Document ID: SEC-2013-1984-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX LLC
Posted Date: 2013-11-20T05:00Z

[Federal Register Volume 78, Number 224 (Wednesday, November 20, 2013)]
[Notices]
[Pages 69725-69728]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27754]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70874; File No. SR-Phlx-2013-111]

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

November 14, 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 October 31, 2013, 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 and II 
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.

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 the certain 
fees and rebates for order execution and routing applicable to the use 
of the order execution and routing services of the NASDAQ OMX PSX 
System by member organizations for all securities traded at $1 or more 
per share.

Amended Fees for Execution of Quotes/Orders in Securities Listed on 
Nasdaq

    The Exchange is proposing to amend fees assessed for the execution 
of orders in securities listed on the Nasdaq Stock Market LLC 
(``Nasdaq'') that execute in NASDAQ OMX PSX (``PSX''). Currently, the 
Exchange assesses a charge of $0.0028 per share executed for an order 
entered through a PSX Market Participant Identifier (``MPID'') through 
which the member organization provides an average daily volume of 
10,000 or more shares of liquidity during the month. The Exchange is 
proposing to increase the charge assessed for such orders executed at 
PSX to $0.0030.
    The Exchange is also proposing to increase the charge assessed for 
an order executed in PSX in Nasdaq securities that is designated as 
eligible for routing. Currently, the Exchange assesses a charge of 
$0.0028 per share executed for an order that is designated as eligible 
for routing. The Exchange is proposing to increase the charge assessed 
for such orders executed at PSX to $0.0030.

Amended Fees for Execution of Quotes/Orders in Securities Listed on 
NYSE

    The Exchange is proposing to amend fees assessed and credits 
provided for the execution of orders in securities listed on the New 
York Stock Exchange,

[[Page 69726]]

Inc. (``NYSE'') that execute in PSX. Currently, the Exchange assesses a 
charge of $0.0028 per share executed for an order entered through a PSX 
MPID through which the member organization provides an average daily 
volume of 10,000 or more shares of liquidity during the month. The 
Exchange is proposing to increase the charge assessed for such orders 
executed at PSX to $0.0030.
    The Exchange is also proposing to increase the charge assessed for 
an order executed in PSX in NYSE-listed securities that is designated 
as eligible for routing. Currently, the Exchange assesses a charge of 
$0.0028 per share executed for an order that is designated as eligible 
for routing. The Exchange is proposing to increase the charge assessed 
for such orders executed in PSX to $0.0030.
    The Exchange is proposing to amend the credit provided to a member 
organization providing displayed liquidity in NYSE-listed securities 
through the PSX System. Currently, the Exchange provides a credit of 
$0.0028 per share executed for a displayed quote/order entered by a 
member organization that provides an average daily volume of 2 million 
or more shares of liquidity during the month. To be eligible, either 
(1) the quote/order is entered through a PSX MPID through which the 
member organization displays, on average over the course of the month, 
100 shares or more at the national best bid and/or national best offer 
at least 25% of the time during regular market hours in the security 
that is the subject of the quote/order, or (2) the member organization 
displays, on average over the course of the month, 100 shares or more 
at the national best bid and/or national best offer at least 25% of the 
time during regular market hours in 500 or more securities. The 
Exchange is proposing to increase the credit to $0.0029 per share 
executed.
    The Exchange is also proposing a new credit provided to a member 
organization providing displayed liquidity in NYSE-listed securities 
through the PSX System. Specifically, the Exchange is proposing to 
offer a credit of $0.0030 per share executed for a displayed quote/
order entered by a member organization that provides an average daily 
volume of 6 million or more shares of liquidity during the month. Like 
the current credit, in order to be eligible, either (1) the quote/order 
is entered through a PSX MPID through which the member organization 
displays, on average over the course of the month, 100 shares or more 
at the national best bid and/or national best offer at least 25% of the 
time during regular market hours in the security that is the subject of 
the quote/order, or (2) the member organization displays, on average 
over the course of the month, 100 shares or more at the national best 
bid and/or national best offer at least 25% of the time during regular 
market hours in 500 or more securities.

