Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118(a), 23105-23109 [2019-10508]

Download as PDF Federal Register / Vol. 84, No. 98 / Tuesday, May 21, 2019 / Notices persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.18 Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by June 11, 2019. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by June 25, 2019. The Commission asks that commenters address the sufficiency of the Exchange’s statements in support of the proposal, in addition to any other comments they may wish to submit about the proposed rule change. In particular, the Exchange states that each Fund may obtain exposure to the Benchmark through investment in OTC Financial Instruments under certain conditions, including situations where the Sponsor deems it impractical or inadvisable to buy or sell Futures Contracts (such as during periods of market volatility or illiquidity). The Commission seeks commenters’ views on whether the Exchange has described in sufficient detail the conditions where the Sponsor deems it impractical or inadvisable to buy or sell Futures Contracts to enable the Funds to obtain exposure to the Benchmark through investment in OTC Financial Instruments. Comments may be submitted by any of the following methods: Commission, 100 F Street NE, Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION All submissions should refer to File Number SR–NYSEArca–2019–02. 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 website (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 website 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–NYSEArca–2019–02 and should be submitted by June 11, 2019. Rebuttal comments should be submitted by June 25, 2019. [Release No. 34–85861; File No. SR– NASDAQ–2019–036] Electronic Comments For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2019–02 on the subject line. Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–10509 Filed 5–20–19; 8:45 am] BILLING CODE 8011–01–P Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118(a) May 15, 2019. 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 1, 2019, 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. 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 fees at Equity 7, Section 118(a) to: (1) Adopt two new credits tiers available to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in securities of all three Tapes 3 that provide liquidity; (2) adopt a new credit tier for midpoint orders (other than Supplemental Orders) that provide liquidity; (3) amend the qualification criteria required to receive a credit available to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in securities of all three Tapes that provide liquidity; and (4) lower a credit available to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in securities of all three Tapes that provide liquidity. The text of the proposed rule change is available on the Exchange’s website at https://nasdaq.cchwallstreet.com/, at the principal office of the Exchange, and at 1 15 jbell on DSK3GLQ082PROD with NOTICES 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). VerDate Sep<11>2014 17:50 May 20, 2019 Jkt 247001 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 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. Under Nasdaq’s rules, Section 118(a)(1) concerns fees for execution and routing of Tape C securities, Section 118(a)(2) concerns fees for execution and routing of Tape A securities, and Section 118(a)(3) concerns fees for execution and routing of Tape B securities. 2 17 18 Section 19 17 CFR 200.30–3(a)(12) & 17 CFR 200.30– 3(a)(57). PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 23105 E:\FR\FM\21MYN1.SGM 21MYN1 23106 Federal Register / Vol. 84, No. 98 / Tuesday, May 21, 2019 / Notices 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 Equity 7, Section 118(a) to: (1) Adopt two new credit tiers available to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in securities of all three Tapes 4 that provide liquidity; (2) adopt a new credit tier for midpoint orders (other than Supplemental Orders) that provide liquidity; (3) amend the qualification criteria required to receive a credit available to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in securities of all three Tapes that provide liquidity; and (4) lower a credit available to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in securities of all three Tapes that provide liquidity. jbell on DSK3GLQ082PROD with NOTICES First New Credit The Exchange is proposing to adopt a new $0.0028 per share executed credit tier under Sections 118(a)(1), (2) and (3) for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in Tape C, A and B securities, respectively, that provide liquidity provided to a member: (i) With shares of liquidity accessed in all 4 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. Under Nasdaq’s rules, Section 118(a)(1) concerns fees for execution and routing of Tape C securities, Section 118(a)(2) concerns fees for execution and routing of Tape A securities, and Section 118(a)(3) concerns fees for execution and routing of Tape B securities. VerDate Sep<11>2014 17:50 May 20, 2019 Jkt 247001 securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.60% of Consolidated Volume during the month, and (ii) with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.225% of Consolidated Volume during the month. Second New Credit The Exchange is proposing to adopt a new $0.0029 per share executed credit tier under Sections 118(a)(1), (2) and (3) for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in Tape C, A and B securities, respectively, that provide liquidity provided to a member: (i) With shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.30% of Consolidated Volume during the month and (ii) member qualifies for the MARS program on The Nasdaq Options Market (‘‘NOM’’) during the month. The Market Access and Routing Subsidy or ‘‘MARS’’ program is an NOM incentive program designed to increase market quality by providing payments to Participants in return for market-improving behavior.5 Nasdaq currently provides a $0.0030 per share executed credit under Sections 118(a)(1), (2) and (3) to members: (i) With shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.50% of Consolidated Volume during the month and (ii) member qualifies for Tier 4 6 of the MARS program on The Nasdaq Options Market during the month. Third New Credit The Exchange is proposing to adopt a new $0.0013 per share executed credit 5 See Options 7, Section 6. To qualify for MARS, the Participant’s routing system (‘‘System’’) would be 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 would also need to 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. Id. 6 There are five MARS payment tiers, each with increasing Average Daily Volume requirements and payments. Id. