Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 114 and Equity 7, Section 118(a) of the Fee Schedule, 38414-38418 [2020-13770]

Download as PDF 38414 Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Notices Securities and OTC Equity Securities. In addition, all national securities exchanges and FINRA are proposing these amendments to their Compliance Rules. Therefore, this is not a competitive rule filing, and, therefore, it does not impose a burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act 37 and subparagraph (f)(6) of Rule 19b–4 thereunder.38 A proposed rule change filed under Rule 19b–4(f)(6) 39 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),40 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative by June 22, 2020. The Commission believes that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest because it implements exemptive relief from the CAT NMS Plan granted by the Commission and facilitates the start of Industry Member reporting on June 22, 2020. In addition, as noted by the Exchange, the proposed rule change is based on a filing recently approved by the Commission.41 Accordingly, the Commission waives 37 15 U.S.C. 78s(b)(3)(A)(iii). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires a self-regulatory organization to give the Commission written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 39 17 CFR 240.19b–4(f)(6). 40 17 CFR 240.19b–4(f)(6)(iii). 41 See Securities Exchange Act Release No. 89108 (June 19, 2020). jbell on DSKJLSW7X2PROD with NOTICES 38 17 VerDate Sep<11>2014 19:42 Jun 25, 2020 Jkt 250001 the 30-day operative delay and designates the proposed rule change operative as of June 22, 2020.42 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– BOX–2020–24 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–BOX–2020–24. 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 42 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 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–BOX–2020–24 and should be submitted on or before July 17, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.43 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–13771 Filed 6–25–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89115; File No. SR– NASDAQ–2020–030] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 114 and Equity 7, Section 118(a) of the Fee Schedule June 22, 2020. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 10, 2020, 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 Equity 7, Section 114(d) to add a Qualified Market Maker (‘‘QMM’’) tier, and Section 118(a) to add several credits for displayed orders/quotes that provide liquidity to the Exchange. The text of the proposed rule change is available on the Exchange’s website at https://nasdaq.cchwallstreet.com/, at the 43 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Notices principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change jbell on DSKJLSW7X2PROD with NOTICES 1. Purpose The Exchange proposes to amend the Qualified Market Maker (‘‘QMM’’) tiers pursuant to Equity 7, Section 114 and also to amend the schedule of credits it provides to member organizations, pursuant to Equity 7, Section 118(a), in two respects. The QMM tier rebate provides a tier rebate to QMMs with respect to displayed orders (other than a Designated Retail Order 3) in securities priced at $1 or more per share that provide liquidity and are for securities listed on NYSE (Tape A), Nasdaq (Tape C) or securities listed on exchanges other than Nasdaq and NYSE (Tape B). Currently, the Exchange provides a $0.0001 per share executed credit when a QMM executes shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent above 0.70% up to, and including, 0.90% of Consolidated Volume 4 during the month. The QMM may receive a $0.0002 per share executed credit if the QMM executes shares of liquidity provided in all securities through one or more of its 3 As defined in Equity 7, Section 118, a ‘‘Designated Retail Order’’ is an agency or riskless principal order that meets the criteria of FINRA Rule 5320.03 and that originates from a natural person and is submitted to Nasdaq by a member that designates it pursuant to this section, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. 4 As used in Equity 7, Section 118(a), the term ‘‘Consolidated Volume’’ means the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. VerDate Sep<11>2014 19:42 Jun 25, 2020 Jkt 250001 Nasdaq Market Center MPIDs that represent above 0.90% of Consolidated Volume during the month. The Exchange proposes to provide a $0.00025 per share executed credit to a QMM that (i) executes shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent above 1.25% of Consolidated Volume during the month; (ii) quotes at the NBBO 5 at least 25% of the time during the month during regular market hours in an average of at least 2,700 symbols per day; (iii) quotes at the NBBO at least 25% of the time during the month during regular market hours in an average of at least 1,200 symbols in securities in Tape A per day; and (iv) executes shares of liquidity provided in securities in Tape A through one or more of its Nasdaq Market Center MPIDs that represent an increase of at least 0.50% of Consolidated Volume relative to May 2020. The Exchange notes that this new QMM rebate is not cumulative. That is, a QMM may only qualify for one of the three tiers in any given month. The Exchange also proposes to include the proposed Tier 3 in the $0.0029 per share executed fee charged to a QMM for orders in securities listed on exchanges other than Nasdaq priced at $1 or more per share that access liquidity on the Nasdaq Market Center if the QMM has a combined Consolidated Volume (adding and removing liquidity) of at least 3.7% and MOC/LOC volume greater than 0.25% of Consolidated Volume. Additionally, the Exchange proposes to amend in two respects, its schedule of credits, as set forth in Equity 7, Section 118, which it provides to members for displayed quotes/orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity. First, for orders in securities in each of Tapes A, B, and C, the Exchange proposes to provide a $0.00305 per share executed credit 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 1.20% of Consolidated Volume during the month, 5 A member is