Document ID: SEC-2013-1095-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2013-06-19T04:00Z

[Federal Register Volume 78, Number 118 (Wednesday, June 19, 2013)]
[Notices]
[Pages 36798-36800]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-14606]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69753; File No. SR-BX-2013-038]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Its 
Schedule of Fees and Rebates for Execution of Orders for Securities 
Priced at $1 or More Under Rule 7018

June 13, 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 3, 2013, NASDAQ OMX BX, Inc. (``BX'' 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 changes to its schedule of fees and rebates 
for execution of orders for securities priced at $1 or more under Rule 
7018. These amendments are effective upon filing, and the Exchange has 
designated the proposed amendments to be operative on June 3, 2013. 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 charges a reduced fee for members providing liquidity 
if they meet the criteria of a ``Qualified Liquidity Provider.'' These 
criteria include requirements that the member access and provide 
volumes of liquidity in excess of certain levels, expressed as a 
percentage of Consolidated Volume.\3\ The Exchange has determined that 
it would be beneficial to members to exclude the date of the annual 
reconstitution of the Russell Investments Indexes (the ``Russell 
Reconstitution'') (in 2013, June 28) from calculations of Consolidated 
Volume. Trades occurring on that date would be excluded from the 
calculation of total Consolidated Volume and from the calculation of 
the member's trading activity (i.e., they would be excluded from both 
the numerator and the denominator of the calculation of a member's 
percentage).
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    \3\ ``Consolidated Volume'' is the consolidated volume of shares 
reported to all consolidated transaction reporting plans by all 
exchanges and trade reporting facilities during a month.
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    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 BX, expressed as a percentage of Consolidated Volume, 
is likely to be lower than their percentage of Consolidated Volume on 
other days during the month. Including the date of the Russell 
Reconstitution in calculations of Consolidated Volume is therefore 
likely to 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 occurring because a member is 
not able to reach a volume percentage on that date that it reaches on 
other trading days during the month. Moreover, excluding the date is 
very unlikely to result in a price increase for any

[[Page 36799]]

members, since a member that was not, on other days during the month, 
trading in BX at volume levels that would allow it qualify for the 
criteria of a Qualified Liquidity Provider, 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.
2. Statutory Basis
    BX believes that the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\4\ in general, and with Sections 
6(b)(4) and 6(b)(5) of the Act,\5\ 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 BX operates or controls, and is not designed to permit 
unfair discrimination between customers, issuers, brokers, or dealers. 
BX believes that the proposed change to exclude the date of the Russell 
Reconstitution from calculations of Consolidated Volume is reasonable 
because it will diminish the likelihood of a de facto price increase 
occurring because a member is not able to reach a volume percentage on 
that date that it reaches on other trading days during the month. BX 
further believes that the change is consistent with an equitable 
allocation of fees and is not unfairly discriminatory. Specifically, 
because trading activity on the date of the Russell Reconstitution will 
be excluded from determinations of a member's percentage of 
Consolidated Volume, BX believes it will be easier for members to 
determine the volume required to meet a certain percentage of 
participation than would otherwise be the case. To the extent that a 
member has been active in BX at a significant level throughout the 
month, excluding the date of the Russell Reconstitution, on which its 
percentage of Consolidated Volume is likely to be lower than on other 
days, will increase its overall percentage for the month. Conversely, 
even if a member was more active on the date of Russell Reconstitution 
than on other dates, it is unlikely that its activity on one day would 
be able to increase its overall monthly percentage to a meaningful 
extent. Thus, BX believes that the change will benefit members that are 
in a position to achieve volume levels required by the BX pricing 
schedule but without harming the ability of any members to reach such 
levels. Finally, BX believes that the change does not unfairly burden 
competition because it will help to preserve or improve the pricing 
status that would apply to members' trading activity in the absence of 
the Russell Reconstitution, and therefore will not impact the ability 
of such members to compete.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    BX 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. BX 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, BX 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, 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 change will make it easier for members to achieve a 
certain percentage of Consolidated Volume during the month of the 
Russell Reconstitution, and therefore it is designed to protect members 
from the possibility of a de facto price increase. Accordingly, BX does 
not believe that the proposed changes will impair the ability of 
members or competing order execution venues to maintain their 
competitive standing in the financial markets.

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: (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.
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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-BX-2013-038 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-BX-2013-038. 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 BX. 
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-2013-038, 
and should be submitted on or before July 10, 2013.

[[Page 36800]]

    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. 2013-14606 Filed 6-18-13; 8:45 am]
BILLING CODE 8011-01-P