Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118, 56667-56670 [2023-17758]
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Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Notices
the Postal Service’s request(s), if any,
can be accessed through compliance
[Docket Nos. MC2023–225 and CP2023–228;
with the requirements of 39 CFR
MC2023–226 and CP2023–229; MC2023–227
1
and CP2023–230; MC2023–228 and CP2023– 3011.301.
The
Commission
invites comments on
231; MC2023–229 and CP2023–232]
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
New Postal Products
with the policies of title 39. For
AGENCY: Postal Regulatory Commission.
request(s) that the Postal Service states
ACTION: Notice.
concern Market Dominant product(s),
applicable statutory and regulatory
SUMMARY: The Commission is noticing a
requirements include 39 U.S.C. 3622, 39
recent Postal Service filing for the
U.S.C. 3642, 39 CFR part 3030, and 39
Commission’s consideration concerning
CFR part 3040, subpart B. For request(s)
a negotiated service agreement. This
that the Postal Service states concern
notice informs the public of the filing,
Competitive product(s), applicable
invites public comment, and takes other
statutory and regulatory requirements
administrative steps.
include 39 U.S.C. 3632, 39 U.S.C. 3633,
DATES: Comments are due: August 22,
39 U.S.C. 3642, 39 CFR part 3035, and
2023.
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
ADDRESSES: Submit comments
section II.
electronically via the Commission’s
Filing Online system at https://
II. Docketed Proceeding(s)
www.prc.gov. Those who cannot submit
1. Docket No(s).: MC2023–225 and
comments electronically should contact
the person identified in the FOR FURTHER CP2023–228; Filing Title: USPS Request
to Add Priority Mail Contract 783 to
INFORMATION CONTACT section by
Competitive Product List and Notice of
telephone for advice on filing
Filing Materials Under Seal; Filing
alternatives.
Acceptance Date: August 14, 2023;
FOR FURTHER INFORMATION CONTACT:
Filing Authority: 39 U.S.C. 3642, 39 CFR
David A. Trissell, General Counsel, at
3040.130 through 3040.135, and 39 CFR
202–789–6820.
3035.105; Public Representative:
SUPPLEMENTARY INFORMATION:
Christopher C. Mohr; Comments Due:
August 22, 2023.
Table of Contents
2. Docket No(s).: MC2023–226 and
I. Introduction
CP2023–229; Filing Title: USPS Request
II. Docketed Proceeding(s)
to Add Priority Mail Contract 784 to
I. Introduction
Competitive Product List and Notice of
The Commission gives notice that the Filing Materials Under Seal; Filing
Acceptance Date: August 14, 2023;
Postal Service filed request(s) for the
Commission to consider matters related Filing Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
to negotiated service agreement(s). The
3035.105; Public Representative:
request(s) may propose the addition or
Christopher C. Mohr; Comments Due:
removal of a negotiated service
agreement from the Market Dominant or August 22, 2023.
3. Docket No(s).: MC2023–227 and
the Competitive product list, or the
CP2023–230; Filing Title: USPS Request
modification of an existing product
to Add Priority Mail & USPS Ground
currently appearing on the Market
Advantage Contract 25 to Competitive
Dominant or the Competitive product
Product List and Notice of Filing
list.
Materials Under Seal; Filing Acceptance
Section II identifies the docket
Date: August 14, 2023; Filing Authority:
number(s) associated with each Postal
39 U.S.C. 3642, 39 CFR 3040.130
Service request, the title of each Postal
Service request, the request’s acceptance through 3040.135, and 39 CFR 3035.105;
Public Representative: Arif Hafiz;
date, and the authority cited by the
Postal Service for each request. For each Comments Due: August 22, 2023.
4. Docket No(s).: MC2023–228 and
request, the Commission appoints an
CP2023–231;
Filing Title: USPS Request
officer of the Commission to represent
the interests of the general public in the to Add First-Class Package Service &
Parcel Select Contract 7 to Competitive
proceeding, pursuant to 39 U.S.C. 505
Product List and Notice of Filing
(Public Representative). Section II also
Materials Under Seal; Filing Acceptance
establishes comment deadline(s)
Date: August 14, 2023; Filing Authority:
pertaining to each request.
