermarket or intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange operates in a highly competitive market in which market participants can readily direct their order flow to competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and rebates to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed fee changes reflect this competitive environment. 12 A ‘‘Priority Customer’’ is a person or entity that is not a broker/dealer in securities, and does not place more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s), as defined in Rule 100(a)(37A). 13 The term Market Maker refers to ‘‘Competitive Market Makers’’ and ‘‘Primary Market Makers’’ collectively. See Rule 100(a)(25). 14 15 U.S.C. 78f(b)(8). VerDate Sep<11>2014 19:02 Jan 19, 2017 Jkt 241001 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,15 and Rule 19b–4(f)(2) 16 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: (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: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number SR–ISEGemini–2017–01 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–ISEGemini–2017–01. 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 (http://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– ISEGemini–2017–01 and should be submitted on or before February 13, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–01299 Filed 1–19–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–79791; File No. SR– NASDAQ–2017–002] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 7018 January 13, 2017. 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 January 3, 2017, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 17 17 15 15 U.S.C. 78s(b)(3)(A)(ii). 16 17 CFR 240.19b–4(f)(2). PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 7907 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\23JAN1.SGM 23JAN1 7908 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange’s transaction fees at Rule 7018(a) to (1) add a new credit of $0.0030 per share for members that meet specified volume requirements on both Nasdaq and the Nasdaq Options Market (‘‘NOM’’) when adding liquidity; (2) add a new credit of $0.0030 per share for members that meet specified volume requirements on Nasdaq when adding liquidity and that qualify for Tier 4 of the Market Access and Routing Subsidy (‘‘MARS’’) program on NOM; and (3) change the current volume requirements needed to qualify for two different credits when adding liquidity in securities that are listed on exchanges other than Nasdaq or the New York Stock Exchange LLC (‘‘NYSE’’). The text of the proposed rule change is available on the Exchange’s Web site at http://nasdaq.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. mstockstill on DSK3G9T082PROD with NOTICES A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposed rule change is to amend the Exchange’s transaction fees at Rule 7018(a) to make three changes. Specifically, the Exchange proposes to (1) add a new credit of $0.0030 per share for members that meet specified volume requirements on both Nasdaq and NOM when adding liquidity; (2) add a new credit of $0.0030 per share for members that meet specified volume requirements on Nasdaq when adding liquidity and that qualify for Tier 4 of the MARS program on NOM; and (3) change the current volume requirements needed to qualify for two different credits when adding liquidity in VerDate Sep<11>2014 19:02 Jan 19, 2017 Jkt 241001 securities that are listed on exchanges other than Nasdaq or the NYSE. These changes are described below. Credit for Adding Liquidity on Nasdaq and NOM The first change will add a new credit to members that meet a specified volume threshold on Nasdaq for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that add liquidity, and that also meet a specified volume threshold on NOM when adding liquidity. Specifically, a member will receive a credit of $0.0030 per share executed if the member (1) adds liquidity through one or more of its Nasdaq Market Center MPIDs during the month that, in all securities, represents at least 0.125% of Consolidated Volume during the month, and (2) adds Customer,3 Professional,4 Firm,5 NonNOM Market Maker 6 and/or BrokerDealer 7 liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 1.15% or more of total industry ADV in the customer clearing range for Equity and ETF option contracts per day during the month on the Nasdaq Options Market. Thus, to qualify under the new proposed credit, an Exchange member must also be a NOM Participant and meet the NOM credit criteria described above, in addition to the proposed requirement that the member have more than 0.125% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. The new credit tier will be available for transactions in securities of all three Tapes.8 The new credit tier is therefore being added to Rules 7018(a)(1), (2), and 3 The term ‘‘Customer’’ 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 defined in Chapter I, Section 1 of the NOM rules. 4 A ‘‘Professional’’ is defined in Chapter I, Section 1 of the NOM rules as ‘‘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).’’ 5 The term ‘‘Firm’’ or (‘‘F’’) applies to any transaction that is identified by a Participant for clearing in the Firm range at OCC. 6 The term ‘‘Non-NOM Market Maker’’ or (‘‘O’’) is a registered market maker on another options exchange that is not a NOM Market Maker. A NonNOM Market Maker must append the proper NonNOM Market Maker designation to orders routed to NOM. 7 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. 