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 tier under Section 118(a)(1) for midpoint orders in Tape C securities that provide liquidity and adopt a new $0.0019 per share executed credit tier under Sections 118(a)(2) and (3) for midpoint orders in Tape A and B securities, respectively, that provide liquidity. The new credits would be provided to a member that (i) executes a combined volume of 1 million or more shares in midpoint orders provided and Midpoint Extended Life Orders executed during the month through one or more of its Nasdaq Market Center MPIDs and (ii) has a 10% or greater increase in midpoint orders provided and Midpoint Extended Life Orders executed through one or more of its Nasdaq Market Center MPIDs during the month over the month of April 2019. A Midpoint Extended Life Order is an Order Type with a Non-Display Order Attribute that is priced at the midpoint between the NBBO and that will not be eligible to execute until a minimum period of one half of a second has passed after acceptance of the Order by the System.7 Amended Credit Tier Criteria The Exchange is proposing to amend the qualification criteria required to receive a $0.0027 per share executed credit under Sections 118(a)(1), (2) and (3) provided to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in Tape C, A and B securities, respectively, that provide liquidity. Currently, the credit is provided to a member (i) with shares of liquidity accessed in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.65% of Consolidated Volume during the month, and (ii) with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.10% of Consolidated Volume during the month. The Exchange is proposing to decrease the level of Consolidated Volume under (i) of the tier from more than 0.65% to more than 0.50% and increase the level of Consolidated Volume under (ii) of the tier from more than 0.10% to more than 0.175%. Decreased Credit The Exchange is proposing to decrease a credit under Sections 118(a)(1), (2) and (3) available to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) in Tape C, A and B securities, respectively, that provide liquidity. Currently, the 7 See E:\FR\FM\21MYN1.SGM Rule 4702(b)(14). 21MYN1 Federal Register / Vol. 84, No. 98 / Tuesday, May 21, 2019 / Notices Exchange provides a $0.0028 per share executed credit to a member with shares of liquidity provided in the Opening and Closing Crosses, excluding Marketon-Close, Limit-on-Close (other than an Limit-on-Close Order entered between 3:50 p.m. ET and immediately prior to 3:55 p.m. ET), Market-on-Open, Limiton-Open, Good-til-Cancelled, and Immediate-or-Cancel orders, through one or more of its Nasdaq Market Center MPIDs that represent more than 0.01% of Consolidated Volume during the month. The Exchange is proposing to reduce the credit available from $0.0028 per share executed to $0.0027 per share executed. 2. Statutory Basis jbell on DSK3GLQ082PROD with NOTICES The Exchange believes that its proposal is consistent with Section 6(b) of the Act,8 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,9 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 broader forms that are most important to investors and listed companies.’’ 10 Likewise, in NetCoalition v. Securities and Exchange Commission 11 (‘‘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.12 As the court emphasized, the Commission ‘‘intended in Regulation NMS that ‘market forces, rather than regulatory requirements’ play a role in determining the market 8 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 10 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 11 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). 12 See NetCoalition, at 534–535. 9 15 VerDate Sep<11>2014 17:50 May 20, 2019 Jkt 247001 data . . . to be made available to investors and at what cost.’’ 13 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’. . . .’’ 14 As a general principle, the Exchange chooses to offer credits to members in return for market improving behavior. Equity 7, Section 118(a) sets forth the various credits available to members, which require a member to significantly contribute to market quality by providing certain levels of Consolidated Volume through one or more of its Nasdaq Market Center MPIDs, volume on NOM, as well as other marketimproving activity. The three new credit tiers are reflective of the Exchange’s efforts to improve market quality in all three Tapes by providing members with differing levels of incentive in return for market-improving activity. The proposed increase to the qualification requirements of the amended credit tier is similarly reflective of the Exchange’s desire to provide incentives to improve market quality, while also balancing the need to keep the incentives provided inline with the market-improving activity required. From time to time, the Exchange must evaluate the effectiveness of its fee and credit tiers in relation to the criteria required to qualify for them, and to make adjustments to them when appropriate. In this case, the Exchange has determined that the credit tier qualification criteria may be increased without a material impact on the number of members that would qualify for the credit. Similarly, the decrease in the credit available is reflective of the Exchange’s determination that the level of credit available may be decreased without a significant impact to the number of members that qualify for the credit. First New Credit The Exchange believes that the proposed $0.0028 per share executed credit is reasonable because it is similar to existing credits available on the 13 Id. at 537. at 539 (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782–83 (December 9, 2008) (SR– NYSEArca–2006–21)). 