Document ID: SEC-2015-1007-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX BX, Inc.
Posted Date: 2015-06-17T04:00Z

[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)]
[Notices]
[Pages 34758-34763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14819]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75145; File No. SR-BX-2015-033]

Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
the Fee Schedule Under Exchange Rule 7018 With Respect to Transactions 
in Securities Priced at $1 or More per Share and the Exchange's Retail 
Price Improvement Program

June 11, 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 June 1, 2015, 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend BX Rule 7018 with respect to 
transactions in securities priced at $1 or more per share and the 
Exchange's Retail Price Improvement Program.
    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

[[Page 34759]]

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 amend the fee schedule under Rule 
7018(a), relating to fees and credits provided for orders in securities 
priced and $1 or more per share that execute on BX, and is proposing to 
increase a credit provided by the Retail Price Improvement program 
under Rule 7018(e).
    Under Rule 7018(a), the Exchange provides credits to member firms 
that access certain levels of liquidity on BX per month. The Exchange 
is proposing to add two new credit tiers of $0.0017 and $0.0012 per 
share executed, which will be provided for orders that access 
liquidity, excluding orders with Midpoint pegging \3\ and orders that 
receive price improvement and execute against an order with Midpoint 
pegging, entered by a member that accesses liquidity equal to or 
exceeding 0.20% and 0.05% of total Consolidated Volume \4\ during a 
month, respectively.
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    \3\ A Midpoint Peg order has its priced [sic] based upon the 
national best bid and offer, excluding the effect that the Midpoint 
Peg Order itself has on the inside bid or inside offer. Primary 
Pegged Orders with an offset amount and Midpoint Pegged Orders will 
never be displayed. A Midpoint Pegged Order may be executed in sub-
pennies if necessary to obtain a midpoint price. A new timestamp is 
created for the order each time it is automatically adjusted.
    \4\ Consolidated Volume is defined as the total consolidated 
volume reported to all consolidated transaction reporting plans by 
all exchanges and trade reporting facilities during a month in 
equity securities, excluding executed orders with a size of less 
than one round lot. 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 shall be 
excluded from both total Consolidated Volume and the member's 
trading activity. See Rule 7018(a).
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    In a related change, the Exchange is amending existing credit tiers 
that provide a credit to members with orders that access liquidity, 
excluding orders with Midpoint pegging and orders that receive price 
improvement and execute against an order with Midpoint pegging, entered 
by a member that accesses liquidity equal to or exceeding 0.1% and 
0.015% of total Consolidated Volume during a month, which currently 
provide credits of $0.0010 and $0.0008 per share executed, 
respectively. The Exchange is proposing to increase the credit provided 
under the 0.1% Consolidated Volume tier from $0.0010 per share executed 
to $0.0015 per share executed. The Exchange is also proposing to 
increase the total Consolidated Volume required to receive the $0.0008 
per share executed credit from 0.015% to 0.02%.
    The Exchange is proposing to increase the credit it provides for 
all other orders that remove liquidity from BX and that do not qualify 
under another higher credit from $0.0004 per share executed to $0.0006 
per share executed. In related changes, the Exchange is eliminating two 
credit tiers, which currently provide credits of $0.0006 per share 
executed and both of which are rendered moot in light of the increased 
credit the Exchange is provided for all other orders that remove 
liquidity from BX. Specifically, the Exchange is proposing to eliminate 
a $0.0006 per share executed credit provided to a member firm for an 
order that accesses liquidity, excluding orders with Midpoint pegging 