8 Tape C securities are those that are listed on the Exchange, Tape A securities are those that are listed on NYSE, and Tape B securities are those that are listed on exchanges other than Nasdaq or NYSE. PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 (3), which provide the fees and credits for execution and routing of orders in Nasdaq-listed securities, New York Stock Exchange (‘‘NYSE’’)-listed securities, and securities not listed on Nasdaq or NYSE, respectively. Credit for Adding Liquidity on Nasdaq and Qualifying for MARS Tier 4 The second change will add a new credit tier to a member for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity on Nasdaq, if the member also qualifies for Tier 4 of NOM’s MARS program, as provided by NOM Rules Chapter XV Section 6. Specifically, the Exchange is proposing to provide a $0.0030 per share executed credit to a member that provides liquidity in all securities during the month through one or more of its Nasdaq Market Center MPIDs representing more than 0.50% of Consolidated Volume during the month. The member must also qualify for Tier 4 of the NOM’s MARS program during the month. The MARS program provides different tiers of rebates or ‘‘MARS Payments’’ to Participants that qualify for the program. The specified MARS Payment is paid on all executed Eligible Contracts that add liquidity, which are routed to NOM through a participating NOM Participant’s System and meet the requisite Eligible Contracts ADV.9 The purpose of MARS is to pay a subsidy to NOM Participants that provide certain order routing functionalities to other NOM 9 To qualify for the program, the Participant’s routing system (‘‘System’’) is required to: (1) Enable the electronic routing of orders to all of the U.S. options exchanges, including NOM; (2) provide current consolidated market data from the U.S. options exchanges; and (3) be capable of interfacing with NOM’s API to access current NOM match engine functionality. Further, the Participant’s System must also cause NOM to be the one of the top three default destination exchanges for (a) individually executed marketable orders if NOM is at the national best bid or offer (‘‘NBBO’’), regardless of size or time or (b) orders that establish a new NBBO on NOM’s Order Book, but allow any user to manually override NOM as a default destination on an order-by-order basis. Any NOM Participant would be permitted to avail itself of this arrangement, provided that its order routing functionality incorporates the features described above and satisfies NOM that it appears to be robust and reliable. The Participant remains solely responsible for implementing and operating its System. See NOM Rules, Chapter XV Section 6. To qualify for a MARS Payment tier, a NOM Participant that has System Eligibility, as described above, must have routed the requisite number of Eligible Contracts daily in a month (‘‘Average Daily Volume’’), which were executed on NOM. For the purpose of qualifying for the MARS Payment, Eligible Contracts may include Firm, Non-NOM Market Maker, Broker-Dealer, or Joint Back Office or ‘‘JBO’’ equity option orders that add liquidity and are electronically delivered and executed. Eligible Contracts do not include Mini Option orders. Id. E:\FR\FM\23JAN1.SGM 23JAN1 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices mstockstill on DSK3G9T082PROD with NOTICES Participants and/or use such functionalities themselves.10 To qualify for the Tier 4 MARS Payment, a Participant must have routed at least 20,000 Eligible Contracts daily in a month that are executed and that added liquidity. Thus, to qualify under the new proposed credit under Rule 7018(a), an Exchange member must also be a NOM Participant and meet the NOM MARS credit criteria described above, in addition to the proposed requirement that the member provides more than 0.50% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. The new credit will be available for transactions in securities of all three Tapes and accordingly the new credit tier is being added to Rules 7018(a)(1), (2), and (3), which provide the fees and credits for execution and routing of orders in Nasdaq-Listed securities, NYSE-listed securities, and securities not listed on Nasdaq or NYSE, respectively. Change to Credit for Transactions in Tape B Securities The Exchange is also proposing to change two of the volume-based credits that are currently offered for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity on Nasdaq in Tape B Securities. Currently, in addition to other credits that it may receive for providing liquidity, the member will receive a credit of $0.0001 per share executed if it provides liquidity in securities that are listed on exchanges other than NASDAQ or NYSE during the month representing at least 0.045% but less than 0.075% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. Nasdaq proposes to change these thresholds, so that the member will receive a credit of $0.0001 per share executed if it provides liquidity in securities that are listed on exchanges other than NASDAQ or NYSE during the month representing at least 0.06% but less than 0.12% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. Nasdaq proposes a similar change to the next credit tier for members that provide liquidity in securities that are listed on exchanges other than Nasdaq or NYSE. Currently, in addition to other credits that it may receive for providing liquidity, the member will receive a 10 See Securities Exchange Act Release No. 79251 (November 7, 2016), 81 FR 79536 (November 14, 2016) (SR–NASDAQ–2016–149). VerDate Sep<11>2014 19:02 Jan 19, 2017 Jkt 241001 credit of $0.0002 per share executed if it provides liquidity in securities that are listed on exchanges other than NASDAQ or NYSE during the month representing at least 0.075% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. Nasdaq proposes to change this threshold, so that the member will receive a credit of $0.0002 per share executed if it provides liquidity in securities that are listed on exchanges other than NASDAQ or NYSE during the month representing at least 0.12% of Consolidated Volume during the month through one or more of its Nasdaq Market Center MPIDs. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,11 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,12 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. Credit for Adding Liquidity on Nasdaq and NOM The Exchange believes that the $0.0030 credit if the member meets the specified volume levels for adding liquidity on Nasdaq and NOM is reasonable. As with other credits that the Exchange provides, the credit is designed to encourage increased activity on Nasdaq and NOM. The Exchange believes that the proposed volume thresholds and the proposed credit are reasonable because they further the Exchange’s goal of incentivizing greater activity by members on both Nasdaq and NOM while imposing proportionate requirements that are not unrealistic for members to achieve. The Exchange also believes that the proposed volume thresholds and the proposed credit are reasonable because they are consistent with other volumebased credits that the Exchange offers to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity. Nasdaq