Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118(e), 64475-64478 [2023-20167]
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Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices
and would support the identified need
for greater regional Tribal resources.
i. How would you see a tribal arts
council benefiting your community?
ii. What regional needs would apply
to tribal arts councils?
iii. Would a government point of
contact specific to arts grants be
beneficial?
iv. What support would Tribal Arts
Councils require from NEA?
v. Do you currently work with your
State and/or Local Arts Agency?
Dated: August 24, 2023.
RaShaunda Thomas,
Deputy Director, Office of Administrative
Services & Contracts, National Endowment
for the Arts.
[FR Doc. 2023–19550 Filed 9–18–23; 8:45 am]
BILLING CODE 7537–01–P
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2023–265 and CP2023–268;
MC2023–267 and CP2023–270; MC2023–268
and CP2023–271]
New Postal Products
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is noticing a
recent Postal Service filing for the
Commission’s consideration concerning
a negotiated service agreement. This
notice informs the public of the filing,
invites public comment, and takes other
administrative steps.
DATES: Comments are due: September
21, 2023.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
ddrumheller on DSK120RN23PROD with NOTICES1
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the Market Dominant or
the Competitive product list, or the
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modification of an existing product
currently appearing on the Market
Dominant or the Competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s website (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3011.301.1
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern Market Dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
Competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2023–265 and
CP2023–268; Filing Title: USPS Request
to Add Priority Mail Express
International, Priority Mail International
& First-Class Package International
Service Contract 27 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: September 13, 2023; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Jennaca D. Upperman; Comments Due:
September 21, 2023.
2. Docket No(s).: MC2023–267 and
CP2023–270; Filing Title: USPS Request
to Add Priority Mail Express, Priority
Mail & USPS Ground Advantage
Contract 8 to Competitive Product List
1 See Docket No. RM2018–3, Order Adopting
Final Rules Relating to Non-Public Information,
June 27, 2018, Attachment A at 19–22 (Order No.
4679).
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and Notice of Filing Materials Under
Seal; Filing Acceptance Date: September
13, 2023; Filing Authority: 39 U.S.C.
3642, 39 CFR 3040.130 through
3040.135, and 39 CFR 3035.105; Public
Representative: Kenneth R. Moeller;
Comments Due: September 21, 2023.
3. Docket No(s).: MC2023–268 and
CP2023–271; Filing Title: USPS Request
to Add USPS Ground Advantage
Contract 3 to Competitive Product List
and Notice of Filing Materials Under
Seal; Filing Acceptance Date: September
13, 2023; Filing Authority: 39 U.S.C.
3642, 39 CFR 3040.130 through
3040.135, and 39 CFR 3035.105; Public
Representative: Kenneth R. Moeller;
Comments Due: September 21, 2023.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2023–20263 Filed 9–18–23; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98375; File No. SR–BX–
2023–022]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Equity 7,
Section 118(e)
September 13, 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
September 1, 2023, Nasdaq BX, Inc.
(‘‘BX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s transaction fees 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
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices
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 the
Statutory Basis for, the Proposed Rule
Change
ddrumheller on DSK120RN23PROD with NOTICES1
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 at Equity 7, Section
118(e). Specifically, the Exchange
proposes to amend the qualifying
criteria for an existing fee for RPI Orders
that provide liquidity.
Currently, the Exchange charges a
$0.0018 per share executed fee for RPI
Orders entered by a member that (i)
quotes RPI Orders in at least 1,200
symbols on average per day and (ii)
provides liquidity through RPI Orders
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 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 Rule 4702(b)(5).
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equal to or exceeding an average daily
volume of 2,500,000 shares. The
Exchange proposes to amend the
qualifying criteria for the $0.0018 fee by
eliminating the requirement to quote
RPI Orders in at least 1,200 symbols on
average per day. Thus, a member could
qualify for the $0.0018 per share
executed fee for RPI Orders if the
member provides liquidity through RPI
Orders equal to or exceeding an average
daily volume of 2,500,000 shares.
