Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118, 13113-13116 [2024-03452]

Download as PDF Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices Analysis Agency: Retirement Operations, Retirement Services, Office of Personnel Management. Title: Application to Make Deposit or Redeposit (CSRS), and Application to Make Service Credit Payment for Civilian Service (FERS). OMB Number: 3206–0134. Affected Public: Individual or Households. Number of Respondents: 150. Estimated Time per Respondent: 30 minutes. Total Burden Hours: 75. Office of Personnel Management. Kayyonne Marston, Federal Register Liaison. [FR Doc. 2024–03443 Filed 2–20–24; 8:45 am] BILLING CODE 6325–38–P POSTAL REGULATORY COMMISSION [Docket Nos. MC2024–191 and CP2024–197] 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: February 23, 2024. 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 I. Introduction II. Docketed Proceeding(s) khammond on DSKJM1Z7X2PROD with NOTICES 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 modification of an existing product VerDate Sep<11>2014 17:43 Feb 20, 2024 Jkt 262001 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).: MC2024–191 and CP2024–197; Filing Title: USPS Request to Add Priority Mail & USPS Ground Advantage Contract 190 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: February 15, 2024; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Alireza Motameni; Comments Due: February 23, 2024. This Notice will be published in the Federal Register. Erica A. Barker, Secretary. [FR Doc. 2024–03500 Filed 2–20–24; 8:45 am] BILLING CODE 7710–FW–P 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). PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 13113 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–99534; File No. SR–BX– 2024–004] Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, Section 118 February 14, 2024. 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 February 1, 2024, Nasdaq BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its pricing schedule at Equity 7, Section 118(a), as described further below. The text of the proposed rule change is available on the Exchange’s website at https://listingcenter.nasdaq.com/ rulebook/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 purpose of the proposed rule change is to provide an additional calculation for purposes of determining whether a member qualifies for fees set 1 15 2 17 E:\FR\FM\21FEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 21FEN1 khammond on DSKJM1Z7X2PROD with NOTICES 13114 Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices forth in Equity 7, Section 118(a) that pertain to providing liquidity. 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. In Equity 7, Section 118(a), the Exchange sets forth such credits and charges applicable for all securities prices at or above $1. Members may qualify for tiers of discounted fees and premium credits based, in part, upon the volume of their activities on the Exchange as a percentage of total ‘‘Consolidated Volume.’’ Pursuant to Equity 7, Section 118(a), the term ‘‘Consolidated Volume’’ means the total consolidated volume reported to all consolidated transaction reporting plans by all exchanges and trade reporting facilities during a month in equity securities, excluding executed orders with a size of less than one round lot. For purposes of calculating Consolidated Volume and the extent of a member’s trading activity, the following are excluded from both total Consolidated Volume and the member’s trading activity: (1) the date of the annual reconstitution of the Russell Investments Indexes; (2) the dates on which stock options, stock index options, and stock index futures expire (i.e., the third Friday of March, June, September, and December); (3) the dates of the rebalance of the MSCI Equities Indexes (i.e., on a quarterly basis); (4) the dates of the rebalance of the S&P 400, S&P 500, and S&P 600 Indexes (i.e., on a quarterly basis); and (5) the date of the annual reconstitution of the Nasdaq100 and Nasdaq Biotechnology Indexes. Generally, the ratio of consolidated volumes in securities priced at or above $1 (‘‘dollar plus volume’’) relative to consolidated volumes inclusive of securities priced below a dollar is usually stable from month to month, such that ‘‘Consolidated Volume’’ has been a reasonable baseline for determining tiered incentives for members that execute dollar plus volume on the Exchange. However, there have been a few months where volumes in securities priced below a dollar (‘‘sub-dollar volume’’) have been elevated, thereby impacting the ratio mentioned above. Anomalous rises in sub-dollar volume stand to have a material adverse impact on members’ qualifications for pricing tiers/incentives because such qualifications