currently offers a variety of credits for displayed quotes/ orders (other than Supplemental Orders or Designated Retail Orders) that add liquidity, some of which are linked to activity on NOM and some of which relate to activity on Nasdaq only, which range from $0.0015 per share executed 11 15 12 15 PO 00000 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). Frm 00127 Fmt 4703 Sfmt 4703 7909 to $0.00305 per share executed, and which apply progressively more stringent requirements in return for higher per share executed credits. Here, the member would receive a $0.0030 per share credit for adding liquidity of at least 0.125% of Consolidated Volume on Nasdaq, and adding Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 1.15% or more of total industry ADV in the customer clearing range for Equity and ETF option contracts per day during the month on NOM. In comparison, the Exchange currently offers a credit of $0.00295 per share executed for members that add Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny Pilot Options of 1.15% or more of total industry ADV in the customer clearing range for Equity and ETF option contracts per day in a month on NOM. By way of further comparison, the Exchange provides a $0.0030 per share executed credit if a member has shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.75% of Consolidated Volume during the month and the member provides a daily average of at least 5 Million shares of non-displayed liquidity. Nasdaq believes that the proposed thresholds and credit are consistent with the credits that it currently offers both for activity on Nasdaq and NOM and on Nasdaq alone, and are therefore reasonable. The Exchange also believes that this proposed credit of $0.0030 is equitable and not unfairly discriminatory. The Exchange is proposing an additional opportunity for members to receive a credit in return for market-improving behavior. The proposed requirements for qualifying for the credit are proportionate to the amount of the proposed credit and equitably reflect the purpose of the proposed credit, which is to incentivize members to transact greater volume on Nasdaq and NOM. Nasdaq is proposing to allow members to qualify for the credit by adding liquidity on NOM in a variety of capacities—as a Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer—in both Penny Pilot and Non-Penny Pilot Options in Equity and ETF options. All similarly situated members are equally capable of qualifying for the proposed credit if they choose to meet the requirements of the new credit, and the same credit will be paid to all members that qualify for it. E:\FR\FM\23JAN1.SGM 23JAN1 7910 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices Nasdaq members that are not currently NOM participants are eligible to become NOM participants by amending their membership application to add NOM.13 Finally, Nasdaq notes that it currently offers other credits that relate to activity on NOM, and other credits that do not relate to activity on NOM.14 As such, members will continue to have opportunities to qualify for similar credits based on market participation not tied to NOM. mstockstill on DSK3G9T082PROD with NOTICES Credit for Adding Liquidity on Nasdaq and Qualifying for MARS Tier 4 The Exchange believes that the $0.0030 credit if the member meets the specified volume levels on Nasdaq and qualifies for Tier 4 of the NOM MARS program is reasonable. The proposed volume thresholds and the proposed credit are reasonable because they further the Exchange’s goal of incentivizing greater activity on Nasdaq and NOM by members while imposing proportionate requirements that are not unrealistic for members to achieve. Nasdaq believes that requiring a member to qualify for MARS in order to qualify for the credit, as opposed to meeting a different volume-based requirement on NOM, is reasonable because MARS is designed to encourage members to provide certain order routing functionalities to other NOM Participants and/or use such functionalities themselves, and the proposed credit further incentivizes such behavior. As with the other new credit that is being offered as part of this proposal, Nasdaq also believes that these proposed volume thresholds and credit are reasonable because they are consistent with credits that Nasdaq currently offers for activity on Nasdaq and NOM and on Nasdaq alone. Here, a member would receive a credit of $0.0030 per share executed if it provides liquidity on Nasdaq that represents more than 0.50% of Consolidated Volume, and qualifies for Tier 4 of the MARS program during the month. In 13 Upon approval, the Nasdaq member would be charged the NOM Participant Fee of $1,000 per month, as set forth in Chapter XV, Section 10 of the NOM Rules. 14 As noted above, Nasdaq currently offers a credit of $0.00295 per month if member adds Customer, Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non- Penny Pilot Options of 1.15% or more of total industry ADV in the customer clearing range for Equity and ETF option contracts per day in a month on NOM. In comparison, Nasdaq also offers a credit of $0.00305 per share executed for a member with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 1.25% of Consolidated Volume during the month. VerDate Sep<11>2014 19:02 Jan 19, 2017 Jkt 241001 comparison, a member would receive a rebate of $0.0027 per share executed if it added liquidity during the month representing more than 0.10% of Consolidated Volume through one or more of its Nasdaq Market Center MPIDs, and added 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 NOM. The Exchange also believes that the proposed credit is equitable and not unfairly discriminatory. The Exchange is proposing an additional opportunity for members to receive a credit in return for market-improving behavior. Requiring members to qualify for MARS Tier 4 in addition to meeting the volume requirements on Nasdaq equitably reflects the purpose of the credit, which is to incentivize members to transact greater volume on Nasdaq and NOM and to enhance the use of order routing functionalities for NOM. As with the other new credit that is being offered as part of this proposal, all similarly situated members are equally capable of qualifying for this proposed credit if they choose to meet the requirements of the new credit, and the same credit will be paid to all members that qualify for