Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118 of the Fee Schedule, 64536-64539 [2021-25130]
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Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices
employee’s compensation in the base
year. In determining an employee’s base
year compensation, any money
remuneration in a month not in excess
of an amount that bears the same ratio
to $775 as the monthly compensation
base for that year bears to $600 shall be
taken into account.
The calendar year 2022 monthly
compensation base is $1,755. The ratio
of $1,755 to $600 is 2.92500000.
Multiplying 2.92500000 by $775
produces $2,267. Accordingly, the
amount determined under section 2(c) is
$2,267 for months in calendar year
2022.
Maximum Daily Benefit Rate
Section 2(a)(3) contains a formula for
determining the maximum daily benefit
rate for registration periods beginning
after June 30, 1989, and after each June
30 thereafter. Legislation enacted on
October 9, 1996, revised the formula for
indexing maximum daily benefit rates.
Under the prescribed formula, the
maximum daily benefit rate increases by
approximately two-thirds of the
cumulative growth in average national
wages since 1984. The maximum daily
benefit rate for registration periods
beginning after June 30, 2022, shall be
equal to 5 percent of the monthly
compensation base for the base year
immediately preceding the beginning of
the benefit year. Section 2(a)(3) further
provides that if the amount so computed
is not a multiple of $1, it shall be
rounded down to the nearest multiple of
$1.
The calendar year 2021 monthly
compensation base is $1,710.
Multiplying $1,710 by 0.05 yields
$85.50. Accordingly, the maximum
daily benefit rate for days of
unemployment and days of sickness
beginning in registration periods after
June 30, 2022, is determined to be $85.
By Authority of the Board.
Stephanie Hillyard,
Secretary to the Board.
[FR Doc. 2021–25154 Filed 11–17–21; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
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[SEC File No. 270–638, OMB Control No.
3235–0687]
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
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Extension:
Rule 239
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 239 (17 CFR 230.239) provides
exemptions under the Securities Act of
1933 (15 U.S.C. 77a et seq.), the
Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) and the Trust
Indenture Act of 1939 (U.S.C. 77aaa et
seq.) for security-based swaps issued by
certain clearing agencies satisfying
certain conditions. The purpose of the
information required by Rule 239 is to
make certain information about
security-based swaps that may be
cleared by the registered or the exempt
clearing agencies available to eligible
contract participants and other market
participants. We estimate that each
registered or exempt clearing agency
issuing security-based swaps in its
function as a central counterparty will
spend approximately 2 hours each time
it provides or update the information in
its agreements relating to security-based
swaps or on its website. We estimate
that each registered or exempt clearing
agency will provide or update the
information approximately 20 times per
year. In addition, we estimate that 75%
of the 2 hours per response (1.5 hours)
is prepared internally by the clearing
agency for a total annual reporting
burden of 180 hours (1.5 hours per
response × 20 times × 6 respondents).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
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unless it displays a currently valid
control number.
Please direct your written comment to
David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: November 15, 2021.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25170 Filed 11–17–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93558; File No. SR–
NASDAQ–2021–088]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Equity 7, Section 118 of the Fee
Schedule
November 12, 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 November
1, 2021, 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 pricing schedule at Equity 7,
Section 118(a), as described further
below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/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
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 86, No. 220 / Thursday, November 18, 2021 / Notices
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
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1. Purpose
The purpose of the proposed rule
change is to amend the Exchange’s
schedule of credits, at Equity 7, Section
118(a). Specifically, the Exchange
proposes to amend the criteria for two
existing credits of $0.0029 per share
executed with respect to its schedule of
credits for displayed quotes/orders
(other than Supplemental Orders or
Designated Retail Orders) that provide
liquidity in Tapes A, B and C.
The Exchange proposes to amend two
existing credits in Tapes A, B and C of
$0.0029 per share executed. One of the
existing credits applies to members (i)
with shares of liquidity provided in all
securities through one or more of its
Nasdaq Market Center MPIDs that
represent more than 0.675% of
Consolidated Volume during the month.
The other credit applies to members (i)
with shares of liquidity accessed in all
securities through one or more of its
Nasdaq Market Center MPIDs that
represent more than 0.80% of
Consolidated Volume during the month,
and (ii) with shares of liquidity
provided in all securities through one or
more of its Nasdaq Market Center MPIDs
that represent more than 0.60% of
Consolidated Volume.
