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
<![CDATA[
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]
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\7\ See Rule 4702(b)(14).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f(b).
\9\ 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.'' \10\
---------------------------------------------------------------------------
\10\ 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
\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\
---------------------------------------------------------------------------
\11\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
\12\ See NetCoalition, at 534-535.
\13\ 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'. . . .'' \14\
---------------------------------------------------------------------------
\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)).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\16\ Id.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (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\
---------------------------------------------------------------------------
\18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-10508 Filed 5-20-19; 8:45 am]
BILLING CODE 8011-01-P
