Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Transaction Fees at Equity 7, Section 118(e), 71891-71894 [2023-22926]
Download as PDF
<![CDATA[
Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices
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.
ddrumheller on DSK120RN23PROD with NOTICES1
II. Docketed Proceeding(s)
1. Docket No(s).: MC2024–7 and
CP2024–7; Filing Title: USPS Request to
Add Priority Mail Express International,
Priority Mail International & First-Class
Package International Service Contract
28 to Competitive Product List and
Notice of Filing Materials Under Seal;
Filing Acceptance Date: October 12,
2023; Filing Authority: 39 U.S.C. 3642,
39 CFR 3040.130 through 3040.135, and
39 CFR 3035.105; Public Representative:
Katalin K. Clendenin; Comments Due:
October 20, 2023.
2. Docket No(s).: MC2024–8 and
CP2024–8; Filing Title: USPS Request to
Add Priority Mail & USPS Ground
Advantage Contract 73 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 12, 2023; Filing Authority:
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Christopher C.
Mohr; Comments Due: October 20, 2023.
3. Docket No(s).: MC2024–9 and
CP2024–9; Filing Title: USPS Request to
Add Priority Mail & USPS Ground
Advantage Contract 74 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 12, 2023; Filing Authority:
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).
VerDate Sep<11>2014
18:01 Oct 17, 2023
Jkt 262001
39 U.S.C. 3642, 39 CFR 3040.130
through 3040.135, and 39 CFR 3035.105;
Public Representative: Jennaca D.
Upperman; Comments Due: October 20,
2023.
4. Docket No(s).: MC2024–10 and
CP2024–10; Filing Title: USPS Request
to Add Priority Mail & USPS Ground
Advantage Contract 75 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: October 12, 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: October 20,
2023.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2023–22974 Filed 10–17–23; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98731; File No. SR–BX–
2023–024]
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Transaction
Fees at Equity 7, Section 118(e)
October 12, 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 29, 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 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 transaction fees at Equity 7,
Section 118(e), as described further
below.
While these amendments are effective
upon filing, the Exchange has
designated the proposed amendments to
be operative on October 1, 2023.
The text of the proposed rule change
is available on the Exchange’s website at
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00075
Fmt 4703
Sfmt 4703
71891
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 the
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 at Equity 7, Section
118(e). Specifically, the Exchange
proposes to amend the qualifying
criteria for two existing fees for RPI
Orders and update a related sunset date
for one of the aforementioned fees.
Currently, the Exchange charges a
$0.0018 per share executed fee for RPI
Orders entered by a member that
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).
E:\FR\FM\18OCN1.SGM
18OCN1
ddrumheller on DSK120RN23PROD with NOTICES1
71892
Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices
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.
Under the proposed change, 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 0.02% of
total Consolidated Volume during a
month (rather than an average daily
volume of 2,500,000 shares, as the
current Rule provides).
The Exchange believes that by
modifying the qualifying criteria for the
$0.0018 per share executed fee to
require that a member provides liquidity
through RPI Orders equal to or
exceeding 0.02% of total Consolidated
Volume during a month rather than an
average daily volume of 2,500,000
shares in order to qualify, the criteria
would be more representative of the
overall volume trading in the market. In
a fluctuating volume environment, the
change to the qualifying criteria would
ease the burden to qualify for the fee.
The Exchange hopes that modifying the
qualifying criteria for the $0.0018 fee as
described above 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.