The public portions of the Postal
1 See Docket No. RM2018–3, Order Adopting
Service’s request(s) can be accessed via
Final Rules Relating to Non-Public Information,
the Commission’s website (https://
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
www.prc.gov). Non-public portions of
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POSTAL REGULATORY COMMISSION
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56667
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Arif Hafiz;
Comments Due: August 22, 2023.
5. Docket No(s).: MC2023–229 and
CP2023–232; Filing Title: USPS Request
to Add Priority Mail & USPS Ground
Advantage Contract 26 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: August 14, 2023; Filing Authority:
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Arif Hafiz;
Comments Due: August 22, 2023.
This Notice will be published in the
Federal Register.
Mallory Richards,
Attorney-Advisor.
[FR Doc. 2023–17822 Filed 8–17–23; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98128; File No. SR–
NASDAQ–2023–028]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Equity 7, Section 118
August 14, 2023.
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 August 1,
2023, 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) to establish a new
credit tier, 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.
1 15
2 17
E:\FR\FM\18AUN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Notices
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
lotter on DSK11XQN23PROD with NOTICES1
1. Purpose
The purpose of the proposed rule
change is to amend the schedule of
credits it provides to members, pursuant
to Equity 7, Section 118(a), by
establishing a new credit tier.
Specifically, the Exchange proposes to
provide a new credit for displayed
quotes/orders (other than Supplemental
Orders or Designated Retail Orders) of
$0.0030 per share executed to a member
with: (i) shares of liquidity provided in
all securities that represent 0.70% or
more (in securities priced at or greater
than $1) of Consolidated Volume (in
securities priced at or greater than $1);
(ii) shares of liquidity provided with
respect to securities that are listed on
exchanges other than Nasdaq or NYSE
that represent 0.15% or more of
Consolidated Volume; and (iii) shares of
non-displayed liquidity (other than
midpoint orders) provided in all
securities that represent 0.10% or more
of Consolidated Volume. The new credit
of $0.0030 per share executed would
apply to displayed quotes/orders (other
than Supplemental Orders or
Designated Retail Orders) in Tape A,
Tape B, and Tape C. Members would
not be permitted to combine the new
$0.0030 per share executed with QMM
credits set forth in Equity 7, Section
114(e).
The purpose of this credit is to
provide members with a new incentive
to add significant amounts of liquidity
to the Exchange and, in particular, to
add significant volumes of liquidity in
securities in Tape B and in nondisplayed liquidity (other than midpoint
orders) in all Tapes. An increase in
liquidity adding activity on the
Exchange would help to improve the
quality of the market for all participants.
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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.
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
3 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (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)).
6 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
4 15
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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 establish a new $0.0030
per share executed credit as a means of
incentivizing members to provide
meaningful amounts of liquidity to the
Exchange, particularly in securities in
Tape B as well as non-displayed orders
(other than midpoint orders) in
securities in any Tape. To the extent
that the Exchange succeeds in
increasing liquidity adding activity on
the Exchange, including in securities in
Tape B and non-displayed order flow
(other than midpoint orders), then the
Exchange would experience
improvements in its market quality,
which would benefit all market
participants.
The Exchange also believes that it is
equitable to establish a new $0.0030 per
share executed credit. Again, this
proposed credit stands to improve the
market quality of the Exchange, to the
benefit of all participants, by
incentivizing members to provide
meaningful amounts of liquidity to the
Exchange, particularly in securities in
Tape B as well as in non-displayed
orders (other than midpoint orders) in
securities in any Tape. The Exchange
also believes that it is equitable to target
the credit, in part, to liquidity adding
activity in securities in Tape B, and
non-displayed orders (other than
midpoint orders) in any Tape, because
the Exchange believes that the market
for such securities and orders would
benefit from additional liquidity. The
Exchange notes that it has limited funds
to apply in the form of incentives, and
thus must deploy those limited funds to
incentives that it believes will be the
most effective at improving market
quality in areas that the Exchange
determines are in need of improvement.