Amended Fees for Execution of Quotes/Orders in Securities Listed on 
Exchanges Other Than Nasdaq or NYSE

    The Exchange is proposing to amend fees assessed and credits 
provided for the execution of orders in securities listed on exchanges 
other than Nasdaq or NYSE that execute at PSX. Currently, the Exchange 
assesses a charge of $0.0028 per share executed for an order entered 
through a PSX MPID through which the member organization provides an 
average daily volume of 10,000 or more shares of liquidity during the 
month. The Exchange is proposing to increase the charge assessed for 
such orders executed at PSX to $0.0030.
    The Exchange is also proposing to increase the charge assessed for 
an order executed in PSX in securities listed on exchanges other than 
Nasdaq or NYSE that is designated as eligible for routing. Currently, 
the Exchange assesses a charge of $0.0028 per share executed for an 
order that is designated as eligible for routing. The Exchange is 
proposing to increase the charge assessed for such orders executed at 
PSX to $0.0030.
    The Exchange is proposing to amend the credit provided to a member 
organization providing displayed liquidity through the PSX System. 
Currently, the Exchange provides a credit of $0.0028 per share executed 
for a displayed quote/order in securities listed on exchanges other 
than Nasdaq or NYSE entered by a member organization that provides an 
average daily volume of 2 million or more shares of liquidity during 
the month. To be eligible, either (1) the quote/order is entered 
through a PSX MPID through which the member organization displays, on 
average over the course of the month, 100 shares or more at the 
national best bid and/or national best offer at least 25% of the time 
during regular market hours in the security that is the subject of the 
quote/order, or (2) the member organization displays, on average over 
the course of the month, 100 shares or more at the national best bid 
and/or national best offer at least 25% of the time during regular 
market hours in 500 or more securities. The Exchange is proposing to 
increase the credit to $0.0029 per share executed.
    The Exchange is also proposing a new credit provided to a member 
organization providing displayed liquidity through the PSX System in 
securities listed on exchanges other than Nasdaq or NYSE. Specifically, 
the Exchange is proposing to offer a credit of $0.0030 per share 
executed for a displayed quote/order entered by a member organization 
that provides an average daily volume of 6 million or more shares of 
liquidity during the month. Like the current credit, in order to be 
eligible, either (1) the quote/order is entered through a PSX MPID 
through which the member organization displays, on average over the 
course of the month, 100 shares or more at the national best bid and/or 
national best offer at least 25% of the time during regular market 
hours in the security that is the subject of the quote/order, or (2) 
the member organization displays, on average over the course of the 
month, 100 shares or more at the national best bid and/or national best 
offer at least 25% of the time during regular market hours in 500 or 
more securities.

Amended Fees for Routing of Orders in All Securities

    The Exchange is proposing to amend fees assessed and credits 
provided for the routing of orders in all securities. Currently, for 
PSTG or PSCN orders that execute in a venue other than PSX the Exchange 
assesses a charge of $0.0025 per share executed at the NYSE, a credit 
of $0.0014 per share executed at BX and a charge of $0.28 [sic] per 
share executed in other venues. The Exchange proposes to decrease the 
credit provided for executions at BX to $0.0011, and to increase the 
charges for executions elsewhere, including the NYSE, to $0.0030 per 
share executed.
    The Exchange is also proposing to amend the fees assessed member 
organizations for entering a PMOP order that executes in a venue other 
than PSX. Currently, the Exchange assesses a charge of $0.0027 per 
share executed at the NYSE and a charge of $0.0031 per share executed 
at venues other than the NYSE. The Exchange proposes increasing these 
fees to $0.0030 per share executed at the NYSE and $0.0035 per share 
executed at venues other than the NYSE.
    The Exchange is proposing to amend the fees assessed and credits 
provided for member organizations entering a PTFY order that executes 
in a venue other than PSX. Currently, the Exchange assesses a charge of 
$0.0024 per share executed at the NYSE, a charge of $0.0005 per share 
executed at venues other than the NYSE, Nasdaq or BX, a charge of 
$0.0028 per share executed at Nasdaq, and provides a credit of $0.0014 
per share executed at BX. The

