Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Transaction Fees at Rule 7018 To Change the Amounts of Certain Credits for Entering Orders That Access Liquidity in the Exchange's Equities System, 55145-55147 [2017-25039]
Download as PDF
Federal Register / Vol. 82, No. 222 / Monday, November 20, 2017 / Notices
All submissions should refer to File
Number SR–CHX–2016–20. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
offices of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CHX–2016–20, and should
be submitted on or before December 5,
2017. Any person who wishes to file a
rebuttal to any other person’s
submission must file that rebuttal by
December 15, 2017.
By the Commission.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–25030 Filed 11–17–17; 8:45 am]
nshattuck on DSK9F9SC42PROD with NOTICES
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82075; File No. SR–BX–
2017–050]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Transaction Fees at Rule
7018 To Change the Amounts of
Certain Credits for Entering Orders
That Access Liquidity in the
Exchange’s Equities System
November 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 November
1, 2017, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s transaction fees at Rule 7018
to change the amounts of certain credits
for entering orders that access liquidity
in the Exchange’s Equities System.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaqbx.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 15
2 17
VerDate Sep<11>2014
15:15 Nov 17, 2017
Jkt 244001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00068
Fmt 4703
Sfmt 4703
55145
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purposes of the proposed rule
changes are to amend the Exchange’s
transaction fees at Rule 7018 to: (1)
increase from $0.0016 to $0.0017 its per
share executed credit for orders that
access liquidity (excluding orders with
Midpoint pegging and excluding orders
that receive price improvement and
execute against an order with a Nondisplayed price) entered by members
that accesses liquidity equal to or
exceeding 0.10% of total Consolidated
Volume during a month; and (2) reduce
its credit for entering an order that
accesses liquidity in the Exchange’s
Equities System for ‘‘all other orders,’’
i.e., orders that do not qualify for other
available credits for removing liquidity.
The Exchange operates on the ‘‘takermaker’’ model, whereby it pays credits
to members that take liquidity and
charges fees to members that provide
liquidity. Currently, the Exchange offers
five different credits for orders that
access liquidity on the Exchange. First,
the Exchange pays a credit of $0.0016
per share executed for an order that
accesses liquidity (excluding orders
with Midpoint pegging and excluding
orders that receive price improvement
and execute against an order with a
Non-displayed price) entered by a
member that accesses liquidity equal to
or exceeding 0.10% of total
Consolidated Volume during a month.
Second, the Exchange pays a credit of
$0.0015 per share executed to an order
that accesses liquidity (excluding orders
with Midpoint pegging and excluding
orders that receive price improvement
and execute against an order with a
Non-displayed price) entered by a
member that accesses liquidity equal to
or exceeding 0.05% of total
Consolidated Volume during [sic]
month. Third, the Exchange pays a
credit of $0.0000 per share executed for
an order that receives price
improvement and executes against an
order with a Non-displayed price.
Fourth, the Exchange pays a credit of
$0.0000 per share executed for an order
with Midpoint pegging that removes
liquidity. Finally, the Exchange pays a
credit of $0.0003 per share executed for
‘‘all other orders.’’
The Exchange now proposes to
increase from $0.0016 to $0.0017 its (per
share executed) credit for orders that
access liquidity (excluding orders with
Midpoint pegging and excluding orders
that receive price improvement and
execute against an order with a Non-
E:\FR\FM\20NON1.SGM
20NON1
55146
Federal Register / Vol. 82, No. 222 / Monday, November 20, 2017 / Notices
displayed price) entered by members
that accesses [sic] liquidity equal to or
exceeding 0.10% of total Consolidated
Volume during a month. The Exchange
also proposes to reduce the credit for
‘‘all other orders’’ from $0.0003 per
share executed to $0.0001 per share
executed. All of the other credits and
charges will remain the same.
The Exchange is proposing the first of
these changes to provide a greater
incentive to member firms to remove
liquidity from the Exchange.
The Exchange is proposing the second
of these changes because it believes that
a $0.0001 credit is more closely aligned
to the requirements necessary to qualify
for that credit and the behavior that the
credit is designed to incentivize. The
Exchange notes that, unlike other
credits the Exchange offers for accessing
liquidity, a member does not have to
meet any volume requirements in order
to qualify for this credit. In contrast, the
Exchange pays a credit of $0.0000 per
share executed for an order that receives
price improvement and executes against
an order with a Non-displayed price,
and for an order with Midpoint pegging
that removes liquidity. In comparison to
these other credits and their attendant
requirements, and given that the
Exchange is limited in the amount of
credits that it provides to members, the
Exchange believes the new credit
amount is appropriate.
nshattuck on DSK9F9SC42PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,3 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,4 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.