and orders that receive price improvement and execute against an order 
with Midpoint pegging, entered by a member that provides an average 
daily volume of at least 25,000 shares of liquidity during the month. 
The Exchange is also proposing to eliminate the $0.0006 per share 
executed credit provided to members with a BSTG,\5\ BSCN,\6\ BMOP,\7\ 
BTFY,\8\ BCRT,\9\ BDRK \10\ or BCST \11\ order that accesses liquidity 
in the NASDAQ OMX BX Equities System, excluding orders with Midpoint 
pegging and excluding orders that receive price improvement and execute 
against an order with Midpoint pegging.
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    \5\ See BX Rule 4758(a)(1)(A)(iii).
    \6\ See BX Rule 4758(a)(1)(A)(iv).
    \7\ See BX Rule 4758(a)(1)(A)(vi).
    \8\ See BX Rule 4758(a)(1)(A)(v).
    \9\ See BX Rule 4758(a)(1)(A)(vii).
    \10\ See BX Rule 4758(a)(1)(A)(viii).
    \11\ See BX Rule 4758(a)(1)(A)(ix).
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    The Exchange is also proposing to modify and eliminate certain 
charges it assesses under Rule 7018(a). Specifically, the Exchange is 
proposing to increase the charge assessed for a Displayed order entered 
by a Qualified Market Maker \12\ (``QMM'') from $0.0009 per share 
executed to $0.0014 per share executed. The Exchange is also proposing 
to adopt a new charge tier of $0.0014 per share executed assessed a 
member that (i) adds liquidity equal to or exceeding 0.25% of total 
Consolidated Volume during a month, and (ii) adds and accesses 
liquidity equal to or exceeding 0.50% of total Consolidated Volume 
during a month.
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    \12\ A member firm may become a QMM by providing through one or 
more of its NASDAQ OMX BX Equities System market maker participant 
identifier (``MPIDs'') more than 0.30% of Consolidated Volume during 
the month. For a member qualifying under this method, the member 
must have at least one Qualified MPID, that is, an MPID through 
which, for at least 200 securities, the QMM quotes at the NBBO an 
average of at least 50% of the time during regular market hours 
(9:30 a.m. through 4:00 p.m.) during the month. The member must also 
provide an average daily volume of 1.5 million shares or more using 
orders with Midpoint pegging during the month.
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    The Exchange is proposing to increase the charges assessed under 
two tiers for a displayed order that adds liquidity equal to or 
exceeding 0.25% and 0.04% of total Consolidated Volume during a month, 
respectively, which are currently set a $0.0012 per share executed and 
$0.0014 per share executed, respectively. The Exchange is proposing to 
increase the charge under the 0.25% tier to $0.0018 per share executed, 
while also decreasing the minimum liquidity needed to be provided to 
qualify under the tier from 0.25% of total Consolidated Volume during a 
month to 0.20% of total Consolidated Volume during a month. The 
Exchange is proposing to increase the charge under the 0.04% tier to 
$0.0019 per share executed and is additionally proposing to increase 
the total Consolidated Volume required to receive the charge from 0.04% 
to 0.10%.
    The Exchange is also proposing to amend charges it assesses for 
providing liquidity in orders with Midpoint pegging. Specifically, it 
is proposing to eliminate the $0.0002 per share executed charge 
assessed for an order with Midpoint pegging entered by a member that 
adds 0.03% of total Consolidated Volume of non-displayed liquidity. The 
Exchange is also proposing to increase the charge assessed for an order 
with Midpoint pegging entered by a member that adds 0.015% of total 
Consolidated Volume of non-displayed liquidity from $0.0004 per share 
executed to $0.0005 per share executed and is additionally increasing 
the total Consolidated Volume requirement from 0.015% to 0.02%. The 
Exchange is proposing to increase the $0.0010 per share executed charge 
for an order with Midpoint pegging entered by a member that does not 
qualify for a lower charge for such an order to $0.0015 per share 
executed.
    The Exchange is proposing to amend certain charges relating to non-
displayed orders. Specifically, the Exchange is proposing to eliminate 
the $0.0014 per share executed charge assessed for a non-displayed 
order, other than orders with Midpoint

