Document ID: SEC-2015-1519-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2015-09-16T04:00Z

[Federal Register Volume 80, Number 179 (Wednesday, September 16, 2015)]
[Notices]
[Pages 55667-55668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-23218]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75889; File No. SR-Phlx-2015-78]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
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

September 10, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act,'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that, on September 1, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated that the amendments be operative on September 
1, 2015.
    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 a charge and 
certain credits 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.
    The Exchange proposes to slightly decrease the charge to a member 
organization entering an order that executes in PSX from $0.0027 to 
$0.0026 per share executed in securities on exchanges other than Nasdaq 
and NYSE.
    Phlx also proposes to increase the credit for non-displayed orders 
from $0.0020 to $0.0023 per share executed for all orders with midpoint 
pegging that provide liquidity, but simultaneously decrease the credit 
from $0.0005 to $0.0000 per share executed for other non-displayed 
orders that provide liquidity.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\3\ in general, and with 
Section 6(b)(4) and 6(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 issuers and other persons using any 
facility or system which the Exchange operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposed changes to the charge and credits in the fee schedule 
under the Exchange's Pricing Schedule under Section VIII are reflective 
of the Exchange's ongoing efforts to use pricing incentive programs to 
attract order flow to the Exchange and improve market quality. The goal 
of these pricing incentives is to provide meaningful incentives for 
members to increase their participation on the Exchange.
    The Exchange believes that the slight decrease in the charge to a 
member organization entering an order that executes in PSX from $0.0027 
to $0.0026 per share executed in securities on exchanges other than 
Nasdaq and NYSE is reasonable because it provides such member 
organizations with a modest benefit of entering orders on the PSX 
System of securities listed on exchanges other than Nasdaq and NYSE and 
should incentivize more participants in the market.
    Phlx also believes that this proposed rule changes is consistent 
with an equitable allocation of fees and are not unfairly 
discriminatory because it is uniformly available to all members 
entering order that execute on PSX for securities listed on exchanges 
other than Nasdaq and NYSE and affects all such members equally and in 
the same way.
    The Exchange is also proposing to increase the non-displayed order 
credit for non-displayed orders from $0.0020 to $0.0023 per share 
executed for all orders with midpoint pegging that provide liquidity, 
but simultaneously decrease the credit from $0.0005 to $0.0000 per 
share executed for other non-displayed orders that provide liquidity. 
The Exchange believes the proposed change to increase the credit for 
all non-displayed orders with midpoint pegging that provide liquidity 
is reasonable because it provides

[[Page 55668]]

member organizations with a credit designed to incentivize increased 
midpoint liquidity on PSX. Additionally, the Exchange believes 
providing a greater credit will act as an incentive for members to 
increase their participation on the Exchange. The Exchange believes 
that the proposed change to decrease to the credit for other non-
displayed orders that provide liquidity is reasonable because the 
Exchange no longer needs to provide an incentive for members to provide 
liquidity in other non-displayed orders. The Exchange also believes the 
proposed change will incentivize greater use of midpoint orders over 
other non-displayed orders and thus increase the activity at the 
midpoint on the market, which, is beneficial to all members.
    The Exchange believes that the proposed rule changes to non-
displayed order credits are consistent with an equitable allocation of 
fees and are not unfairly discriminatory because they are uniformly 
available to all members and affect all members equally and in the same 
way.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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.\5\ 
Phlx 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 charges at a 
particular venue to be excessive, or credit opportunities available at 
other venues to be more favorable. In such an environment, the Exchange 
must continually adjust its charges and credits to remain competitive 
with other exchanges. Because competitors are free to modify their own 
charges and credits in response, and because market participants may 
readily adjust their order routing practices, the Exchange believes 
that the degree to which changes to charges and credits in this market 
may impose any burden on competition is extremely limited.
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    \5\ 15 U.S.C. 78f(b)(8).
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    In this instance, the slight decrease to the charge to member 
organizations entering orders in the PSX System and to credits for non-
displayed orders with midpoint pegging that provide liquidity and for 
other non-displayed orders that provide liquidity do not impose a 
burden on competition because Exchange membership is optional and is 
the subject of competition from other exchanges. These adjustments are 
reflective of the intent to increase the order flow on the Exchange. 
For these reasons, the Exchange 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. 
Moreover, because there are numerous competitive alternatives to the 
use of the Exchange, it is likely that the Exchange will lose market 
share as a result of the changes if they are unattractive to market 
participants.
    Accordingly, Phlx 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.

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-2015-78 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-Phlx-2015-78. 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 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-2015-78 and should be 
submitted on or before October 7, 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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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-23218 Filed 9-15-15; 8:45 am]
 BILLING CODE 8011-01-P