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
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Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Notices
model that is well-established and
ubiquitous in today’s economy among
firms in various industries—from cobranded credit cards to grocery stores to
cellular telephone data plans—that use
it to reward the loyalty of their best
customers that provide high levels of
business activity and incent other
customers to increase the extent of their
business activity. It is also a pricing
model that the Exchange and its
competitors have long employed with
the assent of the Commission. It is fair
because it enhances price discovery and
improves the overall quality of the
equity markets.
The Exchange believes that its
proposed $0.0030 per share executed
credit is not unfairly discriminatory
because the credit is available to all
members. Moreover, the proposed credit
stands to improve the overall market
quality of the Exchange, to the benefit
of all participants, by incentivizing
members to provide meaningful
amounts of liquidity to the Exchange,
including in securities in Tape B as well
as in non-displayed orders (other than
midpoint orders) in securities in any
Tape. It is not unfairly discriminatory to
target the credit, in part, to liquidity
adding activity in securities in Tape B
and non-displayed orders (other than
midpoint orders) in all Tapes, because
the Exchange believes that the market
for such securities and orders would
benefit from additional liquidity. The
Exchange notes that it has limited funds
to apply in the form of incentives, and
thus must deploy those limited funds to
incentives that it believes will be the
most effective at improving market
quality in areas that the Exchange
determines are in need of improvement.
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.
lotter on DSK11XQN23PROD with NOTICES1
Intramarket Competition
The Exchange does not believe that its
proposal will place any category of
Exchange participant at a competitive
disadvantage. To the contrary, the
proposed change will provide an
opportunity for members to receive a
new credit based on their marketimproving behavior. Any member may
elect to provide the levels of market
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activity required in order to receive the
new credit.
The Exchange notes that its members
are free to trade on other venues to the
extent they believe that the Exchange’s
schedule of credits 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
In terms of inter-market competition,
the Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fee
levels at a particular venue to be
excessive, or rebate opportunities
available at other venues to be more
favorable. In such an environment, the
Exchange must continually adjust its
fees to remain 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
and credit changes in this market may
impose any burden on competition is
extremely limited.
Even as one of the largest U.S.
equities exchanges by volume, the
Exchange has less than 20% market
share, which in most markets could
hardly be categorized as having enough
market power to burden competition.
Moreover, as noted above, price
competition between exchanges is
fierce, with liquidity and market share
moving freely between exchanges in
reaction to fee and credit changes. This
is in addition to free flow of order flow
to and among off-exchange venues,
which comprises more than 40% of
industry volume.
The Exchange’s proposal is procompetitive in that the Exchange
intends for the proposal to increase
liquidity on the Exchange and thereby
render the Exchange a more attractive
and vibrant venue to market
participants.
If the change proposed herein is
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 change will impair the ability
of members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
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56669
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.7
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–2023–028 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–2023–028. 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
7 15
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U.S.C. 78s(b)(3)(A)(ii).
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Federal Register / Vol. 88, No. 159 / Friday, August 18, 2023 / Notices
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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NASDAQ–2023–028 and should be
submitted on or before September 8,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–17758 Filed 8–17–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98127; File No. SR–BX–
2023–018]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Schedule of Fees and
Credits at Equity 7, Section 118
August 14, 2023
lotter on DSK11XQN23PROD with NOTICES1
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 August 1,
2023, Nasdaq BX, Inc. (‘‘BX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
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 fees and credits
8 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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at Equity 7, Section 118(e), as described
further below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/bx/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 operates on the ‘‘takermaker’’ model, whereby it generally
pays credits to members that take
liquidity and charges fees to members
that provide liquidity. Currently, the
Exchange has a schedule, at Equity 7,
Section 118(e), which consists of several
different credits and fees for Retail
Orders 3 and Retail Price Improvement
Orders 4 under Rule 4780 (Retail Price
Improvement Program).
The purpose of the proposed rule
change is to amend the Exchange’s
schedule of fees and credits, at Equity
7, Section 118(e). Specifically, the
Exchange proposes to (1) establish a
new fee for certain RPI Orders that
provide liquidity to the Exchange; and
3 Retail Orders shall mean an order type with a
Non-Display Order Attribute submitted to the
Exchange by a Retail Member Organization (as
defined in Rule 4780). A Retail Order must be an
agency Order, or riskless principal Order that
satisfies the criteria of FINRA Rule 5320.03. The
Retail Order must reflect trading interest of a
natural person with no change made to the terms
of the underlying order of the natural person with
respect to price (except in the case of a market order
that is changed to a marketable limit order) or side
of market and that does not originate from a trading
algorithm or any other computerized methodology.
