Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Rule 7018(a)(2), 28176-28178 [2017-12769]
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28176
Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
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–NYSE–
2017–27, and should be submitted on or
before July 11, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–12884 Filed 6–19–17; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–80928; File No. SR–
NASDAQ–2017–056]
sradovich on DSK3GMQ082PROD with NOTICES
June 14, 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 June 1,
2017, The NASDAQ Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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The Exchange proposes to amend the
Exchange’s transaction fees at Rule
7018(a)(2) to eliminate a $0.0001 per
share executed credit provided to a
member for displayed quotes/orders
(other than Supplemental Orders or
Designated Retail Orders) that provide
liquidity in securities listed on the New
York Stock Exchange.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://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.
1. Purpose
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend the
Exchange’s Transaction Fees at Rule
7018(a)(2)
1 15
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
18 17
(‘‘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.
The purpose of the proposed rule
change is to amend Exchange’s
transaction fees at Rule 7018(a)(2) to
eliminate a $0.0001 per share executed
credit provided to a member for
displayed quotes/orders (other than
Supplemental Orders or Designated
Retail Orders) that provide liquidity in
Tape A securities. Under Rule 7018(a),
the Exchange assesses fees for the
removal of liquidity and provides
credits for the provision thereof. The
Exchange currently provides a $0.0001
per share executed credit to a member
for displayed quotes/orders (other than
Supplemental Orders or Designated
Retail Orders) that provide liquidity if
the member has shares of liquidity
provided in all securities during the
PO 00000
Frm 00134
Fmt 4703
Sfmt 4703
month representing at least 0.2% of
Consolidated Volume during the month,
through one or more of its Nasdaq
Market Center MPIDs. This $0.0001 per
share executed credit is provided in
addition to the credits provided for
displayed quotes/orders (other than
Supplemental Orders or Designated
Retail Orders) that provide liquidity
under Rule 7018(a)(2).3 This credit is
also provided in addition to any rebates
that a member qualifies for under the
NBBO, and QMM programs under Rule
7014. The credit is not additive to DLP
rebates under Rule 7014 or Designated
Retail Order credits under Rule 7018.
The credit, together with an identical
credit applicable to Tape B securities,
was adopted to provide incentive to
market participants to increase the level
of liquidity provided to the Exchange, in
which the Exchange had observed a
decline in overall volume on the
Exchange in Tape A and B securities in
comparison to Tape C securities.4 The
Exchange has not observed a significant
improvement to the volume in Tape A
securities on the Exchange in relation to
the Tape A credit and is therefore
proposing to eliminate the credit so that
it may explore other incentives to
improve market quality in Tape A
securities.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,5 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,6 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.
Elimination of the $0.0001 per share
executed credit provided to a member
for displayed quotes/orders (other than
Supplemental Orders or Designated
3 The Exchange also provides a $0.0001 per share
executed credit with identical criteria applicable to
Tape B securities. See Rule 7018(a)(3).
4 See Securities Exchange Act Release No. 77378
(March 16, 2016), 81 FR 15358 (March 22, 2016)
(SR–NASDAQ–2016–037). The Exchange has since
replaced the qualification criteria required to
receive the Tape B $0.0001 per share executed
credit. Specifically, to now qualify for the $0.0001
per share executed credit in Tape B securities, a
member must have shares of liquidity provided 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. See Securities
Exchange Act Release No. 78977 (September 29,
2016), 81 FR 69140 (October 5, 2016) (SR–
NASDAQ–2016–132).
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(4) and (5).
E:\FR\FM\20JNN1.SGM
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Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
Retail Orders) that provide liquidity in
Tape A securities under Rule 7018(a)(2)
is reasonable because providing a credit
in addition to the other credits provided
under Rules 7018(a) and 7014, as
described above, is no longer necessary.
As noted above, the Exchange set the
credit at $0.0001 per share executed
because it believed that providing such
a credit would improve the market in
Tape A securities. The credit has not
significantly provided such incentive
and consequently the Exchange believes
that it should eliminate the credit to
focus its limited funds on other
incentives to improve market quality.
Accordingly, the Exchange believes
eliminating this additional Tape A
credit is reasonable.