[[Page 34760]]

pegging, entered by a member that adds 0.075% of total Consolidated 
Volume of non-displayed liquidity. The Exchange is also proposing to 
increase the $0.0019 per share executed charge assessed for a non-
displayed order, other than orders with Midpoint pegging, entered by a 
member that adds 0.055% of total Consolidated Volume of non-displayed 
liquidity to $0.0024 per share executed and is additionally increasing 
the total Consolidated Volume requirement to 0.06%. The Exchange is 
proposing to increase the charge assessed for all other non-displayed 
orders from $0.0028 per share executed to $0.0030 per share executed.
    The Exchange is proposing to reduce the level of Consolidated 
Volume required to qualify as a QMM. Currently, to be considered a QMM 
a member firm must provide through one or more of its NASDAQ OMX BX 
Equities System MPIDs more than 0.30% of Consolidated Volume during the 
month. To qualify under this method, the member firm must have at least 
one Qualified MPID, that is, an MPID through which, for at least 200 
securities, the QMM quotes at the NBBO an average of at least 50% of 
the time during regular market hours (9:30 a.m. through 4:00 p.m.) 
during the month. The member firm must also provide an average daily 
volume of 1.5M shares or more using orders with Midpoint pegging during 
the month. The Exchange is proposing to reduce the level of 
Consolidated Volume under the rule from 0.30% to 0.15%.
    Lastly, the Exchange is proposing to amend a charge assessed under 
the Retail Price Improvement Program of Rule 7018(e). The Exchange's 
Retail Price Improvement (``RPI'') program provides incentives to 
member firms (or a division thereof) approved by the Exchange to 
participate in the program (a ``Retail Member Organization'') to submit 
designated ``Retail Orders'' \13\ for the purpose of seeking price 
improvement. The Exchange is proposing to increase the $0.0012 per 
share executed credit provided for a Retail Order that accesses other 
liquidity on the Exchange book to $0.0017 per share executed. The 
credit applies to Retail Orders not covered by other credit tiers 
available for accessing liquidity under the rule.
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    \13\ A Retail Order is defined in BX Rule 4780(a)(2), in part, 
as ``an agency or riskless principal order that satisfies the 
criteria of FINRA Rule 5320.03, that originates from a natural 
person and is submitted to the Exchange by a Retail Member 
Organization, provided that no change is made to the terms of the 
order with respect to price (except in the case that a market order 
is changed to a marketable limit order) or side of market and the 
order does not originate from a trading algorithm or any other 
computerized methodology.''
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2. Statutory Basis
    BX believes that the proposed rule changes are consistent with the 
provisions of Section 6 of the Act,\14\ in general, and with Sections 
6(b)(4) and 6(b)(5) of the Act,\15\ 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 the Exchange operates or controls, and is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the proposed two new credit tiers based 
on Consolidated Volume together with the proposed changes to existing 
credit tiers based on Consolidated Volume under BX Rule 7018(a) are 
reasonable because they provide additional opportunities for market 
participants to receive credits for participation on BX. The Exchange 
also believes that the proposed changes to the credit tiers based on 
the level Consolidated Volume are reasonable because the credits tiers 
are directly tied to the level of Consolidated Volume a member firm 
accesses in a given month, with the highest credit provided for the 
greatest level of Consolidated Volume, and the lowest credit provided 
to the lowest level of Consolidated Volume. Specifically, the Exchange 
is proposing a new $0.0017 per share executed credit tier, which will 
require the highest level of Consolidated Volume in liquidity removal 
from the Exchange. The Exchange is proposing to increase the credit 
provided for the next lower tier, which requires liquidity accessed of 
0.1% or more of Consolidated Volume, to $0.0015 per share executed. The 
Exchange is proposing to adopt a new $0.0012 per share executed credit 
tier, which will require adding liquidity equal to or exceeding 0.05% 
of total Consolidated Volume during the month. Lastly, the Exchange is 
modifying an existing credit tier by increasing the minimum total 
Consolidated Volume required from 0.015% to 0.02%. As such, the 
Exchange is generally providing increased credits to provide incentive 
to member firms to remove liquidity, excluding orders with Midpoint 
pegging and excluding orders that receive price improvement and execute 
against an order with Midpoint pegging, from the Exchange. With respect 
to the increased Consolidated Volume required to receive the $0.0008 
credit, the Exchange notes that member firms are being required to 
provide increased Consolidated Volume to receive the credit, which will 
improve market quality for all participants. The Exchange believes that 
the proposed credits noted above are both equitably allocated and are 
not unfairly discriminatory as they are provided to all member firms 
that achieve the minimum level of Consolidated Volume required by the 
tier, with the member firms that provide the greatest level of 
Consolidated Volume receiving the greatest credit.
    The Exchange believes that elimination of the two $0.0006 per share 
executed credit tiers is reasonable because the Exchange has increased 
the credit it provides for all orders that do not otherwise receive a 
higher credit, which the Exchange is increasing to $0.0006 per share 
executed. This increased ``default'' credit is reasonable because the 
Exchange desires to further incentivize member firms to participate in 
the Exchange by removing liquidity, generally. The Exchange believes 
that the proposed elimination of the two $0.0006 per share executed 
credit tiers, and the proposed increase in the ``default'' credit to 
$0.0006 per share executed are both an equitable allocation and are not 
unfairly discriminatory because more member firms will have the 
opportunity to qualify for a higher credit based on their participation 
in BX by removing liquidity.
    The Exchange believes that the proposed change to increase the 
charge assessed a QMM for entering a displayed order is reasonable 
because the exchange must balance the cost of credits provided for 
orders removing liquidity and the desire to provide QMMs with 
incentives to provide displayed orders. The Exchange notes that the 
proposed charge continues to be lower than the default charge assessed 
for all other displayed orders that do not otherwise qualify for a 
lower charge, and as such continues to act as an incentive to market 
participants to provide such liquidity. Moreover, the Exchange will 
continue to provide a reduced charge in return for the