14 Id. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 23107 Exchange for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity. As described above, the Exchange currently provides a $0.0028 per share executed credit tier under Sections 118(a)(1), (2) and (3).15 The Exchange also has a $0.0027 per share executed credit tier, which requires a member to have (i) shares of liquidity accessed in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.65% of Consolidated Volume during the month, and (ii) with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.10% of Consolidated Volume during the month. Thus, the amount of the proposed credit is the same as other credits currently available to members, and there are other similar credit opportunities available to members with different qualification criteria should a member choose not to qualify for the proposed credit. The Exchange believes that the proposed $0.0028 per share executed credit is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same credit to all similarly situated members. The qualification criteria of the proposed credit is set at a sufficiently high level to reflect the significant credit a member would receive if it qualified. Any member may elect to provide the levels of market activity required by the proposed credit’s qualification criteria in order to receive the credit. If the member determines that the level of Consolidated Volume is too high, it has other opportunities to receive credits, which have different qualification criteria, as described above. Second New Credit The Exchange believes that the proposed $0.0029 per share executed credit is reasonable because it is similar to existing credits available on the Exchange for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity. For example, the Exchange currently provides a $0.0029 per share executed credit tier under Sections 118(a)(1), (2) and (3) provided to a 15 To qualify for the credit, a member must have shares of liquidity provided in the Opening and Closing Crosses, excluding Market-on-Close, Limiton-Close (other than an Limit-on-Close Order entered between 3:50 p.m. ET and immediately prior to 3:55 p.m. ET), Market-on-Open, Limit-onOpen, Good-til-Cancelled, and Immediate-or-Cancel orders, through one or more of its Nasdaq Market Center MPIDs that represent more than 0.01% of Consolidated Volume during the month. See Equity 7, Section 118(a)(1), (2) and (3). E:\FR\FM\21MYN1.SGM 21MYN1 23108 Federal Register / Vol. 84, No. 98 / Tuesday, May 21, 2019 / Notices jbell on DSK3GLQ082PROD with NOTICES member with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.60% of Consolidated Volume during the month. As described above, the Exchange also has a $0.0028 per share executed credit tier under Sections 118(a)(1), (2) and (3) with different qualification criteria.16 Thus, the amount of the proposed credit is the same as other credits currently available to members, and there are other similar credit opportunities available to members with different qualification criteria should a member choose not to qualify for the proposed credit. The Exchange believes that the proposed $0.0029 per share executed credit is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same credit to all similarly situated members. The qualification criteria of the proposed credit is set at a sufficiently high level to reflect the significant credit a member would receive if it qualified. Any member may elect to provide the levels of market activity required by the proposed credit’s qualification criteria in order to receive the credit. If the member determines that the level of Consolidated Volume is too high, or if it does not participate on NOM, it has other opportunities to receive similar credits, which require less Consolidated Volume as described above. Third New Credit The Exchange believes that the proposed $0.0013 and $0.0019 per share executed credits are reasonable because they are similar to existing credits available on the Exchange for midpoint orders that provide liquidity. The Exchange currently provides a midpoint order credit of $0.0017 per share executed under Section 118(a)(1) and $0.0020 per share executed Sections 118(a)(2) and (3). To be eligible for these existing midpoint order credits, a member must provide an average daily volume of 3 million or more shares through midpoint orders during the month. The proposed new midpoint order credits are lower than the current credits described above because of the lower qualification criteria of the proposed credits. The Exchange believes that the proposed $0.0013 and $0.0019 per share executed credits are an equitable allocation and are not unfairly discriminatory because the Exchange will apply the same credit to all similarly situated members. The proposed criteria for the new midpoint 16 Id. VerDate Sep<11>2014 17:50 May 20, 2019 Jkt 247001 credits requires members to execute a combined minimum volume of 1 million shares comprising of midpoint orders provided and Midpoint Extended Life Orders executed, and to demonstrate an increase of 10% or more in midpoint orders provided and Midpoint Extended Life Orders executed through one or more of its Nasdaq Market Center MPIDs during the month over the month of April 2019. Thus, members are provided incentive to increase the overall level of midpoint orders and Midpoint Extended Life Orders transacted over its trading in April 2019, in turn improving liquidity in midpoint orders and Midpoint Extended Life Orders. The Exchange chose April 2019 because it is reflective of a member’s most recent trading in midpoint orders and Midpoint Extended Life Orders, thereby setting a baseline for a member’s midpoint order and Midpoint Extended Life Order trading prior to the credit’s effectiveness. The Exchange believes that the qualification criteria of the proposed credit tiers is set at a sufficiently high level to reflect the significant credits a member would receive if it qualified. Any member may elect to provide the levels of market activity required by the proposed credit’s qualification criteria in