Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Schedule of Credits at Equity 7, Section 118(a), 64123-64125 [2022-22839]

Download as PDF Federal Register / Vol. 87, No. 203 / Friday, October 21, 2022 / Notices The Commission estimates that approximately 48 entities fit within the definition of SBS dealer, and zero entities fit within the definition of major SBS participant. Thus, we expect that approximately 48 entities will be required to register with the Commission as SBS Entities and will be subject to the trade acknowledgment provision and verification requirements of Rule 15Fi–2. The total estimated annual time burden of Rule 15Fi–2 is 22,848 hours. Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed 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 by December 20, 2022. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. Please direct your written comments 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: October 17, 2022. Sherry R. Haywood, Assistant Secretary. [FR Doc. 2022–22854 Filed 10–20–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION jspears on DSK121TN23PROD with NOTICES [Release No. 34–96091; File No. SR– NASDAQ–2022–053] Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend its Schedule of Credits at Equity 7, Section 118(a) October 17, 2022. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 VerDate Sep<11>2014 19:08 Oct 20, 2022 Jkt 259001 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 3, 2022, 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 schedule of credits, 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 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, with respect to its schedule of credits for displayed quotes/ orders (other than Supplemental Orders or Designated Retail Orders) that provide liquidity, the Exchange proposes to amend the criteria for an existing credit of $0.0029 per share executed. The Exchange proposes to amend its existing credit of $0.0029 per share executed to a member: (i) with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent 1 15 2 17 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00124 Fmt 4703 more than 0.60% of Consolidated Volume during the month, including shares of liquidity provided with respect to securities that are listed on exchanges other than Nasdaq or NYSE that represent more than 0.10% of Consolidated Volume, and (ii) that adds at least 0.175% of Consolidated Volume during the month in non-displayed orders (excluding midpoint orders) for securities in any tape during the month. The Exchange proposes to amend this credit by lowering the threshold percentage of Consolidated Volume added during the month in nondisplayed orders (excluding midpoint orders) for securities in any tape during the month. Specifically, the Exchange proposes lowering this threshold percentage from 0.175% to 0.15%. The Exchange proposes to amend the existing criteria because it proved too difficult for members to meet in combination with the other criterion set forth in the credit, and has hindered the credit in achieving its intended effect. 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. The lower threshold proposed will be more readily attainable for members and will continue to incent members to add substantial volumes of non-displayed liquidity to the Exchange. 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 relevant to current levels of liquidity providing activity on the Exchange. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,3 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,4 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 Exchange’s proposed change to its schedule of credits is 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. 3 15 4 15 Sfmt 4703 64123 E:\FR\FM\21OCN1.SGM U.S.C. 78f(b). U.S.C. 78f(b)(4) and (5). 21OCN1 jspears on DSK121TN23PROD with NOTICES 64124 Federal Register / Vol. 87, No. 203 / Friday, October 21, 2022 / Notices 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’. . . .’’ 5 The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 6 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. The Exchange believes that it is reasonable to require a member to (i) provide shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.60% of Consolidated Volume during the month, 5 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)). 6 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). VerDate Sep<11>2014 19:08 Oct 20, 2022 Jkt 259001 including shares of liquidity provided with respect to securities that are listed on exchanges other than Nasdaq or NYSE that represent more than 0.10% of Consolidated Volume, and (ii) add at least 0.15% (instead of 0.175%) of Consolidated Volume during the month in non-displayed orders (excluding midpoint orders) for securities in any tape during the month in order to qualify for the existing $0.0029 per share executed credit. The Exchange believes that it is reasonable to lower the threshold percentage of Consolidated Volume in non-displayed orders (excluding midpoint orders) for securities in any tape in order to qualify for the credit to ensure that this credit remains relevant to current levels of liquidity providing activity on the Exchange. The Exchange believes it is reasonable to establish a lower threshold because it proved too difficult for members to meet in combination with the other criterion set forth in the credit, and has hindered the credit in achieving its intended effect. 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. The proposal to lower the requirement that a member add at least 0.175% of Consolidated Volume to 0.15% of Consolidated Volume (during the month in non-displayed orders (excluding midpoint orders)) is reasonable because the proposed amendment will be more readily attainable for members and will still incent members to add substantial volumes of non-displayed liquidity to the Exchange. The Exchange believes its proposal will allocate its charges and credits fairly among its market participants. The Exchange also believes it is equitable to recalibrate or revise existing criteria for its credits to ensure that the credits remain appropriate for participants to attain. The Exchange believes that its 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 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 the assent of the Commission. It is fair because it enhances price discovery and improves the overall quality of the equity markets. The Exchange believes that its proposal to decrease the non-displayed volume threshold percentage to qualify for an existing $0.0029 transaction credit is not unfairly discriminatory because the credit is available to all members. The Exchange also believes it is not unfairly discriminatory to recalibrate or revise existing criteria for its credits to ensure that the credits are effective and readily attainable. Any Participant that is dissatisfied with the proposal 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 participant at a competitive disadvantage. Any member may elect to achieve the levels of liquidity required in order to qualify for the credit. The Exchange notes that its members are free to trade on other venues to the extent they believe that the Exchange’s 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 fee and credit changes. Intermarket Competition The Exchange believes that the proposed change to its schedule of credits to amend the criteria to qualify for an existing $0.0029 transaction credit as noted above 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 live exchanges and from offexchange venues, which include 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 E:\FR\FM\21OCN1.SGM 21OCN1 Federal Register / Vol. 87, No. 203 / Friday, October 21, 2022 / Notices fees 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 fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. The proposed change to the qualifying criteria for an existing credit is reflective of this competition because, as a threshold issue, the Exchange is a relatively small market so its ability to burden intermarket competition is limited. In this regard, even the largest U.S. equities exchange by volume only has 17–18% 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 comprises more than 40% of industry volume in recent months. 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. jspears on DSK121TN23PROD with NOTICES 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) of the Act 7 and paragraph (f) of Rule 19b–4 8 thereunder. 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 7 15 8 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f). VerDate Sep<11>2014 19:08 Oct 20, 2022 Jkt 259001 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–2022–053 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–2022–053. 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–2022–053 and PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 64125 should be submitted on or before November 14, 2022. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.9 J. Matthew DeLesDernier, Deputy Secretary. [FR Doc. 2022–22839 Filed 10–20–22; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission will hold an Open Meeting on Wednesday, October 26, 2022 at 10:00 a.m. PLACE: The meeting will be webcast on the Commission’s website at www.sec.gov. STATUS: This meeting will begin at 10:00 a.m. (ET) and will be open to the public via webcast on the Commission’s website at www.sec.gov. MATTERS TO BE CONSIDERED: 1. The Commission will consider whether to adopt final rules to implement of Section 10D of the Securities Exchange Act of 1934, as added by Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. 2. The Commission will consider whether to adopt rule and form amendments that would require openend management investment companies to transmit concise and visually engaging annual and semi-annual reports directly to shareholders that highlight key information for investors. The Commission also will consider whether to amend the advertising rules for registered investment companies and business development companies. 3. The Commission will consider whether to propose a new rule under the Investment Advisers Act of 1940 to establish minimum and consistent oversight requirements for registered investment advisers that outsource certain services or functions to service providers, and whether to propose amendments to related recordkeeping and Form ADV reporting requirements. CONTACT PERSON FOR MORE INFORMATION: For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. TIME AND DATE: 9 17 E:\FR\FM\21OCN1.SGM CFR 200.30–3(a)(12). 21OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 87, Number 203 (Friday, October 21, 2022)]
[Notices]
[Pages 64123-64125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-22839]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96091; File No. SR-NASDAQ-2022-053]