The Exchange proposes to amend the
credits in all three Tapes by also
requiring a member to execute an
average daily volume (‘‘ADV’’) of at
least 350,000 shares of Midpoint
Extended Life Orders (‘‘M–ELOs’’) 3
during the month. The proposed
amendments will increase the extent to
which members engage in M–ELO
activity on the Exchange and grow the
extent of such activity over time. From
time to time, the Exchange believes it is
reasonable to recalibrate the criteria for
credits such as these to ensure that the
credits remain appropriately
challenging for participants to attain in
3 Pursuant to Equity 4, Rule 4702(b)(14), a
‘‘Midpoint Extended Life Order’’ is an Order Type
with a Non-Display Order Attribute that is priced
at the midpoint between the NBBO and that will
not be eligible to execute until a minimum period
of 10 milliseconds has passed after acceptance of
the Order by the System.
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light of changes to their levels of activity
on the Exchange.
2. Statutory Basis
The Exchange believes that its
proposals are consistent with Section
6(b) of the Act,4 in general, and further
the objectives of Sections 6(b)(4) and
6(b)(5) of the Act,5 in particular, in that
they provide for the equitable allocation
of reasonable dues, fees and other
charges among members and issuers and
other persons using any facility, and are
not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers. The
proposals are also consistent with
Section 11A of the Act relating to the
establishment of the national market
system for securities.
The Proposals Are Reasonable
The Exchange’s proposals 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 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’. . . .’’ 6
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
4 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
6 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)).
5 15
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broader forms that are most important to
investors and listed companies.’’ 7
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. Within the foregoing context,
the proposals represent reasonable
attempts by the Exchange to increase its
liquidity and market share relative to its
competitors.
The Exchange believes that it is
reasonable to amend the credit of
$0.0029 per share executed, which
applies to members (i) with shares of
liquidity provided in all securities
through one or more of its Nasdaq
Market Center MPIDs that represent
more than 0.675% of Consolidated
Volume during the month, and the
credit of $0.0029 per share executed,
which applies to members (i) with
shares of liquidity accessed in all
securities through one or more of its
Nasdaq Market Center MPIDs that
represent more than 0.80% of
Consolidated Volume during the month,
and (ii) with shares of liquidity
provided in all securities through one or
more of its Nasdaq Market Center MPIDs
that represent more than 0.60% of
Consolidated Volume. The proposed
additional requirement of executing an
ADV of at least 350,000 shares of M–
ELOs during the month will encourage
members that currently qualify for the
credit to increase the extent to which
members engage in M–ELO activity.
From time to time, the Exchange
believes it is reasonable to recalibrate
the criteria for credits such as this one
to ensure that the credits remain
appropriately challenging for
participants to attain in light of changes
to their levels of activity on the
Exchange. The Exchange has limited
resources at its disposal to devote to
incentives and it periodically reassesses
the allocation of those resources when
they prove to be ineffective.
7 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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Additionally, these proposals are
reasonable because they will provide
extra incentives to members to engage in
substantial amounts of MELO-related
activity on the Exchange during a
month. The Exchange believes that if
such incentives are effective, then any
ensuing increase in M–ELOs and
executions on the Exchange will
improve the quality of the M–ELO
market, and the market overall, to the
benefit of M–ELO and all market
participants.
The Exchange notes that those market
participants that are dissatisfied with
the proposals are free to shift their order
flow to competing venues that offer
more generous pricing or less stringent
qualifying criteria.
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The Proposals Are Equitable Allocations
of Credits
The Exchange believes that it is an
equitable allocation to modify the
eligibility requirements for its
transaction credits because the
proposals will encourage members to
increase the extent to which they add
liquidity to the Exchange. To the extent
that the Exchange succeeds in
increasing the levels of liquidity and
activity on the Exchange, including in
segments for which there is an observed
need or demand, such as non-displayed,
MELO, and Tape B securities, then the
Exchange will experience improvements
in its market quality, which stands to
benefit all market participants. The
Exchange also believes it is equitable to
recalibrate or revise existing criteria for
its credits to ensure that the credits
remain appropriately challenging for
participants to attain in light of changes
to their levels of activity on the
Exchange.
