Document ID: SEC-2013-1240-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2013-07-08T04:00Z

[Federal Register Volume 78, Number 130 (Monday, July 8, 2013)]
[Notices]
[Pages 40791-40792]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16229]

[[Page 40791]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69901; File No. SR-Phlx-2013-70]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to the 
Schedule of Fees and Rebates for the Execution of Quotes and Orders on 
NASDAQ OMX PSX

July 1, 2013.
    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 June 25, 2013, 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 Substance 
of the Proposed Rule Change

    The Exchange proposes changes to its schedule of fees and rebates 
for execution of quotes and orders on NASDAQ OMX PSX (``PSX''). Phlx 
proposes to implement the proposed rule change on July 1, 2013. The 
text of the proposed rule change is available on the Exchange's Web 
site at http://nasdaqomxphlx.cchwallstreet.com/nasdaqomxphlx/phlx, 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
    Phlx is proposing two modifications to its schedule of fees and 
rebates for transactions occurring on PSX.\3\ First, the Exchange 
currently charges a fee of $0.0028 per share executed for orders in 
securities listed on The NASDAQ Stock Market (``NASDAQ'') or the New 
York Stock Exchange (``NYSE'') entered through a PSX market participant 
identifier (``MPID'') through which a member organization provides an 
average daily volume of 10,000 or more shares of liquidity during the 
month. The Exchange also charges a fee of $0.0028 per share executed 
for orders in securities listed on NASDAQ or NYSE that are designated 
as eligible for routing, to the extent that such orders execute on PSX 
rather than routing. Orders that do not qualify for these discounts are 
charged $0.0030 per share executed. For orders in securities listed on 
exchanges other than NASDAQ and NYSE, however, the Exchange currently 
charges $0.0025 per share executed if entered through a PSX MPID 
through which a member organization provides an average daily volume of 
10,000 or more shares of liquidity during the month, and also charges 
$0.0025 per share executed for orders in securities listed on exchanges 
other than NASDAQ or NYSE that are designated as eligible for routing. 
The Exchange is proposing to change both of these fees to $0.0028 per 
share executed, so that the fees for accessing liquidity in all 
securities, regardless of listing venue, will be equivalent.\4\
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    \3\ The changes apply to securities priced at $1 or more per 
share.
    \4\ As is the case with securities listed on NASDAQ or NYSE, the 
fee for orders in securities listed on other venues that do not 
qualify for discounts is $0.0030 per share executed. This fee is not 
changing.
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2. Statutory Basis
    Phlx believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\5\ in general, and with 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 or 
system which Phlx operates or controls, and is not designed to permit 
unfair discrimination between customers, issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The change with respect to the fee charged for orders in securities 
listed on venues other than NASDAQ or NYSE that are entered through a 
PSX MPID through which a member organization provides an average daily 
volume of 10,000 or more shares of liquidity during the month is 
reasonable because it will make the applicable fee equivalent to the 
fee already charged with respect to orders entered by the same member 
organization with respect to securities listed on NASDAQ or NYSE. 
Moreover, the fee in question is consistent with the requirements of 
SEC Rule 610(c) under Regulation NMS.\7\ In adopting that rule, the 
Commission found that fees not in excess of $0.0030 per share executed 
would promote the objective of equal regulation and preventing 
excessive fees.\8\ The change is consistent with an equitable 
allocation of fees because the modified fee applicable to the volume 
tier in question remains lower than the fee charged to member 
organizations not achieving the tier, and therefore continues to 
provide a financial incentive for member organizations to achieve 
higher volume levels at PSX. The change is not unfairly discriminatory 
because the resulting fee is equivalent to the fee charged with respect 
to orders in securities listed on NASDAQ or NYSE. Finally, the fee 
change does not unduly burden competition because affected member 
organizations will continue to pay an access fee that is lower than the 
base rate of $0.0030 per share executed, and therefore their ability to 
compete will not be impacted; rather, they will continue to pay a 
comparatively lower fee that reflects a volume-based discount, 
conceptually similar to volume-based pricing incentives that are 
provided by numerous other trading venues.
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    \7\ 17 CFR 242.610(c).
    \8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37596 (June 29, 2005).
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    The change with respect to the fee charged for routable orders in 
securities listed on venues other than NASDAQ or NYSE is reasonable 
because it will make the applicable fee equivalent to the fee already 
charged with respect to routable orders entered with respect to 
securities listed on NASDAQ or NYSE. Moreover, the fee in question is 
consistent with the requirements of SEC Rule 610(c) under Regulation 
NMS.\9\ In adopting that rule, the Commission found that fees not in 
excess of $0.0030 per share executed would promote the objective of 
equal regulation and preventing excessive

[[Page 40792]]

fees.\10\ The change is consistent with an equitable allocation of fees 
because the modified fee remains lower than the fee charged with 
respect to non-routable orders not qualifying for a volume discount, 
and therefore continues to provide a means by which member 
organizations not qualifying for a volume tier may achieve a rate more 
favorable than the undiscounted rate. The change is not unfairly 
discriminatory because the resulting fee is equivalent to the fee 
charged with respect to orders in securities listed on NASDAQ or NYSE. 
Finally, the fee change does not unduly burden competition because 
affected member organizations will continue to pay an access fee that 
is lower than the base rate of $0.0030 per share executed, and 
therefore their ability to compete will not be impacted; rather, they 
will continue to pay a comparatively lower fee that reflects a discount 
designed to encourage member organizations to use the routing services 
of PSX.
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    \9\ 17 CFR 242.610(c).
    \10\ Securities Exchange Act Release No. 51808 (June 9, 2005), 
70 FR 37496, 37596 (June 29, 2005).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Phlx does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.\11\ Phlx 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, Phlx 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, Phlx believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited. In 
this instance, Phlx is instituting a limited fee increase, but one that 
is designed to make the fee schedule consistent across all securities. 
If the changes are unattractive to market participants, it is likely 
that PSX will lose market share as member organizations opt to trade 
securities at other execution venues. Accordingly, Phlx does not 
believe that the changes will impair the ability of member 
organizations or competing order execution venues to maintain their 
competitive standing in the financial markets.
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    \11\ 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) of the Act \12\ and paragraph (f) of Rule 19b-4 
thereunder.\13\ 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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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 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-Phlx-2013-70 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-2013-70. 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-2013-70 and should be 
submitted on or before July 29, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-16229 Filed 7-5-13; 8:45 am]
BILLING CODE 8011-01-P