it. Nasdaq members that are not currently NOM participants are eligible to become NOM participants by amending their membership application to add NOM. Finally, Nasdaq notes that it currently offers other credits that relate to activity on NOM, while other credits that do not relate to activity on NOM. As such, members will continue to have opportunities to qualify for similar credits based on market participation not tied to NOM. Change to Credit for Transactions in Tape B Securities Nasdaq believes that the change to the current credit for transactions in Tape B Securities is reasonable, equitable and not unfairly discriminatory. Nasdaq notes that the members will continue to receive the same credit—either $0.0001 or $0.0002 per share executed—as they currently receive if they meet the volume requirements. Nasdaq believes that the changes to the volume thresholds for both credits are reasonable. The purpose of the credits is to incentivize greater activity on Nasdaq in Tape B Securities. The Exchange believes that the proposed volume thresholds, coupled with the current credits, are reasonable because they are more closely aligned to the Exchange’s goal of incentivizing greater activity by PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 members in Tape B Securities than the current volume thresholds, while imposing requirements that are not unrealistic for members to achieve. Nasdaq believes that the proposed volume changes to credits for transactions in Tape B Securities are equitable and not unfairly discriminatory. The Exchange believes that the proposed requirements are more proportionate to the amount of the current credits than the current requirements, and more equitably reflect the purpose of the current credits, which is to incentivize members to transact greater volume on Nasdaq in Tape B Securities. Moreover, all similarly situated members are equally capable of qualifying for the credits if they choose to meet the volume requirements, and the same credits will be paid to all members that qualify for them. 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 proposed new credits provided to a member for execution of securities of each of the three Tapes, in addition to meeting specified thresholds on NOM, do not impose a burden on competition because the Exchange’s execution services are completely voluntary and subject to extensive competition both from other exchanges and from offexchange venues. All similarly situated members are equally capable of qualifying for the credits if they choose to meet the volume requirements, and the same credits will be paid to all E:\FR\FM\23JAN1.SGM 23JAN1 Federal Register / Vol. 82, No. 13 / Monday, January 23, 2017 / Notices members that qualify for them. Members will continue to have opportunities to qualify for similar credits based on market participation not tied to NOM. Moreover, the proposed changes are designed to reward market-improving behavior by providing new credit tiers based on various measures of such behavior, which may encourage other market venues to provide similar credits to improve their market quality. Thus, the Exchange does not believe that the proposed credits will impose any burden on competition, but may rather promote competition. Similarly, the changes to the existing credits for transactions in Tape B Securities do not impose a burden on competition because the Exchange’s execution services are completely voluntary. All similarly situated members are equally capable of qualifying for the credits if they choose to meet the volume requirements, and the same credits will be paid to all members that qualify for them. In addition, the credits for transactions in Tape B securities are designed to reward market-improving behavior, and the proposed changes are designed to better align the requirements for the credits with the actual credits. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. mstockstill on DSK3G9T082PROD with NOTICES C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.15 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 15 15 U.S.C. 78s(b)(3)(A)(ii). VerDate Sep<11>2014 19:02 Jan 19, 2017 Jkt 241001 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NASDAQ–2017–002 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–2017–002. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR– NASDAQ–2017–002, and should be submitted on or before February 13, 2017. PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 7911 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–01295 Filed 1–19–17; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Meeting of the Advisory Committee on Veterans Business Affairs U.S. Small Business Administration. ACTION: Notice of open Federal Advisory Committee Meeting. AGENCY: The U.S. Small Business Administration (SBA) is issuing this notice to announce the location, date, time, and agenda for the next meeting of the Advisory Committee on Veterans Business Affairs. The meeting is open to the public. DATES: Thursday, March 9, 2017, from 9:00 a.m. to 4:00 p.m. ADDRESSES: Eisenhower Conference Room B, located on the concourse level, U.S. Small Business Administration, 409 3rd Street SW., Washington, DC 20416. SUMMARY: Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C., Appendix 2), SBA announces the meeting of the Advisory Committee on Veterans Business Affairs (ACVBA). The ACVBA is established pursuant to 15 U.S.C. 657(b) note, and serves as an independent source of advice and policy recommendations to the Administrator of the SBA. The purpose of this meeting is to discuss the formation and growth of small business concerns owned and controlled by veterans and service disabled veterans, to focus on strategic planning, and provide updates on past and current events. Additional Information: This meeting is open to the public. Advance notice of attendance is requested. Anyone wishing to attend and/or make comments to the ACVBA must contact SBA’s Office of Veterans Business Development no later than March 6, 2017 at veteransbusiness@sba.gov. Comments for the record will be limited to five minutes in the interest of time and to accommodate as many participants as possible. Written comments should also be sent to the above email no later than March 6, 2017. Special accommodation requests SUPPLEMENTARY INFORMATION: 16 17 E:\FR\FM\23JAN1.SGM CFR 200.30–3(a)(12). 23JAN1

