11252 Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3CHX Article 1, Rule 1(s) defines ‘‘Participant,’’ 

in pertinent part, as ‘‘any Participant Firm that 

holds a valid Trading Permit and any person 

associated with a Participant Firm who is registered 

with the Exchange under Articles 16 and 17 as a 

Market Maker Trader or Institutional Broker 

Representative, respectively. A Participant shall be 

considered a ‘member’ of the Exchange for purposes 

of the Exchange Act.’’ 

4See Securities Exchange Act Release No. 72711 

(July 29, 2014), 79 FR 45570 (August 5, 2014) (SR– 

CHX–2014–10). Other national securities exchanges 

filed similar proposals. See e.g., Securities 

Exchange Act Release Nos. 72710 (July 29, 2014), 

79 FR 45511 (August 5, 2014) (SR–NYSE–2014–38), 

and 72684 (July 28, 2014), 79 FR 44956 (August 1, 

2014) (SR–NASDAQ–2014–072). 

5The Exchange understands that other national 

securities exchanges will file similar proposed rule 

changes with the Commission to further describe 

their use of data feeds for order handling and 

execution, order routing and regulatory compliance. 

6 17 CFR 240.19b–4(f)(6)(iii). 

7See Mary Jo White, Chair, Securities and 

Exchange Commission, Speech at Sandler O’Neil & 

Partners L.P. Global Exchange and Brokerage 

Conference (June 5, 2014). 

8See letter from Stephen Luparello, Division of 

Trading and Markets, Securities and Exchange 

Commission, to John K. Kerin, Chief Executive 

Officer and President, Chicago Stock Exchange, 

Inc., dated June 20, 2014. 

9See supra note 4. 

10See Exchange Act Release No. 73150 

(September 19, 2014), 79 FR 57603 (September 25, 

2014) (SR–CHX–2014–15). 

11CHX Article 1, Rule 2(b)(2)(D) defines 

‘‘Midpoint Cross’’ as follows: 

a cross order modifier with an instruction to 

execute it at the midpoint between the NBBO. If the 

NBBO is locked at the time a Midpoint Cross is 

received, the Midpoint Cross will execute at the 

locked NBBO. If the NBBO is crossed at the time 

a Midpoint Cross is received, the Midpoint Cross 

will be automatically cancelled. A Midpoint Cross 

order may only be executed in an increment 

permitted by Article 20, Rule 4(a)(7)(b). 

12At the time SR–CHX–2014–10 was filed, the 

SIP data feeds were the only data feeds utilized by 

the Exchange for operational and regulatory 

compliance purposes. 

13Where the SIP data feeds show a crossed 

NBBO, the Exchange’s NBBO calculation protocol 

ignores crossing quotes and executes orders up to 

the first uncrossed NBBO. See paragraph .01(d) of 

CHX Article 20, Rule 5 

14See supra note 10. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74357; File No. SR–CHX– 

2015–01] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change Concerning 

the Use of Market Data Feeds by the 

Exchange 

February 24, 2015. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 2 thereunder, 

notice is hereby given that, on February 

12, 2015, the Chicago Stock Exchange, 

Inc. (‘‘CHX’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

CHX proposes to clarify for 

Participants and non-Participants the 

Exchange’s use of data feeds for order 

handling and execution, order routing 

and regulatory compliance.3 On July 16, 

2014, the Exchange filed a proposed 

rule change that described its use of the 

consolidated market data disseminated 

by the securities information processors 

(‘‘SIP data feeds’’) for all operational 

and regulatory compliance purposes 

(the ‘‘initial rule filing’’) with the 

Securities and Exchange Commission 

(the ‘‘Commission’’).4 The Exchange 

now submits this supplemental filing.5

The Exchange has designated this 

proposed rule change as noncontroversial and provided the 

Commission with the notice required by 

Rule 19b–4(f)(6)(iii) under the Act.6

The text of this proposed rule change 

is available on the Exchange’s Web site 

at (www.chx.com) and in 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 

CHX included statements concerning 

the purpose of and basis for the 

proposed rule changes 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 

CHX 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 

On June 5, 2014, Chair White 

requested that all national securities 

exchanges develop proposed rule 

changes to disclose their use of data 

feeds to execute and route orders and 

comply with regulatory requirements.7

In addition, on June 20, 2014, the 

Commission’s Division of Trading and 

Markets requested that the Exchange file 

proposed rule changes that disclose its 

usage of particular market data feeds, 

among other things.8 In response to 

these requests, the Exchange filed an 

initial rule filing with the Commission 

on July 16, 2014.9 The Exchange now 

submits this supplemental filing 

concerning the use of SIP data feeds for 

the CHX Routing Services,10 which is 

not yet operational, and the pricing of 

cross orders marked Midpoint Cross.11

Initial Rule Filing 

Under the initial rule filing, the 

Exchange adopted Article 1, Rule 4, 

which provides that the consolidated 

market data disseminated by the 

securities information processors shall 

be the only market data feed utilized by 

the Exchange for all operational and 

regulatory compliance purposes.12 The 

Exchange also noted the following: 

• The SIP data feeds are the only data 

feeds utilized by the Exchange to 

calculate the National Best Bid and 

Offer (‘‘NBBO’’) for the purposes of 

compliance with Regulation NMS and 

Regulation SHO. The Exchange does not 

utilize direct feeds from away markets 

for such purposes. 

