Document ID: SEC-2018-0400-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq MRX, LLC
Posted Date: 2018-03-12T04:00Z

[Federal Register Volume 83, Number 48 (Monday, March 12, 2018)]
[Notices]
[Pages 10759-10761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04836]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82817; File No. SR-MRX-2018-07]

Self-Regulatory Organizations; Nasdaq MRX, LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Clarify Certain 
Terms Used in the Schedule of Fees

March 6, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule b-4 thereunder,\2\ notice is hereby given that 
on February 20, 2018, Nasdaq MRX, LLC (``MRX'' or ``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.b-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 a proposed rule change to clarify certain 
terms used in the Schedule of Fees, and to make certain other non-
substantive changes to the Schedule of Fees.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqmrx.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 clarify certain terms 
used in the Schedule of Fees, and to make certain other non-substantive 
changes to the Schedule of Fees. These proposed changes are designed to 
make it easier to understand how the Exchange charges fees under the 
Schedule of Fees, and have no impact on the actual fees charged to 
members, which will remain unchanged. While the Exchange believes that 
its members understand the concepts being clarified in this proposed 
rule change, which have been included in the Schedule of Fees in some 
cases since the Exchange began aggregating volume from affiliated/
appointed firms in 2016,\3\ the Exchange believes that this proposed 
rule change will avoid any future potential for member confusion.
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    \3\ See Securities Exchange Act Release No. 77412 (March 21, 
2016), 81 FR 16238 (March 25, 2016) (SR-ISEMercury-2016-06); 77841 
(May 16, 2016), 81 FR 31986 (May 20, 2016) (SR-ISEMercury-2016-11).
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    First, the Exchange proposes to adopt explicit definitions for the 
following terms: (1) Market Maker, (2) Affiliated Member, and (3) 
Appointed Member. As proposed, a ``Market Maker'' is a market maker as 
defined in Nasdaq MRX Rule 100(a)(30); an ``Affiliated Member'' is a 
Member that shares at least 75% common ownership with a particular 
Member as reflected on the Member's Form BD, Schedule A; \4\ and an 
``Appointed Member'' is either an Appointed Market Maker or Appointed 
Order Flow Provider. While these terms are currently used in the 
Schedule of Fees, in capitalized or non-capitalized form, and are 
described in either the Schedule of Fees or the Nasdaq MRX Rules, as 
well as the proposed rule changes that adopted the relevant 
terminology, the Exchange believes that including these definitions in 
the Preface to the Schedule of Fees will make the Schedule of Fees 
easier for members to understand. In connection with the above changes, 
the Exchange also proposes to delete references to the 75% common 
ownership requirement in the Qualifying Tier Thresholds section of the 
Schedule of Fees, as this concept is now included in the definition of 
Affiliated Member.
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    \4\ If a firm has multiple exchange memberships housed in a 
single legal entity (e.g., a Primary Market Maker and an Electronic 
Access Member) those memberships would be Affiliated Members due to 
sharing 100% common ownership.
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    Second, the Exchange proposes to amend language under the 
Qualifying Tier Thresholds section of the Schedule of Fees to reference 
more explicitly how the Exchange aggregates volume executed by 
Affiliated Members and Appointed Members for purposes of various 
average daily volume (``ADV'') categories. Currently, this section 
contains bullets that describe ``Total Affiliated Priority Customer 
ADV'' and ``Total Affiliated Member ADV,'' and separate bullets that 
describe how the Exchange aggregates this volume with Appointed 
Members. The Exchange now proposes to incorporate the Appointed Member 
concept into the bullets that define these ADV categories by adding the 
words ``and/or Appointed'' to the ADV category descriptions, and 
including language that indicates that these categories include volume 
executed by Affiliated Members and/or Appointed Members, which will be 
aggregated with the Member's volume in the manner described in the 
Schedule of Fees. In connection with these changes, the Exchange 
proposes to indicate that these terms ``mean'' rather than ``include'' 
the ADV described in the bullets to reinforce that no other volume is 
included in these calculations. In addition, the Exchange proposes to 
remove language indicating that volume executed in the PIM, 
Facilitation, and QCC mechanisms is included in the ADV category based 
on Priority Customer volume, as the current language already indicates 
that all Priority Customer volume in all symbols and order types is 
included.
    Third, the Exchange proposes non-substantive changes to the defined 
terms ``Nasdaq MRX Appointed Market Maker,'' ``Nasdaq MRX Appointed 
Order Flow Provider,'' and ``Flash Order.'' Nasdaq MRX Appointed Market 
Maker and Nasdaq MRX Appointed Order Flow Provider will now be

