Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule at Equity 7, Section 3, 28418-28420 [2021-11076]
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Federal Register / Vol. 86, No. 100 / Wednesday, May 26, 2021 / Notices
investors, or otherwise in furtherance of
the purposes of the Act.
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
For the Commission, pursuant to delegated
authority.16
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–11084 Filed 5–25–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91960; File No. SR–Phlx–
2021–31]
• 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–
MSRB–2021–03 on the subject line.
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Pricing Schedule at Equity
7, Section 3
Paper Comments
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 12,
2021, Nasdaq PHLX LLC (‘‘Phlx’’ 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.
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–MSRB–2021–03. 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 MSRB. 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–MSRB–2021–03 and should
be submitted on or before June 16, 2021.
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May 20, 2021.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s pricing schedule at Equity 7,
Section 3, as described further below.
The Exchange originally filed the
proposal pricing change on May 3, 2021
(SR–Phlx–2021–29). On May 12, 2021,
the Exchange withdrew that filing and
submitted this filing.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/rules, 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
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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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 its
pricing schedule, at Equity 7, Section 3,
to make a change to its fees for routing
of orders using the SCAR routing option
in all securities. Specifically, the
Exchange proposes to lower the $0.0025
per share executed credit that is given
to a member that enters an order in any
of the three tapes using the ‘‘SCAR’’
routing option 3 which ultimately
executes on Nasdaq BX (‘‘BX’’).
BX recently revised its pricing
schedule to lower its existing credits.4
Currently, all credits provided to
members on BX are lower than $0.0025
per share executed. As a result, the
Exchange is proposing to lower its
existing $0.0025 per share credit to
$0.0016 per share executed for SCAR
orders that execute on BX in order to
better align this amount with the credit
amount provided by BX on its fee
schedule.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,5 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,6 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Proposal Is Reasonable
The Exchange’s proposed changes to
its SCAR routing rebate are reasonable
in several respects. As a threshold
matter, the Exchange is subject to
significant competitive forces in the
market for equity securities transaction
3 Pursuant to Equity 4, Section 3315(a)(1)(A)(x),
‘‘SCAR’’ is a routing option under which orders will
check the System for available shares and
simultaneously route to BX and Nasdaq in
accordance with the System routing table. If shares
remain unexecuted after routing, they are posted on
the book or cancelled. Once on the book, should the
order subsequently be locked or crossed by another
market center, the System will not route the order
to the locking or crossing market center.
4 Securities Exchange Act Release No. 91639
(April 22, 2021), 80 FR 22500, (April 28, 2021).
5 15 U.S.C. 78f(b).
6 15 U.S.C. 78f(b)(4) and (5).
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Federal Register / Vol. 86, No. 100 / Wednesday, May 26, 2021 / Notices
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 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’. . . .’’ 7
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.’’ 8
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.
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.
The Exchange believes it is reasonable
to lower the $0.0025 per share executed
credit that it provides to a member that
enters a SCAR routed order that
executes on BX because the proposal
will better align this credit with
corresponding credits that BX provides
to its own members that remove
liquidity from that exchange.9 The
7 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)).
8 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
9 See Nasdaq BX Equity 7 (Pricing Schedule),
available at https://listingcenter.nasdaq.com/
rulebook/phlx/rules/Phlx%20Equity%207 [sic].
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Exchange also believes that it is
appropriate to periodically reassess and
recalibrate its fees. In this instance,
better aligning the credits will help to
ensure that market participants will not
use the Exchange’s SCAR order routing
strategy solely to obtain a higher rebate
on orders that are routed and executed
on BX.
The Proposal Is an Equitable Allocation
of Credits and Not Unfairly
Discriminatory
The Exchange believes its proposal to
lower its credit for SCAR routed orders
that execute on BX to $0.0016 per share
executed credit is an equitable
allocation because the proposed
amended credit amount is better aligned
with the liquidity removal credits that
BX provides to its members.
Additionally, the proposal is not
unfairly discriminatory because the
proposed amended credit is available to
all members.
Any participant that is dissatisfied
with the proposals is free to shift their
order flow to competing venues that
provide more generous pricing or less
stringent qualifying criteria.
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.
Intramarket Competition
The Exchange does not believe that its
proposal will place any category of
Exchange participants at a competitive
disadvantage. The proposal will merely
ensure that the amount of the SCAR
credit is better aligned with the recently
lowered corresponding credits that BX
provides to its own members that
remove liquidity from that exchange.
As noted above, all members of the
Exchange will benefit from the
protection of the overall quality of the
equity market. Moreover, members are
free to trade on other venues to the
extent they believe that the proposed
credit amount is 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.
Intermarket Competition
The Exchange’s proposal is procompetitive in that the proposal will
result in competitive alignment between
the SCAR credit and the amounts of
liquidity removal credits that BX
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28419
provides to its own members that
remove liquidity from that exchange.
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
The foregoing rule change has become
effective pursuant to Section
19(b)(3)(A)(ii) of the Act.10
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) Necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
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–
Phlx–2021–31 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–Phlx–2021–31. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
10 15
E:\FR\FM\26MYN1.SGM
U.S.C. 78s(b)(3)(A)(ii).