depend members upon achieving threshold percentages of volumes as a percentage of Consolidated Volume, and an extraordinary rise in sub-dollar volume stands to elevate Consolidated Volume. As a result, VerDate Sep<11>2014 17:43 Feb 20, 2024 Jkt 262001 members may find it more difficult, if not practically impossible, to qualify for or to continue to qualify for their existing pricing tiers during months where there are such rises in sub-dollar volumes, even if their dollar plus volumes have not diminished relative to prior months. The Exchange believes that it would be unfair for its members that execute significant dollar plus volumes on the Exchange to fail to achieve or to lose their existing pricing tiers for such volumes due to anomalous behavior that is extraneous to them. Therefore, the Exchange wishes to amend its Rules to help avoid extraordinary spikes in subdollar volumes from adversely affecting a member’s qualification of pricing tiers for their dollar plus stock executions. Accordingly, the Exchange proposes to amend its pricing schedule at Equity 7, Section 118(a) to state that, for purposes of calculating a member’s qualifications for fees that pertain to providing liquidity set forth in Section 118(a), the Exchange will calculate a member’s volume and total Consolidated Volume twice. First, the Exchange will calculate a member’s volume and total Consolidated Volume as presently set forth in Equity 7, Section 118(a) (i.e., inclusive of volume that consists of executions in securities priced less than $1). Second, the Exchange will calculate a member’s volume and total Consolidated Volume exclusive of volume that consists of executions in securities priced less than $1, while also increasing the distinct qualifying volume percentage thresholds, as set forth in Section 118(a), by 10%. Thereafter, the Exchange proposes to assess which of these two calculations would qualify the member for the most advantageous fees for the month and then it will apply those to the member. Although the Exchange wishes to avoid extraordinary spikes in sub-dollar volumes from adversely affecting a member’s qualification of pricing tiers for their dollar plus stock executions, the Exchange proposes to include certain limits on the proposal to efficiently allocate the Exchange’s limited resources for pricing tiers/ incentives. Specifically, as noted above, the Exchange proposes to limit the application of the proposed calculation excluding sub-dollar volumes to those incentives in Section 118(a) that pertain to providing liquidity. In addition, as noted above, the Exchange proposes to increase the distinct qualifying volume percentage thresholds set forth in Section 118(a) by 10% for purposes of the proposed calculation excluding sub- PO 00000 Frm 00082 Fmt 4703 Sfmt 4703 dollar volumes.3 The Exchange wishes to impose such limitations in order to limit the cost impact on the Exchange, while still providing some relief to members in months with extraordinary spikes in sub-dollar volumes. The Exchange has limited resources to devote to incentive programs, and it is appropriate for the Exchange to reallocate these incentives periodically in a manner that best achieves the Exchange’s overall mix of objectives. 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,4 in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,5 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 pricing schedule 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 3 For example, the Exchange assess a fee of $0.0020 per share executed to members providing liquidity for a displayed order entered by a member that adds liquidity equal to or exceeding 0.05% of total Consolidated Volume during a month. See Equity 7, Section 118(a). Under the proposal, in addition to calculating the member’s volume and total Consolidated Volume exclusive of volume that consists of executions in securities priced less than $1, the distinct qualifying volume percentage threshold would be increased by 10%. Therefore, for purposes of this example, in order to qualify for the fee tier using volumes excluding sub-dollar activity, the member would need to add liquidity equal to or exceeding 0.055% of total Consolidated Volume during a month (i.e., 0.05% + (10%)(0.05%)). 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(4) and (5). E:\FR\FM\21FEN1.SGM 21FEN1 Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices of order flow from broker dealers’. . . .’’ 6 The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ‘‘has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.’’ 