The Exchange hopes that the less
strict qualifying criteria (i.e., removing
the requirement to quote RPI Orders in
at least 1,200 symbols on average per
day) will encourage members to
increase liquidity providing activity in
RPI Orders 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.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with section 6(b)
of the Act,5 in general, and furthers the
objectives of sections 6(b)(4) and 6(b)(5)
of the Act,6 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange’s proposed change to
its schedule of fees 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
5 15
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U.S.C. 78f(b)(4) and (5).
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of order flow from broker
dealers’. . . .’’ 7
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 8
Numerous indicia demonstrate the
competitive nature of this market. For
example, clear substitutes to the
Exchange exist in the market for equity
security transaction services. The
Exchange is only one of several equity
venues to which market participants
may direct their order flow. 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 it is reasonable
and equitable to amend the qualifying
criteria for the $0.0018 per share
executed fee for RPI Orders by
eliminating the requirement to quote
RPI Orders in at least 1,200 symbols on
average per day. As discussed above, the
Exchange’s goal is to increase liquidity
adding activity in RPI Orders on its
platform. It is reasonable and equitable
to address this need by easing the
qualification requirements as an
incentive for members to increase their
liquidity activity in RPI Orders 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.
7 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir.
2010) (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782–83
(December 9, 2008) (SR–NYSEArca–2006–21)).
8 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
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The Exchange believes that the
proposal is not unfairly discriminatory.
As an initial matter, the Exchange
believes that nothing about its volumebased tiered pricing model is inherently
unfair; instead, it is a rational pricing
model that is well-established and
ubiquitous in today’s economy among
firms in various industries—from cobranded credit cards to grocery stores to
cellular telephone data plans—that use
it to reward the loyalty of their best
customers that provide high levels of
business activity and incent other
customers to increase the extent of their
business activity. It is also a pricing
model that the Exchange and its
competitors have long employed with
the assent of the Commission. It is fair
because it incentivizes customer activity
that increases liquidity, enhances price
discovery, and improves the overall
quality of the equity markets.
The Exchange intends for its proposal
to improve market quality for all
members that submit RPI and Retail
Orders on the Exchange and by
extension attract more liquidity to the
market, improving market wide quality
and price discovery. Although net
adders of liquidity for RPI Orders will
benefit most from the proposal, this
result is fair insofar as increased
liquidity adding activity in RPI Orders
will help to improve market quality and
the attractiveness of the Exchange to all
existing and prospective retail
participants.
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.
ddrumheller on DSK120RN23PROD with NOTICES1
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. The proposal eases the
qualification requirements for the
$0.0018 per share executed fee for RPI
Orders. Members may modify their
businesses so that they can meet the
required threshold and pay lower
charges. As noted above, all members of
the Exchange will benefit from any
increase in market activity that the
proposal effectuates. Moreover,
members are free to trade on other
venues to the extent they believe that
the fees assessed, and credits provided,
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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 its
proposed modification to its schedule of
fees 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 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 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 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.
In sum, the Exchange intends for the
proposed change to its fees to increase
member incentives to engage in the
addition of liquidity on the Exchange. 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
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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.9
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–
BX–2023–022 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–BX–2023–022. 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
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Federal Register / Vol. 88, No. 180 / Tuesday, September 19, 2023 / Notices
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
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–BX–2023–022 and should be
submitted on or before October 10,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–20167 Filed 9–18–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98378; File No. SR–BX–
2023–023]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Equity 4,
Rules 4702 and 4703
ddrumheller on DSK120RN23PROD with NOTICES1
September 13, 2023.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on
September 5, 2023, Nasdaq BX, Inc.
(‘‘BX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
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.
10 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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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Equity 4, Rules 4702 and 4703.
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 proposes amendments
to its Rules to address inconsistencies
between the Rule Text and observed
System behavior as well as behavior
unaccounted for in the existing Rule
text, as follows. This proposal is similar
to a rule change filed by the Exchange’s
sister exchange, the Nasdaq Stock
Market, LLC on August 16, 2023.3
First Rule Change
The first proposed rule change
addresses an edge case of inconsistency
between the Rule text and System
behavior, this time regarding Market
Maker Peg Orders.4 Rule 4702(b)(7)(A)
3 See Securities Exchange Act Release No. 34–
98225 (August 16, 2023), 88 FR 60255 (August 31,
2023) (SR–NASDAQ–2023–030). The Exchange’s
proposal differs from that of Nasdaq in that it
excludes changes to Order Types and Attributes
that are inapplicable to the Exchange due to its
absence of opening and closing crosses.