considered to be quoting at the NBBO if one of its MPIDs has a displayed order (other than a Designated Retail Order) at either the national best bid or the national best offer or both the national best bid and offer. On a daily basis, Nasdaq will determine the number of securities in which each of a member’s MPIDs satisfied the 25% NBBO requirement. Nasdaq will aggregate all of a member’s MPIDs to determine the number of securities for purposes of the 25% NBBO requirement. To qualify the QMM must meet the requirement for an average of the symbols specified per day over the course of the month. PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 38415 and (ii) with at least 0.25% of Consolidated Volume during the month that sets the NBBO. Second, for adding liquidity in securities in Tape A, the Exchange proposes to provide a new $0.00005 per share executed supplemental credit to a member that, through one or more of its Nasdaq Market Center MPIDs: (i) Adds liquidity in securities in Tape A that represents at least 0.75% of Consolidated Volume during the month; and (ii) adds liquidity in securities in Tape B of at least 0.60% of Consolidated Volume during the month. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,7 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 proposal is also consistent with Section 11A of the Act relating to the establishment of the national market system for securities. The Proposal Is Reasonable The Exchange’s proposed changes to its schedule of credits are reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for equity securities transaction services that constrain its pricing determinations in that market. The fact that this market is competitive has long been recognized by the courts. In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: ‘‘[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’. . . .’’ 8 The Commission and the courts have repeatedly expressed their preference 6 15 U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 8 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782–83 (December 9, 2008) (SR–NYSEArca–2006–21)). 7 15 E:\FR\FM\26JNN1.SGM 26JNN1 jbell on DSKJLSW7X2PROD with NOTICES 38416 Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Notices 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.’’ 9 Numerous indicia demonstrate the competitive nature of this market. For example, clear substitutes to the Exchange exist in the market for equity security transaction services. The Exchange is only one of several equity venues to which market participants may direct their order flow. Competing equity exchanges offer similar tiered pricing structures to that of the Exchange, including schedules of rebates and fees that apply based upon members achieving certain volume thresholds. Within this environment, market participants can freely and often do shift their order flow among the Exchange and competing venues in response to changes in their respective pricing schedules. As such, the proposal represents a reasonable attempt by the Exchange to increase its liquidity and market share relative to its competitors. In particular, the Exchange proposes to add an additional QMM tier rebate that would provide a $0.00025 per share credit with the goal of increasing the overall incentive to QMMs to further increase their liquidity adding activity on the Exchange, and more specifically, in securities in Tape A. The proposal will also provide an incentive for QMMs to add liquidity at the NBBO in more securities, which is intended to improve market quality. To the extent that this proposed change leads to an increase in overall liquidity activity on the Exchange and more competitive pricing, this will improve the quality of the Exchange’s market and increase its attractiveness to existing and prospective participants. Additionally, the Exchange proposes to add QMMs that meet the criteria for Tier 3 to the $0.0029 per share executed fee charged for orders in securities listed on exchanges other than Nasdaq priced at $1 or more per share that access liquidity on the Nasdaq Market Center. It is reasonable to assess the fee to QMMs that meet the Tier 3 9 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). VerDate Sep<11>2014 19:42 Jun 25, 2020 Jkt 250001 requirements because QMMs that meet the Tier 2 requirements are already charged the fee, and any QMM that satisfies the Tier 3 requirement has also met the Tier 2 requirement. Similarly, the Exchange believes that it is reasonable to provide a $0.00305 per share executed credit to a member that adds liquidity in each of Tapes A, B, and C, and to provide a $0.00005 per share executed supplemental credit to a member that adds liquidity in Tape A. The proposed changes are intended to incentivize members to increase liquidity and set the NBBO, which will further improve overall market quality. The Exchange notes that those participants that are dissatisfied with the proposed credits are free to shift their order flow to competing venues. The Proposal Is an Equitable Allocation of Fees and Credits The Exchange believes its proposal will allocate the proposed credits fairly among market participants. The proposed amendments to Equity 7, Section 114 will give a QMM the opportunity to receive a higher credit for adding a higher volume of liquidity and quoting at the NBBO in more securities. Additionally, it is reasonable to charge the same fee to QMMs that meet the Tier 2 and Tier 3 requirements because all QMMs that meet the Tier 3 requirements also meet the Tier 2 requirements and Tier 2 is currently assessed the fee. The proposed amendments in Equity 7, Section 118 will allow members to qualify for a credit by adding liquidity and setting the NBBO. Additionally, it will provide a supplemental credit to members for adding liquidity in securities in Tape A. It is equitable for the Exchange to add additional incentives for members to receive a credit when their orders add liquidity to the Exchange as a means of incentivizing increased liquidity adding activity. An increase in overall liquidity on the Exchange will improve the quality of the Exchange’s market and increase its attractiveness to existing and prospective participants. Furthermore, it is equitable for the Exchange to propose credit for participants