[[Page 34761]]

provision of market improving order activity. The Exchange believes 
that the proposed change is both equitably allocated and is not 
unfairly discriminatory because the increased charge applies uniformly 
to all member firms that previously had qualified to receive such a 
credit.
    The Exchange believes that the proposed new $0.0014 per share 
executed charge available to a member firm that adds liquidity equal to 
or exceeding 0.25% of total Consolidated Volume during a month and adds 
and accesses liquidity equal to or exceeding 0.50% of total 
Consolidated Volume during a month, is reasonable because it provides a 
new means by which a member firm may qualify for a lower charge than 
the default charge applied to liquidity-providing displayed orders. The 
Exchange provides incentives to member firms to enter displayed orders 
on BX and, in the present case, it is providing a reduced charge to a 
member that enters such an order, but also provides market improving 
liquidity in the form of significant levels of Consolidated Volume of 
adding and accessing liquidity during the month. The Exchange believes 
that the proposed change is both equitably allocated and is not 
unfairly discriminatory because the new charge applies uniformly to all 
member firms that qualify under the tier's requirements, which requires 
beneficial market activity by the member firm in return for the lower 
charge.
    The Exchange believes that the proposed increase to the $0.0012 per 
share executed and $0.0014 per share executed charge tiers assessed for 
Displayed orders entered by a member firm that adds liquidity equal to 
or exceeding 0.25% and 0.04% of total Consolidated Volume during a 
month, respectively, is reasonable because it reflects a small increase 
to the charges assessed for such orders by qualifying members, while 
each continue to remain lower than the default charge assessed for 
providing liquidity in displayed orders. As such, the proposed charges 
will continue [sic] act as an incentive to market participants to 
provide displayed orders. The Exchange also believes that decreasing 
the level of Consolidated Volume required to receive the proposed 
$0.0018 per share executed charge from 0.025% to 0.020% is reasonable 
because it lowers the total Consolidated Volume requirement, which the 
Exchange has observed was set too high to effectively provide incentive 
to market participants to improve the market. The Exchange also 
believes that it is reasonable to increase the level of Consolidated 
Volume required to receive the $0.0019 per share executed charge from 
0.04% to 0.10% because the Exchange believes that increasing the level 
may result in improved market quality in the form of additional total 
Consolidated Volume in return for the reduced charge. The Exchange 
believes that the proposed changes to the $0.0012 charge tier is both 
an equitable allocation and is not unfairly discriminatory because the 
increased charge applies uniformly to all member firms that qualify 
under the tier's revised, lower Consolidated Volume requirement, which 
will continue to provide a charge lower than the default charge 
assessed for displayed orders. The Exchange also believes that the 
proposed changes to the $0.0014 charge tier is both an equitable 
allocation and is not unfairly discriminatory because the increased 
charge applies uniformly to all member firms that qualify under the 
tier's revised, higher Consolidated Volume requirement, which will 
continue to provide a charge lower than the default charge assessed for 
displayed orders.
    The Exchange believes that elimination of the $0.0002 per share 
executed charge provided for an order with Midpoint pegging entered by 
a member firm that adds 0.03% of total Consolidated Volume of non-
displayed liquidity is reasonable because the Exchange will continue to 
