Document ID: SEC-2014-1865-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2014-11-05T05:00Z

[Federal Register Volume 79, Number 214 (Wednesday, November 5, 2014)]
[Notices]
[Pages 65738-65739]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26228]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73470; File No. SR-BX-2014-053]

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) With Respect to Transactions 
in Securities Priced at $1 per Share or More

October 30, 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 October 23, 2014, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
a 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.
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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 fee schedule under Exchange Rule 
7018(a) with respect to transactions in securities priced at $1 per 
share or more. While the changes proposed herein are effective upon 
filing, the Exchange has designated that the amendments be operative on 
November 3, 2014.
    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 increase a credit provided to member 
firms applicable to transactions in securities priced at $1 or more 
under BX Rule 7018(a). Specifically, the Exchange proposes to increase 
the credit provided to all members that enter an order that executes 
against a midpoint pegged order. Currently, the Exchange provides a 
credit of $0.0003 per share executed for such an order. The Exchange is 
proposing to increase the credit provided to $0.0005 per share 
executed. The Exchange believes that the proposed increase in the 
credit provided to member firms for removing midpoint liquidity will 
encourage firms to access more resting midpoint liquidity before 
routing to other destinations for price improvement opportunities.
2. Statutory Basis
    BX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\3\ in general, and Sections 6(b)(4) 
and (b)(5) of the Act,\4\ in particular, because it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system that 
the Exchange operates or controls, and it does not unfairly 
discriminate between customers, issuers, brokers or dealers. The 
proposed rule change is reflective of the Exchange's ongoing efforts to 
use rebates and discounted execution fees to attract orders that the 
Exchange believes will improve market quality. Generally, the Exchange 
seeks to provide members with discounts that they deem helpful, and to 
eliminate those that they do not.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes that the proposed change is reasonable 
because it promotes these goals by providing an increased credit to 
member firms that remove liquidity at the midpoint. In this regard, the 
Exchange believes that this credit will incentivize member firms to 
execute against midpoint liquidity and this, in turn, will lead to an 
increase in price improvement and liquidity, which generally benefits 
the investing public. Moreover, the proposed change is reasonable as it 
is a pro-competitive price reduction designed to enhance the Exchange's 
position in the marketplace and broaden the execution opportunities for 
BX members. The Exchange also believes that the proposed increase in 
the credit is reasonable because it reflects the availability of what 
is, in effect, a price reduction for all members that execute against a 
midpoint pegged order.
    The Exchange believes that the proposed credit increase is 
consistent with an equitable allocation of fees and is not unfairly 
discriminatory because the rebate applies uniformly across all members 
[sic] firms and is provided to those firms that elect to execute 
against midpoint pegged orders. BX notes that it operates in a highly 
competitive market in which market participants can easily and readily 
favor competing venues if they deem fee levels at a particular venue to 
be excessive or rebate opportunities to be insufficient. In such an 
environment, BX must continually adjust its fees or rebates to remain 
competitive with other exchanges. BX believes that the proposed rule 
change reflects this very competitive environment because it is 
designed to ensure that the credits for participation on BX attract 
order flow that improves the market for all participants.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule changes will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended.\5\ 
BX notes that it operates in a highly competitive market in which 
market participants can readily favor over 40

[[Page 65739]]

different competing exchanges and alternative trading systems 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, BX must continually adjust its fees to remain 
competitive with other exchanges. Because competitors are free to 
modify their own fees in response, and because market participants may 
readily adjust their order routing practices, BX believes that the 
degree to which fee changes in this market may impose any burden on 
competition is extremely limited. In this instance, the increase to the 
credit for an order that executes against a midpoint pegged order 
enhances the Exchange's competitiveness by increasing a credit for a 
type of order activity that the Exchange seeks to encourage, thereby 
improving market liquidity and attracting market participants. 
Moreover, because there are numerous competitive alternatives to the 
use of the Exchange, it is likely that BX will lose market share as a 
result of the changes if they are unattractive to market participants. 
Accordingly, BX does not believe that the proposed rule 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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    \5\ 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

    The foregoing change has become effective pursuant to Section 
19(b)(3)(A) of the Act \6\ and paragraph (f) of Rule 19b-4 \7\ 
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 necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f).
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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 rule-comments@sec.gov. Please include 
File Number SR-BX-2014-053 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-2014-053. 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 such filing also will be available 
for inspection and copying at the principal offices 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-BX-2014-053, 
and should be submitted on or before November 26, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2014-26228 Filed 11-4-14; 8:45 am]
BILLING CODE 8011-01-P