with orders in securities in Tapes A due to the Exchange’s goal to specifically promote increased liquidity in securities in Tape A. An increase in overall liquidity adding activity on the Exchange will improve the quality of the Nasdaq market and increase its attractiveness to existing and prospective participants. Similarly, incentivizing members to add liquidity at the NBBO in securities in Tape A under Tier 3 of the QMM program will PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 increase the overall liquidity and robustness of the Exchange’s order book and increase its attractiveness to existing and prospective participants. Any participant that is dissatisfied with the proposed new credits is free to shift their order flow to competing venues that provide more favorable pricing or less stringent qualifying criteria. The Proposal Is not Unfairly Discriminatory The Exchange believes that the proposal is not unfairly discriminatory. As an initial matter, the Exchange believes that nothing about its volumebased tiered pricing model is inherently unfair; instead, it is a rational pricing model that is well-established and ubiquitous in today’s economy among firms in various industries—from cobranded credit cards to grocery stores to cellular telephone data plans—that use it to reward the loyalty of their best customers that provide high levels of business activity and incent other customers to increase the extent of their business activity. It is also a pricing model that the Exchange and its competitors have long employed with the assent of the Commission. It is fair because it incentivizes customer activity that increases liquidity, enhances price discovery, and improves the overall quality of the equity markets. The Exchange intends for the proposal to improve market quality for all members on the Exchange and by extension attract more liquidity to the market, thereby improving market wide quality and price discovery. Although a member’s orders in securities in Tape A will benefit most from the proposed supplemental credit, this result is fair insofar as an uptick in liquidity adding activity will help to improve market quality and the attractiveness of the Exchange’s equity market to all existing and prospective participants. Additionally, pricing by tape is not uncommon as competing exchanges offer similar pricing structures.10 Finally, the Exchange notes that any participant that does not find the amended credits to be sufficiently attractive is free to shift its order flow to a competing venue. 10 See New York Stock Exchange Price List 2020, available at https://www.nyse.com/publicdocs/nyse/ markets/nyse/NYSE_Price_List.pdf; NYSE Arca Equities Fees and Charges, available at https:// www.nyse.com/publicdocs/nyse/markets/nyse-arca/ NYSE_Arca_Marketplace_Fees.pdf; CBOE BZX U.S. Equities Fee Schedule, available at https:// markets.cboe.com/us/equities/membership/fee_ schedule/bzx/; CBOE EDGX U.S. Equities Fee Schedule, available at https://markets.cboe.com/us/ equities/membership/fee_schedule/edgx/. E:\FR\FM\26JNN1.SGM 26JNN1 Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that its proposals will place any category of Exchange participant at a competitive disadvantage. The Exchange’s proposal to modify its QMM program will not burden intramarket competition because the QMM program, as modified, will continue to provide all members with an opportunity to obtain credits for transactions if they improve the market by providing a minimum percentage of volume per month and quoting a certain volume at the NBBO, which the Exchange believes will improve market quality. Additionally, the proposed credits for providing liquidity and setting the NBBO will not place any burden on intramarket competition because all members will have the opportunity to obtain the additional proposed credits if the member increases liquidity and sets the NBBO, which will further improve overall market quality. Similarly, the proposed supplemental credit will not place any burden on intramarket competition because all members will have the opportunity to obtain the proposed supplemental credit, which will improve overall market quality. Moreover, including QMMs that qualify for Tier 3 in the $0.0029 per share executed fee charged to a QMM for orders in securities listed on exchanges other than Nasdaq priced at $1 or more per share that access liquidity on the Nasdaq Market Center will not place any burden on intramarket competition because members are free to trade on other venues to the extent they believe that fees imposed are not attractive. Furthermore, all members of the Exchange will benefit from an increase in the addition of liquidity by those that choose to meet the criteria for each of the proposed credits. Members may grow their businesses so that they have the capacity to receive credits for providing liquidity. Moreover, members are free to trade on other venues to the extent they believe that the credits provided are not attractive. As one can observe by looking at any market share chart, price competition between exchanges is fierce, with liquidity and market share moving freely between exchanges in reaction to fee and credit changes. The Exchange notes that the tier structure is consistent with brokerdealer fee practices as well as the other industries, as described above. Intermarket Competition Addressing whether the proposed credits could impose a burden on competition on other SROs that is not VerDate Sep<11>2014 19:42 Jun 25, 2020 Jkt 250001 necessary or appropriate, the Exchange believes that its proposed modifications to its schedule of credits will not impose a burden on competition because the Exchange’s execution services are completely voluntary and subject to extensive competition both from the other 12 live exchanges and from off-exchange venues, which include 34 alternative trading systems that trade national market system stock. 