• In addition to the SIP data feeds, 

the Exchange uses its own internal data 

for operational and regulatory 

compliance purposes. 

• The Exchange does not ignore or 

modify SIP quote data for the purposes 

of establishing the NBBO under any 

circumstances where the SIP data feed 

shows an uncrossed market.13

• The Exchange does not offer 

outbound routing of orders, but that if 

the Exchange were to adopt such 

functionality in the future, the Exchange 

would only utilize the SIP data feeds for 

routing purposes. 

• The Exchange does not offer pegged 

orders that have limit prices that track 

the NBBO. 

The Exchange continues to utilize the 

SIP data feeds for all operational and 

regulatory compliance purposes, as 

described under initial filing, and 

submits the following updates and 

points of clarification. 

CHX Routing Services 

On September 8, 2014, the Exchange 

filed SR–CHX–2014–15, through which 

the Exchange adopted rules concerning 

the CHX Routing Services, an outbound 

order routing service that is not yet 

operational.14 As described in the initial 

rule filing, the CHX Routing Services 

will only utilize the SIP data feeds for 

order routing purposes. 

Thus, the Exchange proposes to 

amend Article 1, Rule 4(a) to explicitly 

provide that the consolidated market 


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Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices 11253 

15The Exchange may utilize other data feeds in 

conducting manual reviews of Matching System 

activity. 16See supra note 11. 17See CHX Article 1, Rule 2(a)(2). 

18 15 U.S.C. 78f(b). 

19 15 U.S.C. 78f(b)(5). 

20 15 U.S.C. 78s(b)(3)(A). 

21 17 CFR 240.19b–4(f)(6). As required under Rule 

19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. 

data disseminated by the securities 

information processor shall be the only 

market data feeds utilized by the 

Exchange for the handling, execution 

and routing of orders, as well as for the 

regulatory compliance processes related 

to those functions.15

Midpoint Cross 

Under the initial rule filing, the 

Exchange noted that it does not offer 

pegged orders that have limit prices that 

track the NBBO. To clarify, the 

Exchange has never offered single-sided 

orders that are continuously repriced to 

follow changes to the NBBO (‘‘singlesided pegged orders’’). The Exchange 

does, however, offer Midpoint Cross, 

which is a cross order (i.e., two-sided 

order) modifier that instructs the 

Matching System to execute the order at 

the midpoint of the NBBO.16 Unlike 

single-sided pegged orders, cross orders 

marked Midpoint Cross are not 

continuously repriced to follow changes 

to the NBBO because cross orders are 

always handled Immediate Or Cancel 

(‘‘IOC’’).17

Mechanically, upon receipt of a cross 

order marked Midpoint Cross, the 

Matching System will utilize the NBBO 

calculated from the SIP data feed and 

internal CHX book data in the subject 

security to identify the NBBO midpoint 

price. The Matching System utilizes the 

internal CHX book data in the subject 

security, in addition to the SIP data 

feed, because the internal CHX book 

data always reflects the most recent 

CHX quote(s) in the subject security, 

which may not yet be reflected in the 

SIP data feed. Assuming that the order 

is otherwise executable within the CHX 

book, the Matching System will 

immediately execute the order at the 

NBBO midpoint. Incidentally, the 

Exchange clarifies that it does not ignore 

or modify SIP quote data concerning 

away market quotes under any 

circumstances where the SIP data feed 

shows an uncrossed market. The 

Exchange may, however, ignore SIP 

quote data regarding its own market if 

the Exchange’s internal data in the 

subject security is different from what is 

received from the SIP, such as when 

pricing the Midpoint Cross order. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of Section 6(b) of the 

Act.18 In particular, the proposal is 

consistent with Section 6(b)(5) of the 

Act,19 because it would promote just 

and equitable principles of trade, 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system. 

Specifically, the Exchange believes that 

the proposed update and clarifications 

concerning the Exchange’s use of the 

SIP data feeds in the context of the CHX 

Routing Services and the Midpoint 

Cross order modifier will enhance 

transparency concerning the operation 

of the Exchange. This will, in turn, 

promote the public confidence and 

strengthen the national market system. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change implicates any 

competitive issues. To the contrary, the 

Exchange anticipates that other national 

securities exchanges will also make 

similar clarifications concerning their 

respective use of data feeds and this 

proposed rule will ensure consistent 

treatment of this subject matter in the 

respective rulebooks. 