order to receive the credit. If the member determines that the level of shares of midpoint orders and Midpoint Extended Life Orders is too high, it has other opportunities to receive credits for midpoint orders, including the $0.0010 per share executed credit for all other midpoint orders under Section 118(a)(1) and the $0.0014 per share executed credit for all other midpoint orders under Sections 118(a)(2) and (3). Amended Credit Tier Criteria The Exchange believes that the amount of the proposed amended credit tier is reasonable because the amount of the credit is remaining unchanged. The proposed changes to the qualification criteria are reasonable because the Exchange believes that an increase in the criteria should not decrease the number of members that will qualify for the credit. As described above, the Exchange must evaluate the effectiveness of its fee and credit tiers in relation to the criteria required to qualify for them, and to make adjustments to them when appropriate. The Exchange believes that the proposed amended credit qualification criteria is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same credit criteria to all members and provide the credit to all members that meet the qualification criteria, unless that PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 member qualifies for a larger credit. The proposed qualification criteria of the credit is set at a sufficiently high level to reflect the significant credits a member would receive if it qualified. Any member may elect to provide the levels of market activity required by the proposed credit’s qualification criteria in order to receive the credit. If the member determines that the level of Consolidated Volume is too high, it has other opportunities to receive credits, which require less Consolidated Volume. Decreased Credit The Exchange believes that the proposed amended credit is reasonable because the amount of the credit given is the same as existing credits available on the Exchange for displayed quotes/ orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity. For example, the Exchange provides a $0.0027 per share executed credit tier under Sections 118(a)(1), (2) and (3) available to a member with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.30% of Consolidated Volume during the month. The Exchange believes that the proposed amended credit is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same credit to all similarly situated members. The proposed qualification criteria of the proposed credit is set at a sufficiently high level to reflect the significant credits a member would receive if it qualified. Any member may elect to provide the levels of market activity required by the proposed credit’s qualification criteria in order to receive the credit. If the member determines that the level of Consolidated Volume is too high, it has other opportunities to receive credits, which require less Consolidated Volume. 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 E:\FR\FM\21MYN1.SGM 21MYN1 Federal Register / Vol. 84, No. 98 / Tuesday, May 21, 2019 / Notices jbell on DSK3GLQ082PROD with NOTICES 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 adopting new credit opportunities for members. Thus, the proposed change provides another opportunity for members to receive a credit based on their market-improving behavior and is reflective of the highly competitive market in which the Exchange operates. The new credit tiers may attract greater order flow to the Exchange, which would benefit all market participants on Nasdaq. The proposed amended criteria for an existing credit and proposed reduced credit are reflective of the need to periodically calibrate the criteria required to receive credits. The Exchange has limited resources with which to apply to credits. Given the competitive environment among exchanges and other trading venues, the Exchange must ensure that it is requiring the most beneficial market activity for a credit that is permitted in the competitive landscape for order flow. In this regard, the Exchange notes that other market venues are free to adopt the same or similar credits and incentives as a competitive response to this proposed change. Moreover, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result and, conversely, if the proposal is successful at attracting greater volume to the Exchange other market venues are free to make similar changes as a competitive response. 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.17 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–2019–036 on the subject line. 17:50 May 20, 2019 Jkt 247001 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–NASDAQ–2019–036 and should be submitted on or before June 11, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.18 Eduardo A. Aleman, Deputy Secretary. [FR Doc. 2019–10508 Filed 5–20–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–85864; File No. SR–NYSE– 2019–24] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Price List Paper Comments May 15, 2019. • 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–2019–036. 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 website (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 website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on May 9, 2019, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II, below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 17 15 VerDate Sep<11>2014 23109 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00093 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its Price List to modify the (1) charges for transactions that remove liquidity from the Exchange; (2) requirements for credits related to executions of orders sent to Floor brokers that add liquidity on the Exchange; and (3) remove Tier 18 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 E:\FR\FM\21MYN1.SGM 21MYN1

Agencies

[Federal Register Volume 84, Number 98 (Tuesday, May 21, 2019)]
[Notices]
[Pages 23105-23109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10508]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85861; File No. SR-NASDAQ-2019-036]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Equity 7, Section 118(a)

May 15, 2019.