Agencies

[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Notices]
[Pages 7907-7911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01295]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79791; File No. SR-NASDAQ-2017-002]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 7018

 January 13, 2017.
    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 January 3, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by 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.

---------------------------------------------------------------------------

[[Page 7908]]

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's transaction fees at 
Rule 7018(a) to (1) add a new credit of $0.0030 per share for members 
that meet specified volume requirements on both Nasdaq and the Nasdaq 
Options Market (``NOM'') when adding liquidity; (2) add a new credit of 
$0.0030 per share for members that meet specified volume requirements 
on Nasdaq when adding liquidity and that qualify for Tier 4 of the 
Market Access and Routing Subsidy (``MARS'') program on NOM; and (3) 
change the current volume requirements needed to qualify for two 
different credits when adding liquidity in securities that are listed 
on exchanges other than Nasdaq or the New York Stock Exchange LLC 
(``NYSE'').
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Exchange's 
transaction fees at Rule 7018(a) to make three changes. Specifically, 
the Exchange proposes to (1) add a new credit of $0.0030 per share for 
members that meet specified volume requirements on both Nasdaq and NOM 
when adding liquidity; (2) add a new credit of $0.0030 per share for 
members that meet specified volume requirements on Nasdaq when adding 
liquidity and that qualify for Tier 4 of the MARS program on NOM; and 
(3) change the current volume requirements needed to qualify for two 
different credits when adding liquidity in securities that are listed 
on exchanges other than Nasdaq or the NYSE. These changes are described 
below.
Credit for Adding Liquidity on Nasdaq and NOM
    The first change will add a new credit to members that meet a 
specified volume threshold on Nasdaq for displayed quotes/orders (other 
than Supplemental Orders or Designated Retail Orders) that add 
liquidity, and that also meet a specified volume threshold on NOM when 
adding liquidity. Specifically, a member will receive a credit of 
$0.0030 per share executed if the member (1) adds liquidity through one 
or more of its Nasdaq Market Center MPIDs during the month that, in all 
securities, represents at least 0.125% of Consolidated Volume during 
the month, and (2) adds Customer,\3\ Professional,\4\ Firm,\5\ Non-NOM 
Market Maker \6\ and/or Broker-Dealer \7\ liquidity in Penny Pilot 
Options and/or Non-Penny Pilot Options of 1.15% or more of total 
industry ADV in the customer clearing range for Equity and ETF option 
contracts per day during the month on the Nasdaq Options Market. Thus, 
to qualify under the new proposed credit, an Exchange member must also 
be a NOM Participant and meet the NOM credit criteria described above, 
in addition to the proposed requirement that the member have more than 
0.125% of Consolidated Volume during the month through one or more of 
its Nasdaq Market Center MPIDs.
---------------------------------------------------------------------------

    \3\ The term ``Customer'' 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 defined in Chapter I, Section 1 of the NOM 
rules.
    \4\ A ``Professional'' is defined in Chapter I, Section 1 of the 
NOM rules as ``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).''
    \5\ The term ``Firm'' or (``F'') applies to any transaction that 
is identified by a Participant for clearing in the Firm range at 
OCC.
    \6\ The term ``Non-NOM Market Maker'' or (``O'') is a registered 
market maker on another options exchange that is not a NOM Market 
Maker. A Non-NOM Market Maker must append the proper Non-NOM Market 
Maker designation to orders routed to NOM.
    \7\ 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.
---------------------------------------------------------------------------

    The new credit tier will be available for transactions in 
securities of all three Tapes.\8\ The new credit tier is therefore 
being added to Rules 7018(a)(1), (2), and (3), which provide the fees 
and credits for execution and routing of orders in Nasdaq-listed 
securities, New York Stock Exchange (``NYSE'')-listed securities, and 
securities not listed on Nasdaq or NYSE, respectively.
---------------------------------------------------------------------------

    \8\ Tape C securities are those that are listed on the Exchange, 
Tape A securities are those that are listed on NYSE, and Tape B 
securities are those that are listed on exchanges other than Nasdaq 
or NYSE.
---------------------------------------------------------------------------

Credit for Adding Liquidity on Nasdaq and Qualifying for MARS Tier 4
    The second change will add a new credit tier to a member for 
displayed quotes/orders (other than Supplemental Orders or Designated 
Retail Orders) that provide liquidity on Nasdaq, if the member also 
qualifies for Tier 4 of NOM's MARS program, as provided by NOM Rules 
Chapter XV Section 6. Specifically, the Exchange is proposing to 
provide a $0.0030 per share executed credit to a member that provides 
liquidity in all securities during the month through one or more of its 
Nasdaq Market Center MPIDs representing more than 0.50% of Consolidated 
Volume during the month. The member must also qualify for Tier 4 of the 
NOM's MARS program during the month. The MARS program provides 
different tiers of rebates or ``MARS Payments'' to Participants that 
qualify for the program. The specified MARS Payment is paid on all 
executed Eligible Contracts that add liquidity, which are routed to NOM 
through a participating NOM Participant's System and meet the requisite 
Eligible Contracts ADV.\9\ The purpose of MARS is to pay a subsidy to 
NOM Participants that provide certain order routing functionalities to 
other NOM

