Document ID: SEC-2015-0305-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2015-02-24T05:00Z

[Federal Register Volume 80, Number 36 (Tuesday, February 24, 2015)]
[Notices]
[Pages 9807-9809]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03663]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74292; File No. SR-Phlx-2015-14]

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 18, 2015.
    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 February 3, 2015, 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 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 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.

[[Page 9808]]

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 and routing applicable to the use of the order 
execution and routing services of the NASDAQ OMX PSX System (``PSX'') 
by member organizations for all securities traded at $1 or more per 
share, as well as clarify that consolidated volume does not include the 
date of the annual reconstitution of the Russell Investments Indexes.
    Specifically, the charge to a member organization entering an order 
that executes in PSX will increase from: (i) $0.0024 to $0.0026 per 
share executed for shares executed in The NASDAQ Stock Market LLC 
(``Nasdaq'')-listed securities; (ii) $0.0024 to $0.0025 per share 
executed for shares executed in New York Stock Exchange (``NYSE'')-
listed securities; and (iii) $0.0024 to $0.0026 per share executed for 
shares in securities listed on exchanges other than Nasdaq or NYSE. The 
Exchange believes that these increases better reflect the costs in 
providing rebates to members.
    Additionally, the Exchange proposes to clarify that for purposes of 
calculating consolidated volume and the extent of a member's trading 
activity, expressed as a percentage of, or ratio to, consolidated 
volume, the date of the annual reconstitution of the Russell 
Investments Indexes (``Russell Reconstitution'') will be excluded from 
both total consolidated volume and the member's trading activity. This 
change is consistent with the practices of both Nasdaq and the NASDAQ 
OMX BX, Inc. (``BX'') exchanges.
    Also, the Exchange proposes to make a few clarifications in the 
Exchange's Pricing Schedule. Specifically, in section (a)(2) of ``Order 
Execution and Routing in All Securities'' under ``VIII. NASDAQ OMX PSX 
FEES'', the Exchange proposes to replace the word ``None'' with 
``$0.0000 per share executed at NASDAQ OMX BX''. The Exchange believes 
this proposed change will serve to enhance market participant's 
understanding that there is no charge for shares executed at BX and 
reduce any possible confusion in these instances. Additionally, in this 
same section for both XDRK and XCST orders, the first column will 
clarify that the amounts in the accompanying column are charges for 
executions on a venue other than the NASDAQ OMX PSX System, rather than 
the current practice of simply indicating that they are a ``charge or 
credit'' to a member organization entering such orders. Finally, the 
description of the charge to members entering an XDRK order is changed 
to ``$0.0007 per share executed''; and the reference to ``shares 
executed at a venue other than NASDAQ OMX BX'' is deleted since an XDRK 
order cannot execute at BX. These clarifications are all intended to 
reduce confusion and make the fee schedule easier to understand.
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 Sections 6(b)(4) and (b)(5) of the Act \4\ 
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.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange is proposing modest increases to the charges that a 
member organization entering an order that executes in PSX from: (i) 
$0.0024 to $0.0026 per share executed for shares executed in Nasdaq-
listed securities; (ii) $0.0024 to $0.0025 per share executed for 
shares executed in NYSE-listed securities; and (iii) $0.0024 to $0.0026 
per share executed for shares in securities listed on exchanges other 
than Nasdaq or NYSE. The Exchange believes that these modest increases 
are reasonable because they reflect the Exchange's need to adjust its 
credits and fees in response to the costs and benefits provided by the 
Exchange. Additionally, these modest increases are reasonable since by 
staggering increases, the Exchange is able to offer reduced rates in 
some tapes while balancing the need to fund rebates and operational 
costs.
    The Exchange believes that the proposed changes are consistent with 
an equitable allocation of fees and are not unfairly discriminatory 
because they apply to all member organizations that enter orders that 
execute in PSX. The Exchange also believes that they are consistent 
with equitable allocation of fees and are not unfairly discriminatory 
because they apply to all member organizations that enter orders that 
execute in PSX.
    The Exchange is also proposing to clarify that for purposes of 
calculating consolidated volume and the extent of a member's trading 
activity, expressed as a percentage of, or ratio to, consolidated 
volume, the date of the Russell Reconstitution will be excluded from 
both total consolidated volume and the member's trading activity. The 
Exchange believes that this clarification is reasonable because it is 
consistent with the practices at both Nasdaq and the BX exchanges and 
will reduce confusion concerning the Russell Reconstitution.
    The Exchange believes that the proposed changes are consistent with 
an equitable allocation of fees and are not unfairly discriminatory 
because trading volumes on the date of the Russell Reconstitution are 
generally far in excess of volumes on other days during the month. As a 
result, the trading activity of members that are regular daily 
participants in PSX, expressed as a percentage of consolidated volume, 
is likely to be lower than their percentage of consolidated volume on 
other days during the month. Therefore, including the date of the 
Russell Reconstitution in calculations of consolidated volume would 
likely make it more difficult for members to achieve particular volume 
levels during the month. Accordingly, excluding the date of the Russell 
Reconstitution from these calculations will diminish the likelihood of 
a de facto price increase from occurring because a member is not able 
to reach a volume percentage on that date that it typically reaches on 
other trading days during the month. Moreover, excluding the date is 
very unlikely to result in a price increase for any members, since a 
member that was not, on other days during the month, trading in PSX at 
volume levels that would allow it to qualify for rebate tiers, would be 
unlikely to achieve percentage volume levels on the date of the Russell 
Reconstitution that would increase its overall monthly percentage to 
the required levels, even if it was very active on that date.
    Finally, the Exchange believes that the remaining changes to the 
Pricing Schedule are reasonable because they

[[Page 9809]]

are intended to clarify and reduce confusion through the clarification 
as to what is a charge or credit, the clarification that there is no 
charge for certain orders executed at BX, as well as to clarify through 
the removal of unnecessary language that may add confusion to the 
Pricing Schedule. The Exchange also believes that these changes are 
consistent with an equitable allocation of fees and are not unfairly 
discriminatory because they do not impact fees and serve only to 
clarify and reduce possible 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, 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 modest increases to the 
charges assessed are intended to allow the Exchange to help offset its 
costs in providing rebates to members. Because there are numerous 
competitive alternatives to PSX, it is likely the Exchange would lose 
market share and money as a result of changes if they do not reflect 
costs.
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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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\6\ 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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    \6\ 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-2015-14 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2015-14. 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 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-2015-14, and should be submitted on 
or before March 17, 2015.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2015-03663 Filed 2-23-15; 8:45 am]
BILLING CODE 8011-01-P