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 

Because the proposed rule change 

does not (i) significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 20 and Rule 19b–4(f)(6) 

thereunder.21

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 necessary or appropriate in the 

public interest, for the protection of 

investors, or 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 (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CHX–2015–01 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–CHX–2015–01. 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 Web site (http://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 Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–CHX– 


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11254 Federal Register / Vol. 80, No. 40 / Monday, March 2, 2015 / Notices 

22 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The addition of the language concerning price 

improvement to BX Rule 7018 merely reflects how 

the system for credits and fees already currently 

operates, which is why this new language does not 

change the overall current rates for such credits. 

4See BX Rule 4758(a)(v). 

5See BX Rule 4758(a)(vii). 

6See NASDAQ OMX PHLX LLC Pricing 

Schedule, Section VIII(a)(1). 

2015–01 and should be submitted on or 

before March 23, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2015–04181 Filed 2–27–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74363; File No. SR–BX– 

2015–013] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Fee Schedule Under Exchange Rule 

7018(a) and (e) With Respect to 

Transactions in Securities Priced at $1 

per Share or More 

February 24, 2015. 

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 

11, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

fee schedule under Exchange Rule 7018 

with respect to transactions in securities 

priced at $1 or more per share. 

The text of the proposed rule change 

is also available on the Exchange’s Web 

site at http://

nasdaqomxbx.cchwallstreet.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to amend 

BX Rule 7018(a) and (e) to modify the 

fees and rebates assessed under the rule 

applicable to transactions in securities 

priced at $1 or more. Specifically, the 

Exchange proposes to clarify and make 

uniform throughout BX Rule 7018(a) the 

term ‘‘Midpoint pegging’’, as well as in 

BX Rule 7018(e) regarding credits for 

retail orders. The Exchange also 

proposes to include within BX Rule 

7018(a) a specific line item for a credit 

for an ‘‘Order with Midpoint pegging 

that removes liquidity’’ of $0.0005 per 

share executed. The Exchange believes 

that these proposed changes increase 

transparency as to how a member’s 

credit is determined, clarify the fee 

schedule, and do not change the overall 

current rate for such credits except for 

the one minor change noted above.3

Changing the language for nondisplayed orders entered by a member 

that provides an average daily volume of 

3.5 million or more shares (but less than 

5 million shares) of non-displayed 

liquidity to include ‘‘other than orders 

with Midpoint pegging’’ instead of 

‘‘including those pegged to the 

midpoint’’ results in no actual change. 

Currently, a member would never 

receive the $0.0024 per share executed 

charge for an order with Midpoint 

pegging because instead the member 

would have qualified for the $0.0005 

per share executed charge for an order 

with Midpoint pegging entered by a 

member that provides an average daily 

volume of 2 million or more shares of 

non-displayed liquidity during the 

month. 

Additionally, the Exchange proposes 

to define ‘‘price improvement’’ to mean 

instances when the accepted price of an 

order differs from the executed price of 

an order and incorporate it where 

applicable in BX Rule 7018(a) and (e). 

The accepted price is the price the 

matching engine assigns an order based 

on the instructions submitted by the 

member. It may differ from a customer’s 

limit price because of the order type 

(e.g., pegging and post only orders) or 

for regulatory reasons (e.g., Reg SHO, 

Reg NMS compliance or other 

regulatory restrictions). The accepted 

price of an order will not be more 

aggressive than the customer’s limit 

price, and is often the same as the 

customer’s submitted limit price. An 

order can execute up to its accepted 

price and this is the least advantageous 

price at which an order can execute. 

Any execution price that is different 

than the accepted price must be more 

advantageous than the accepted price. 

Thus, executions where the accepted 

price does not equal the execution price 

are situations when the order is 

receiving price improvement versus its 

accepted price. 

The Exchange also proposes to change 

the fee assessed for BTFY and BCRT 

orders in securities listed on The 

NASDAQ Stock Market LLC 

(‘‘NASDAQ’’) (‘‘Tape C’’), the New York 

Stock Exchange (‘‘NYSE’’) (‘‘Tape A’’) 

and on exchanges other than NASDAQ 

and the NYSE (‘‘Tape B’’) (collectively, 

the ‘‘Tapes’’). 

BTFY 4 is a routing option under 

which orders check the order execution 

and trade reporting system owned and 

operated by BX (the ‘‘System’’) for 

available shares only if so instructed by 

the entering firm and are thereafter 

routed to destinations on the System 

routing table. If shares remain 

unexecuted after routing, they are 

posted to the System book. Once on the 

System book, should the order 

subsequently be locked or crossed by 

another market center, the System will 

not route the order to the locking or 

crossing market center. 

BCRT 5 is a routing option under 

which orders check the System and then 

route to PSX and NASDAQ. If shares 

remain unexecuted, they are posted to 

the System book or cancelled. Once on 

the System book, should the order 

subsequently be locked or crossed by 

another market center, the System will 

not route the order to the locking or 

crossing market center. 

For BTFY and BCRT orders, the 

Exchange currently passes through all 

fees and rebates for orders that execute 

on PSX or NASDAQ. BTFY and BCRT 

orders executed on BX result in a pass 

through charge of $0.0025 or $0.0026 

per share executed on PSX 6 and 

$0.0030 per share executed on 


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