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.
The Proposals Are Not Unfairly
Discriminatory
The Exchange believes that its
proposals are 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
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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 believes that its
proposals to amend the qualifying
criteria for its transaction credits are not
unfairly discriminatory because these
credits are available to all members.
Moreover, these proposals stand to
improve the overall market quality of
the Exchange, to the benefit of all
market participants, by incentivizing
members to increase the extent of their
liquidity provision or activity on the
Exchange, including in segments for
which there is an observed need or
demand, such as non-displayed, M–
ELO, and Tape B securities. The
Exchange also believes it is not unfairly
discriminatory to recalibrate or revise
existing criteria for its credits to ensure
that the credits remain appropriately
challenging for participants to attain in
light of changes to their levels of activity
on the Exchange.
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 changes 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
proposals will place any category of
Exchange participant at a competitive
disadvantage.
As noted above, Nasdaq’s proposals to
amend transaction credits are intended
to have market-improving effects, to the
benefit of all members. Any member
may elect to achieve the levels of
liquidity or activity required in order to
qualify for the amended credits.
The Exchange notes that its members
are free to trade on other venues to the
extent they believe that the proposed
qualification criteria for or amounts of
these credits 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 credit changes.
The Exchange notes that its pricing tier
structure is consistent with brokerdealer fee practices as well as the other
industries, as described above.
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Intermarket Competition
In terms of inter-market competition,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem credit
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 amended credits 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
credit changes. This is in addition to
free flow of order flow to and among offexchange venues which comprises
upwards of 44% of industry volume.
The Exchange’s proposals to amend
its transaction credits are procompetitive in that the Exchange
intends for the changes to increase
liquidity addition and activity on the
Exchange, thereby rendering 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.
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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,8 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–2021–088 on the subject line.
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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–2021–088. 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
8 15
U.S.C. 78s(b)(3)(A)(ii).
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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–2021–088 and
should be submitted on or before
December 9, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.9
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–25130 Filed 11–17–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–93559; File No. SR–
CboeBZX–2021–019]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Order
Disapproving a Proposed Rule Change
To List and Trade Shares of the
VanEck Bitcoin Trust Under BZX Rule
14.11(e)(4), Commodity-Based Trust
Shares
November 12, 2021.
I. Introduction
On March 1, 2021, Cboe BZX
Exchange, Inc. (‘‘BZX’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to list and trade
shares (‘‘Shares’’) of the VanEck Bitcoin
Trust (‘‘Trust’’) under BZX Rule
14.11(e)(4), Commodity-Based Trust
Shares. The proposed rule change was
published for comment in the Federal
Register on March 19, 2021.3
9 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 91326
(Mar. 15, 2021), 86 FR 14987 (‘‘Notice’’). Comments
1 15
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64539
On April 28, 2021, pursuant to
Section 19(b)(2) of the Exchange Act,4
the Commission designated a longer
period within which to approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether to
disapprove the proposed rule change.5
On June 16, 2021, the Commission
instituted proceedings under Section
19(b)(2)(B) of the Exchange Act 6 to
determine whether to approve or
disapprove the proposed rule change.7
On September 8, 2021, the Commission
designated a longer period for
Commission action on the proposed rule
change.8
This order disapproves the proposed
rule change. The Commission concludes
that BZX has not met its burden under
the Exchange Act and the Commission’s
Rules of Practice to demonstrate that its
proposal is consistent with the
requirements of Exchange Act Section
6(b)(5), in particular, the requirement
that the rules of a national securities
exchange be ‘‘designed to prevent
fraudulent and manipulative acts and
practices’’ and ‘‘to protect investors and
the public interest.’’ 9
When considering whether BZX’s
proposal to list and trade the Shares is
designed to prevent fraudulent and
manipulative acts and practices, the
Commission applies the same standard
used in its orders considering previous
proposals to list bitcoin 10-based
on the proposed rule change can be found at:
https://www.sec.gov/comments/sr-cboebzx-2021019/srcboebzx2021019.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 91695,
86 FR 24066 (May 5, 2021).
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 92196,
86 FR 32985 (June 23, 2021).
8 See Securities Exchange Act Release No. 92894,
86 FR 51203 (Sept. 14, 2021). On September 30,
2021, the Exchange filed Amendment No. 1 to the
proposed rule change and withdrew it on October
1, 2021. On October 1, 2021, the Exchange filed
Amendment No. 2 to the proposed rule change; and
on November 4, 2021, the Exchange filed
Amendment No. 3 to the proposed rule change. As
discussed below, see Section III.E, infra, the
Commission views these amendments as untimely.