[[Page 7909]]

Participants and/or use such functionalities themselves.\10\ To qualify 
for the Tier 4 MARS Payment, a Participant must have routed at least 
20,000 Eligible Contracts daily in a month that are executed and that 
added liquidity. Thus, to qualify under the new proposed credit under 
Rule 7018(a), an Exchange member must also be a NOM Participant and 
meet the NOM MARS credit criteria described above, in addition to the 
proposed requirement that the member provides more than 0.50% of 
Consolidated Volume during the month through one or more of its Nasdaq 
Market Center MPIDs.
---------------------------------------------------------------------------

    \9\ To qualify for the program, the Participant's routing system 
(``System'') is required to: (1) Enable the electronic routing of 
orders to all of the U.S. options exchanges, including NOM; (2) 
provide current consolidated market data from the U.S. options 
exchanges; and (3) be capable of interfacing with NOM's API to 
access current NOM match engine functionality. Further, the 
Participant's System must also cause NOM to be the one of the top 
three default destination exchanges for (a) individually executed 
marketable orders if NOM is at the national best bid or offer 
(``NBBO''), regardless of size or time or (b) orders that establish 
a new NBBO on NOM's Order Book, but allow any user to manually 
override NOM as a default destination on an order-by-order basis. 
Any NOM Participant would be permitted to avail itself of this 
arrangement, provided that its order routing functionality 
incorporates the features described above and satisfies NOM that it 
appears to be robust and reliable. The Participant remains solely 
responsible for implementing and operating its System. See NOM 
Rules, Chapter XV Section 6.
     To qualify for a MARS Payment tier, a NOM Participant that has 
System Eligibility, as described above, must have routed the 
requisite number of Eligible Contracts daily in a month (``Average 
Daily Volume''), which were executed on NOM. For the purpose of 
qualifying for the MARS Payment, Eligible Contracts may include 
Firm, Non-NOM Market Maker, Broker-Dealer, or Joint Back Office or 
``JBO'' equity option orders that add liquidity and are 
electronically delivered and executed. Eligible Contracts do not 
include Mini Option orders. Id.
    \10\ See Securities Exchange Act Release No. 79251 (November 7, 
2016), 81 FR 79536 (November 14, 2016) (SR-NASDAQ-2016-149).
---------------------------------------------------------------------------

    The new credit will be available for transactions in securities of 
all three Tapes and accordingly the new credit tier is being added to 
Rules 7018(a)(1), (2), and (3), which provide the fees and credits for 
execution and routing of orders in Nasdaq-Listed securities, NYSE-
listed securities, and securities not listed on Nasdaq or NYSE, 
respectively.
Change to Credit for Transactions in Tape B Securities
    The Exchange is also proposing to change two of the volume-based 
credits that are currently offered for displayed quotes/orders (other 
than Supplemental Orders or Designated Retail Orders) that provide 
liquidity on Nasdaq in Tape B Securities. Currently, in addition to 
other credits that it may receive for providing liquidity, the member 
will receive a credit of $0.0001 per share executed if it provides 
liquidity in securities that are listed on exchanges other than NASDAQ 
or NYSE during the month representing at least 0.045% but less than 
0.075% of Consolidated Volume during the month through one or more of 
its Nasdaq Market Center MPIDs. Nasdaq proposes to change these 
thresholds, so that the member will receive a credit of $0.0001 per 
share executed if it provides liquidity in securities that are listed 
on exchanges other than NASDAQ or NYSE during the month representing at 
least 0.06% but less than 0.12% of Consolidated Volume during the month 
through one or more of its Nasdaq Market Center MPIDs.
    Nasdaq proposes a similar change to the next credit tier for 
members that provide liquidity in securities that are listed on 
exchanges other than Nasdaq or NYSE. Currently, in addition to other 
credits that it may receive for providing liquidity, the member will 
receive a credit of $0.0002 per share executed if it provides liquidity 
in securities that are listed on exchanges other than NASDAQ or NYSE 
during the month representing at least 0.075% of Consolidated Volume 
during the month through one or more of its Nasdaq Market Center MPIDs. 
Nasdaq proposes to change this threshold, so that the member will 
receive a credit of $0.0002 per share executed if it provides liquidity 
in securities that are listed on exchanges other than NASDAQ or NYSE 
during the month representing at least 0.12% of Consolidated Volume 
during the month through one or more of its Nasdaq Market Center MPIDs.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\11\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\12\ 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, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