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 credits to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which credit changes in this market may impose any burden on competition is extremely limited. The proposed credits for adding liquidity are reflective of this competition because even as one of the largest U.S. equities exchanges by volume, the Exchange has less than 20% market share, which in most markets could hardly be categorized as having enough market power to burden competition. Moreover, as noted above, price competition between exchanges is fierce, with liquidity and market share moving freely between exchanges in reaction to fee and credit changes. This is in addition to free flow of order flow to and among off-exchange venues which comprised more than 42% of industry volume for the month of May 2020. The Exchange intends for the proposed changes, which add qualifying credits for its QMMs and other members, to increase member incentives to engage in the addition of liquidity on the Exchange. These changes are procompetitive in that the Exchange intends for them to increase liquidity on the Exchange and thereby render the Exchange a more attractive and vibrant venue to market participants. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 38417 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 Pursuant to Section 19(b)(3)(A)(ii) of the Act,11 the Exchange has designated this proposal as establishing or changing a due, fee, or other charge imposed by the self-regulatory organization on any person, whether or not the person is a member of the self-regulatory organization, which renders the proposed rule change effective upon filing. 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–2020–030 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–2020–030. 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 11 15 E:\FR\FM\26JNN1.SGM U.S.C. 78s(b)(3)(A)(ii). 26JNN1 38418 Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Notices 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–2020–030 and should be submitted on or before July 17, 2020. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–13770 Filed 6–25–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–89114; File No. SR–BX– 2020–011] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118 jbell on DSKJLSW7X2PROD with NOTICES June 22, 2020. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on June 10, 2020, Nasdaq BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III, below, which Items have been 12 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 19:42 Jun 25, 2020 Jkt 250001 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 make certain changes to the Exchange’s transaction fees, at Equity 7, Section 118(a). The text of the proposed rule change is available on the Exchange’s website at https://nasdaqbx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange operates on the ‘‘takermaker’’ model, whereby it generally pays credits to members that take liquidity and charges fees to members that provide liquidity. Currently, the Exchange has a schedule, at Equity 7, Section 118(a), which consists of several different credits that it provides for orders in securities priced at $1 or more per share that access liquidity on the Exchange and several different charges that it assesses for orders in such securities that add liquidity on the Exchange. Over the course of the last few months, the Exchange has experimented with various reformulations of its pricing schedule with the aim of increasing activity on the Exchange, improving market quality, and increasing market share.3 Although 3 See e.g., Securities Exchange Act Release No. 34–87271 (October 10, 2019), 84 FR 55621 (October 17, 2019) (SR–BX–2019–035); Securities Exchange Act Release No. 34–87093 (September 24, 2019), 84 FR 57530 (October 25, 2019) (SR–BX–2019–031); Securities Exchange Act Release No. 34–86120 (June 17, 2019); 84 FR 29270 (June 21, 2019) (SR– PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 these changes have met with some success, the Exchange has yet to achieve the results it desires. Accordingly, the Exchange proposes to again revise its pricing schedule, in a further attempt to improve the attractiveness of the market to new and existing participants. The Exchange proposes to amend its existing $0.0028 per share executed charge for non-displayed orders (other than orders with Midpoint pegging) entered by a member that adds liquidity equal to or exceeding 0.25% of total Consolidated Volume 4 during a month. The Exchange proposes to reduce the percentage of total Consolidated Volume needed to qualify for this charge, from 0.25% to 0.225% of total Consolidated Volume. Additionally, the Exchange proposes to allow a member to achieve the new volume threshold by including the removal of liquidity. By easing the volume requirements for this charge, which represents a discount off of the standard $0.0030 per share executed charge (for all other non-displayed orders), the Exchange intends to increase the number of members that seek to and do qualify for it, and thereby provide incentives for members to add liquidity to the Exchange. The proposed changes to ease the qualifying volume threshold for obtaining the $0.0028 per share executed charge and to include removing liquidity in the calculation of the new volume threshold, will benefit participants that are net adders and net takers of liquidity by enabling them to more easily qualify for the existing $0.0028 per share executed discounted charge. Those participants that act as net adders of liquidity to the Exchange will benefit directly from the proposed change that would apply to orders that add liquidity to the Exchange. Those participants that act as net removers of liquidity will also benefit from the proposed amendment as their liquidity removal activity will be tied to achieving the $0.0028 discounted charge. Any ensuing increase in liquidity adding and removing activity BX–2019–019); Securities Exchange Act Release No. 34–85912 (May 22, 2019); 84 FR 24834 (May 29, 2019) (SR–BX–2019–013). 4 As used in this rule, the term ‘‘Consolidated Volume’’ shall mean the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. For purposes of calculating Consolidated Volume and the extent of a member’s trading activity the date of the annual reconstitution of the Russell Investments Indexes shall be excluded from both total Consolidated Volume and the member’s trading activity. As used in this rule, ‘‘price improvement’’ shall mean instances when the accepted price of an order differs from the executed price of an order. E:\FR\FM\26JNN1.SGM 26JNN1