    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 1, 2019, 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's transaction fees at 
fees at Equity 7, Section 118(a) to: (1) Adopt two new credits tiers 
available to members for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) in securities of all 
three Tapes \3\ that provide liquidity; (2) adopt a new credit tier for 
midpoint orders (other than Supplemental Orders) that provide 
liquidity; (3) amend the qualification criteria required to receive a 
credit available to members for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) in securities of all 
three Tapes that provide liquidity; and (4) lower a credit available to 
members for displayed quotes/orders (other than Supplemental Orders or 
Designated Retail Orders) in securities of all three Tapes that provide 
liquidity.
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    \3\ 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. Under Nasdaq's rules, Section 118(a)(1) concerns fees for 
execution and routing of Tape C securities, Section 118(a)(2) 
concerns fees for execution and routing of Tape A securities, and 
Section 118(a)(3) concerns fees for execution and routing of Tape B 
securities.
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    The text of the proposed rule change is available on the Exchange's 
website at https://nasdaq.cchwallstreet.com/, at the principal office of 
the Exchange, and at

[[Page 23106]]

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 Equity 7, Section 118(a) to: (1) Adopt two new 
credit tiers available to members for displayed quotes/orders (other 
than Supplemental Orders or Designated Retail Orders) in securities of 
all three Tapes \4\ that provide liquidity; (2) adopt a new credit tier 
for midpoint orders (other than Supplemental Orders) that provide 
liquidity; (3) amend the qualification criteria required to receive a 
credit available to members for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) in securities of all 
three Tapes that provide liquidity; and (4) lower a credit available to 
members for displayed quotes/orders (other than Supplemental Orders or 
Designated Retail Orders) in securities of all three Tapes that provide 
liquidity.
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    \4\ 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. Under Nasdaq's rules, Section 118(a)(1) concerns fees for 
execution and routing of Tape C securities, Section 118(a)(2) 
concerns fees for execution and routing of Tape A securities, and 
Section 118(a)(3) concerns fees for execution and routing of Tape B 
securities.
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First New Credit
    The Exchange is proposing to adopt a new $0.0028 per share executed 
credit tier under Sections 118(a)(1), (2) and (3) for displayed quotes/
orders (other than Supplemental Orders or Designated Retail Orders) in 
Tape C, A and B securities, respectively, that provide liquidity 
provided to a member: (i) With shares of liquidity accessed in all 
securities through one or more of its Nasdaq Market Center MPIDs that 
represent more than 0.60% of Consolidated Volume during the month, and 
(ii) with shares of liquidity provided in all securities through one or 
more of its Nasdaq Market Center MPIDs that represent more than 0.225% 
of Consolidated Volume during the month.
Second New Credit
    The Exchange is proposing to adopt a new $0.0029 per share executed 
credit tier under Sections 118(a)(1), (2) and (3) for displayed quotes/
orders (other than Supplemental Orders or Designated Retail Orders) in 
Tape C, A and B securities, respectively, that provide liquidity 
provided to a member: (i) With shares of liquidity provided in all 
securities through one or more of its Nasdaq Market Center MPIDs that 
represent more than 0.30% of Consolidated Volume during the month and 
(ii) member qualifies for the MARS program on The Nasdaq Options Market 
(``NOM'') during the month. The Market Access and Routing Subsidy or 
``MARS'' program is an NOM incentive program designed to increase 
market quality by providing payments to Participants in return for 
market-improving behavior.\5\ Nasdaq currently provides a $0.0030 per 
share executed credit under Sections 118(a)(1), (2) and (3) to members: 
(i) With shares of liquidity provided in all securities through one or 
more of its Nasdaq Market Center MPIDs that represent more than 0.50% 
of Consolidated Volume during the month and (ii) member qualifies for 
Tier 4 \6\ of the MARS program on The Nasdaq Options Market during the 
month.
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    \5\ See Options 7, Section 6. To qualify for MARS, the 
Participant's routing system (``System'') would be 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 would also need to 
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. Id.
    \6\ There are five MARS payment tiers, each with increasing 
Average Daily Volume requirements and payments. Id.
