Document ID: SEC-2014-1587-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2014-09-23T04:00Z

[Federal Register Volume 79, Number 184 (Tuesday, September 23, 2014)]
[Notices]
[Pages 56838-56840]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-22540]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73126; File No. SR-Phlx-2014-60]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Pricing Schedule Under Section VIII With Respect To 
Execution and Routing of Orders in Securities Priced at $1 or More Per 
Share

September 17, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on September 5, 2014, NASDAQ OMX PHLX LLC (``Phlx'' 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

[[Page 56839]]

notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Pricing Schedule 
under Section VIII, entitled ``NASDAQ OMX PSX FEES,'' with respect to 
execution and routing of orders in securities priced at $1 or more per 
share. The Exchange implemented the fees on September 2, 2014.\3\
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    \3\ The proposed rule change was originally filed on August 28, 
2014 (Phlx-2014-58). This filing makes a technical correction to the 
original filing, which was withdrawn concurrently with the 
submission of this filing.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.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 purpose of the proposed rule change is to amend certain fees 
for order execution on the NASDAQ OMX PSX System (``PSX'') by member 
organizations for securities traded at $1 or more per share. Chapter 
VIII(a)(1) of the PSX pricing schedule concerns fees assessed for 
execution of quotes/orders on PSX in securities listed on the Nasdaq 
Stock Market (``Nasdaq''), securities listed on the New York Stock 
Exchange (``NYSE'') and securities listed on exchanges other than 
Nasdaq and NYSE. Under the rule, the Exchange assesses two separate 
fees of $0.0026 per share executed for execution of securities that are 
eligible for routing, and for execution of securities that are not 
eligible for routing. The Exchange is proposing to eliminate the 
current distinction made between orders designated as eligible for 
routing and those that are not, and rather distinguish the charges 
assessed based on the venue on which the security is listed. 
Specifically, the Exchange is proposing to assess a charge of $0.0024 
per share executed in securities listed on NYSE, $0.0024 per share 
executed in securities listed on an exchange other than Nasdaq or NYSE, 
and $0.0026 per share executed in securities listed on Nasdaq.
    The Exchange notes that it historically distinguished the fees it 
assessed under Chapter VIII(a) by the listing venue of the security 
executed; however, in an effort to simplify the fee schedule, the 
Exchange recently consolidated three sections of the rule concerning 
each of the three types of securities into a single section under 
Chapter VIII(a)(1) that applies to all three types of securities.\4\ A 
consequence of the proposed rule change will be that charges assessed 
for executions in securities listed on NYSE and securities listed on an 
exchange other than Nasdaq or NYSE will decrease, without regard to 
their ability to be routed, and charges assessed for executions in 
securities listed on Nasdaq will remain unchanged, also without regard 
to their ability to be routed.
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    \4\ The Exchange noted at the time that the three sections were 
largely identical in terms of the categories for which charges are 
assessed and credits given. Notwithstanding, the Exchange must, from 
time to time, make distinctions in the fees assessed and credits 
provided based on type of security traded and the market-improving 
behavior sought to incentivize. See Securities Exchange Act Release 
No. 72572 (July 9, 2014), 79 FR 41327 (July 15, 2014)(SR-Phlx-2014-
43).
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2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \5\ in general, and 
furthers the objectives of Sections 6(b)(4) and (b)(5) of the Act \6\ 
in particular, in that it is an equitable allocation of reasonable fees 
and other charges among Exchange members and other persons using its 
facilities, and it does not unfairly discriminate between customers, 
issuers, brokers or dealers. The proposed changes are reasonable 
because they reflect a modest decrease in the charges assessed for 
execution of securities in NYSE-listed and securities listed on an 
exchange other than Nasdaq or NYSE, and no change in the charge 
assessed for the execution of orders in securities designated as not 
eligible for routing in Nasdaq-listed securities. The proposed changes 
are consistent with an equitable allocation of fees and are not 
unfairly discriminatory because they provide incentive to market 
participants to improve the market in the applicable securities by 
offering a reduced rate than is currently offered for the execution of 
securities on PSX. The Exchange makes distinctions in fees and charges 
based on desire to provide certain incentives to market participants to 
further provide liquidity to the market weighed against the costs the 
Exchange incurs in providing such incentives. In the present case, the 
Exchange is providing incentive to market participants to improve the 
market in NYSE-listed and securities listed on an exchange other than 
Nasdaq or NYSE, which is not as robust as the liquidity currently 
available in Nasdaq-listed securities. Because the market in Nasdaq-
listed securities is robust on PSX, the Exchange is maintaining the 
current charge assessed for executions in Nasdaq-listed securities. 
Moreover, under the proposed change a member that receives an execution 
on PSX in a security listed on a venue noted in the amended rule will 
be assessed the same charge that all other members are assessed for the 
execution of a security listed on the same venue. For these reasons, 
the Exchange believes that the proposal is an equitable allocation of 
fees and is not unfairly discriminatory.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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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, as amended.\7\ The Exchange 
notes that it operates in a highly competitive market in which market 
participants can readily favor competing venues if they deem fee levels 
at a particular venue to be excessive, or rebate opportunities 
available at other venues to be more favorable. In such an environment, 
the Exchange must continually adjust its fees to remain competitive 
with other exchanges and with alternative trading systems that have 
been exempted from compliance with the statutory standards applicable 
to exchanges. Because competitors are free to modify their own fees in 
response, and because market participants may readily adjust their 
order routing practices, the Exchange believes that the degree to which 
fee changes in this market may impose any burden on competition is 
extremely limited. In this instance, the reduced charges are intended 
to provide

[[Page 56840]]

incentive to market participants to add liquidity to the Exchange in 
securities listed on NYSE or exchanges other than Nasdaq or NYSE, while 
maintaining the current charge applied to Nasdaq-listed securities, 
which is reflective of the robust liquidity in Nasdaq-listed securities 
currently on the market. Because there are numerous competitive 
alternatives to PSX, it is possible that the changes will not have the 
desired effect and, although the Exchange believes unlikely in the 
current proposal, the Exchange could lose market share as a result of 
the changes to the extent that they are unattractive to market 
participants. Accordingly, the Exchange does not believe the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets.
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    \7\ 15 U.S.C. 78f(b)(8).
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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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\8\ the Exchange has 
designated this proposal as establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization on any person, 
whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is 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-Phlx-2014-60 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-Phlx-2014-60. 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-Phlx-2014-60 and should be 
submitted on or before October 14, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-22540 Filed 9-22-14; 8:45 am]
BILLING CODE 8011-01-P