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
3 15
4 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
VerDate Sep<11>2014
15:15 Nov 17, 2017
Jkt 244001
broader forms that are most important to
investors and listed companies.’’ 5
Likewise, in NetCoalition v. Securities
and Exchange Commission 6
(‘‘NetCoalition’’) the D.C. Circuit upheld
the Commission’s use of a market-based
approach in evaluating the fairness of
market data fees against a challenge
claiming that Congress mandated a costbased approach.7 As the court
emphasized, the Commission ‘‘intended
in Regulation NMS that ‘market forces,
rather than regulatory requirements’
play a role in determining the market
data . . . to be made available to
investors and at what cost.’’ 8
Further, ‘‘[n]o one disputes that
competition for order flow is ‘fierce.’
. . . As the SEC explained, ‘[i]n the U.S.
national market system, buyers and
sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’ 9 Although the court and
the SEC were discussing the cash
equities markets, the Exchange believes
that these views apply with equal force
to the options markets.
The Exchange believes that it is
reasonable to increase from $0.0016 to
$0.0017 its (per share executed) credit
for orders that access liquidity
(excluding orders with Midpoint
pegging and excluding orders that
receive price improvement and execute
against an order with Midpoint pegging
[sic]) entered by members that access
liquidity equal to or exceeding 0.10% of
total Consolidated Volume during a
month. The Exchange must, from time
to time, assess the effectiveness of its
credits in achieving their intended
objectives and adjust the levels of such
credits based on the Exchange’s
observations of market participant
behavior. In this instance, the Exchange
determined that the level of the credit
should be increased to provide a
stronger incentive to market participants
to improve the market. The Exchange
believes that the proposed credit
increase is equitable and is not unfairly
5 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
6 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010).
7 See NetCoalition, at 534—535.
8 Id. at 537.
9 Id. at 539 (quoting Securities Exchange Act
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR–
NYSEArca-2006–21)).
PO 00000
Frm 00069
Fmt 4703
Sfmt 4703
discriminatory it [sic] will apply to all
member firms that achieve the
minimum level of Consolidated Volume
required by the tier.
The Exchange believes that reducing
the credit for ‘‘all other orders’’ from
$0.0003 to $0.0001 is reasonable
because the amount of the new credit is
more closely aligned to the
requirements necessary to qualify for
the credit and the behavior that it is
designed to incentivize, especially given
that the Exchange is limited in the
amount of credits that it provides to
members. Unlike other credits the
Exchange offers for accessing liquidity,
a member does not have to meet any
volume requirements in order to qualify
for this credit. While the Exchange does
presently pay credits of $0.0015 and
$0.0016 per share executed for accessing
liquidity, a member must also meet also
meet [sic] a volume threshold of
accessing liquidity equal to or exceeding
0.05% or 0.10% of total Consolidated
Volume during a month, respectively. In
contrast, the Exchange pays a credit of
$0.0000 for an order that receives price
improvement and executes against an
order with a Non-displayed price, and
for an order with Midpoint pegging that
removes liquidity. The Exchange
believes that the new credit amount is
more closely aligned to the
requirements for qualifying for that
credit, especially in comparison to the
other credits offered by the Exchange
and their attendant requirements.
The Exchange believes that the
second proposed change is equitably
allocated among members, and is not
designed to permit unfair
discrimination. BX notes that
participation on the Exchange, and
eligibility for this credit, is voluntary,
and that the Exchange continues to offer
other credits for which members may
attempt to qualify instead of the
proposed credit. Additionally, the
proposed change to the credit amount
applies to all members that otherwise
qualify for the credit.
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.
E:\FR\FM\20NON1.SGM
20NON1
Federal Register / Vol. 82, No. 222 / Monday, November 20, 2017 / Notices
In such an environment, the Exchange
must continually adjust its fees to
remain competitive with other
exchanges and with alternative trading
systems that have been exempted from
compliance with the statutory standards
applicable to exchanges. Because
competitors are free to modify their own
fees in response, and because market
participants may readily adjust their
order routing practices, the Exchange
believes that the degree to which fee
changes in this market may impose any
burden on competition is extremely
limited.
In this instance, the changes to credits
do not impose a burden on competition
because participation in the Exchange is
optional and is the subject of
competition from other exchanges. The
proposed changes to the credits are
reflective of the Exchange’s overall
efforts to provide greater incentives to
market participants in the form of
credits for market participation it
believes needs improvement to the
benefit of all participants. For these
reasons, the Exchange does not believe
that any of the proposed changes will
impair the ability of members or
competing order execution venues to
maintain their competitive standing in
the financial markets. Moreover,
because there are numerous competitive
alternatives to the use of the Exchange,
it is likely that BX will lose market
share as a result of the changes if they
are unattractive to market participants.