See Equity 4, Rule 4702(b)(6).
4 Retail Price Improving (‘‘RPI’’) Orders shall
mean an Order Type with a Non-Display Order
Attribute that is held on the Exchange Book in order
to provide liquidity at a price at least $0.001 better
than the NBBO through a special execution process
described in Rule 4780. A Retail Price Improving
Order may be entered in price increments of $0.001.
RPI Orders collectively may be referred to as ‘‘RPI
Interest.’’ See Equity 4, Rule 4702(b)(5).
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(2) specify that certain Retail Orders that
access liquidity shall be excluded in the
calculation of a member’s volume for
purposes of Equity 7, Section 118.
Currently, the Exchange charges
certain fees for RPI Orders that provide
liquidity, ranging from $0.0018 per
share executed to $0.0025 per share
executed. The Exchange proposes to
adopt a new fee of $0.0003 per share
executed for RPI Orders that provide
liquidity for accepted Retail Orders
greater than or equal to $10,000. The
Exchange hopes that the proposed fee
will encourage members to increase
liquidity providing activity in RPI
Orders greater than or equal to $10,000
on the Exchange. If the proposal is
effective in achieving this purpose, then
the quality of the Exchange’s market
will improve, particularly with respect
to RPI and Retail Orders to the benefit
of all participants, especially those who
submit RPI and Retail Orders.
The Exchange also proposes to
exclude accepted Retail Orders greater
than or equal to $10,000 that access
liquidity provided by RPI Orders for
purposes of determining a member’s
volume for Equity 7, Section 118.5 The
Exchange has limited resources to
devote to incentive programs, and it is
appropriate for the Exchange to
reallocate these incentives periodically
in a manner that best achieves the
Exchange’s overall mix of objectives.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,6 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,7 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
5 For example, pursuant to Equity 7, Section
118(a), the Exchange provides a credit of $0.0018
per share executed for an Order that accesses
liquidity (excluding orders with Midpoint pegging
and excluding orders that receive price
improvement and execute against an order with a
Non-displayed price) entered by a member: (i)
whose combined liquidity removing and adding
activities equal or exceed 0.15% of total
Consolidated Volume during a month; (ii) that
accesses liquidity equal to or exceeding 0.05% of
total Consolidated Volume during a month; and (iii)
that adds liquidity equal to or exceeding an average
daily volume of 50,000 shares in a month. The
proposed change would exclude accepted Retail
Orders greater than or equal to $10,000 that access
liquidity provided by RPI Orders from the volume
calculations for purposes of determining whether or
not a member qualifies for this $0.0018 per share
executed credit.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(4) and (5).
E:\FR\FM\18AUN1.SGM
18AUN1
]]>Agencies
[Federal Register Volume 88, Number 159 (Friday, August 18, 2023)]
[Notices]
[Pages 56667-56670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17758]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98128; File No. SR-NASDAQ-2023-028]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Equity 7, Section 118
August 14, 2023.
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 August 1, 2023, 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 schedule of credits
at Equity 7, Section 118(a) to establish a new credit tier, 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.
[[Page 56668]]
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 schedule of
credits it provides to members, pursuant to Equity 7, Section 118(a),
by establishing a new credit tier.
Specifically, the Exchange proposes to provide a new credit for
displayed quotes/orders (other than Supplemental Orders or Designated
Retail Orders) of $0.0030 per share executed to a member with: (i)
shares of liquidity provided in all securities that represent 0.70% or
more (in securities priced at or greater than $1) of Consolidated
Volume (in securities priced at or greater than $1); (ii) shares of
liquidity provided with respect to securities that are listed on
exchanges other than Nasdaq or NYSE that represent 0.15% or more of
Consolidated Volume; and (iii) shares of non-displayed liquidity (other
than midpoint orders) provided in all securities that represent 0.10%
or more of Consolidated Volume. The new credit of $0.0030 per share
executed would apply to displayed quotes/orders (other than
Supplemental Orders or Designated Retail Orders) in Tape A, Tape B, and
Tape C. Members would not be permitted to combine the new $0.0030 per
share executed with QMM credits set forth in Equity 7, Section 114(e).