Currently, the Exchange charges a
$0.0020 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; (ii)
provides liquidity through RPI Orders
equal to or exceeding an average daily
volume of 1,000,000 shares; and (iii)
increases its average daily volume of
liquidity provided in RPI Orders at least
10% relative to the month of March
2023. This fee is applicable through
September 30, 2023. The Exchange
proposes to amend the qualifying
criteria for the $0.0020 fee. First, the
Exchange proposes to revise the criteria
to require that a member provides
liquidity through RPI Orders equal to or
exceeding 0.01% of total Consolidated
Volume during a month instead of the
current criteria that a member provides
liquidity through RPI Orders equal to or
exceeding an average daily volume of
1,000,000 shares. Second, the Exchange
proposes to revise the criteria that a
customer increases its average daily
volume of liquidity provided in RPI
Orders at least 10% relative to the
month of March 2023 by modifying the
VerDate Sep<11>2014
18:01 Oct 17, 2023
Jkt 262001
reference month from March 2023 to
April 2023. Additionally, the Exchange
proposes to offer the fee through
October 31, 2023. Specifically, the
Exchange proposes to charge a $0.0020
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; (ii) provides liquidity
through RPI Orders equal to or
exceeding 0.01% of total Consolidated
Volume during a month (rather than an
average daily volume of 1,000,000
shares); and (iii) increases its average
daily volume of liquidity provided in
RPI Orders at least 10% relative to the
month of April 2023 (rather than March
2023). The proposed rule change
provides that such fee is applicable
through October 31, 2023.
The Exchange believes that by
modifying the qualifying criteria for the
$0.0020 per share executed fee to
require that a member provides liquidity
through RPI Orders equal to or
exceeding 0.01% of total Consolidated
Volume during a month rather than an
average daily volume of 1,000,000
shares in order to qualify, the criteria
would be more representative of the
overall volume trading in the market. In
a fluctuating volume environment, the
change to the qualifying criteria would
ease the burden to qualify for the fee.
Additionally, the Exchange hopes that
the proposed revision to the qualifying
criteria to a more recent reference
month, together with the change to
require RPI Orders equal to or exceeding
0.01% of total Consolidated Volume,
will encourage members to increase
liquidity providing activity in RPI
Orders on the Exchange relative to April
2023. 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.
At this time, the Exchange proposes to
amend the sunset date for the proposed
fee of $0.0020 per share executed. The
fee will be available through October 31,
2023.5 By revising the reference month
in the qualifying criteria and extending
the sunset date, the Exchange intends to
continue to encourage members to earn
lower fees by increasing liquidity
providing activity in RPI Orders on the
Exchange. The Exchange will continue
to evaluate the appropriate parameters
going forward to encourage increasing
5 The proposed $0.0020 per share executed fee
would be available through October 31, 2023 but
would not be available thereafter. For example, as
of November 1, 2023, the Exchange would no longer
offer the incentive as proposed.
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
liquidity providing activity in RPI
Orders on the Exchange.
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
discrimination between customers,
issuers, brokers, or dealers.
The Exchange’s proposed changes to
its schedule of credits are reasonable in
several respects. As a threshold matter,
the Exchange is subject to significant
competitive forces in the market for
equity securities transaction services
that constrain its pricing determinations
in that market. The fact that this market
is competitive has long been recognized
by the courts. In NetCoalition v.
Securities and Exchange Commission,
the D.C. Circuit stated as follows: ‘‘[n]o
one disputes that competition for order
flow is ‘fierce.’ . . . As the SEC
explained, ‘[i]n the U.S. national market
system, buyers and sellers of securities,
and the broker-dealers that act as their
order-routing agents, have a wide range
of choices of where to route orders for
execution’; [and] ‘no exchange can
afford to take its market share
percentages for granted’ because ‘no
exchange possesses a monopoly,
regulatory or otherwise, in the execution
of order flow from broker
dealers’. . . .’’ 8
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.’’ 9
Numerous indicia demonstrate the
competitive nature of this market. For
6 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
8 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)).
9 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
7 15
E:\FR\FM\18OCN1.SGM
18OCN1
ddrumheller on DSK120RN23PROD with NOTICES1
Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices
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 requiring
that a member provides liquidity
through RPI Orders equal to or
exceeding 0.02% of total Consolidated
Volume during a month rather than
requiring an average daily volume of
2,500,000 shares. Similarly, the
Exchange believes it is reasonable and
equitable to amend the qualifying
criteria for the $0.0020 per share
executed fee for RPI Orders by requiring
that a member provides liquidity
through RPI Orders equal to or
exceeding 0.01% of total Consolidated
Volume rather than requiring an average
daily volume of 1,000,000 shares. The
Exchange’s goal is to make the criteria
more representative of the overall
volume trading in the market and
increase liquidity adding activity in RPI
Orders on its platform. It is reasonable
and equitable to address this need by
modifying 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.
