Federal Register / Vol. 87, No. 32 / Wednesday, February 16, 2022 / Notices 8903 

12 15 U.S.C. 78s(b)(2). 

13 17 CFR 240.19d–1(c)(2). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Pursuant to Equity 7, Section 118(a), the term 

‘‘Consolidated Volume’’ shall mean 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 date of the annual reconstitution 

of the Russell Investments Indexes shall be 

excluded from both total Consolidated Volume and 

the member’s trading activity. For the purposes of 

calculating the extent of a member’s trading activity 

during the month on Nasdaq and determining the 

charges and credits applicable to such member’s 

activity, all M–ELO Orders that a member executes 

on Nasdaq during the month will count as liquidityadding activity on Nasdaq. 

4 15 U.S.C. 78f(b). 

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

providing greater flexibility to the 

Exchange in handling certain violations. 

The Commission, however, also 

believes that a violation of any selfregulatory organization’s rules, or of 

Commission rules, is a serious matter. In 

approving this propose rule change, the 

Commission in no way minimizes the 

importance of compliance with the 

Exchange’s rules and all other rules 

subject to fines under NYSE Rule 9217. 

The Commission expects that the 

Exchange will continue to conduct 

surveillance with due diligence and 

make a determination based on its 

findings, on a case-by-case basis, 

whether a fine of more or less than the 

recommended amount is appropriate for 

a violation under NYSE Rule 9217 or 

whether a violation requires formal 

disciplinary action. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 12 and Rule 

19d–1(c)(2) thereunder,13 that the 

proposed rule change (SR–NYSE–2021– 

73) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–03281 Filed 2–15–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94218; File No. SR– 

NASDAQ–2022–013] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Transaction Credits at 

Equity 7, Section 118 

February 10, 2022. 

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, 2022, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) the proposed 

rule change as described in Items I, II, 

and III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

Exchange’s transaction credits at Equity 

7, Section 118, as described further 

below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/nasdaq/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to amend the Exchange’s 

schedule of credits, at Equity 7, Section 

118(a). The Exchange proposes to 

amend an existing credit to its members 

for displayed quotes/orders (other than 

Supplemental Orders or Designated 

Retail Orders) that provide liquidity to 

the Exchange. 

Currently, the Exchange provides a 

credit of $0.0029 per share executed to 

a member that, through one or more of 

its Nasdaq Market Center MPIDs: (i) 

Provides shares of liquidity in all 

securities that represent equal to or 

greater than 0.65% of Consolidated 

Volume 3 during the month; (ii) 

increases its average daily volume of 

Midpoint Extended Life Orders 

executed by 150% or more during the 

month relative to the month of January 

2021; and (iii) executes an average daily 

volume of at least 750,000 shares in 

Midpoint Extended Life Orders for the 

month. The Exchange proposes to 

amend this credit by providing an 

additional means of attaining it. 

Specifically, the Exchange proposes to 

amend the first criterion for the credit 

to state that a member must provide 

shares of liquidity in all securities that 

represent equal to or greater than either 

0.65% of Consolidated Volume or an 

average daily volume of 70 million 

shares during the month. 

By providing an additional means by 

which a member can attain this credit, 

the Exchange intends to increase the 

number of members that strive to and do 

attain it, including by increasing their 

average daily volume of liquidity adding 

activity on the Exchange. To the extent 

that the proposal succeeds in this 

objective, then Exchange will 

experience an increase in liquidity, 

which in turn stands to improve the 

quality of the market, to the benefit all 

participants. 

The Exchange notes that those 

participants that are dissatisfied with 

this new proposal are free to shift their 

order flow to competing venues. 

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 

proposal is also consistent with Section 

11A of the Act relating to the 

establishment of the national market 

system for securities. 

The Proposal Is Reasonable 

The Exchange’s proposal is reasonable 

in several respects. As a threshold 

matter, the Exchange is subject to 

significant competitive forces in the 

market for equity securities transaction 

services that constrain its pricing 

determinations in that market. The fact 

that this market is competitive has long 


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8904 Federal Register / Vol. 87, No. 32 / Wednesday, February 16, 2022 / Notices 

6NetCoalition 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)). 

7Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(‘‘Regulation NMS Adopting Release’’). 

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 brokerdealers 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’. . . .’’ 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. 

The Exchange believes it is reasonable 

to amend the criteria for its existing 

$0.0029 per share executed credit. By 

providing an additional means by which 

a member can attain this credit, the 

Exchange intends to increase the 

number of members that strive to and do 

attain it, including by increasing their 

average daily volume of liquidity adding 

activity on the Exchange. To the extent 

that the proposal succeeds in this 

objective, then Exchange will 

experience an increase in liquidity, 

which in turn stands to improve the 

quality of the market, to the benefit all 

participants. 

The Exchange notes that those 

participants that are dissatisfied with 

the amended credit are free to shift their 

order flow to competing venues. 

The Proposal Is an Equitable Allocation 

of Credits 

The Exchange believes its proposal 

will allocate its charges and credits 

fairly among its market participants. 