These amendments also do not materially alter the
substance of the proposed rule change, and
therefore they are not subject to notice and
comment. Furthermore, even if these amendments
had been timely filed, they would not alter the
Commission’s conclusion that the Exchange’s
proposal is not consistent with the Exchange Act.
See Section III.E.
9 15 U.S.C. 78f(b)(5).
10 Bitcoins are digital assets that are issued and
transferred via a decentralized, open-source
protocol used by a peer-to-peer computer network
through which transactions are recorded on a
public transaction ledger known as the ‘‘bitcoin
blockchain.’’ The bitcoin protocol governs the
creation of new bitcoins and the cryptographic
system that secures and verifies bitcoin
transactions. See, e.g., Notice, 86 FR 14988.
E:\FR\FM\18NON1.SGM
18NON1
]]>Agencies
[Federal Register Volume 86, Number 220 (Thursday, November 18, 2021)]
[Notices]
[Pages 64536-64539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25130]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93558; File No. SR-NASDAQ-2021-088]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Equity 7, Section 118 of the Fee Schedule
November 12, 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 November 1, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's pricing schedule at
Equity 7, Section 118(a), as described further below.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/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
[[Page 64537]]
any comments it received on the proposed rule change. The text of these
statements may be examined at the places specified in Item IV below.
The Exchange has prepared summaries, set forth in sections A, B, and C
below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to amend the Exchange's
schedule of credits, at Equity 7, Section 118(a). Specifically, the
Exchange proposes to amend the criteria for two existing credits of
$0.0029 per share executed with respect to its schedule of credits for
displayed quotes/orders (other than Supplemental Orders or Designated
Retail Orders) that provide liquidity in Tapes A, B and C.
The Exchange proposes to amend two existing credits in Tapes A, B
and C of $0.0029 per share executed. One of the existing credits
applies to members (i) with shares of liquidity provided in all
securities through one or more of its Nasdaq Market Center MPIDs that
represent more than 0.675% of Consolidated Volume during the month. The
other credit applies to members (i) with shares of liquidity accessed
in all securities through one or more of its Nasdaq Market Center MPIDs
that represent more than 0.80% of Consolidated Volume during the month,
and (ii) with shares of liquidity provided in all securities through
one or more of its Nasdaq Market Center MPIDs that represent more than
0.60% of Consolidated Volume.
The Exchange proposes to amend the credits in all three Tapes by
also requiring a member to execute an average daily volume (``ADV'') of
at least 350,000 shares of Midpoint Extended Life Orders (``M-ELOs'')
\3\ during the month. The proposed amendments will increase the extent
to which members engage in M-ELO activity on the Exchange and grow the
extent of such activity over time. From time to time, the Exchange
believes it is reasonable to recalibrate the criteria for credits such
as these to ensure that the credits remain appropriately challenging
for participants to attain in light of changes to their levels of
activity on the Exchange.
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\3\ Pursuant to Equity 4, Rule 4702(b)(14), a ``Midpoint
Extended Life Order'' is an Order Type with a Non-Display Order
Attribute that is priced at the midpoint between the NBBO and that
will not be eligible to execute until a minimum period of 10
milliseconds has passed after acceptance of the Order by the System.
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2. Statutory Basis
The Exchange believes that its proposals are consistent with
Section 6(b) of the Act,\4\ in general, and further the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\5\ in particular, in that they
provide for the equitable allocation of reasonable dues, fees and other
charges among members and issuers and other persons using any facility,
and are not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. The proposals are also consistent with
Section 11A of the Act relating to the establishment of the national
market system for securities.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4) and (5).
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The Proposals Are Reasonable
The Exchange's proposals 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'. . . .'' \6\
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\6\ 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)).
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The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \7\
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\7\ 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. 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. Within the
foregoing context, the proposals represent reasonable attempts by the
Exchange to increase its liquidity and market share relative to its
competitors.