7 Numerous indicia demonstrate the competitive nature of this market. For example, clear substitutes to the Exchange exist in the market for equity security transaction services. The Exchange is only one of several equity venues to which market participants may direct their order flow. Competing equity exchanges offer similar tiered pricing structures to that of the Exchange, including schedules of rebates and fees that apply based upon members achieving certain volume thresholds. Within this environment, market participants can freely and often do shift their order flow among the Exchange and competing venues in response to changes in their respective pricing schedules. The Exchange believes that the proposal is reasonable and equitable because, in its absence, members may experience material adverse impacts on their ability to qualify for certain incentives during a month with an anomalous rise in sub-dollar volumes. The Exchange does not wish to penalize members that execute significant volumes on the Exchange due to anomalous and extraneous trading activities of a small number of firms in sub-dollar securities. The proposed rule would seek to provide a means for members that provide liquidity to avoid such a penalty by determining whether calculating member volume and total Consolidated Volume to include or exclude sub-dollar volume 8 would result in Exchange members qualifying khammond on DSKJM1Z7X2PROD with NOTICES 6 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782–83 (December 9, 2008) (SR–NYSEArca–2006–21)). 7 Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (‘‘Regulation NMS Adopting Release’’). 8 As noted above, in considering whether a member meets qualifying fee criteria using the proposed calculation excluding sub-dollar volumes, the distinct qualifying volume percentage thresholds would be increased by 10%. VerDate Sep<11>2014 17:43 Feb 20, 2024 Jkt 262001 for the most advantageous charges, and then applying the calculations that would result in the incentives for providing liquidity that are most advantageous to each member. The Exchange believes it is reasonable to limit the proposal by applying the proposed calculation to fees that pertain to providing liquidity and increasing the distinct qualifying volume percentage thresholds by 10% when using the proposed calculation excluding subdollar volumes because the Exchange has limited resources to devote to incentive programs, and it is appropriate for the Exchange to reallocate these incentives periodically in a manner that best achieves the Exchange’s overall mix of objectives. The Exchange believes that the proposed rule change is an equitable allocation and is not unfairly discriminatory because the Exchange does not intend for the proposal to advantage any particular member and the Exchange will apply the proposed calculation to all similarly situated members. Those participants that are dissatisfied with the changes to the Exchange’s pricing schedule are free to shift their order flow to competing venues that provide more favorable fees or generous incentives. 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 Exchange intends for its proposal to help avoid pricing disadvantages due to anomalous spikes in sub-dollar volumes and is not intended to provide a competitive advantage to any particular member. The Exchange also intends for its proposal to reallocate its limited resources more efficiently and to align them with the Exchange’s overall mix of objectives. The Exchange notes that its members are free to trade on other venues to the extent they believe that the proposal is not attractive. As one can observe by looking at any market share chart, price competition between exchanges is fierce, with liquidity and market share moving freely between exchanges in reaction to fee and credit changes. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 13115 Intermarket Competition In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its credits and 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 credits and fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which credit or fee changes in this market may impose any burden on competition is extremely limited. The proposal is reflective of this competition. 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 upwards of 40% of industry volume. In sum, if the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. 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 9 15 E:\FR\FM\21FEN1.SGM U.S.C. 78s(b)(3)(A)(ii). 21FEN1 13116 Federal Register / Vol. 89, No. 35 / Wednesday, February 21, 2024 / Notices khammond on DSKJM1Z7X2PROD with NOTICES 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. obscene or subject to copyright protection. All submissions should refer to file number SR–BX–2024–004, and should be submitted on or before March 13, 2024. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.10 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. 