Agencies

[Federal Register Volume 85, Number 124 (Friday, June 26, 2020)]
[Notices]
[Pages 38414-38418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13770]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89115; File No. SR-NASDAQ-2020-030]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Equity 7, Section 114 and Equity 7, Section 118(a) of the Fee 
Schedule

June 22, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 10, 2020, 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.
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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 
Equity 7, Section 114(d) to add a Qualified Market Maker (``QMM'') 
tier, and Section 118(a) to add several credits for displayed orders/
quotes that provide liquidity to the Exchange.
    The text of the proposed rule change is available on the Exchange's 
website at https://nasdaq.cchwallstreet.com/, at the

[[Page 38415]]

principal office of the Exchange, and at the Commission's Public 
Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend the Qualified Market Maker (``QMM'') 
tiers pursuant to Equity 7, Section 114 and also to amend the schedule 
of credits it provides to member organizations, pursuant to Equity 7, 
Section 118(a), in two respects.
    The QMM tier rebate provides a tier rebate to QMMs with respect to 
displayed orders (other than a Designated Retail Order \3\) in 
securities priced at $1 or more per share that provide liquidity and 
are for securities listed on NYSE (Tape A), Nasdaq (Tape C) or 
securities listed on exchanges other than Nasdaq and NYSE (Tape B). 
Currently, the Exchange provides a $0.0001 per share executed credit 
when a QMM executes shares of liquidity provided in all securities 
through one or more of its Nasdaq Market Center MPIDs that represent 
above 0.70% up to, and including, 0.90% of Consolidated Volume \4\ 
during the month. The QMM may receive a $0.0002 per share executed 
credit if the QMM executes shares of liquidity provided in all 
securities through one or more of its Nasdaq Market Center MPIDs that 
represent above 0.90% of Consolidated Volume during the month.
---------------------------------------------------------------------------

    \3\ As defined in Equity 7, Section 118, a ``Designated Retail 
Order'' is an agency or riskless principal order that meets the 
criteria of FINRA Rule 5320.03 and that originates from a natural 
person and is submitted to Nasdaq by a member that designates it 
pursuant to this section, provided that no change is made to the 
terms of the order with respect to price or side of market and the 
order does not originate from a trading algorithm or any other 
computerized methodology.
    \4\ As used in Equity 7, Section 118(a), the term ``Consolidated 
Volume'' means the total consolidated volume reported to all 
consolidated transaction reporting plans by all exchanges and trade 
reporting facilities during a month in equity securities, excluding 
executed orders with a size of less than one round lot.
---------------------------------------------------------------------------