[[Page 10760]]

renamed ``Appointed Market Maker'' and ``Appointed Order Flow 
Provider,'' respectively, and will be updated with a proper citation to 
Qualifying Tier Threshold section of the Schedule of Fees, which the 
Exchange proposes to title ``Table 3.'' With respect to the definition 
of ``Flash Order,'' the Exchange proposes to change the word 
``response'' to use its non-capitalized form as there is no defined 
term that refers to a response to a Flash Order.
    Fourth, the Exchange proposes to update references to the ``Fee 
Schedule'' with the correct title of that document, which is the 
``Schedule of Fees,'' and to use all of the defined terms described in 
this filing where applicable throughout the Schedule of Fees. In 
addition, the Exchange proposes to add language that indicates that 
other terms not defined in the Schedule of Fees shall have the meaning 
ascribed to them under Nasdaq MRX Rules. The Exchange believes that the 
addition of this language will aid members in interpreting the Schedule 
of Fees, which currently uses certain terms that are defined in Nasdaq 
MRX Rules--e.g., the term ``Member'', which is defined in MRX Rule 
100(a)(28). With respect to the definition of ``Member'' in particular, 
the Exchange proposes to update the text of the Schedule of Fees to use 
the capitalized term throughout.
    Finally, the Exchange proposes to eliminate an obsolete reference 
to footnote 3 under Section I, Table 2, which is currently marked 
``Reserved,'' and to add the word ``instead'' to footnote 2 under 
Section I, Table 1 to reinforce that the taker fees described in that 
footnote would apply instead of the regular taker fees described in 
Table 1. With respect to the former change, footnote 1 under Section I, 
Table 2 contains language stating that fees, i.e., the fee for Crossing 
Orders, apply to the originating and contra orders, except as noted in 
footnote 3. Because footnote 3 is now marked reserved, this exception 
is no longer necessary. With respect to the latter change, footnote 2 
under Section I, Table 1 describes a discounted taker fee that is 
applied to Members that meet specified requirements. The proposed 
addition of the word ``instead'' would reinforce that the fees in that 
footnote are instead of and not in addition to those contained in the 
table.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\6\ 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. Specifically, the Exchange believes that 
the proposed rule change is reasonable, equitable, and not unfairly 
discriminatory as it is designed to increase transparency around the 
Schedule of Fees to the benefit of members and investors. The proposed 
rule change adopts more explicit definitions for certain terms used in 
the Schedule of Fees, and makes other non-substantive clarifying 
changes, which do not impact how the Exchange will charge fees. For the 
following reasons, the Exchange believes that each of the proposed 
changes is reasonable, equitable, and 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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    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to adopt explicit definitions of ``Market 
Maker,'' ``Affiliated Member,'' and ``Appointed Member.'' The term 
``Market Maker'' is already used throughout the Schedule of Fees and 
will refer to related definitions already included in the Exchange's 
rules. And the terms ``Affiliated Member'' and ``Appointed Member'' are 
based on current language in the Qualifying Tier Thresholds section of 
the Schedule of Fees. Specifically, the ``Affiliated Member'' 
definition replaces language that indicates how the Exchange aggregates 
volume from affiliates that meet the specified common ownership 
requirements, and the term ``Appointed Member'' refers to two types of 
Members that can agree to have their volume aggregated in the manner 
described in the Schedule of Fees.
    The Exchange believes that the proposes changes related to Total 
Affiliated and/or Appointed Priority Customer ADV and Total Affiliated 
and/or Appointed Member ADV are reasonable, equitable, and not unfairly 
discriminatory as they reinforce the fact that volume executed by 
Appointed Members may be aggregated in the manner described in the 
Qualifying Tier Thresholds section of the Schedule of Fees. Although 
this is an existing concept described in the Schedule of Fees, the 