2024–03452 Filed 2–20–24; 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–2024–004 on the subject line. Barings Corporate Investors, et al. 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–2024–004. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. 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 VerDate Sep<11>2014 17:43 Feb 20, 2024 Jkt 262001 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 35131; File No. 812–15488] Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’). ACTION: Notice. AGENCY: Notice of application for an order (‘‘Order’’) under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ‘‘Act’’) and rule 17d–1 under the Act to permit certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d–1 under the Act. Summary of Application: Applicants request an order to amend a previous order granted by the Commission that permits certain business development companies (‘‘BDCs’’) and closed-end management investment companies to co-invest in portfolio companies with each other and with certain affiliated investment entities. Applicants: Barings Corporate Investors, Barings Global Short Duration High Yield Fund, CI Subsidiary Trust, Barings Participation Investors, PI Subsidiary Trust, Barings LLC, Massachusetts Mutual Life Insurance Company, C.M. Life Insurance company, Barings Finance LLC, Tower Square Capital Partners IV, L.P., Tower Square Capital Partners IV–A, L.P., Barings BDC, Inc., Energy Hardware Holdings, Inc., SIC Investment Holdings LLC, Barings Private Credit Corporation, Barings Capital Investment Corporation, BCIC Holdings, Inc., Barings Private Equity Opportunities and Commitments Fund, Barings Global Credit Fund (LUX)—Segregated Loan Account 5, ` R.L., Barings Segregated Loans 5 S.A BAYVK R Private Debt SCS, SICAV–FIS, ` R.L., Barings BAYVK R PD 1 Loan S.A Umbrella Fund plc—Barings European High Yield Bond Fund, Barings Global Investment Funds plc—Barings European Loan Fund, Barings European 10 17 PO 00000 CFR 200.30–3(a)(12). Frm 00084 Fmt 4703 Sfmt 4703 Loan Limited, BCF Europe Funding Limited, BCF Senior Funding I Designated Activity Company, BCF Senior Funding I LLC, MassMutual Global Floating Rate Fund, Barings Umbrella Fund plc—Barings Global High Yield Bond Fund, Barings Global Investment Funds 2 plc—Barings Global High Yield Credit Strategies Fund, Barings Global High Yield Credit Strategies Limited, Barings Global Investment Funds plc—Barings Global Loan Fund, Barings Global Loan Limited, Barings Global Credit Fund (LUX)—Barings Global Private Loan Fund, Barings Global Private Loans 1 ` R.L., Barings Umbrella Fund plc— S.A Barings Global Senior Secured Bond Fund, Barings CMS Fund, LP, Barings Umbrella Fund plc—Barings U.S. High Yield Bond Fund, Barings Direct Lending 2018 LP, Barings European Direct Lending 1 L.P., Barings European ` R.L., Barings Direct Lending 1 S.A Global Credit Fund (LUX)—Barings European Private Loan Fund II, Barings ` R.L., European Private Loans 2 S.A Barings Global Credit Fund (LUX)— Barings European Private Loan Fund III, ` Barings European Private Loans 3 S.A R.L., Barings Global Credit Fund (LUX)—Barings European Private Loan Fund III (A), Barings European Private ` R.L., Barings Global Loans 3A S.A Investment Funds plc—Barings Global Loan and High Yield Bond Fund, Barings Global Loan and High Yield Bond Limited, Barings Global Investment Funds plc—Barings Global Loan Select Responsible Exclusions Fund, Barings Global Loan Select Responsible Exclusions Limited, Barings Global Credit Fund (LUX)— Barings Global Private Loan Fund 2, ` R.L., Barings Global Private Loans 2 S.A Barings Global Credit Fund (LUX)— Barings Global Private Loan Fund 3, ` R.L., Barings Global Private Loans 3 S.A Barings Global Private Loan Fund 4 SCSp, Barings Global Private Loans 4 ` R.L., Barings Global Private Loan S.A Fund 4(S) SCSp, Barings Global Private ` R.L., Barings Global Loans 4(S) S.A Credit Fund (LUX)—Segregated Loan Account 3, Barings Segregated Loans 3 ` R.L., Barings Global Credit Fund S.A (LUX)—Segregated Loan Account 1, ` R.L., Barings Segregated Loans 1 S.A Barings Global Credit Fund (LUX)— Segregated Loan Account 2, Barings ` R.L., Barings Segregated Loans 2 S.A Global Investment Funds plc—Global Private Loan Strategy Fund 1, Barings Global Private Loan Strategy 1 Limited, Barings Global Credit Fund (LUX)— Segregated Loan Account 4, Barings Global Credit Fund (LUX)—Segregated Loan Account 6, Barings Segregated E:\FR\FM\21FEN1.SGM 21FEN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 89, Number 35 (Wednesday, February 21, 2024)]
[Notices]
[Pages 13113-13116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03452]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99534; File No. SR-BX-2024-004]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend Equity 7, 
Section 118