provide opportunity for member firms to receive a reduced charge for 
such non-displayed liquidity based on a certain level of total 
Consolidated Volume. Specifically, the Exchange will provide a member 
firm with a reduced charge for non-displayed liquidity if it achieves 
0.02% of total Consolidated Volume during a month. The Exchange 
believes that the 0.03% total Consolidated Volume tier is no longer 
needed to provide incentive to market participant [sic] to provide such 
Midpoint pegging orders. The Exchange believes that the proposed change 
is both equitably allocated and is not unfairly discriminatory because 
member firms will continue to receive a charge lower than the default 
charge assessed for non-displayed orders in return for providing 
beneficial liquidity in the form of Midpoint pegging orders, albeit at 
an increased charge.
    The Exchange believes that the proposed increase to the charge 
assessed for an order with Midpoint pegging entered by a member firm 
that adds 0.015% of total Consolidated Volume from $0.0004 per share 
executed to $0.0005 per share executed is reasonable because it 
represents a modest increase to the charge assessed for such orders, 
while remaining lower than the default charge assessed for other non-
displayed orders. Moreover, the Exchange believes that the proposed 
increased charge will continue [sic] act as an incentive to market 
participants to provide orders with Midpoint pegging. The Exchange 
believes that the proposed change is both equitably allocated and is 
not unfairly discriminatory because member firms will continue to 
receive a charge lower than the default charge assessed for orders in 
return for providing beneficial liquidity in the form of Midpoint 
pegging orders, albeit at an increased charge. The Exchange also 
believes that the proposed increase to the charge is equitably 
allocated and not unfairly discriminatory because all members entering 
orders with Midpoint pegging that meet the criteria of the tier will be 
assessed the proposed charge.
    The Exchange believes that the increase the [sic] charge for 
Midpoint pegging orders that do not otherwise qualify for a lower 
charge from $0.0010 per share executed to $0.0015 per share executed is 
reasonable because it represents a modest increase to the charge 
assessed for such orders, while remaining lower than the default charge 
assessed for non-displayed orders. Moreover, the Exchange believes that 
the proposed increased charge will continue [sic] act as an incentive 
to market participants provide orders with Midpoint pegging. The 
Exchange believes that the proposed change is both equitably allocated 
and is not unfairly discriminatory because member firms will continue 
to receive a charge lower than the default charge assessed for non-
displayed orders in return for providing beneficial liquidity in the 
form of Midpoint pegging orders, albeit at an increased charge. The 
Exchange also believes that the proposed increase to the charge is 
equitably allocated and not unfairly discriminatory because all members 
entering orders with Midpoint pegging that do not otherwise qualify for 
a lower charge under another tier will be assessed the proposed charge.
    The Exchange believes that elimination of the $0.0014 per share 
executed charge assessed for non-displayed orders, other than orders 
with Midpoint pegging, entered by a member firm that adds 0.075% of 
total Consolidated Volume of non-displayed liquidity is reasonable 
because the Exchange will continue to offer member firms opportunity to 
receive a reduced charge for such orders, albeit at a higher charge 
under a separate tier. The Exchange notes that, while the proposed 
charge under the remaining tier is $0.0024 per share executed, member 
firms will only be required to provide a minimum of 0.06% of total

[[Page 34762]]