The Exchange believes that it is reasonable to amend the credit of
$0.0029 per share executed, which applies to members (i) with shares of
liquidity provided in all securities through one or more of its Nasdaq
Market Center MPIDs that represent more than 0.675% of Consolidated
Volume during the month, and the credit of $0.0029 per share executed,
which applies to members (i) with shares of liquidity accessed in all
securities through one or more of its Nasdaq Market Center MPIDs that
represent more than 0.80% of Consolidated Volume during the month, and
(ii) with shares of liquidity provided in all securities through one or
more of its Nasdaq Market Center MPIDs that represent more than 0.60%
of Consolidated Volume. The proposed additional requirement of
executing an ADV of at least 350,000 shares of M-ELOs during the month
will encourage members that currently qualify for the credit to
increase the extent to which members engage in M-ELO activity.
From time to time, the Exchange believes it is reasonable to
recalibrate the criteria for credits such as this one to ensure that
the credits remain appropriately challenging for participants to attain
in light of changes to their levels of activity on the Exchange. The
Exchange has limited resources at its disposal to devote to incentives
and it periodically reassesses the allocation of those resources when
they prove to be ineffective.
[[Page 64538]]
Additionally, these proposals are reasonable because they will provide
extra incentives to members to engage in substantial amounts of MELO-
related activity on the Exchange during a month. The Exchange believes
that if such incentives are effective, then any ensuing increase in M-
ELOs and executions on the Exchange will improve the quality of the M-
ELO market, and the market overall, to the benefit of M-ELO and all
market participants.
The Exchange notes that those market participants that are
dissatisfied with the proposals are free to shift their order flow to
competing venues that offer more generous pricing or less stringent
qualifying criteria.
The Proposals Are Equitable Allocations of Credits
The Exchange believes that it is an equitable allocation to modify
the eligibility requirements for its transaction credits because the
proposals will encourage members to increase the extent to which they
add liquidity to the Exchange. To the extent that the Exchange succeeds
in increasing the levels of liquidity and activity on the Exchange,
including in segments for which there is an observed need or demand,
such as non-displayed, MELO, and Tape B securities, then the Exchange
will experience improvements in its market quality, which stands to
benefit all market participants. The Exchange also believes it is
equitable to recalibrate or revise existing criteria for its credits to
ensure that the credits remain appropriately challenging for
participants to attain in light of changes to their levels of activity
on the Exchange.
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.
The Proposals Are Not Unfairly Discriminatory
The Exchange believes that its proposals are 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 believes that its proposals to amend the qualifying
criteria for its transaction credits are not unfairly discriminatory
because these credits are available to all members. Moreover, these
proposals stand to improve the overall market quality of the Exchange,
to the benefit of all market participants, by incentivizing members to
increase the extent of their liquidity provision or activity on the
Exchange, including in segments for which there is an observed need or
demand, such as non-displayed, M-ELO, and Tape B securities. The
Exchange also believes it is not unfairly discriminatory to recalibrate
or revise existing criteria for its credits to ensure that the credits
remain appropriately challenging for participants to attain in light of
changes to their levels of activity on the Exchange.
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 changes 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 proposals will place any
category of Exchange participant at a competitive disadvantage.
As noted above, Nasdaq's proposals to amend transaction credits are
intended to have market-improving effects, to the benefit of all
members. Any member may elect to achieve the levels of liquidity or
activity required in order to qualify for the amended credits.
The Exchange notes that its members are free to trade on other
venues to the extent they believe that the proposed qualification
criteria for or amounts of these credits 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 credit changes. The Exchange notes
that its pricing tier structure is consistent with broker-dealer fee
practices as well as the other industries, as described above.
Intermarket Competition
In terms of inter-market competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem credit 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 amended credits 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 credit changes. This is in addition to
free flow of order flow to and among off-exchange venues which
comprises upwards of 44% of industry volume.
The Exchange's proposals to amend its transaction credits are pro-
competitive in that the Exchange intends for the changes to increase
liquidity addition and activity on the Exchange, thereby rendering 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.
[[Page 64539]]
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,\8\ 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.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2021-088 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-2021-088. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2021-088 and should be submitted
on or before December 9, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-25130 Filed 11-17-21; 8:45 am]
BILLING CODE 8011-01-P