Credit for Adding Liquidity on Nasdaq and NOM
    The Exchange believes that the $0.0030 credit if the member meets 
the specified volume levels for adding liquidity on Nasdaq and NOM is 
reasonable. As with other credits that the Exchange provides, the 
credit is designed to encourage increased activity on Nasdaq and NOM. 
The Exchange believes that the proposed volume thresholds and the 
proposed credit are reasonable because they further the Exchange's goal 
of incentivizing greater activity by members on both Nasdaq and NOM 
while imposing proportionate requirements that are not unrealistic for 
members to achieve.
    The Exchange also believes that the proposed volume thresholds and 
the proposed credit are reasonable because they are consistent with 
other volume-based credits that the Exchange offers to members for 
displayed quotes/orders (other than Supplemental Orders or Designated 
Retail Orders) that provide liquidity. Nasdaq currently offers a 
variety of credits for displayed quotes/orders (other than Supplemental 
Orders or Designated Retail Orders) that add liquidity, some of which 
are linked to activity on NOM and some of which relate to activity on 
Nasdaq only, which range from $0.0015 per share executed to $0.00305 
per share executed, and which apply progressively more stringent 
requirements in return for higher per share executed credits. Here, the 
member would receive a $0.0030 per share credit for adding liquidity of 
at least 0.125% of Consolidated Volume on Nasdaq, and adding Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity 
in Penny Pilot Options and/or Non-Penny Pilot Options of 1.15% or more 
of total industry ADV in the customer clearing range for Equity and ETF 
option contracts per day during the month on NOM. In comparison, the 
Exchange currently offers a credit of $0.00295 per share executed for 
members that add Customer, Professional, Firm, Non-NOM Market Maker 
and/or Broker-Dealer liquidity in Penny Pilot Options and/or Non-Penny 
Pilot Options of 1.15% or more of total industry ADV in the customer 
clearing range for Equity and ETF option contracts per day in a month 
on NOM. By way of further comparison, the Exchange provides a $0.0030 
per share executed credit if a member has shares of liquidity provided 
in all securities through one or more of its Nasdaq Market Center MPIDs 
that represent more than 0.75% of Consolidated Volume during the month 
and the member provides a daily average of at least 5 Million shares of 
non-displayed liquidity. Nasdaq believes that the proposed thresholds 
and credit are consistent with the credits that it currently offers 
both for activity on Nasdaq and NOM and on Nasdaq alone, and are 
therefore reasonable.
    The Exchange also believes that this proposed credit of $0.0030 is 
equitable and not unfairly discriminatory. The Exchange is proposing an 
additional opportunity for members to receive a credit in return for 
market-improving behavior. The proposed requirements for qualifying for 
the credit are proportionate to the amount of the proposed credit and 
equitably reflect the purpose of the proposed credit, which is to 
incentivize members to transact greater volume on Nasdaq and NOM. 
Nasdaq is proposing to allow members to qualify for the credit by 
adding liquidity on NOM in a variety of capacities--as a Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer--in both 
Penny Pilot and Non-Penny Pilot Options in Equity and ETF options. All 
similarly situated members are equally capable of qualifying for the 
proposed credit if they choose to meet the requirements of the new 
credit, and the same credit will be paid to all members that qualify 
for it.

[[Page 7910]]

Nasdaq members that are not currently NOM participants are eligible to 
become NOM participants by amending their membership application to add 
NOM.\13\ Finally, Nasdaq notes that it currently offers other credits 
that relate to activity on NOM, and other credits that do not relate to 
activity on NOM.\14\ As such, members will continue to have 
opportunities to qualify for similar credits based on market 
participation not tied to NOM.
---------------------------------------------------------------------------

    \13\ Upon approval, the Nasdaq member would be charged the NOM 
Participant Fee of $1,000 per month, as set forth in Chapter XV, 
Section 10 of the NOM Rules.
    \14\ As noted above, Nasdaq currently offers a credit of 
$0.00295 per month if member adds Customer, Professional, Firm, Non-
NOM Market Maker and/or Broker-Dealer liquidity in Penny Pilot 
Options and/or Non- Penny Pilot Options of 1.15% or more of total 
industry ADV in the customer clearing range for Equity and ETF 
option contracts per day in a month on NOM. In comparison, Nasdaq 
also offers a credit of $0.00305 per share executed for a member 
with shares of liquidity provided in all securities through one or 
more of its Nasdaq Market Center MPIDs that represent more than 
1.25% of Consolidated Volume during the month.
---------------------------------------------------------------------------