The Exchange also believes it is
reasonable and equitable to amend the
reference date in the qualifying criteria
for the $0.0020 per share executed fee
for RPI Orders, to provide, in part, that
in order to qualify for such fee, a
member must increase its average daily
volume of liquidity provided in RPI
Orders at least 10% relative to the
month of April 2023 (instead of March
2023). The Exchange’s goal is to
continue to encourage an increase in
VerDate Sep<11>2014
18:01 Oct 17, 2023
Jkt 262001
liquidity adding activity in RPI Orders
on its platform. It is reasonable and
equitable to address this need by
updating the requirement for a member
to increase its average daily volume of
liquidity provided in RPI Orders at least
10% relative to the month of April 2023,
instead of March 2023, as an incentive
for members to increase their liquidity
activity in RPI Orders on the Exchange
relative to a more current reference
month. 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’s proposal to sunset the
$0.0020 fee at the end of October 2023
is also reasonable because the Exchange
is updating the reference month in the
qualifying criteria as discussed above
and the Exchange believes that despite
only offering this fee for a limited time,
the incentive may continue to encourage
members to earn lower fees by
increasing liquidity providing activity
in RPI Orders on the Exchange.
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. The Exchange’s proposal to
sunset the $0.0020 fee incentive at the
end of October 2023 is equitable and not
PO 00000
Frm 00077
Fmt 4703
Sfmt 4703
71893
unfairly discriminatory because the fee
will be available to all members during
the month it is offered.
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. As described above, the
proposal modifies the qualification
requirements for the $0.0018 per share
executed fee and the $0.0020 per share
executed fee for RPI Orders and revises
the sunset date for the $0.0020 per share
executed fee. 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. The Exchange’s
proposal to sunset the fee at the end of
October does not impose an undue
burden on competition because any
member can qualify for the fee during
the month it is offered. 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 modifications 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
E:\FR\FM\18OCN1.SGM
18OCN1
71894
Federal Register / Vol. 88, No. 200 / Wednesday, October 18, 2023 / Notices
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 changes to its fees to increase
member incentives to engage in the
addition of liquidity on the Exchange. If
the changes proposed herein are
unattractive to market participants, it is
likely that the Exchange will lose
market share as a result. Accordingly,
the Exchange does not believe that the
proposed changes will impair the ability
of members or competing order
execution venues to maintain their
competitive standing in the financial
markets.
ddrumheller on DSK120RN23PROD with NOTICES1
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to section
19(b)(3)(A)(ii) of the Act.10
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) necessary or appropriate in
10 15
U.S.C. 78s(b)(3)(A)(ii).
VerDate Sep<11>2014
18:01 Oct 17, 2023
Jkt 262001
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.
submitted on or before November 8,
2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Sherry R. Haywood,
Assistant Secretary.
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:
[FR Doc. 2023–22926 Filed 10–17–23; 8:45 am]
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–2023–024 on the subject line.
Self-Regulatory Organizations; MIAX
Emerald, LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Fee
Schedule for Purge Ports
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–2023–024. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of 10
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–2023–024 and should be
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–98734; File No. SR–
EMERALD–2023–26]
October 12, 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 29, 2023, MIAX Emerald,
LLC (‘‘MIAX Emerald’’ 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 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
MIAX Emerald Options Exchange Fee
Schedule (the ‘‘Fee Schedule’’) to
amend fees for Purge Ports.3
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-options/emerald-options/rule-filings,
at MIAX’s principal office, 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
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 The proposed fee change is based on a recent
proposal by Nasdaq Phlx LLC (‘‘Phlx’’) to adopt fees
for purge ports. See Securities Exchange Act
Release No. 97825 (June 30, 2023), 88 FR 43405
(July 7, 2023) (SR–Phlx–2023–28).