26MYN1
28420
Federal Register / Vol. 86, No. 100 / Wednesday, May 26, 2021 / Notices
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–Phlx–2021–31 and should
be submitted on or before June 16, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–11076 Filed 5–25–21; 8:45 am]
BILLING CODE 8011–01–P
(‘‘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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade the shares of the following under
NYSE Arca Rule 8.200–E, Commentary
.02 (‘‘Trust Issued Receipts’’):
ConvexityShares Daily 1.5x SPIKES
Futures ETF. The proposed change is
available on the Exchange’s website at
www.nyse.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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91949; File No. SR–
NYSEArca–2021–28]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade the
Shares of ConvexityShares Daily 1.5x
SPIKES Futures ETF Under NYSE Arca
Rule 8.200–E (Trust Issued Receipts)
May 20, 2021.
19(b)(1) 1
Pursuant to Section
of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on May 13,
2021, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
11 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
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Jkt 253001
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the following
under NYSE Arca Rule 8.200–E,
Commentary .02, which governs the
listing and trading of Trust Issued
Receipts: ConvexityShares Daily 1.5x
SPIKES Futures ETF (the ‘‘Fund’’).4
The Fund is a series of the
ConvexityShares Trust (the ‘‘Trust’’), a
Delaware statutory trust.5 The Fund is
4 Commentary .02 to NYSE Arca Rule 8.200–E
applies to Trust Issued Receipts that invest in
‘‘Financial Instruments.’’ The term ‘‘Financial
Instruments,’’ as defined in Commentary .02(b)(4) to
NYSE Arca Rule 8.200–E, means any combination
of investments, including cash; securities; options
on securities and indices; futures contracts; options
on futures contracts; forward contracts; equity caps,
collars, and floors; and swap agreements.
5 On December 15, 2020, ConvexityShares Trust
submitted to the Commission its draft registration
statement, with respect to the Trust, on Form S–1
(‘‘Registration Statement’’) under the Securities Act
of 1933 (‘‘1933 Act’’). The Jumpstart Our Business
Startups Act, enacted on April 5, 2012, added
Section 6(e) to the 1933 Act. Section 6(e) of the
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Frm 00092
Fmt 4703
Sfmt 4703
managed and controlled by its sponsor
and investment manager,
ConvexityShares, LLC (the ‘‘Sponsor’’).
The Fund is a commodity pool and the
Sponsor is a commodity pool operator
subject to regulation by the Commodity
Futures Trading Commission (‘‘CFTC’’)
and the National Futures Association
under the Commodity Exchange Act, as
amended. U.S. Bank, a national banking
association, will provide custody and
fund accounting to the Trust and the
Fund. Its affiliate, U.S. Bancorp Fund
Services, will be the transfer agent
(‘‘Transfer Agent’’) for Fund Shares and
administrator for the Fund. Foreside
will serve as the distributor for the Fund
(‘‘Distributor’’).
According to the Registration
Statement, the Fund is benchmarked to
the T3 SPIKE Front 2 Futures Index (the
‘‘Index’’), an investable index of SPIKES
futures contracts. The Fund will seek to
offer exposure to forward equity market
volatility by obtaining exposure to the
components of the Index. The Index, as
described further below, is intended to
reflect the returns that are potentially
available through an unleveraged
investment in the SPIKES futures
contracts comprising the Index.6 The
Index consists of short-term SPIKES
1933 Act provides that an ‘‘emerging growth
company’’ may confidentially submit to the
Commission a draft registration statement for
confidential, non-public review by the Commission
staff prior to public filing, provided that the initial
confidential submission and all amendments
thereto shall be publicly filed not later than 21 days
before the date on which the issuer conducts a road
show, as such term is defined in 1933 Act Rule
433(h)(4). An emerging growth company is defined
in Section 2(a)(19) of the 1933 Act as an issuer with
less than $1,000,000,000 total annual gross
revenues during its most recently completed fiscal
year. The Trust meets the definition of an emerging
growth company and consequently has submitted
its Registration Statement on a confidential basis
with the Commission. The Exchange will not
commence trading in Shares of the Fund until the
Registration Statement becomes effective.
6 The Index is sponsored by Triple Three Partners
Pty Ltd, which licenses the use of the Index to its
affiliated company, T3i Pty Ltd (Triple Three
Partners Pty Ltd and T3i Pty Ltd. are collectively
referred to herein as ‘‘T3 Index’’ or the ‘‘Index
Sponsor’’). T3 Index maintains a website at https://
t3index.com/. The Index Sponsor is affiliated with
the Sponsor. The Index Sponsor has implemented
and will maintain a fire wall regarding access to
information concerning the composition and/or
changes to the Index. In addition, the Index
Sponsor has implemented and will maintain
procedures that are designed to prevent the use and
dissemination of material, non-public information
regarding the Index. The Index Sponsor is not
registered as an investment adviser or broker-dealer
and is not affiliated with any broker-dealers. The
Sponsor is not registered as a broker-dealer or
affiliated with a broker-dealer. In the event the
Sponsor becomes registered as a broker-dealer or
becomes affiliated with a broker-dealer, it will
implement and maintain a fire wall with respect to
its relevant personnel or its broker-dealer affiliate
regarding access to and dissemination of material
non-public information regarding the Index.