Elimination of the $0.0001 per share
executed credit provided to a member
for displayed quotes/orders (other than
Supplemental Orders or Designated
Retail Orders) that provide liquidity in
Tape A securities under Rule 7018(a)(2)
is an equitable allocation and is not
unfairly discriminatory because it is no
longer needed to improve the market in
Tape A securities. The Exchange has
limited funds to apply in the form of
incentives, and thus must deploy those
limited funds to incentives that it
believes will be the most effective and
improve market quality in areas that the
Exchange determines are in need of
improvement. The Exchange has
observed that the credit has not
provided the incentive that was
necessary to significantly improve the
market in Tape A securities by attracting
more order flow to the Exchange and is
therefore removing the credit so that it
may consider other incentives that may
improve Tape A market quality. As
noted above, the Exchange has limited
funds to apply toward incentives, and
although an incentive may not
significantly achieve its goal of
improving market quality, it may
nonetheless result in a cost to the
Exchange. Eliminating the credit will
allow the Exchange deploy its limited
funds to incentives in Tape A securities
or other areas designed to improve
market quality. Accordingly, the
Exchange believes that eliminating the
credit is an equitable allocation and is
not unfairly discriminatory.
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
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18:01 Jun 19, 2017
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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 Exchange is
proposing to eliminate an incentive
provided to market participants, which
was designed to improve market quality
in Tape A securities. The incentive has
not significantly improved market
quality in Tape A securities and the
Exchange does not believe that
continuing to offer the credit is the best
use of its limited fund nor would it
likely achieve the market improvement
for which it was designed. Because the
Exchange’s execution services are
completely voluntary and subject to
extensive competition both from other
exchanges and from off-exchange
venues, the proposed elimination of the
credit should not impose a burden on
competition. If the Exchange is incorrect
in concluding that the incentive was not
significantly effective, it will likely lose
market share in Tape A securities to one
of the many other trading venues to the
extent market participants believe that
those markets are more attractive. Thus,
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 or impose any burden on
competition.
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.7
7 15
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
Frm 00135
Fmt 4703
Sfmt 4703
28177
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 (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2017–056) 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–2017–056). 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
E:\FR\FM\20JNN1.SGM
20JNN1
28178
Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
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–2017–056, and should be
submitted on or before July 11, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–12769 Filed 6–19–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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
[Release No. 34–80922; File No. SR–ISE–
2017–49]
1. Purpose
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Schedule of
Fees To (1) Reduce the Priority
Customer Taker Fee for Regular
Orders in SPY to $0.35 Per Contract,
and (2) Lower the Threshold of Net
Zero Complex Contracts
The purpose of the proposed rule
change is to amend the Schedule of Fees
to (1) reduce the Priority Customer 3
taker fee for regular orders in SPY to
$0.35 per contract, and (2) lower the
threshold of net zero complex contracts
from 2,000 contracts to 1,000 contracts.
Each of these changes is described in
more detail below.
June 14, 2017.
Priority Customer Taker Fee
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 May 31,
2017, Nasdaq ISE, LLC (‘‘ISE’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II,
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
Currently, the Exchange charges a
taker fee for regular orders in Select
Symbols 4 that is $0.44 per contract for
Market Maker 5 orders, $0.45 per
contract for Non-Nasdaq ISE Market
Maker,6 Firm Proprietary,7 BrokerDealer,8 and Professional Customer
orders,9 and $0.40 per contract for
Priority Customer orders. The Exchange
now proposes to adopt a reduced
Priority Customer taker fee of $0.35 per
contract for regular orders in SPY,
sradovich on DSK3GMQ082PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend its
Schedule of Fees to (1) reduce the
Priority Customer taker fee for regular
orders in SPY to $0.35 per contract, and
(2) lower the threshold of net zero
complex contracts from 2,000 contracts
to 1,000 contracts.
The text of the proposed rule change
is available on the Exchange’s Web site
at www.ise.com, at the principal office
of the Exchange, and at the
Commission’s Public Reference Room.
8 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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18:01 Jun 19, 2017
Jkt 241001
3 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 Nasdaq ISE Rule
100(a)(37A).
4 ‘‘Select Symbols’’ are options overlying all
symbols listed on the Nasdaq ISE that are in the
Penny Pilot Program.
5 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See ISE Rule 100(a)(25).
6 A ‘‘Non-Nasdaq ISE Market Maker’’ is a market
maker as defined in Section 3(a)(38) of the
Securities Exchange Act of 1934, as amended,
registered in the same options class on another
options exchange.