1 15
E:\FR\FM\18OCN1.SGM
18OCN1
]]>Agencies
[Federal Register Volume 88, Number 200 (Wednesday, October 18, 2023)]
[Notices]
[Pages 71891-71894]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22926]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98731; File No. SR-BX-2023-024]
Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Its
Transaction Fees at Equity 7, Section 118(e)
October 12, 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 29, 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 Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's transaction fees at
Equity 7, Section 118(e), as described further below.
While these amendments are effective upon filing, the Exchange has
designated the proposed amendments to be operative on October 1, 2023.
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 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).
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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 two existing
fees for RPI Orders and update a related sunset date for one of the
aforementioned fees.
Currently, the Exchange charges a $0.0018 per share executed fee
for RPI Orders entered by a member that
[[Page 71892]]
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. Under the proposed change, 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 0.02% of total Consolidated Volume during a month (rather
than an average daily volume of 2,500,000 shares, as the current Rule
provides).
The Exchange believes that by modifying the qualifying criteria for
the $0.0018 per share executed fee to require that a member provides
liquidity through RPI Orders equal to or exceeding 0.02% of total
Consolidated Volume during a month rather than an average daily volume
of 2,500,000 shares in order to qualify, the criteria would be more
representative of the overall volume trading in the market. In a
fluctuating volume environment, the change to the qualifying criteria
would ease the burden to qualify for the fee. The Exchange hopes that
modifying the qualifying criteria for the $0.0018 fee as described
above 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.
Currently, the Exchange charges a $0.0020 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; (ii) provides liquidity through
RPI Orders equal to or exceeding an average daily volume of 1,000,000
shares; and (iii) increases its average daily volume of liquidity
provided in RPI Orders at least 10% relative to the month of March
2023. This fee is applicable through September 30, 2023. The Exchange
proposes to amend the qualifying criteria for the $0.0020 fee. First,
the Exchange proposes to revise the criteria to require that a member
provides liquidity through RPI Orders equal to or exceeding 0.01% of
total Consolidated Volume during a month instead of the current
criteria that a member provides liquidity through RPI Orders equal to
or exceeding an average daily volume of 1,000,000 shares. Second, the
Exchange proposes to revise the criteria that a customer increases its
average daily volume of liquidity provided in RPI Orders at least 10%
relative to the month of March 2023 by modifying the reference month
from March 2023 to April 2023. Additionally, the Exchange proposes to
offer the fee through October 31, 2023. Specifically, the Exchange
proposes to charge a $0.0020 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; (ii) provides liquidity through RPI Orders
equal to or exceeding 0.01% of total Consolidated Volume during a month
(rather than an average daily volume of 1,000,000 shares); and (iii)
increases its average daily volume of liquidity provided in RPI Orders
at least 10% relative to the month of April 2023 (rather than March
2023). The proposed rule change provides that such fee is applicable
through October 31, 2023.
The Exchange believes that by modifying the qualifying criteria for
the $0.0020 per share executed fee to require that a member provides
liquidity through RPI Orders equal to or exceeding 0.01% of total
Consolidated Volume during a month rather than an average daily volume
of 1,000,000 shares in order to qualify, the criteria would be more
representative of the overall volume trading in the market. In a
fluctuating volume environment, the change to the qualifying criteria
would ease the burden to qualify for the fee. Additionally, the
Exchange hopes that the proposed revision to the qualifying criteria to
a more recent reference month, together with the change to require RPI
Orders equal to or exceeding 0.01% of total Consolidated Volume, will
encourage members to increase liquidity providing activity in RPI
Orders on the Exchange relative to April 2023. 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.
At this time, the Exchange proposes to amend the sunset date for
the proposed fee of $0.0020 per share executed. The fee will be
available through October 31, 2023.\5\ By revising the reference month
in the qualifying criteria and extending the sunset date, the Exchange
intends to continue to encourage members to earn lower fees by
increasing liquidity providing activity in RPI Orders on the Exchange.
The Exchange will continue to evaluate the appropriate parameters going
forward to encourage increasing liquidity providing activity in RPI
Orders on the Exchange.