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

October 17, 2022.
    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 October 3, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III, below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's schedule of credits, 
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 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, with 
respect to its schedule of credits for displayed quotes/orders (other 
than Supplemental Orders or Designated Retail Orders) that provide 
liquidity, the Exchange proposes to amend the criteria for an existing 
credit of $0.0029 per share executed.
    The Exchange proposes to amend its existing credit of $0.0029 per 
share executed to a member: (i) with shares of liquidity provided in 
all securities through one or more of its Nasdaq Market Center MPIDs 
that represent more than 0.60% of Consolidated Volume during the month, 
including shares of liquidity provided with respect to securities that 
are listed on exchanges other than Nasdaq or NYSE that represent more 
than 0.10% of Consolidated Volume, and (ii) that adds at least 0.175% 
of Consolidated Volume during the month in non-displayed orders 
(excluding midpoint orders) for securities in any tape during the 
month. The Exchange proposes to amend this credit by lowering the 
threshold percentage of Consolidated Volume added during the month in 
non-displayed orders (excluding midpoint orders) for securities in any 
tape during the month. Specifically, the Exchange proposes lowering 
this threshold percentage from 0.175% to 0.15%.
    The Exchange proposes to amend the existing criteria because it 
proved too difficult for members to meet in combination with the other 
criterion set forth in the credit, and has hindered the credit in 
achieving its intended effect. 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. The 
lower threshold proposed will be more readily attainable for members 
and will continue to incent members to add substantial volumes of non-
displayed liquidity to the Exchange. 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 relevant to current 
levels of liquidity providing activity on the Exchange.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\3\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\4\ 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.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange's proposed change to its schedule of credits is 
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.

