Document ID: SEC-2014-0288-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2014-02-18T05:00Z

[Federal Register Volume 79, Number 32 (Tuesday, February 18, 2014)]
[Notices]
[Pages 9302-9303]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-03376]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71520; File No. SR-Phlx-2014-09]

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

February 11, 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 January 31, 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 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 the 
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.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated that the amendments be operative on February 3, 
2014.
    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 the [sic] 
certain fees and credits for order execution and routing applicable to 
the use of the order execution and routing services of the NASDAQ OMX 
PSX System by member organizations for all securities traded at $1 or 
more per share. Specifically, the Exchange is proposing to amend fees 
and credits provided for the routing of orders in all securities.
    Currently, for PSTG, PSCN, PTFY, PCRT or XCST orders that execute 
at NASDAQ OMX BX (``BX'') the Exchange provides a credit of $0.0011 per 
share to the member organization. The Exchange proposes to no longer 
offer this credit.
    Additionally, the Exchange currently charges a member organization 
entering a PMOP order that executes at the New York Stock Exchange 
(``NYSE'') $0.0030 per share. The Exchange is proposing to increase the 
charge assessed for such orders executed at NYSE to $0.0035 per share.
    The Exchange also currently charges a member organization $0.0005 
per share for entering a PTFY order that executes in a venue other than 
the NASDAQ OMX PSX (``PSX), NYSE, The Nasdaq Stock Market LLC 
(``Nasdaq'') or BX. The Exchange is proposing to increase the charge 
assessed for such orders to $0.0007 per share.
    Finally, the Exchange will institute a $0.0007 per share charge for 
XCST and XDRK orders for shares executed at a venue other than BX. 
Currently, there is no charge for either XCST or XDRK.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing 
Schedule is consistent with Section 6(b) of the Act \3\ in general, and 
furthers the objectives of Section 6(b)(4) and (b)(5) of the Act \4\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among members and other persons 
using its facilities, and is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers. The 
proposed changes are reasonable because they reflect a modest decrease 
in the credits provided in the execution of certain orders and a modest 
increase in the fees assessed for others, which will allow the Exchange 
to reduce costs and increase revenue.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange is proposing modest increase of only $0.0002 per 
share, from $0.000t [sic] to $0.0007 per share, for a member 
organization entering a PTFY order that executes in a venue other than 
the PSX, NYSE, NASDAQ or BX. The Exchange proposes the same $0.0007 per 
share charge for a member organization entering a XCST or XDRK order 
that executes in a venue other than the PSX, NYSE, NASDAQ or BX. 
Currently, there is no charge for such XCST and XDRK orders. These 
changes are consistent with an equitable allocation of fees and not 
unfairly discriminatory because it [sic] will eliminate an existing 
disparity between the fees charged for a PTFY, XCST and XDRK orders 
that execute in a venue other than the PSX, NYSE, NASDAQ or BX, thereby 
making the applicable fees consistent. In addition, the change is 
equitable and not unfairly discriminatory because it affects these 
similarly situated member organizations in the same way.
    The Exchange is proposing a similarly modest increase of only 
$0.0005 per share, from $0.0030 to $0.0035 per share, for a member 
organization entering a PMOP order that executes in [sic] the NYSE. 
This change is consistent with an equitable allocation of fees and not 
unfairly discriminatory because it will eliminate an existing disparity 
between the fees charged for a PTFY order executed at NYSE with PMOP 
orders executed at venues other than NYSE, thereby making the 
applicable fees consistent. In addition,

[[Page 9303]]

the change is equitable and not unfairly discriminatory because it 
affects all similarly situated member organizations in the same way.
    The Exchange is also proposing to no longer provide a credit of 
$0.0011 per share executed at BX to a member organization entering 
PSTG, PSCN, PTFY, PCRT or XCST orders that execute at BX. These changes 
are reasonable because the Exchange believes it is no longer necessary 
to further incentivizes [sic] member organizations to provide displayed 
quotes and orders on PSX. Additionally, the changes are equitable and 
not unfairly discriminatory because they affect all similarly situated 
member organizations in the same way.
    The changes with respect to the charges assessed and credits 
provided for routing of orders in all securities are reasonable because 
they represent a modest increases [sic] in charges assessed a member 
organization for PTFY, XCST and XDRK orders that execute at a venue 
other than BX and for PMOP orders that execute at NYSE, and a modest 
decreases [sic] in the credits provided to member organizations for 
PSTG, PSCN, PTFY, PCRT and XCST orders that execute at BX. The Exchange 
notes that the increase in fees and decrease in credits are designed to 
incentivize member organizations to provide orders and quotes that 
execute on PSX. In addition, the change is equitable and not unfairly 
discriminatory because it affects only those members that opt to use 
the Exchange's optional routing services.

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.\5\ 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 decreased credits and 
increased fees are intended to reduce the Exchange's costs, while still 
continuing to provide an incentive for members to execute shares on PSX 
and make use of its optional routing functionality. Because there are 
numerous competitive alternatives to PSX, it is likely the Exchange 
will lose market share as a result of the changes if 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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    \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 rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\6\ 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.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-Phlx-2014-09 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-Phlx-2014-09. 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-
Phlx-2014-09, and should be submitted on or before March 11, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03376 Filed 2-14-14; 8:45 am]
BILLING CODE 8011-01-P