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Third New Credit
    The Exchange is proposing to adopt a new $0.0013 per share executed 
credit tier under Section 118(a)(1) for midpoint orders in Tape C 
securities that provide liquidity and adopt a new $0.0019 per share 
executed credit tier under Sections 118(a)(2) and (3) for midpoint 
orders in Tape A and B securities, respectively, that provide 
liquidity. The new credits would be provided to a member that (i) 
executes a combined volume of 1 million or more shares in midpoint 
orders provided and Midpoint Extended Life Orders executed during the 
month through one or more of its Nasdaq Market Center MPIDs and (ii) 
has a 10% or greater increase in midpoint orders provided and Midpoint 
Extended Life Orders executed through one or more of its Nasdaq Market 
Center MPIDs during the month over the month of April 2019. A Midpoint 
Extended Life Order is an Order Type with a Non-Display Order Attribute 
that is priced at the midpoint between the NBBO and that will not be 
eligible to execute until a minimum period of one half of a second has 
passed after acceptance of the Order by the System.\7\
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    \7\ See Rule 4702(b)(14).
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Amended Credit Tier Criteria
    The Exchange is proposing to amend the qualification criteria 
required to receive a $0.0027 per share executed credit under Sections 
118(a)(1), (2) and (3) provided to members for displayed quotes/orders 
(other than Supplemental Orders or Designated Retail Orders) in Tape C, 
A and B securities, respectively, that provide liquidity. Currently, 
the credit is provided to a member (i) with shares of liquidity 
accessed in all securities through one or more of its Nasdaq Market 
Center MPIDs that represent more than 0.65% of Consolidated Volume 
during the month, and (ii) with shares of liquidity provided in all 
securities through one or more of its Nasdaq Market Center MPIDs that 
represent more than 0.10% of Consolidated Volume during the month. The 
Exchange is proposing to decrease the level of Consolidated Volume 
under (i) of the tier from more than 0.65% to more than 0.50% and 
increase the level of Consolidated Volume under (ii) of the tier from 
more than 0.10% to more than 0.175%.
Decreased Credit
    The Exchange is proposing to decrease a credit under Sections 
118(a)(1), (2) and (3) available to members for displayed quotes/orders 
(other than Supplemental Orders or Designated Retail Orders) in Tape C, 
A and B securities, respectively, that provide liquidity. Currently, 
the

[[Page 23107]]

Exchange provides a $0.0028 per share executed credit to a member with 
shares of liquidity provided in the Opening and Closing Crosses, 
excluding Market-on-Close, Limit-on-Close (other than an Limit-on-Close 
Order entered between 3:50 p.m. ET and immediately prior to 3:55 p.m. 
ET), Market-on-Open, Limit-on-Open, Good-til-Cancelled, and Immediate-
or-Cancel orders, through one or more of its Nasdaq Market Center MPIDs 
that represent more than 0.01% of Consolidated Volume during the month. 
The Exchange is proposing to reduce the credit available from $0.0028 
per share executed to $0.0027 per share executed.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\8\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\9\ 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.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4) and (5).
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    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.'' \10\
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    \10\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
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    Likewise, in NetCoalition v. Securities and Exchange Commission 
\11\ (``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.\12\ 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.'' \13\
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    \11\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \12\ See NetCoalition, at 534-535.
    \13\ Id. at 537.
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    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'. . . .'' \14\
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    \14\ 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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    As a general principle, the Exchange chooses to offer credits to 
members in return for market improving behavior. Equity 7, Section 
118(a) sets forth the various credits available to members, which 
require a member to significantly contribute to market quality by 
providing certain levels of Consolidated Volume through one or more of 
its Nasdaq Market Center MPIDs, volume on NOM, as well as other market-
improving activity. The three new credit tiers are reflective of the 
Exchange's efforts to improve market quality in all three Tapes by 
providing members with differing levels of incentive in return for 
market-improving activity. The proposed increase to the qualification 
requirements of the amended credit tier is similarly reflective of the 
Exchange's desire to provide incentives to improve market quality, 
while also balancing the need to keep the incentives provided in-line 
with the market-improving activity required. From time to time, the 
Exchange must evaluate the effectiveness of its fee and credit tiers in 
relation to the criteria required to qualify for them, and to make 
adjustments to them when appropriate. In this case, the Exchange has 
determined that the credit tier qualification criteria may be increased 
without a material impact on the number of members that would qualify 
for the credit. Similarly, the decrease in the credit available is 
reflective of the Exchange's determination that the level of credit 
available may be decreased without a significant impact to the number 
of members that qualify for the credit.