Accordingly, BX does not believe that
the proposed rule changes will impair
the ability of members or competing
order execution venues to maintain
their competitive standing in the
financial markets.
nshattuck on DSK9F9SC42PROD 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.10
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
10 15
U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
15:15 Nov 17, 2017
Jkt 244001
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
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
BX–2017–050 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BX–2017–050. 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.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–BX–2017–050 and should
be submitted on or before December 11,
2017.
Frm 00070
Fmt 4703
Sfmt 9990
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–25039 Filed 11–17–17; 8:45 am]
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:
PO 00000
55147
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82078; SR–BatsBZX–2017–
56]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of
Withdrawal of a Proposed Rule Change
To List and Trade Shares of Specified
Series of the Innovator Shield Strategy
S&P 500 Monthly Index Series and
Innovator Ultra Shield Strategy S&P
500 Monthly Index Series Under Rule
14.11(c)(3)
November 14, 2017.
On August 22, 2017, Bats BZX
Exchange, Inc. (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b-4 thereunder,2 a proposed rule
change to list and trade shares of
specified series of the Innovator Shield
Strategy S&P 500 Monthly Index Series
and Innovator Ultra Shield Strategy S&P
500 Monthly Index Series under BZX
Rule 14.11(c)(3). The proposed rule
change was published for comment in
the Federal Register on September 5,
2017.3 The Commission received no
comments on the proposed rule change.
On October 18, 2017, the Commission
extended the time period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to approve or disapprove the
proposed rule change to December 4,
2017.4
On November 8, 2017, the Exchange
withdrew the proposed rule change
(SR–BatsBZX–2017–56).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–25041 Filed 11–17–17; 8:45 am]
BILLING CODE 8011–01–P
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 81495
(August 29, 2017), 82 FR 42003.
4 See Securities Exchange Act Release No. 81895,
82 FR 49252 (October 24, 2017).
5 17 CFR 200.30–3(a)(57).
1 15
E:\FR\FM\20NON1.SGM
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Agencies
[Federal Register Volume 82, Number 222 (Monday, November 20, 2017)]
[Notices]
[Pages 55145-55147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25039]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82075; File No. SR-BX-2017-050]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Transaction Fees at Rule 7018 To Change the Amounts of
Certain Credits for Entering Orders That Access Liquidity in the
Exchange's Equities System
November 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 November 1, 2017, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III, below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's transaction fees at
Rule 7018 to change the amounts of certain credits for entering orders
that access liquidity in the Exchange's Equities System.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqbx.cchwallstreet.com/ 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 purposes of the proposed rule changes are to amend the
Exchange's transaction fees at Rule 7018 to: (1) increase from $0.0016
to $0.0017 its per share executed credit for orders that access
liquidity (excluding orders with Midpoint pegging and excluding orders
that receive price improvement and execute against an order with a Non-
displayed price) entered by members that accesses liquidity equal to or
exceeding 0.10% of total Consolidated Volume during a month; and (2)
reduce its credit for entering an order that accesses liquidity in the
Exchange's Equities System for ``all other orders,'' i.e., orders that
do not qualify for other available credits for removing liquidity.
The Exchange operates on the ``taker-maker'' model, whereby it pays
credits to members that take liquidity and charges fees to members that
provide liquidity. Currently, the Exchange offers five different
credits for orders that access liquidity on the Exchange. First, the
Exchange pays a credit of $0.0016 per share executed for an order that
accesses liquidity (excluding orders with Midpoint pegging and
excluding orders that receive price improvement and execute against an
order with a Non-displayed price) entered by a member that accesses
liquidity equal to or exceeding 0.10% of total Consolidated Volume
during a month. Second, the Exchange pays a credit of $0.0015 per share
executed to an order that accesses liquidity (excluding orders with
Midpoint pegging and excluding orders that receive price improvement
and execute against an order with a Non-displayed price) entered by a
member that accesses liquidity equal to or exceeding 0.05% of total
Consolidated Volume during [sic] month. Third, the Exchange pays a
credit of $0.0000 per share executed for an order that receives price
improvement and executes against an order with a Non-displayed price.
Fourth, the Exchange pays a credit of $0.0000 per share executed for an
order with Midpoint pegging that removes liquidity. Finally, the
Exchange pays a credit of $0.0003 per share executed for ``all other
orders.''
The Exchange now proposes to increase from $0.0016 to $0.0017 its
(per share executed) credit for orders that access liquidity (excluding
orders with Midpoint pegging and excluding orders that receive price
improvement and execute against an order with a Non-
[[Page 55146]]
displayed price) entered by members that accesses [sic] liquidity equal
to or exceeding 0.10% of total Consolidated Volume during a month. The
Exchange also proposes to reduce the credit for ``all other orders''
from $0.0003 per share executed to $0.0001 per share executed. All of
the other credits and charges will remain the same.
The Exchange is proposing the first of these changes to provide a
greater incentive to member firms to remove liquidity from the
Exchange.