February 14, 2024.
    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 February 1, 2024, Nasdaq BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III below, 
which Items have been prepared by the Exchange. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
---------------------------------------------------------------------------

    \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 its pricing schedule at Equity 7, 
Section 118(a), as described further below.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/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 purpose of the proposed rule change is to provide an additional 
calculation for purposes of determining whether a member qualifies for 
fees set

[[Page 13114]]

forth in Equity 7, Section 118(a) that pertain to providing liquidity.
    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. In Equity 7, Section 118(a), the 
Exchange sets forth such credits and charges applicable for all 
securities prices at or above $1. Members may qualify for tiers of 
discounted fees and premium credits based, in part, upon the volume of 
their activities on the Exchange as a percentage of total 
``Consolidated Volume.''
    Pursuant to Equity 7, Section 118(a), the term ``Consolidated 
Volume'' means the total consolidated volume reported to all 
consolidated transaction reporting plans by all exchanges and trade 
reporting facilities during a month in equity securities, excluding 
executed orders with a size of less than one round lot. For purposes of 
calculating Consolidated Volume and the extent of a member's trading 
activity, the following are excluded from both total Consolidated 
Volume and the member's trading activity: (1) the date of the annual 
reconstitution of the Russell Investments Indexes; (2) the dates on 
which stock options, stock index options, and stock index futures 
expire (i.e., the third Friday of March, June, September, and 
December); (3) the dates of the rebalance of the MSCI Equities Indexes 
(i.e., on a quarterly basis); (4) the dates of the rebalance of the S&P 
400, S&P 500, and S&P 600 Indexes (i.e., on a quarterly basis); and (5) 
the date of the annual reconstitution of the Nasdaq-100 and Nasdaq 
Biotechnology Indexes.
    Generally, the ratio of consolidated volumes in securities priced 
at or above $1 (``dollar plus volume'') relative to consolidated 
volumes inclusive of securities priced below a dollar is usually stable 
from month to month, such that ``Consolidated Volume'' has been a 
reasonable baseline for determining tiered incentives for members that 
execute dollar plus volume on the Exchange. However, there have been a 
few months where volumes in securities priced below a dollar (``sub-
dollar volume'') have been elevated, thereby impacting the ratio 
mentioned above.
    Anomalous rises in sub-dollar volume stand to have a material 
adverse impact on members' qualifications for pricing tiers/incentives 
because such qualifications depend members upon achieving threshold 
percentages of volumes as a percentage of Consolidated Volume, and an 
extraordinary rise in sub-dollar volume stands to elevate Consolidated 
Volume. As a result, members may find it more difficult, if not 
practically impossible, to qualify for or to continue to qualify for 
their existing pricing tiers during months where there are such rises 
in sub-dollar volumes, even if their dollar plus volumes have not 
diminished relative to prior months.
    The Exchange believes that it would be unfair for its members that 
execute significant dollar plus volumes on the Exchange to fail to 
achieve or to lose their existing pricing tiers for such volumes due to 
anomalous behavior that is extraneous to them. Therefore, the Exchange 
wishes to amend its Rules to help avoid extraordinary spikes in sub-
dollar volumes from adversely affecting a member's qualification of 
pricing tiers for their dollar plus stock executions.
    Accordingly, the Exchange proposes to amend its pricing schedule at 
Equity 7, Section 118(a) to state that, for purposes of calculating a 
member's qualifications for fees that pertain to providing liquidity 
set forth in Section 118(a), the Exchange will calculate a member's 
volume and total Consolidated Volume twice. First, the Exchange will 
calculate a member's volume and total Consolidated Volume as presently 
set forth in Equity 7, Section 118(a) (i.e., inclusive of volume that 
consists of executions in securities priced less than $1). Second, the 
Exchange will calculate a member's volume and total Consolidated Volume 
exclusive of volume that consists of executions in securities priced 
less than $1, while also increasing the distinct qualifying volume 
percentage thresholds, as set forth in Section 118(a), by 10%. 
Thereafter, the Exchange proposes to assess which of these two 
calculations would qualify the member for the most advantageous fees 
for the month and then it will apply those to the member.
    Although the Exchange wishes to avoid extraordinary spikes in sub-
dollar volumes from adversely affecting a member's qualification of 
pricing tiers for their dollar plus stock executions, the Exchange 
proposes to include certain limits on the proposal to efficiently 
allocate the Exchange's limited resources for pricing tiers/incentives. 
Specifically, as noted above, the Exchange proposes to limit the 
application of the proposed calculation excluding sub-dollar volumes to 
those incentives in Section 118(a) that pertain to providing liquidity. 
In addition, as noted above, the Exchange proposes to increase the 
distinct qualifying volume percentage thresholds set forth in Section 
118(a) by 10% for purposes of the proposed calculation excluding sub-
dollar volumes.\3\ The Exchange wishes to impose such limitations in 
order to limit the cost impact on the Exchange, while still providing 
some relief to members in months with extraordinary spikes in sub-
dollar volumes. The Exchange has limited resources to devote to 
incentive programs, and it is appropriate for the Exchange to 
reallocate these incentives periodically in a manner that best achieves 
the Exchange's overall mix of objectives.
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    \3\ For example, the Exchange assess a fee of $0.0020 per share 
executed to members providing liquidity for a displayed order 
entered by a member that adds liquidity equal to or exceeding 0.05% 
of total Consolidated Volume during a month. See Equity 7, Section 
118(a). Under the proposal, in addition to calculating the member's 
volume and total Consolidated Volume exclusive of volume that 
consists of executions in securities priced less than $1, the 
distinct qualifying volume percentage threshold would be increased 
by 10%. Therefore, for purposes of this example, in order to qualify 
for the fee tier using volumes excluding sub-dollar activity, the 
member would need to add liquidity equal to or exceeding 0.055% of 
total Consolidated Volume during a month (i.e., 0.05% + 
(10%)(0.05%)).
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2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\5\ 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.
---------------------------------------------------------------------------