[[Page 69727]]

Exchange is proposing to decrease the credit provided to $0.0011 per 
share executed at BX, and increase the charges for shares executed at 
NYSE and Nasdaq to $0.0030 per share executed.
    The Exchange is proposing to amend the fees assessed and credits 
provided for member organizations entering a PCRT order that executes 
in a venue other than PSX. Currently, the Exchange assesses a charge of 
$0.0028 per share executed at Nasdaq and provides a credit of $0.0014 
per share executed at BX. The Exchange is proposing to increase the 
charge assessed for executions on Nasdaq to $0.0030 per share executed, 
and to decrease the credit provided for executions on BX to $0.0011 per 
share executed.
    Last, the Exchange is proposing to amend the credit provided to a 
member organization for entering an XCST order that executes at BX. 
Currently, the Exchange provides a credit of $0.0014 per share executed 
at BX. The Exchange is proposing to decrease the credit provided to 
$0.0011.
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. The proposed changes are reasonable 
because they reflect a modest decrease in the credits provided in the 
execution of certain orders and a modest increase in the fees assessed 
for others, which will allow the Exchange to reduce costs and increase 
revenue.
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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 change with respect to fees for execution of quotes/orders in 
securities that execute on PSX is reasonable because it will make the 
applicable fees for orders that execute in PSX uniform, without regard 
to the nature of entry, eligibility for routing, or the listing venue 
of the security. Moreover, the change will result in a modest increase 
of only $0.0002 per share executed for PSX MPID-entered orders eligible 
for the existing tier, and for orders designated as eligible for 
routing. The change is consistent with an equitable allocation of fees 
and not unfairly discriminatory because it will eliminate an existing 
disparity between the fees charged for orders that execute in PSX, 
thereby making the applicable fees consistent. In addition, the change 
is equitable and not unfairly discriminatory because it affects all 
member organizations that execute orders in PSX.
    The change with respect to the credits provided for execution of 
quotes/orders in NYSE-listed securities and securities listed on 
exchanges other than Nasdaq is reasonable because it further 
incentivizes member organizations to provide displayed quotes and 
orders on PSX. Specifically, the change achieves this goal by 
increasing the credit provided under the current tier, and creating a 
new tier that provides a larger credit to member organizations that 
provide a larger average daily volume of shares of liquidity during the 
month. The change is consistent with an equitable allocation of fees 
and not unfairly discriminatory because it applies the same criteria 
and provides the same rebate to member organizations trading in non-
Nasdaq securities that provide displayed liquidity to PSX, under each 
of the tiers.
    The changes with respect to the charges assessed and credits 
provided for routing of orders in all securities are reasonable because 
they represent a modest increases in charges assessed a member 
organization for PSTG, PSCN, PMOP, PTFY and PCRT orders that execute in 
a venue other than PSX, and a modest decrease in the credits provided 
to member organizations for PSTG, PSCN, PTFY, PCRT and XCST orders that 
execute at BX. The Exchange notes that the increase in fees and 
decrease in credits are designed to incentivize member organizations to 
provide orders and quotes that execute on PSX. In addition, the change 
is equitable and not unfairly discriminatory because it affects only 
those members that opt to use the Exchange's optional routing services.

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 decreased credits and 
increased fees are intended to reduce the Exchange's costs, while still 
continuing to provide an incentive for members to execute shares on PSX 
and make use of its optional routing functionality. Because there are 
numerous competitive alternatives to PSX, it is likely the Exchange 
will lose market share as a result of the changes if they are 
unattractive to market participants. Accordingly, the Exchange does not 
believe the proposed changes will impair the ability of members or 
competing order execution venues to maintain their competitive standing 
in the financial markets.
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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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \6\ and paragraph (f) of Rule 19b-4 
thereunder.\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.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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

[[Page 69728]]

     Send an email to rule-comments@sec.gov. Please include 
File Number SR-Phlx-2013-111 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-Phlx-2013-111. 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 the 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-2013-111 and should be 
submitted on or before December 11, 2013.
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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\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27754 Filed 11-19-13; 8:45 am]
BILLING CODE 8011-01-P