The Exchange is proposing the second of these changes because it
believes that a $0.0001 credit is more closely aligned to the
requirements necessary to qualify for that credit and the behavior that
the credit is designed to incentivize. The Exchange notes that, unlike
other credits the Exchange offers for accessing liquidity, a member
does not have to meet any volume requirements in order to qualify for
this credit. In contrast, the Exchange pays a credit of $0.0000 per
share executed for an order that receives price improvement and
executes against an order with a Non-displayed price, and for an order
with Midpoint pegging that removes liquidity. In comparison to these
other credits and their attendant requirements, and given that the
Exchange is limited in the amount of credits that it provides to
members, the Exchange believes the new credit amount is appropriate.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\3\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\4\ 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.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \5\
---------------------------------------------------------------------------
\5\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Likewise, in NetCoalition v. Securities and Exchange Commission \6\
(``NetCoalition'') the D.C. Circuit upheld the Commission's use of a
market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\7\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \8\
---------------------------------------------------------------------------
\6\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\7\ See NetCoalition, at 534--535.
\8\ Id. at 537.
---------------------------------------------------------------------------
Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \9\ Although the court and the
SEC were discussing the cash equities markets, the Exchange believes
that these views apply with equal force to the options markets.
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\9\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
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The Exchange believes that it is reasonable to increase from
$0.0016 to $0.0017 its (per share executed) credit for orders that
access liquidity (excluding orders with Midpoint pegging and excluding
orders that receive price improvement and execute against an order with
Midpoint pegging [sic]) entered by members that access liquidity equal
to or exceeding 0.10% of total Consolidated Volume during a month. The
Exchange must, from time to time, assess the effectiveness of its
credits in achieving their intended objectives and adjust the levels of
such credits based on the Exchange's observations of market participant
behavior. In this instance, the Exchange determined that the level of
the credit should be increased to provide a stronger incentive to
market participants to improve the market. The Exchange believes that
the proposed credit increase is equitable and is not unfairly
discriminatory it [sic] will apply to all member firms that achieve the
minimum level of Consolidated Volume required by the tier.
The Exchange believes that reducing the credit for ``all other
orders'' from $0.0003 to $0.0001 is reasonable because the amount of
the new credit is more closely aligned to the requirements necessary to
qualify for the credit and the behavior that it is designed to
incentivize, especially given that the Exchange is limited in the
amount of credits that it provides to members. Unlike other credits the
Exchange offers for accessing liquidity, a member does not have to meet
any volume requirements in order to qualify for this credit. While the
Exchange does presently pay credits of $0.0015 and $0.0016 per share
executed for accessing liquidity, a member must also meet also meet
[sic] a volume threshold of accessing liquidity equal to or exceeding
0.05% or 0.10% of total Consolidated Volume during a month,
respectively. In contrast, the Exchange pays a credit of $0.0000 for an
order that receives price improvement and executes against an order
with a Non-displayed price, and for an order with Midpoint pegging that
removes liquidity. The Exchange believes that the new credit amount is
more closely aligned to the requirements for qualifying for that
credit, especially in comparison to the other credits offered by the
Exchange and their attendant requirements.
The Exchange believes that the second proposed change is equitably
allocated among members, and is not designed to permit unfair
discrimination. BX notes that participation on the Exchange, and
eligibility for this credit, is voluntary, and that the Exchange
continues to offer other credits for which members may attempt to
qualify instead of the proposed credit. Additionally, the proposed
change to the credit amount applies to all members that otherwise
qualify for the credit.
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.
[[Page 55147]]
In such an environment, the Exchange must continually adjust its
fees to remain competitive with other exchanges and with alternative
trading systems that have been exempted from compliance with the
statutory standards applicable to exchanges. Because competitors are
free to modify their own fees in response, and because market
participants may readily adjust their order routing practices, the
Exchange believes that the degree to which fee changes in this market
may impose any burden on competition is extremely limited.
In this instance, the changes to credits do not impose a burden on
competition because participation in the Exchange is optional and is
the subject of competition from other exchanges. The proposed changes
to the credits are reflective of the Exchange's overall efforts to
provide greater incentives to market participants in the form of
credits for market participation it believes needs improvement to the
benefit of all participants. For these reasons, the Exchange does not
believe that any of the proposed changes will impair the ability of
members or competing order execution venues to maintain their
competitive standing in the financial markets. Moreover, because there
are numerous competitive alternatives to the use of the Exchange, it is
likely that BX will lose market share as a result of the changes if
they are unattractive to market participants.
Accordingly, BX does not believe that the proposed rule changes
will impair the ability of members or competing order execution venues
to maintain their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\10\
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\10\ 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-BX-2017-050 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2017-050. 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. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-BX-2017-050 and should be
submitted on or before December 11, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25039 Filed 11-17-17; 8:45 am]
BILLING CODE 8011-01-P