[[Page 64124]]

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'. . . .'' \5\
---------------------------------------------------------------------------

    \5\ 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.'' \6\
---------------------------------------------------------------------------

    \6\ 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.
    The Exchange believes that it is reasonable to require a member to 
(i) provide shares of liquidity provided in all securities through one 
or more of its Nasdaq Market Center MPIDs that represent more than 
0.60% of Consolidated Volume during the month, including shares of 
liquidity provided with respect to securities that are listed on 
exchanges other than Nasdaq or NYSE that represent more than 0.10% of 
Consolidated Volume, and (ii) add at least 0.15% (instead of 0.175%) of 
Consolidated Volume during the month in non-displayed orders (excluding 
midpoint orders) for securities in any tape during the month in order 
to qualify for the existing $0.0029 per share executed credit. The 
Exchange believes that it is reasonable to lower the threshold 
percentage of Consolidated Volume in non-displayed orders (excluding 
midpoint orders) for securities in any tape in order to qualify for the 
credit to ensure that this credit remains relevant to current levels of 
liquidity providing activity on the Exchange.
    The Exchange believes it is reasonable to establish a lower 
threshold because it proved too difficult for members to meet in 
combination with the other criterion set forth in the credit, and has 
hindered the credit in achieving its intended effect. 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. The proposal to lower the requirement that a 
member add at least 0.175% of Consolidated Volume to 0.15% of 
Consolidated Volume (during the month in non-displayed orders 
(excluding midpoint orders)) is reasonable because the proposed 
amendment will be more readily attainable for members and will still 
incent members to add substantial volumes of non-displayed liquidity to 
the Exchange.
    The Exchange believes its proposal will allocate its charges and 
credits fairly among its market participants. The Exchange also 
believes it is equitable to recalibrate or revise existing criteria for 
its credits to ensure that the credits remain appropriate for 
participants to attain.
    The Exchange believes that its 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 
enhances price discovery and improves the overall quality of the equity 
markets.
    The Exchange believes that its proposal to decrease the non-
displayed volume threshold percentage to qualify for an existing 
$0.0029 transaction credit is not unfairly discriminatory because the 
credit is available to all members. The Exchange also believes it is 
not unfairly discriminatory to recalibrate or revise existing criteria 
for its credits to ensure that the credits are effective and readily 
attainable.
    Any Participant that is dissatisfied with the proposal 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 participant at a competitive disadvantage. Any 
member may elect to achieve the levels of liquidity required in order 
to qualify for the credit. The Exchange notes that its members are free 
to trade on other venues to the extent they believe that the Exchange's 
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 fee and credit changes.
Intermarket Competition
    The Exchange believes that the proposed change to its schedule of 
credits to amend the criteria to qualify for an existing $0.0029 
transaction credit as noted above 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 live 
exchanges and from off-exchange venues, which include 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

[[Page 64125]]

fees 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 fees in response, and because market 
participants may readily adjust their order routing practices, the 
Exchange believes that the degree to which fee changes in this market 
may impose any burden on competition is extremely limited.
    The proposed change to the qualifying criteria for an existing 
credit is reflective of this competition because, as a threshold issue, 
the Exchange is a relatively small market so its ability to burden 
intermarket competition is limited. In this regard, even the largest 
U.S. equities exchange by volume only has 17-18% 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 comprises more than 40% of industry volume in recent months.
    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) of the Act \7\ and paragraph (f) of Rule 19b-4 \8\ 
thereunder.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f).
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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-2022-053 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-2022-053. 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-2022-053 and should be submitted 
on or before November 14, 2022.

    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,
Deputy Secretary.
[FR Doc. 2022-22839 Filed 10-20-22; 8:45 am]
BILLING CODE 8011-01-P

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