First New Credit
    The Exchange believes that the proposed $0.0028 per share executed 
credit is reasonable because it is similar to existing credits 
available on the Exchange for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) that provide 
liquidity. As described above, the Exchange currently provides a 
$0.0028 per share executed credit tier under Sections 118(a)(1), (2) 
and (3).\15\ The Exchange also has a $0.0027 per share executed credit 
tier, which requires a member to have (i) shares of liquidity accessed 
in all securities through one or more of its Nasdaq Market Center MPIDs 
that represent more than 0.65% of Consolidated Volume during the month, 
and (ii) with shares of liquidity provided in all securities through 
one or more of its Nasdaq Market Center MPIDs that represent more than 
0.10% of Consolidated Volume during the month. Thus, the amount of the 
proposed credit is the same as other credits currently available to 
members, and there are other similar credit opportunities available to 
members with different qualification criteria should a member choose 
not to qualify for the proposed credit.
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    \15\ To qualify for the credit, a member must have shares of 
liquidity provided in the Opening and Closing Crosses, excluding 
Market-on-Close, Limit-on-Close (other than an Limit-on-Close Order 
entered between 3:50 p.m. ET and immediately prior to 3:55 p.m. ET), 
Market-on-Open, Limit-on-Open, Good-til-Cancelled, and Immediate-or-
Cancel orders, through one or more of its Nasdaq Market Center MPIDs 
that represent more than 0.01% of Consolidated Volume during the 
month. See Equity 7, Section 118(a)(1), (2) and (3).
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    The Exchange believes that the proposed $0.0028 per share executed 
credit is an equitable allocation and is not unfairly discriminatory 
because the Exchange will apply the same credit to all similarly 
situated members. The qualification criteria of the proposed credit is 
set at a sufficiently high level to reflect the significant credit a 
member would receive if it qualified. Any member may elect to provide 
the levels of market activity required by the proposed credit's 
qualification criteria in order to receive the credit. If the member 
determines that the level of Consolidated Volume is too high, it has 
other opportunities to receive credits, which have different 
qualification criteria, as described above.
Second New Credit
    The Exchange believes that the proposed $0.0029 per share executed 
credit is reasonable because it is similar to existing credits 
available on the Exchange for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) that provide 
liquidity. For example, the Exchange currently provides a $0.0029 per 
share executed credit tier under Sections 118(a)(1), (2) and (3) 
provided to a

[[Page 23108]]

member with shares of liquidity provided in all securities through one 
or more of its Nasdaq Market Center MPIDs that represent more than 
0.60% of Consolidated Volume during the month. As described above, the 
Exchange also has a $0.0028 per share executed credit tier under 
Sections 118(a)(1), (2) and (3) with different qualification 
criteria.\16\ Thus, the amount of the proposed credit is the same as 
other credits currently available to members, and there are other 
similar credit opportunities available to members with different 
qualification criteria should a member choose not to qualify for the 
proposed credit.
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    \16\ Id.
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    The Exchange believes that the proposed $0.0029 per share executed 
credit is an equitable allocation and is not unfairly discriminatory 
because the Exchange will apply the same credit to all similarly 
situated members. The qualification criteria of the proposed credit is 
set at a sufficiently high level to reflect the significant credit a 
member would receive if it qualified. Any member may elect to provide 
the levels of market activity required by the proposed credit's 
qualification criteria in order to receive the credit. If the member 
determines that the level of Consolidated Volume is too high, or if it 
does not participate on NOM, it has other opportunities to receive 
similar credits, which require less Consolidated Volume as described 
above.
Third New Credit
    The Exchange believes that the proposed $0.0013 and $0.0019 per 
share executed credits are reasonable because they are similar to 
existing credits available on the Exchange for midpoint orders that 
provide liquidity. The Exchange currently provides a midpoint order 
credit of $0.0017 per share executed under Section 118(a)(1) and 
$0.0020 per share executed Sections 118(a)(2) and (3). To be eligible 
for these existing midpoint order credits, a member must provide an 
average daily volume of 3 million or more shares through midpoint 
orders during the month. The proposed new midpoint order credits are 
lower than the current credits described above because of the lower 
qualification criteria of the proposed credits.
    The Exchange believes that the proposed $0.0013 and $0.0019 per 
share executed credits are an equitable allocation and are not unfairly 
discriminatory because the Exchange will apply the same credit to all 
similarly situated members. The proposed criteria for the new midpoint 
credits requires members to execute a combined minimum volume of 1 
million shares comprising of midpoint orders provided and Midpoint 
Extended Life Orders executed, and to demonstrate an increase of 10% or 
more in midpoint orders provided and Midpoint Extended Life Orders 
executed through one or more of its Nasdaq Market Center MPIDs during 
the month over the month of April 2019. Thus, members are provided 
incentive to increase the overall level of midpoint orders and Midpoint 
Extended Life Orders transacted over its trading in April 2019, in turn 
improving liquidity in midpoint orders and Midpoint Extended Life 
Orders. The Exchange chose April 2019 because it is reflective of a 
member's most recent trading in midpoint orders and Midpoint Extended 
Life Orders, thereby setting a baseline for a member's midpoint order 
and Midpoint Extended Life Order trading prior to the credit's 
effectiveness. The Exchange believes that the qualification criteria of 
the proposed credit tiers is set at a sufficiently high level to 
reflect the significant credits a member would receive if it qualified. 