    The Exchange proposes to provide a $0.00025 per share executed 
credit to a QMM that (i) executes shares of liquidity provided in all 
securities through one or more of its Nasdaq Market Center MPIDs that 
represent above 1.25% of Consolidated Volume during the month; (ii) 
quotes at the NBBO \5\ at least 25% of the time during the month during 
regular market hours in an average of at least 2,700 symbols per day; 
(iii) quotes at the NBBO at least 25% of the time during the month 
during regular market hours in an average of at least 1,200 symbols in 
securities in Tape A per day; and (iv) executes shares of liquidity 
provided in securities in Tape A through one or more of its Nasdaq 
Market Center MPIDs that represent an increase of at least 0.50% of 
Consolidated Volume relative to May 2020. The Exchange notes that this 
new QMM rebate is not cumulative. That is, a QMM may only qualify for 
one of the three tiers in any given month.
---------------------------------------------------------------------------

    \5\ A member is considered to be quoting at the NBBO if one of 
its MPIDs has a displayed order (other than a Designated Retail 
Order) at either the national best bid or the national best offer or 
both the national best bid and offer. On a daily basis, Nasdaq will 
determine the number of securities in which each of a member's MPIDs 
satisfied the 25% NBBO requirement. Nasdaq will aggregate all of a 
member's MPIDs to determine the number of securities for purposes of 
the 25% NBBO requirement. To qualify the QMM must meet the 
requirement for an average of the symbols specified per day over the 
course of the month.
---------------------------------------------------------------------------

    The Exchange also proposes to include the proposed Tier 3 in the 
$0.0029 per share executed fee charged to a QMM for orders in 
securities listed on exchanges other than Nasdaq priced at $1 or more 
per share that access liquidity on the Nasdaq Market Center if the QMM 
has a combined Consolidated Volume (adding and removing liquidity) of 
at least 3.7% and MOC/LOC volume greater than 0.25% of Consolidated 
Volume.
    Additionally, the Exchange proposes to amend in two respects, its 
schedule of credits, as set forth in Equity 7, Section 118, which it 
provides to members for displayed quotes/orders (other than 
Supplemental Orders or Designated Retail Orders) that provide 
liquidity. First, for orders in securities in each of Tapes A, B, and 
C, the Exchange proposes to provide a $0.00305 per share executed 
credit 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 1.20% of Consolidated Volume during the month, and (ii) with 
at least 0.25% of Consolidated Volume during the month that sets the 
NBBO. Second, for adding liquidity in securities in Tape A, the 
Exchange proposes to provide a new $0.00005 per share executed 
supplemental credit to a member that, through one or more of its Nasdaq 
Market Center MPIDs: (i) Adds liquidity in securities in Tape A that 
represents at least 0.75% of Consolidated Volume during the month; and 
(ii) adds liquidity in securities in Tape B of at least 0.60% of 
Consolidated Volume during the month.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ 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 proposal is also consistent with 
Section 11A of the Act relating to the establishment of the national 
market system for securities.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Proposal Is Reasonable
    The Exchange's proposed changes to its schedule of credits are 
reasonable in several respects. As a threshold matter, the Exchange is 
subject to significant competitive forces in the market for equity 
securities transaction services that constrain its pricing 
determinations in that market. The fact that this market is competitive 
has long been recognized by the courts. In NetCoalition v. Securities 
and Exchange Commission, the D.C. Circuit stated as follows: ``[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'. . . .'' \8\
---------------------------------------------------------------------------

    \8\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their 
preference

[[Page 38416]]

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.'' \9\
---------------------------------------------------------------------------