The Exchange believes that its 

proposed amendment to its credit is an 

equitable allocation. The proposal will 

encourage members to increase the 

extent to which they add liquidity to the 

Exchange. To the extent that the 

Exchange succeeds in increasing the 

levels of liquidity and activity on the 

Exchange, then the Exchange will 

experience improvements in its market 

quality, which stands to benefit all 

market participants. 

Any participant that is dissatisfied 

with the proposal is free to shift their 

order flow to competing venues that 

provide more generous pricing or less 

stringent qualifying criteria. 

The Proposal Is Not Unfairly 

Discriminatory 

The Exchange believes that its 

proposal is not unfairly discriminatory. 

As an initial matter, the Exchange 

believes that nothing about its volumebased tiered pricing model is inherently 

unfair; instead, it is a rational pricing 

model that is well-established and 

ubiquitous in today’s economy among 

firms in various industries—from cobranded credit cards to grocery stores to 

cellular telephone data plans—that use 

it to reward the loyalty of their best 

customers that provide high levels of 

business activity and incent other 

customers to increase the extent of their 

business activity. It is also a pricing 

model that the Exchange and its 

competitors have long employed with 

the assent of the Commission. It is fair 

because it enhances price discovery and 

improves the overall quality of the 

equity markets. 

The Exchange also believes that its 

proposal is not unfairly discriminatory 

because the additional qualification 

option will be available to all members. 

Overall, the proposal stands to 

improve the overall market quality of 

the Exchange, to the benefit of all 

market participants, by incentivizing 

members to increase the extent of their 

liquidity provision or activity on the 

Exchange. 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 noted above, the Exchange’s 

proposal is intended to have marketimproving effects, to the benefit of all 

members. The Exchange notes that its 

members are free to trade on other 

venues to the extent they believe that 

these proposals 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 

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 proposed amended credit is 

reflective of this competition. 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. 

Even as one of the largest U.S. 

equities exchanges by volume, the 

Exchange has less than 20% market 

share, which in most markets could 

hardly be categorized as having enough 

market power to burden competition. 

Moreover, as noted above, price 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 32 / Wednesday, February 16, 2022 / Notices 8905 

8 15 U.S.C. 78s(b)(3)(A)(ii). 9 17 CFR 200.30–3(a)(12). 

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 50% of 

industry volume. 

In sum, if the change proposed herein 

is unattractive to market participants, it 

is likely that the Exchange will lose 

market share as a result. Accordingly, 

the Exchange does not believe that the 

proposed change will impair the ability 

of members or competing order 

execution venues to maintain their 

competitive standing in the financial 

markets. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.8

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 (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NASDAQ–2022–013 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2022–013. 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 (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 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. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number R–NASDAQ–2022–013 and 

should be submitted on or before March 

9, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–03278 Filed 2–15–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34502; 812–15295] 

Morgan Stanley Pathway Funds 

February 10, 2022. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application under 

Section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from Section 15(c) of the Act. 

SUMMARY OF APPLICATION: The requested 

exemption would permit a Trust’s board 

of trustees (the ‘‘Board’’) to approve new 

sub-advisory agreements and material 

amendments to existing sub-advisory 

agreements without complying with the 

in-person meeting requirement of 

Section 15(c) of the Act. 

APPLICANT: Morgan Stanley Pathway 

Funds (the ‘‘Trust’’). 

FILING DATES: The application was filed 

on December 29, 2021. 

HEARING OR NOTIFICATION OF HEARING: 

An order granting the requested relief 

will be issued unless the Commission 

orders a hearing. Interested persons may 

request a hearing on any application by 

emailing the SEC’s Secretary at 

Secretarys-Office@sec.gov and serving 

the relevant applicant with a copy of the 

request by email, if an email address is 

listed for the relevant applicant below, 

or personally or by mail, if a physical 

address is listed for the relevant 

applicant below. 

Hearing requests should be received 

by the Commission by 5:30 p.m. on 

March 7, 2022, and should be 

accompanied by proof of service on 

applicants, in the form of an affidavit or, 

for lawyers, a certificate of service. 

Pursuant to rule 0–5 under the Act, 

hearing requests should state the nature 

of the writer’s interest, any facts bearing 

upon the desirability of a hearing on the 

matter, the reason for the request, and 

the issues contested. Persons who wish 

to be notified of a hearing may request 

notification by emailing the 

Commission’s Secretary. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. Applicants: 

John J. O’Brien, Esq., johnobrien@

morganlewis.com. 

FOR FURTHER INFORMATION CONTACT: 

Terri Jordan, Branch Chief, at (202) 551– 

3239 (Division of Investment 

Management, Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: For 

Applicants’ representations, legal 

analysis, and condition, please refer to 

Applicants’ application, dated 

December 29, 2021, which may be 

obtained via the Commission’s website 

by searching for the file number, using 

the Company name box, at http://

www.sec.gov/search/search.htm, or by 

calling (202) 551–8090. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–03270 Filed 2–15–22; 8:45 am] 

BILLING CODE 8011–01–P 


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