4 Pursuant to Rule 4702(b)(7)(A), a ‘‘Market Maker
Peg Order’’ is an Order Type designed to allow a
Market Maker to maintain a continuous two-sided
quotation at a displayed price that is compliant
with the quotation requirements for Market Makers
set forth in Equity 2, Section 5(a)(2). The displayed
price of the Market Maker Peg Order is set with
reference to a ‘‘Reference Price’’ in order to keep the
displayed price of the Market Maker Peg Order
within a bounded price range. The Reference Price
for a Market Maker Peg Order to buy (sell) is the
then-current National Best Bid (National Best
Offer), or if no such National Best Bid or National
Best Offer, the most recent reported last-sale eligible
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states that, if after entry of a Market
Maker Peg Order that has a displayed
price based on the NBBO, and the
NBBO subsequently shifts such that the
displayed price of the Market Maker Peg
Order to buy (sell) is equal to or greater
(less) than the National Best Bid (or
National Best Offer), the Market Maker
Peg Order will not be subsequently
repriced until a new reference price is
established that is more aggressive than
the displayed price of the Market Maker
Peg Order. System testing revealed that
the System does not reprice Market
Maker Peg Orders in this scenario, but
only if such Orders are in round lot
sizes, whereas it does reprice such
Orders when they are in odd lot sizes.
After evaluation, the Exchange
determined to maintain this System
behavior and amend the Rule to
conform to it. The Exchange proposes to
do so because the existing language
proscribing repricing only makes sense
within the context of round lot Market
Maker Peg Orders, which this scenario
would set a new NBBO and when they
do so, cannot reprice with respect to the
reference price they just set. By contrast,
odd lot Market Maker Peg Orders are
ineligible to set the NBBO, and do not
have this same problem. Accordingly,
the Exchange proposes to amend Rule
4702(b)(7)(A) to clarify that the
prohibition against repricing only
applies to Market Maker Peg Orders in
round lot sizes.
Second Rule Change
The second proposal would amend
Equity 4, Rule 4703(h), to correct its
description of behavior of the NonDisplayed portion of Orders with the
Reserve Attribute.5 Rule 4703(h)
provides as follows, in pertinent part:
In all cases, if the remaining size of the
Non-Displayed Order is less than the fixed or
random amount stipulated by the Participant,
the full remaining size of the Non-Displayed
trade from the responsible single plan processor for
that day, or if none, the previous closing price of
the security as adjusted to reflect any corporate
actions (e.g., dividends or stock splits) in the
security.
5 ‘‘Reserve Size’’ is, in part, an Order Attribute
that ‘‘permits a Participant to stipulate that an
Order Type that is displayed may have its displayed
size replenished from additional non-displayed
size.’’ Rule 4703(h). The Rule also states that
Reserve ‘‘is not available for Orders that are not
displayed; provided, however, that if a Participant
enters Reserve Size for a Non-Displayed Order with
a Time-in-Force of IOC, the full size of the Order,
including Reserve Size, will be processed as a NonDisplayed Order.’’ Id. In addition to the change
proposed above, the Exchange proposes to
eliminate from the immediately preceding language
‘‘with a Time-in-Force of IOC’’ because the
Exchange does not assess a reason to include this
qualifier. The statement that a Non-Displayed Order
with Reserve will be entirely non-displayed is true
even as to Non-Displayed Orders with other TIFs.
E:\FR\FM\19SEN1.SGM
19SEN1
]]>Agencies
[Federal Register Volume 88, Number 180 (Tuesday, September 19, 2023)]
[Notices]
[Pages 64475-64478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-20167]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98375; File No. SR-BX-2023-022]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7,
Section 118(e)
September 13, 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 September 1, 2023, Nasdaq BX, Inc. (``BX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the self-regulatory organization. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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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 transaction fees 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
[[Page 64476]]
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange operates on the ``taker-maker'' 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).