---------------------------------------------------------------------------
\5\ The proposed $0.0020 per share executed fee would be
available through October 31, 2023 but would not be available
thereafter. For example, as of November 1, 2023, the Exchange would
no longer offer the incentive as proposed.
---------------------------------------------------------------------------
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 discrimination between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
The Exchange's proposed changes to its schedule of credits are
reasonable in several respects. As a threshold matter, the Exchange is
subject to significant competitive forces in the market for equity
securities transaction services that constrain its pricing
determinations in that market. The fact that this market is competitive
has long been recognized by the courts. In NetCoalition v. Securities
and Exchange Commission, the D.C. Circuit stated as follows: ``[n]o one
disputes that competition for order flow is `fierce.' . . . As the SEC
explained, `[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \8\
---------------------------------------------------------------------------
\8\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010)
(quoting Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
---------------------------------------------------------------------------
The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, while adopting a series of steps to improve the current market
model, the Commission highlighted the importance of market forces in
determining prices and SRO revenues and, also, recognized that current
regulation of the market system ``has been remarkably successful in
promoting market competition in its broader forms that are most
important to investors and listed companies.'' \9\
---------------------------------------------------------------------------
\9\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------
Numerous indicia demonstrate the competitive nature of this market.
For
[[Page 71893]]
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 requiring that a member provides liquidity through RPI Orders
equal to or exceeding 0.02% of total Consolidated Volume during a month
rather than requiring an average daily volume of 2,500,000 shares.
Similarly, the Exchange believes it is reasonable and equitable to
amend the qualifying criteria for the $0.0020 per share executed fee
for RPI Orders by requiring that a member provides liquidity through
RPI Orders equal to or exceeding 0.01% of total Consolidated Volume
rather than requiring an average daily volume of 1,000,000 shares. The
Exchange's goal is to make the criteria more representative of the
overall volume trading in the market and increase liquidity adding
activity in RPI Orders on its platform. It is reasonable and equitable
to address this need by modifying 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.
The Exchange also believes it is reasonable and equitable to amend
the reference date in the qualifying criteria for the $0.0020 per share
executed fee for RPI Orders, to provide, in part, that in order to
qualify for such fee, a member must increase its average daily volume
of liquidity provided in RPI Orders at least 10% relative to the month
of April 2023 (instead of March 2023). The Exchange's goal is to
continue to encourage an increase in liquidity adding activity in RPI
Orders on its platform. It is reasonable and equitable to address this
need by updating the requirement for a member to increase its average
daily volume of liquidity provided in RPI Orders at least 10% relative
to the month of April 2023, instead of March 2023, as an incentive for
members to increase their liquidity activity in RPI Orders on the
Exchange relative to a more current reference month. 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's proposal to sunset the $0.0020 fee at the end of
October 2023 is also reasonable because the Exchange is updating the
reference month in the qualifying criteria as discussed above and the
Exchange believes that despite only offering this fee for a limited
time, the incentive may continue to encourage members to earn lower
fees by increasing liquidity providing activity in RPI Orders on the
Exchange.
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. The Exchange's proposal
to sunset the $0.0020 fee incentive at the end of October 2023 is
equitable and not unfairly discriminatory because the fee will be
available to all members during the month it is offered.
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. As
described above, the proposal modifies the qualification requirements
for the $0.0018 per share executed fee and the $0.0020 per share
executed fee for RPI Orders and revises the sunset date for the $0.0020
per share executed fee. 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. The Exchange's proposal
to sunset the fee at the end of October does not impose an undue burden
on competition because any member can qualify for the fee during the
month it is offered. 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 modifications 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
[[Page 71894]]
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 changes to its fees
to increase member incentives to engage in the addition of liquidity on
the Exchange. If the changes proposed herein are unattractive to market
participants, it is likely that the Exchange will lose market share as
a result. Accordingly, the Exchange does not believe that the proposed
changes will impair the ability of members or competing order execution
venues to maintain their competitive standing in the financial markets.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act.\10\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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-2023-024 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-2023-024. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
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-2023-024 and should be
submitted on or before November 8, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-22926 Filed 10-17-23; 8:45 am]
BILLING CODE 8011-01-P