Credit for Adding Liquidity on Nasdaq and Qualifying for MARS Tier 4
    The Exchange believes that the $0.0030 credit if the member meets 
the specified volume levels on Nasdaq and qualifies for Tier 4 of the 
NOM MARS program is reasonable. The proposed volume thresholds and the 
proposed credit are reasonable because they further the Exchange's goal 
of incentivizing greater activity on Nasdaq and NOM by members while 
imposing proportionate requirements that are not unrealistic for 
members to achieve. Nasdaq believes that requiring a member to qualify 
for MARS in order to qualify for the credit, as opposed to meeting a 
different volume-based requirement on NOM, is reasonable because MARS 
is designed to encourage members to provide certain order routing 
functionalities to other NOM Participants and/or use such 
functionalities themselves, and the proposed credit further 
incentivizes such behavior.
    As with the other new credit that is being offered as part of this 
proposal, Nasdaq also believes that these proposed volume thresholds 
and credit are reasonable because they are consistent with credits that 
Nasdaq currently offers for activity on Nasdaq and NOM and on Nasdaq 
alone. Here, a member would receive a credit of $0.0030 per share 
executed if it provides liquidity on Nasdaq that represents more than 
0.50% of Consolidated Volume, and qualifies for Tier 4 of the MARS 
program during the month. In comparison, a member would receive a 
rebate of $0.0027 per share executed if it added liquidity during the 
month representing more than 0.10% of Consolidated Volume through one 
or more of its Nasdaq Market Center MPIDs, and added 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 NOM.
    The Exchange also believes that the proposed credit is equitable 
and not unfairly discriminatory. The Exchange is proposing an 
additional opportunity for members to receive a credit in return for 
market-improving behavior. Requiring members to qualify for MARS Tier 4 
in addition to meeting the volume requirements on Nasdaq equitably 
reflects the purpose of the credit, which is to incentivize members to 
transact greater volume on Nasdaq and NOM and to enhance the use of 
order routing functionalities for NOM.
    As with the other new credit that is being offered as part of this 
proposal, all similarly situated members are equally capable of 
qualifying for this proposed credit if they choose to meet the 
requirements of the new credit, and the same credit will be paid to all 
members that qualify for it. Nasdaq members that are not currently NOM 
participants are eligible to become NOM participants by amending their 
membership application to add NOM. Finally, Nasdaq notes that it 
currently offers other credits that relate to activity on NOM, while 
other credits that do not relate to activity on NOM. As such, members 
will continue to have opportunities to qualify for similar credits 
based on market participation not tied to NOM.
Change to Credit for Transactions in Tape B Securities
    Nasdaq believes that the change to the current credit for 
transactions in Tape B Securities is reasonable, equitable and not 
unfairly discriminatory. Nasdaq notes that the members will continue to 
receive the same credit--either $0.0001 or $0.0002 per share executed--
as they currently receive if they meet the volume requirements. Nasdaq 
believes that the changes to the volume thresholds for both credits are 
reasonable. The purpose of the credits is to incentivize greater 
activity on Nasdaq in Tape B Securities. The Exchange believes that the 
proposed volume thresholds, coupled with the current credits, are 
reasonable because they are more closely aligned to the Exchange's goal 
of incentivizing greater activity by members in Tape B Securities than 
the current volume thresholds, while imposing requirements that are not 
unrealistic for members to achieve.
    Nasdaq believes that the proposed volume changes to credits for 
transactions in Tape B Securities are equitable and not unfairly 
discriminatory. The Exchange believes that the proposed requirements 
are more proportionate to the amount of the current credits than the 
current requirements, and more equitably reflect the purpose of the 
current credits, which is to incentivize members to transact greater 
volume on Nasdaq in Tape B Securities. Moreover, all similarly situated 
members are equally capable of qualifying for the credits if they 
choose to meet the volume requirements, and the same credits will be 
paid to all members that qualify for them.

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 proposed new credits provided to a member for 
execution of securities of each of the three Tapes, in addition to 
meeting specified thresholds on NOM, do not impose a burden on 
competition because the Exchange's execution services are completely 
voluntary and subject to extensive competition both from other 
exchanges and from off-exchange venues. All similarly situated members 
are equally capable of qualifying for the credits if they choose to 
meet the volume requirements, and the same credits will be paid to all

[[Page 7911]]

members that qualify for them. Members will continue to have 
opportunities to qualify for similar credits based on market 
participation not tied to NOM. Moreover, the proposed changes are 
designed to reward market-improving behavior by providing new credit 
tiers based on various measures of such behavior, which may encourage 
other market venues to provide similar credits to improve their market 
quality. Thus, the Exchange does not believe that the proposed credits 
will impose any burden on competition, but may rather promote 
competition.
    Similarly, the changes to the existing credits for transactions in 
Tape B Securities do not impose a burden on competition because the 
Exchange's execution services are completely voluntary. All similarly 
situated members are equally capable of qualifying for the credits if 
they choose to meet the volume requirements, and the same credits will 
be paid to all members that qualify for them. In addition, the credits 
for transactions in Tape B securities are designed to reward market-
improving behavior, and the proposed changes are designed to better 
align the requirements for the credits with the actual credits.
    In sum, if the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. Accordingly, the Exchange does not believe that the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\15\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2017-002 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-2017-002. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2017-002, and should 
be submitted on or before February 13, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01295 Filed 1-19-17; 8:45 am]
 BILLING CODE 8011-01-P