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\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 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 Rule 4702(b)(5).
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The purpose of the proposed rule change is to amend the Exchange's
schedule of fees at Equity 7, Section 118(e). Specifically, the
Exchange proposes to amend the qualifying criteria for an existing fee
for RPI Orders that provide liquidity.
Currently, the Exchange charges a $0.0018 per share executed fee
for RPI Orders entered by a member that (i) quotes RPI Orders in at
least 1,200 symbols on average per day and (ii) provides liquidity
through RPI Orders equal to or exceeding an average daily volume of
2,500,000 shares. The Exchange proposes to amend the qualifying
criteria for the $0.0018 fee by eliminating the requirement to quote
RPI Orders in at least 1,200 symbols on average per day. Thus, a member
could qualify for the $0.0018 per share executed fee for RPI Orders if
the member provides liquidity through RPI Orders equal to or exceeding
an average daily volume of 2,500,000 shares.
The Exchange hopes that the less strict qualifying criteria (i.e.,
removing the requirement to quote RPI Orders in at least 1,200 symbols
on average per day) will encourage members to increase liquidity
providing activity in RPI Orders 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.
2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\5\ in general, and furthers the objectives of sections
6(b)(4) and 6(b)(5) of the Act,\6\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees and other charges
among members and issuers and other persons using any facility, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposed change to its schedule of fees 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'. . . .'' \7\
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\7\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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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.'' \8\
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\8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
equity security transaction services. The Exchange is only one of
several equity venues to which market participants may direct their
order flow. 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 it is reasonable and equitable to amend the
qualifying criteria for the $0.0018 per share executed fee for RPI
Orders by eliminating the requirement to quote RPI Orders in at least
1,200 symbols on average per day. As discussed above, the Exchange's
goal is to increase liquidity adding activity in RPI Orders on its
platform. It is reasonable and equitable to address this need by easing
the qualification requirements as an incentive for members to increase
their liquidity activity in RPI Orders 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.
[[Page 64477]]
The Exchange believes that the proposal is not unfairly
discriminatory. As an initial matter, the Exchange believes that
nothing about its volume-based tiered pricing model is inherently
unfair; instead, it is a rational pricing model that is well-
established and ubiquitous in today's economy among firms in various
industries--from co-branded credit cards to grocery stores to cellular
telephone data plans--that use it to reward the loyalty of their best
customers that provide high levels of business activity and incent
other customers to increase the extent of their business activity. It
is also a pricing model that the Exchange and its competitors have long
employed with the assent of the Commission. It is fair because it
incentivizes customer activity that increases liquidity, enhances price
discovery, and improves the overall quality of the equity markets.
The Exchange intends for its proposal to improve market quality for
all members that submit RPI and Retail Orders on the Exchange and by
extension attract more liquidity to the market, improving market wide
quality and price discovery. Although net adders of liquidity for RPI
Orders will benefit most from the proposal, this result is fair insofar
as increased liquidity adding activity in RPI Orders will help to
improve market quality and the attractiveness of the Exchange to all
existing and prospective retail participants.
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. The
proposal eases the qualification requirements for the $0.0018 per share
executed fee for RPI Orders. Members may modify their businesses so
that they can meet the required threshold and pay lower charges. As
noted above, all members of the Exchange will benefit from any increase
in market activity that the proposal effectuates. Moreover, members are
free to trade on other venues to the extent they believe that the fees
assessed, and credits provided, are not attractive. As one can observe
by looking at any market share chart, price competition between
exchanges is fierce, with liquidity and market share moving freely
between exchanges in reaction to fee and credit changes.
Intermarket Competition
The Exchange believes that its proposed modification to its
schedule of fees 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 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 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 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.
In sum, the Exchange intends for the proposed change to its fees to
increase member incentives to engage in the addition of liquidity on
the Exchange. 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.\9\
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\9\ 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-BX-2023-022 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-BX-2023-022. 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
[[Page 64478]]
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 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-BX-2023-022 and should be submitted on
or before October 10, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-20167 Filed 9-18-23; 8:45 am]
BILLING CODE 8011-01-P