    \9\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
equity security transaction services. The Exchange is only one of 
several equity venues to which market participants may direct their 
order flow. Competing equity exchanges offer similar tiered pricing 
structures to that of the Exchange, including schedules of rebates and 
fees that apply based upon members achieving certain volume thresholds.
    Within this environment, market participants can freely and often 
do shift their order flow among the Exchange and competing venues in 
response to changes in their respective pricing schedules. As such, the 
proposal represents a reasonable attempt by the Exchange to increase 
its liquidity and market share relative to its competitors.
    In particular, the Exchange proposes to add an additional QMM tier 
rebate that would provide a $0.00025 per share credit with the goal of 
increasing the overall incentive to QMMs to further increase their 
liquidity adding activity on the Exchange, and more specifically, in 
securities in Tape A. The proposal will also provide an incentive for 
QMMs to add liquidity at the NBBO in more securities, which is intended 
to improve market quality. To the extent that this proposed change 
leads to an increase in overall liquidity activity on the Exchange and 
more competitive pricing, this will improve the quality of the 
Exchange's market and increase its attractiveness to existing and 
prospective participants. Additionally, the Exchange proposes to add 
QMMs that meet the criteria for Tier 3 to the $0.0029 per share 
executed fee charged for orders in securities listed on exchanges other 
than Nasdaq priced at $1 or more per share that access liquidity on the 
Nasdaq Market Center. It is reasonable to assess the fee to QMMs that 
meet the Tier 3 requirements because QMMs that meet the Tier 2 
requirements are already charged the fee, and any QMM that satisfies 
the Tier 3 requirement has also met the Tier 2 requirement.
    Similarly, the Exchange believes that it is reasonable to provide a 
$0.00305 per share executed credit to a member that adds liquidity in 
each of Tapes A, B, and C, and to provide a $0.00005 per share executed 
supplemental credit to a member that adds liquidity in Tape A. The 
proposed changes are intended to incentivize members to increase 
liquidity and set the NBBO, which will further improve overall market 
quality.
    The Exchange notes that those participants that are dissatisfied 
with the proposed credits are free to shift their order flow to 
competing venues.
The Proposal Is an Equitable Allocation of Fees and Credits
    The Exchange believes its proposal will allocate the proposed 
credits fairly among market participants. The proposed amendments to 
Equity 7, Section 114 will give a QMM the opportunity to receive a 
higher credit for adding a higher volume of liquidity and quoting at 
the NBBO in more securities. Additionally, it is reasonable to charge 
the same fee to QMMs that meet the Tier 2 and Tier 3 requirements 
because all QMMs that meet the Tier 3 requirements also meet the Tier 2 
requirements and Tier 2 is currently assessed the fee.
    The proposed amendments in Equity 7, Section 118 will allow members 
to qualify for a credit by adding liquidity and setting the NBBO. 
Additionally, it will provide a supplemental credit to members for 
adding liquidity in securities in Tape A. It is equitable for the 
Exchange to add additional incentives for members to receive a credit 
when their orders add liquidity to the Exchange as a means of 
incentivizing increased liquidity adding activity. An increase in 
overall liquidity on the Exchange will improve the quality of the 
Exchange's market and increase its attractiveness to existing and 
prospective participants. Furthermore, it is equitable for the Exchange 
to propose credit for participants with orders in securities in Tapes A 
due to the Exchange's goal to specifically promote increased liquidity 
in securities in Tape A. An increase in overall liquidity adding 
activity on the Exchange will improve the quality of the Nasdaq market 
and increase its attractiveness to existing and prospective 
participants. Similarly, incentivizing members to add liquidity at the 
NBBO in securities in Tape A under Tier 3 of the QMM program will 
increase the overall liquidity and robustness of the Exchange's order 
book and increase its attractiveness to existing and prospective 
participants.
    Any participant that is dissatisfied with the proposed new credits 
is free to shift their order flow to competing venues that provide more 
favorable pricing or less stringent qualifying criteria.
The Proposal Is not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. As an initial matter, the Exchange believes that 
nothing about its volume-based tiered pricing model is inherently 
unfair; instead, it is a rational pricing model that is well-
established and ubiquitous in today's economy among firms in various 
industries--from co-branded credit cards to grocery stores to cellular 
telephone data plans--that use it to reward the loyalty of their best 
customers that provide high levels of business activity and incent 
other customers to increase the extent of their business activity. It 
is also a pricing model that the Exchange and its competitors have long 
employed with the assent of the Commission. It is fair because it 
incentivizes customer activity that increases liquidity, enhances price 
discovery, and improves the overall quality of the equity markets.
    The Exchange intends for the proposal to improve market quality for 
all members on the Exchange and by extension attract more liquidity to 
the market, thereby improving market wide quality and price discovery. 
Although a member's orders in securities in Tape A will benefit most 
from the proposed supplemental credit, this result is fair insofar as 
an uptick in liquidity adding activity will help to improve market 
quality and the attractiveness of the Exchange's equity market to all 
existing and prospective participants. Additionally, pricing by tape is 
not uncommon as competing exchanges offer similar pricing 
structures.\10\
---------------------------------------------------------------------------

    \10\ See New York Stock Exchange Price List 2020, available at 
https://www.nyse.com/publicdocs/nyse/markets/nyse/NYSE_Price_List.pdf; NYSE Arca Equities Fees and Charges, available 
at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Marketplace_Fees.pdf; CBOE BZX U.S. Equities Fee Schedule, 
available at https://markets.cboe.com/us/equities/membership/fee_schedule/bzx/; CBOE EDGX U.S. Equities Fee Schedule, available 
at https://markets.cboe.com/us/equities/membership/fee_schedule/edgx/.
---------------------------------------------------------------------------

    Finally, the Exchange notes that any participant that does not find 
the amended credits to be sufficiently attractive is free to shift its 
order flow to a competing venue.