The purpose of this credit is to provide members with a new
incentive to add significant amounts of liquidity to the Exchange and,
in particular, to add significant volumes of liquidity in securities in
Tape B and in non-displayed liquidity (other than midpoint orders) in
all Tapes. An increase in liquidity adding activity on the Exchange
would help to improve the quality of the market for all participants.
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.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4) and (5).
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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. 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\
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\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)).
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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.'' \6\
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\6\ 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. 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 establish a new
$0.0030 per share executed credit as a means of incentivizing members
to provide meaningful amounts of liquidity to the Exchange,
particularly in securities in Tape B as well as non-displayed orders
(other than midpoint orders) in securities in any Tape. To the extent
that the Exchange succeeds in increasing liquidity adding activity on
the Exchange, including in securities in Tape B and non-displayed order
flow (other than midpoint orders), then the Exchange would experience
improvements in its market quality, which would benefit all market
participants.
The Exchange also believes that it is equitable to establish a new
$0.0030 per share executed credit. Again, this proposed credit stands
to improve the market quality of the Exchange, to the benefit of all
participants, by incentivizing members to provide meaningful amounts of
liquidity to the Exchange, particularly in securities in Tape B as well
as in non-displayed orders (other than midpoint orders) in securities
in any Tape. The Exchange also believes that it is equitable to target
the credit, in part, to liquidity adding activity in securities in Tape
B, and non-displayed orders (other than midpoint orders) in any Tape,
because the Exchange believes that the market for such securities and
orders would benefit from additional liquidity. The Exchange notes that
it has limited funds to apply in the form of incentives, and thus must
deploy those limited funds to incentives that it believes will be the
most effective at improving market quality in areas that the Exchange
determines are in need of improvement.
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
[[Page 56669]]
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 proposed $0.0030 per share executed
credit is not unfairly discriminatory because the credit is available
to all members. Moreover, the proposed credit stands to improve the
overall market quality of the Exchange, to the benefit of all
participants, by incentivizing members to provide meaningful amounts of
liquidity to the Exchange, including in securities in Tape B as well as
in non-displayed orders (other than midpoint orders) in securities in
any Tape. It is not unfairly discriminatory to target the credit, in
part, to liquidity adding activity in securities in Tape B and non-
displayed orders (other than midpoint orders) in all Tapes, because the
Exchange believes that the market for such securities and orders would
benefit from additional liquidity. The Exchange notes that it has
limited funds to apply in the form of incentives, and thus must deploy
those limited funds to incentives that it believes will be the most
effective at improving market quality in areas that the Exchange
determines are in need of improvement.
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. To the
contrary, the proposed change will provide an opportunity for members
to receive a new credit based on their market-improving behavior. Any
member may elect to provide the levels of market activity required in
order to receive the new credit.
The Exchange notes that its members are free to trade on other
venues to the extent they believe that the Exchange's schedule of
credits 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
In terms of inter-market competition, the Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem fee levels at a
particular venue to be excessive, or rebate opportunities available at
other venues to be more favorable. In such an environment, the Exchange
must continually adjust its fees to remain 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 and
credit changes in this market may impose any burden on competition is
extremely limited.
Even as one of the largest U.S. equities exchanges by volume, the
Exchange has less than 20% market share, which in most markets could
hardly be categorized as having enough market power to burden
competition. Moreover, as noted above, price competition between
exchanges is fierce, with liquidity and market share moving freely
between exchanges in reaction to fee and credit changes. This is in
addition to free flow of order flow to and among off-exchange venues,
which comprises more than 40% of industry volume.
The Exchange's proposal is pro-competitive in that the Exchange
intends for the proposal to increase liquidity on the Exchange and
thereby render the Exchange a more attractive and vibrant venue to
market participants.
If the change proposed herein is 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
change 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.\7\
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\7\ 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-2023-028 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-2023-028. 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
[[Page 56670]]
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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NASDAQ-2023-028 and should
be submitted on or before September 8, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-17758 Filed 8-17-23; 8:45 am]
BILLING CODE 8011-01-P