Exchange believes that including all of this information in the bullets 
that describe these ADV categories will make the Schedule of Fees 
easier for Members to follow. Furthermore, the other changes being 
proposed to these categories--including removing unnecessary references 
to volume executed in the PIM, Facilitation, and QCC mechanisms, and 
using the word ``means''--are non-substantive changes designed to make 
these descriptions more transparent.
    The Exchange believes that the proposed changes to the defined 
terms ``Nasdaq MRX Appointed Market Maker,'' ``Nasdaq MRX Appointed 
Order Flow Provider,'' and ``Flash Order'' are reasonable, equitable, 
and not unfairly discriminatory. In addition to renaming Nasdaq MRX 
Appointed Market Maker and Nasdaq MRX Appointed Order Flow Provider to 
``Appointed Market Maker'' and ``Appointed Order Flow Provider,'' 
respectively, these definitions will be updated with a proper citation 
so that members can identify where these terms are described in the 
Schedule of Fees. In addition, the proposed change to the definition of 
``Flash Order'' is a non-substantive change to the capitalization of a 
word that is not defined in the Schedule of Fees.
    The Exchange believes that it is reasonable, equitable, and not 
unfairly discriminatory to update references to the ``Fee Schedule'' 
with the correct title of that document, which is the ``Schedule of 
Fees,'' and to use all of the defined terms described in this filing 
where applicable throughout the Schedule of Fees as these changes are 
meant to ensure that defined terms are used consistently in the 
Schedule of Fees. Furthermore, the Exchange believes that it is 
reasonable, equitable, and not unfairly discriminatory add language 
that indicates that other terms not defined in the Schedule of Fees 
shall have the meaning ascribed to them under Nasdaq MRX Rules. Certain 
definitions contained in the Nasdaq MRX Rules are used in the Schedule 
of Fees, and the Exchange believes that adding this reference to the 
Schedule of Fees will alert members to this fact. With this change, the 
Exchange will also use the defined term ``Member'' throughout the 
Schedule of Fees to indicate that the Exchange is using the defined 
term contained in the Nasdaq MRX Rules.
    Finally, the Exchange believes that it is reasonable, equitable, 
and not unfairly discriminatory to eliminate the reference to footnote 
3 under Section I, Table 2, and to add the word ``instead'' to footnote 
2 under Section I, Table 1. The former change removes an obsolete 
reference to a footnote that is now marked ``Reserved.'' The latter 
reinforces that the taker fees described in that footnote would apply 
instead of the regular taker fees described in Table

[[Page 10761]]

1. While the Exchange believes that members understand that the 
footnoted taker fees, which are provided to members that meet 
additional volume and other requirements, apply instead of rather than 
in addition to the taker fees charged to members that do not meet these 
requirements, the Exchange believes that spelling this out more 
explicitly will avoid any potential confusion.

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. The Exchange does not believe 
that the proposed rule change will have any impact on competition as 
the proposed changes would merely clarify the Schedule of Fees by, 
among other things, adopting explicit definitions for certain common 
terms, and making other non-substantive changes. No changes to the 
actual fees charged to market participants are proposed, and members 
will continue to be charged the same fees as they are assessed under 
the Schedule of Fees today.

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,\7\ and Rule b-4 (f)(2) \8\ thereunder. 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.b-4 (f)(2).
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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 [email protected]. Please include 
File Number SR-MRX-2018-07 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-MRX-2018-07. 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 SR-MRX-2018-07 and should be submitted on 
or before April 2, 2018.

    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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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-04836 Filed 3-9-18; 8:45 am]
 BILLING CODE 8011-01-P