Any member may elect to provide the levels of market activity required 
by the proposed credit's qualification criteria in order to receive the 
credit. If the member determines that the level of shares of midpoint 
orders and Midpoint Extended Life Orders is too high, it has other 
opportunities to receive credits for midpoint orders, including the 
$0.0010 per share executed credit for all other midpoint orders under 
Section 118(a)(1) and the $0.0014 per share executed credit for all 
other midpoint orders under Sections 118(a)(2) and (3).
Amended Credit Tier Criteria
    The Exchange believes that the amount of the proposed amended 
credit tier is reasonable because the amount of the credit is remaining 
unchanged. The proposed changes to the qualification criteria are 
reasonable because the Exchange believes that an increase in the 
criteria should not decrease the number of members that will qualify 
for the credit. As described above, the Exchange must evaluate the 
effectiveness of its fee and credit tiers in relation to the criteria 
required to qualify for them, and to make adjustments to them when 
appropriate.
    The Exchange believes that the proposed amended credit 
qualification criteria is an equitable allocation and is not unfairly 
discriminatory because the Exchange will apply the same credit criteria 
to all members and provide the credit to all members that meet the 
qualification criteria, unless that member qualifies for a larger 
credit. The proposed qualification criteria of the credit is set at a 
sufficiently high level to reflect the significant credits a member 
would receive if it qualified. Any member may elect to provide the 
levels of market activity required by the proposed credit's 
qualification criteria in order to receive the credit. If the member 
determines that the level of Consolidated Volume is too high, it has 
other opportunities to receive credits, which require less Consolidated 
Volume.
Decreased Credit
    The Exchange believes that the proposed amended credit is 
reasonable because the amount of the credit given is the same as 
existing credits available on the Exchange for displayed quotes/orders 
(other than Supplemental Orders or Designated Retail Orders) that 
provide liquidity. For example, the Exchange provides a $0.0027 per 
share executed credit tier under Sections 118(a)(1), (2) and (3) 
available to a member with shares of liquidity provided in all 
securities through one or more of its Nasdaq Market Center MPIDs that 
represent more than 0.30% of Consolidated Volume during the month.
    The Exchange believes that the proposed amended credit is an 
equitable allocation and is not unfairly discriminatory because the 
Exchange will apply the same credit to all similarly situated members. 
The proposed qualification criteria of the proposed credit is set at a 
sufficiently high level to reflect the significant credits a member 
would receive if it qualified. Any member may elect to provide the 
levels of market activity required by the proposed credit's 
qualification criteria in order to receive the credit. If the member 
determines that the level of Consolidated Volume is too high, it has 
other opportunities to receive credits, which require less Consolidated 
Volume.

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

[[Page 23109]]

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 adopting new credit opportunities 
for members. Thus, the proposed change provides another opportunity for 
members to receive a credit based on their market-improving behavior 
and is reflective of the highly competitive market in which the 
Exchange operates. The new credit tiers may attract greater order flow 
to the Exchange, which would benefit all market participants on Nasdaq. 
The proposed amended criteria for an existing credit and proposed 
reduced credit are reflective of the need to periodically calibrate the 
criteria required to receive credits. The Exchange has limited 
resources with which to apply to credits. Given the competitive 
environment among exchanges and other trading venues, the Exchange must 
ensure that it is requiring the most beneficial market activity for a 
credit that is permitted in the competitive landscape for order flow. 
In this regard, the Exchange notes that other market venues are free to 
adopt the same or similar credits and incentives as a competitive 
response to this proposed change. Moreover, if the changes proposed 
herein are unattractive to market participants, it is likely that the 
Exchange will lose market share as a result and, conversely, if the 
proposal is successful at attracting greater volume to the Exchange 
other market venues are free to make similar changes as a competitive 
response. 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.\17\
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    \17\ 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 [email protected]. Please include 
File Number SR-NASDAQ-2019-036 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-2019-036. 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 website (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 website 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-NASDAQ-2019-036 and should be submitted 
on or before June 11, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10508 Filed 5-20-19; 8:45 am]
 BILLING CODE 8011-01-P
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