Consolidated Volume of non-displayed liquidity. The Exchange believes 
that this charge tier will continue [sic] act as an incentive to market 
participants to provide non-displayed liquidity. The Exchange believes 
that the proposed change is both equitably allocated and is not 
unfairly discriminatory because member firms will continue to receive a 
charge lower than the default charge assessed for non-displayed orders 
that qualify under the deleted tier in return for providing non-
displayed liquidity, albeit at an increased charge under the remaining 
tier.
    The Exchange believes that increasing the charge assessed and total 
Consolidated Volume required for non-displayed orders, other than 
orders with Midpoint pegging, entered by a member firm that adds 0.055% 
of total Consolidated Volume of non-displayed liquidity is reasonable 
because the charge continues to be lower than the charge assessed for 
other non-displayed orders, thereby continuing to serve as an incentive 
to market participants to provide non-displayed liquidity, and the 
modest increase in required total Consolidated Volume will encourage 
members to provide additional non-displayed liquidity. The Exchange 
notes that non-displayed liquidity is not as beneficial to market 
quality as other forms of displayed liquidity and, accordingly, the 
Exchange assesses a higher charge for such liquidity. The Exchange 
believes that the proposed change is both equitably allocated and is 
not unfairly discriminatory because member firms will continue to 
receive a charge lower than the default charge assessed for non-
displayed orders that qualify under the tier in return for providing 
non-displayed liquidity at a level slightly higher than is currently 
required, which will apply to all member firms that qualify under the 
tier. Additionally, the Exchange believes that the proposed change is 
equitably allocated and not unfairly discriminatory because all members 
can add liquidity to BX and the more liquidity a member adds the lower 
the charge because the member is improving the quality of the market by 
providing this additional liquidity.
    The Exchange believes that the proposed increase to the default 
charge assessed for non-displayed orders that do not otherwise qualify 
for a lower charge from $0.0028 per share executed to $0.0030 per share 
executed is reasonable because it is reflective of the Exchange's need 
to balance the fees assessed with the desire to improve market quality. 
The Exchange believes that non-displayed liquidity on BX is sufficient 
that it can support a minor increase to the charge assessed, thus 
allowing the Exchange to apply other discounted charges and offer 
credits designed to further increase participation on the Exchange. The 
Exchange also believes that the proposed increase to the default charge 
is equitably allocated and not unfairly discriminatory because all 
members entering non-displayed orders on BX that do not qualify for a 
reduced charge will be assessed the proposed charge.
    The Exchange believes the proposed reduction in the level of 
Consolidated Volume required to qualify as a QMM from 0.30% to 0.15% is 
reasonable because it will provide a greater incentive to market 
participants to participate in the program, which is designed to 
improve the market by providing member firms with incentive to 
participate in the market in return for reduced charge for providing 
Displayed Orders. The Exchange also believes that the proposed 
reduction in Consolidated Volume required to qualify as a QMM is 
equitably allocated and not unfairly discriminatory because all member 
firms that qualify under the amended QMM eligibility standard will be 
considered QMMs, and therefore be eligible for the reduced charge. As 
noted, the proposed change is designed to expand participation in the 
program, which will benefit all market participants in the form of 
improved liquidity.
    The Exchange believes the proposed increased credit provided for a 
Retail Order that accesses other liquidity on the Exchange book from 
$0.0012 per share executed to $0.0017 per share executed is reasonable 
because it will provide a greater incentive to market participants to 
participate in the program, which is designed to improve the market for 
retail order flow. The Exchange also believes that the proposed 
increase to the credit is equitably allocated and not unfairly 
discriminatory because all members entering a Retail Order that 
accesses other liquidity on the Exchange book will receive the credit.
    Finally, 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. 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. The changes reflect this environment because although 
they reflect both increases in credits and fees, with the price 
increases being minor and lower than the default charges assessed under 
the fee schedule, while the increased credits are designed to 
incentivize changes in market participant behavior to the benefit of 
the market overall.

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.\16\ 
BX notes that it operates in a highly competitive market in which 
market participants can readily favor dozens of 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.
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    \16\ 15 U.S.C. 78f(b)(8).
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    In this instance, the changes to fees and credits do not impose a 
burden on competition because participation in the Exchange is optional 
and is the subject of competition from other exchanges. The proposed 
changes to the credits and charges are reflective of the Exchange's 
overall efforts to provide greater incentives to market participants in 
the form of credits and reduced charges for market participation it 
believes needs improvement to the benefit of all participants. For 
these reasons, the Exchange does not believe that any of the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets. 
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.

[[Page 34763]]

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 \17\ and paragraph (f) of Rule 19b-4 \18\ 
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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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 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-2015-033 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-2015-033. 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-2015-033, 
and should be submitted on or before July 8, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-14819 Filed 6-16-15; 8:45 am]
 BILLING CODE 8011-01-P