E:\FR\FM\26MYN1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 100 (Wednesday, May 26, 2021)]
[Notices]
[Pages 28418-28420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11076]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91960; File No. SR-Phlx-2021-31]
Self-Regulatory Organizations; Nasdaq PHLX LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Pricing Schedule at Equity 7, Section 3
May 20, 2021.
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 12, 2021, Nasdaq PHLX LLC (``Phlx'' 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 pricing schedule at
Equity 7, Section 3, as described further below.
The Exchange originally filed the proposal pricing change on May 3,
2021 (SR-Phlx-2021-29). On May 12, 2021, the Exchange withdrew that
filing and submitted this filing.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/phlx/rules, 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 proposes to amend its pricing schedule, at Equity 7,
Section 3, to make a change to its fees for routing of orders using the
SCAR routing option in all securities. Specifically, the Exchange
proposes to lower the $0.0025 per share executed credit that is given
to a member that enters an order in any of the three tapes using the
``SCAR'' routing option \3\ which ultimately executes on Nasdaq BX
(``BX'').
---------------------------------------------------------------------------
\3\ Pursuant to Equity 4, Section 3315(a)(1)(A)(x), ``SCAR'' is
a routing option under which orders will check the System for
available shares and simultaneously route to BX and Nasdaq in
accordance with the System routing table. If shares remain
unexecuted after routing, they are posted on the book or cancelled.
Once on the book, should the order subsequently be locked or crossed
by another market center, the System will not route the order to the
locking or crossing market center.
---------------------------------------------------------------------------
BX recently revised its pricing schedule to lower its existing
credits.\4\ Currently, all credits provided to members on BX are lower
than $0.0025 per share executed. As a result, the Exchange is proposing
to lower its existing $0.0025 per share credit to $0.0016 per share
executed for SCAR orders that execute on BX in order to better align
this amount with the credit amount provided by BX on its fee schedule.
---------------------------------------------------------------------------
\4\ Securities Exchange Act Release No. 91639 (April 22, 2021),
80 FR 22500, (April 28, 2021).
---------------------------------------------------------------------------
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\5\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\6\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------
\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Proposal Is Reasonable
The Exchange's proposed changes to its SCAR routing rebate are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for equity
securities transaction
[[Page 28419]]
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'. . . .'' \7\
---------------------------------------------------------------------------
\7\ 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 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.'' \8\
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\8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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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.
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.
The Exchange believes it is reasonable to lower the $0.0025 per
share executed credit that it provides to a member that enters a SCAR
routed order that executes on BX because the proposal will better align
this credit with corresponding credits that BX provides to its own
members that remove liquidity from that exchange.\9\ The Exchange also
believes that it is appropriate to periodically reassess and
recalibrate its fees. In this instance, better aligning the credits
will help to ensure that market participants will not use the
Exchange's SCAR order routing strategy solely to obtain a higher rebate
on orders that are routed and executed on BX.
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\9\ See Nasdaq BX Equity 7 (Pricing Schedule), available at
https://listingcenter.nasdaq.com/rulebook/phlx/rules/Phlx%20Equity%207 [sic].
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The Proposal Is an Equitable Allocation of Credits and Not Unfairly
Discriminatory
The Exchange believes its proposal to lower its credit for SCAR
routed orders that execute on BX to $0.0016 per share executed credit
is an equitable allocation because the proposed amended credit amount
is better aligned with the liquidity removal credits that BX provides
to its members. Additionally, the proposal is not unfairly
discriminatory because the proposed amended credit is available to all
members.
Any participant that is dissatisfied with the proposals is free to
shift their order flow to competing venues that provide more generous
pricing or less stringent qualifying criteria.
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.
Intramarket Competition
The Exchange does not believe that its proposal will place any
category of Exchange participants at a competitive disadvantage. The
proposal will merely ensure that the amount of the SCAR credit is
better aligned with the recently lowered corresponding credits that BX
provides to its own members that remove liquidity from that exchange.
As noted above, all members of the Exchange will benefit from the
protection of the overall quality of the equity market. Moreover,
members are free to trade on other venues to the extent they believe
that the proposed credit amount is 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.
Intermarket Competition
The Exchange's proposal is pro-competitive in that the proposal
will result in competitive alignment between the SCAR credit and the
amounts of liquidity removal credits that BX provides to its own
members that remove liquidity from that exchange.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\10\
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-Phlx-2021-31 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-Phlx-2021-31. This file
number should be included on the subject line if email is used. To help
the Commission process and review your
[[Page 28420]]
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-
Phlx-2021-31 and should be submitted on or before June 16, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-11076 Filed 5-25-21; 8:45 am]
BILLING CODE 8011-01-P