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

    The Exchange's proposed changes to its pricing schedule 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

[[Page 13115]]

of order flow from broker dealers'. . . .'' \6\
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    \6\ NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir. 2010) 
(quoting Securities Exchange Act Release No. 59039 (December 2, 
2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-
21)).
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    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \7\
---------------------------------------------------------------------------

    \7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Numerous indicia demonstrate the competitive nature of this market. 
For example, clear substitutes to the Exchange exist in the market for 
equity security transaction services. The Exchange is only one of 
several equity venues to which market participants may direct their 
order flow. Competing equity exchanges offer similar tiered pricing 
structures to that of the Exchange, including schedules of rebates and 
fees that apply based upon members achieving certain volume thresholds.
    Within this environment, market participants can freely and often 
do shift their order flow among the Exchange and competing venues in 
response to changes in their respective pricing schedules.
    The Exchange believes that the proposal is reasonable and equitable 
because, in its absence, members may experience material adverse 
impacts on their ability to qualify for certain incentives during a 
month with an anomalous rise in sub-dollar volumes. The Exchange does 
not wish to penalize members that execute significant volumes on the 
Exchange due to anomalous and extraneous trading activities of a small 
number of firms in sub-dollar securities. The proposed rule would seek 
to provide a means for members that provide liquidity to avoid such a 
penalty by determining whether calculating member volume and total 
Consolidated Volume to include or exclude sub-dollar volume \8\ would 
result in Exchange members qualifying for the most advantageous 
charges, and then applying the calculations that would result in the 
incentives for providing liquidity that are most advantageous to each 
member. The Exchange believes it is reasonable to limit the proposal by 
applying the proposed calculation to fees that pertain to providing 
liquidity and increasing the distinct qualifying volume percentage 
thresholds by 10% when using the proposed calculation excluding sub-
dollar volumes because the Exchange has limited resources to devote to 
incentive programs, and it is appropriate for the Exchange to 
reallocate these incentives periodically in a manner that best achieves 
the Exchange's overall mix of objectives. The Exchange believes that 
the proposed rule change is an equitable allocation and is not unfairly 
discriminatory because the Exchange does not intend for the proposal to 
advantage any particular member and the Exchange will apply the 
proposed calculation to all similarly situated members.
---------------------------------------------------------------------------

    \8\ As noted above, in considering whether a member meets 
qualifying fee criteria using the proposed calculation excluding 
sub-dollar volumes, the distinct qualifying volume percentage 
thresholds would be increased by 10%.
---------------------------------------------------------------------------

    Those participants that are dissatisfied with the changes to the 
Exchange's pricing schedule are free to shift their order flow to 
competing venues that provide more favorable fees or generous 
incentives.

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 Exchange intends for its proposal to help avoid pricing 
disadvantages due to anomalous spikes in sub-dollar volumes and is not 
intended to provide a competitive advantage to any particular member. 
The Exchange also intends for its proposal to reallocate its limited 
resources more efficiently and to align them with the Exchange's 
overall mix of objectives. The Exchange notes that its members are free 
to trade on other venues to the extent they believe that the proposal 
is not attractive. As one can observe by looking at any market share 
chart, price competition between exchanges is fierce, with liquidity 
and market share moving freely between exchanges in reaction to fee and 
credit changes.
Intermarket Competition
    In terms of inter-market competition, the Exchange notes that it 
operates in a highly competitive market in which market participants 
can readily favor competing venues if they deem fee levels at a 
particular venue to be excessive, or rebate opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its credits and 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 credits and 
fees in response, and because market participants may readily adjust 
their order routing practices, the Exchange believes that the degree to 
which credit or fee changes in this market may impose any burden on 
competition is extremely limited. The proposal is reflective of this 
competition.
    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 upwards of 40% of industry 
volume.
    In sum, if the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. Accordingly, the Exchange does not believe that the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may

[[Page 13116]]

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-2024-004 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-2024-004. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. 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-2024-004, and should 
be submitted on or before March 13, 2024.

    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. 2024-03452 Filed 2-20-24; 8:45 am]
BILLING CODE 8011-01-P

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