[[Page 38417]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that its proposals will place any 
category of Exchange participant at a competitive disadvantage. The 
Exchange's proposal to modify its QMM program will not burden 
intramarket competition because the QMM program, as modified, will 
continue to provide all members with an opportunity to obtain credits 
for transactions if they improve the market by providing a minimum 
percentage of volume per month and quoting a certain volume at the 
NBBO, which the Exchange believes will improve market quality. 
Additionally, the proposed credits for providing liquidity and setting 
the NBBO will not place any burden on intramarket competition because 
all members will have the opportunity to obtain the additional proposed 
credits if the member increases liquidity and sets the NBBO, which will 
further improve overall market quality. Similarly, the proposed 
supplemental credit will not place any burden on intramarket 
competition because all members will have the opportunity to obtain the 
proposed supplemental credit, which will improve overall market 
quality. Moreover, including QMMs that qualify for Tier 3 in the 
$0.0029 per share executed fee charged to a QMM for orders in 
securities listed on exchanges other than Nasdaq priced at $1 or more 
per share that access liquidity on the Nasdaq Market Center will not 
place any burden on intramarket competition because members are free to 
trade on other venues to the extent they believe that fees imposed are 
not attractive.
    Furthermore, all members of the Exchange will benefit from an 
increase in the addition of liquidity by those that choose to meet the 
criteria for each of the proposed credits. Members may grow their 
businesses so that they have the capacity to receive credits for 
providing liquidity. Moreover, members are free to trade on other 
venues to the extent they believe that the credits provided are not 
attractive. As one can observe by looking at any market share chart, 
price competition between exchanges is fierce, with liquidity and 
market share moving freely between exchanges in reaction to fee and 
credit changes. The Exchange notes that the tier structure is 
consistent with broker-dealer fee practices as well as the other 
industries, as described above.
Intermarket Competition
    Addressing whether the proposed credits could impose a burden on 
competition on other SROs that is not necessary or appropriate, the 
Exchange believes that its proposed modifications to its schedule of 
credits will not impose a burden on competition because the Exchange's 
execution services are completely voluntary and subject to extensive 
competition both from the other 12 live exchanges and from off-exchange 
venues, which include 34 alternative trading systems that trade 
national market system stock. 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 credits to remain competitive with other exchanges and with 
alternative trading systems that have been exempted from compliance 
with the statutory standards applicable to exchanges. Because 
competitors are free to modify their own credits in response, and 
because market participants may readily adjust their order routing 
practices, the Exchange believes that the degree to which credit 
changes in this market may impose any burden on competition is 
extremely limited.
    The proposed credits for adding liquidity are reflective of this 
competition because even as one of the largest U.S. equities exchanges 
by volume, the Exchange has less than 20% market share, which in most 
markets could hardly be categorized as having enough market power to 
burden competition. Moreover, as noted above, price competition between 
exchanges is fierce, with liquidity and market share moving freely 
between exchanges in reaction to fee and credit changes. This is in 
addition to free flow of order flow to and among off-exchange venues 
which comprised more than 42% of industry volume for the month of May 
2020.
    The Exchange intends for the proposed changes, which add qualifying 
credits for its QMMs and other members, to increase member incentives 
to engage in the addition of liquidity on the Exchange. These changes 
are pro-competitive in that the Exchange intends for them to increase 
liquidity on the Exchange and thereby render the Exchange a more 
attractive and vibrant venue to market participants.
    In sum, if the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. Accordingly, the Exchange does not believe that the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.

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

    No written comments were either solicited or received.

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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\11\ the Exchange 
has designated this proposal as establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization on any person, 
whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
---------------------------------------------------------------------------

    \11\ 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-2020-030 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-2020-030. 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

[[Page 38418]]

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-2020-030 and should be submitted on or before July 17, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13770 Filed 6-25-20; 8:45 am]
BILLING CODE 8011-01-P
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