7 A ‘‘Firm Proprietary’’ order is an order
submitted by a member for its own proprietary
account.
8 A ‘‘Broker-Dealer’’ order is an order submitted
by a member for a broker-dealer account that is not
its own proprietary account.
9 A ‘‘Professional Customer’’ is a person or entity
that is not a broker/dealer and is not a Priority
Customer.
PO 00000
Frm 00136
Fmt 4703
Sfmt 4703
which is the most actively traded name
on the Exchange. This taker fee will
remain unchanged for Select Symbols
other than SPY. The Exchange believes
that this reduction in fees will attract
additional Priority Customer orders in
SPY to the Exchange.
Net Zero Complex Orders
Currently, the Exchange does not
provide Priority Customer rebates for
complex orders that that leg in to the
regular order book and trade at a net
price per contract at or near $0.00 (i.e.,
net zero complex orders), provided
those orders are entered on behalf of
originating market participants that
execute an ADV of at least 2,000
contracts in net zero complex orders in
a given month.10 While these complex
orders would generally not find a
counterparty in the complex order book,
they may leg in to the regular order book
where they are typically executed by
Market Makers or other market
participants on the individual legs who
pay a fee to trade with this order flow.
The Exchange does not provide rebates
for net zero complex orders to prevent
members from engaging in rebate
arbitrage by entering valueless complex
orders solely to recover rebates. For
purposes of determining which complex
orders qualify as net zero, the Exchange
counts all complex orders that leg in to
the regular order book and are executed
at a net price per contract that is within
a range of $0.01 credit and $0.01 debit.
The 2,000 contract threshold exists to
differentiate market participants that are
entering legitimate complex orders from
those that are entering net zero complex
orders solely to earn a rebate. The
Exchange now proposes to lower the
threshold of net zero complex contracts
from 2,000 contracts to 1,000 contracts
per day. As such, net zero priced
complex orders that leg into the regular
order book and are entered by firms
with an ADV in this type of activity of
1,000 contracts or more in a given
month will not earn the Priority
Customer complex order rebate.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,11
in general, and Section 6(b)(4) of the
Act,12 in particular, in that it is designed
10 See Securities Exchange Act Release No. 80219
(March 13, 2017), 82 FR 14249 (March 17, 2017)
(SR–ISE–2017–22). Priority Customer complex
orders that do not meet the definition of a net zero
complex order, or that are entered on behalf of
originating market participants that do not reach the
2,000 contract ADV threshold, remain eligible for
rebates based on the tier achieved.
11 15 U.S.C. 78f.
12 15 U.S.C. 78f(b)(4).
E:\FR\FM\20JNN1.SGM
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Agencies
[Federal Register Volume 82, Number 117 (Tuesday, June 20, 2017)]
[Notices]
[Pages 28176-28178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12769]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80928; File No. SR-NASDAQ-2017-056]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Exchange's Transaction Fees at Rule 7018(a)(2)
June 14, 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 June 1, 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.
---------------------------------------------------------------------------
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)(2) to eliminate a $0.0001 per share executed credit
provided to a member for displayed quotes/orders (other than
Supplemental Orders or Designated Retail Orders) that provide liquidity
in securities listed on the New York Stock Exchange.
The text of the proposed rule change is available on the Exchange's
Web site at https://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 Exchange's
transaction fees at Rule 7018(a)(2) to eliminate a $0.0001 per share
executed credit provided to a member for displayed quotes/orders (other
than Supplemental Orders or Designated Retail Orders) that provide
liquidity in Tape A securities. Under Rule 7018(a), the Exchange
assesses fees for the removal of liquidity and provides credits for the
provision thereof. The Exchange currently provides a $0.0001 per share
executed credit to a member for displayed quotes/orders (other than
Supplemental Orders or Designated Retail Orders) that provide liquidity
if the member has shares of liquidity provided in all securities during
the month representing at least 0.2% of Consolidated Volume during the
month, through one or more of its Nasdaq Market Center MPIDs. This
$0.0001 per share executed credit is provided in addition to the
credits provided for displayed quotes/orders (other than Supplemental
Orders or Designated Retail Orders) that provide liquidity under Rule
7018(a)(2).\3\ This credit is also provided in addition to any rebates
that a member qualifies for under the NBBO, and QMM programs under Rule
7014. The credit is not additive to DLP rebates under Rule 7014 or
Designated Retail Order credits under Rule 7018.
