Document ID: SEC-2015-1213-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, LLC
Posted Date: 2015-07-20T04:00Z

[Federal Register Volume 80, Number 138 (Monday, July 20, 2015)]
[Notices]
[Pages 42862-42863]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17657]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75446; File No. SR-Phlx-2015-58]

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

July 14, 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 June 30, 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 July 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 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 will increase non-displayed order credits for all 
orders with midpoint pegging that provide liquidity through PSX. 
Specifically, the credit tiers for non-displayed orders of a $0.0015 
per share executed credit for orders with midpoint pegging that provide 
liquidity entered by a member organization that provides 1,000,000 
shares or more average daily volume of non-displayed liquidity during 
the month and the credit tier for non-displayed orders of $0.0010 per 
share executed will be replaced with a single credit tier of $0.0020 
per share executed for all orders with midpoint pegging \3\ that 
provide liquidity to create further incentives to provide midpoint 
liquidity on PSX for the benefit of investors and other market 
participants.
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    \3\ Including the Midpoint Peg Post-Only Order recently filed 
with the Commission, once effective and operative. See SR-PHLX-2015-
056 (as recently filed).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\4\ in general, and with 
Section 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 the Exchange operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposed increases to the 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 is proposing to increase non-displayed order credits 
for all orders with midpoint pegging that provide liquidity through PSX 
by replacing the existing two such tiers with a single tier. 
Specifically, the credit tiers for non-displayed orders of a $0.0015 
per share executed credit for orders with midpoint pegging that provide 
liquidity entered by a member organization that provides 1,000,000 
shares or more average daily volume of non-displayed liquidity during 
the month and the credit tier for non-displayed orders of $0.0010 per 
share executed will be replaced with a single credit tier of $0.0020 
per share executed for all orders with midpoint pegging that provide 
liquidity.
    The Exchange believes the proposed change is reasonable because the 
increase to the credit for all orders with midpoint pegging that 
provide liquidity provides member organizations with a uniform 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.

[[Page 42863]]

    The Exchange believes that the proposed rule change is consistent 
with an equitable allocation of fees and is not unfairly discriminatory 
because the single credit for all orders with midpoint pegging that 
provide liquidity is uniformly available to all members and affects 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.\6\ 
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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    \6\ 15 U.S.C. 78f(b)(8).
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    In this instance, the changes to the credits for all orders with 
midpoint pegging that provide liquidity do not impose a burden on 
competition because Exchange membership is optional and is the subject 
of competition from other exchanges. The increased credit is 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.\7\ 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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    \7\ 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-2015-58 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-2015-58. 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-2015-58 and should be 
submitted on or before August 10, 2015.
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    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-17657 Filed 7-17-15; 8:45 am]
 BILLING CODE 8011-01-P