---------------------------------------------------------------------------
\3\ The Exchange also provides a $0.0001 per share executed
credit with identical criteria applicable to Tape B securities. See
Rule 7018(a)(3).
---------------------------------------------------------------------------
The credit, together with an identical credit applicable to Tape B
securities, was adopted to provide incentive to market participants to
increase the level of liquidity provided to the Exchange, in which the
Exchange had observed a decline in overall volume on the Exchange in
Tape A and B securities in comparison to Tape C securities.\4\ The
Exchange has not observed a significant improvement to the volume in
Tape A securities on the Exchange in relation to the Tape A credit and
is therefore proposing to eliminate the credit so that it may explore
other incentives to improve market quality in Tape A securities.
---------------------------------------------------------------------------
\4\ See Securities Exchange Act Release No. 77378 (March 16,
2016), 81 FR 15358 (March 22, 2016) (SR-NASDAQ-2016-037). The
Exchange has since replaced the qualification criteria required to
receive the Tape B $0.0001 per share executed credit. Specifically,
to now qualify for the $0.0001 per share executed credit in Tape B
securities, a member must have shares of liquidity provided 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. See Securities Exchange Act Release No.
78977 (September 29, 2016), 81 FR 69140 (October 5, 2016) (SR-
NASDAQ-2016-132).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\5\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\6\ 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.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
Elimination of the $0.0001 per share executed credit provided to a
member for displayed quotes/orders (other than Supplemental Orders or
Designated
[[Page 28177]]
Retail Orders) that provide liquidity in Tape A securities under Rule
7018(a)(2) is reasonable because providing a credit in addition to the
other credits provided under Rules 7018(a) and 7014, as described
above, is no longer necessary. As noted above, the Exchange set the
credit at $0.0001 per share executed because it believed that providing
such a credit would improve the market in Tape A securities. The credit
has not significantly provided such incentive and consequently the
Exchange believes that it should eliminate the credit to focus its
limited funds on other incentives to improve market quality.
Accordingly, the Exchange believes eliminating this additional Tape A
credit is reasonable.
Elimination of the $0.0001 per share executed credit provided to a
member for displayed quotes/orders (other than Supplemental Orders or
Designated Retail Orders) that provide liquidity in Tape A securities
under Rule 7018(a)(2) is an equitable allocation and is not unfairly
discriminatory because it is no longer needed to improve the market in
Tape A securities. The Exchange has limited funds to apply in the form
of incentives, and thus must deploy those limited funds to incentives
that it believes will be the most effective and improve market quality
in areas that the Exchange determines are in need of improvement. The
Exchange has observed that the credit has not provided the incentive
that was necessary to significantly improve the market in Tape A
securities by attracting more order flow to the Exchange and is
therefore removing the credit so that it may consider other incentives
that may improve Tape A market quality. As noted above, the Exchange
has limited funds to apply toward incentives, and although an incentive
may not significantly achieve its goal of improving market quality, it
may nonetheless result in a cost to the Exchange. Eliminating the
credit will allow the Exchange deploy its limited funds to incentives
in Tape A securities or other areas designed to improve market quality.
Accordingly, the Exchange believes that eliminating the credit is an
equitable allocation and is not unfairly discriminatory.
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 Exchange is proposing to eliminate an
incentive provided to market participants, which was designed to
improve market quality in Tape A securities. The incentive has not
significantly improved market quality in Tape A securities and the
Exchange does not believe that continuing to offer the credit is the
best use of its limited fund nor would it likely achieve the market
improvement for which it was designed. Because the Exchange's execution
services are completely voluntary and subject to extensive competition
both from other exchanges and from off-exchange venues, the proposed
elimination of the credit should not impose a burden on competition. If
the Exchange is incorrect in concluding that the incentive was not
significantly effective, it will likely lose market share in Tape A
securities to one of the many other trading venues to the extent market
participants believe that those markets are more attractive. Thus, 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 or impose any
burden on competition.
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.\7\
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\7\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NASDAQ-2017-056) 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-2017-056). 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
[[Page 28178]]
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-2017-056, and should be submitted
on or before July 11, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
Eduardo A. Aleman,
Assistant Secretary.
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\8\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-12769 Filed 6-19-17; 8:45 am]
BILLING CODE 8011-01-P