Document ID: SEC-2015-0216-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ OMX PHLX, LLC
Posted Date: 2015-02-04T05:00Z

[Federal Register Volume 80, Number 23 (Wednesday, February 4, 2015)]
[Notices]
[Pages 6148-6150]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02105]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74170; File No. SR-Phlx-2015-08]

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

January 29, 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 January 16, 2015, 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, 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.
    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.

[[Page 6149]]

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 (``PSX'') by member organizations for all securities traded at 
$1 or more per share.
    Currently, for non-displayed orders the Exchange assesses a charge 
of ``$0.0003 per share executed charge for a midpoint pegged order 
(``midpoint order'')''. The Exchange proposes to delete this so that 
the charge for orders with midpoint pegging to access liquidity will 
revert to the $0.0024 per share executed charge currently assessed on 
member organizations that enter orders that execute in PSX.
    Additionally, the Exchange proposes to eliminate the $0.0003 per 
share executed charge for orders that execute against resting midpoint 
liquidity and add a $0.0010 per share credit for orders with midpoint 
pegging that provide liquidity.
    The current $0.0005 per share executed credit for other non-
displayed orders that provide liquidity will remain unchanged, but 
within the Pricing Schedule it will follow the charge listed in the 
paragraph immediately above for purposes of clarity. This makes it 
clear that the word ``other'' in ``other non-displayed orders that 
provide liquidity'' refers to orders other than ``orders with midpoint 
pegging''.
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 the Exchange's need to adjust its credits and fees 
in response to the costs and benefits provided. Credits provided by the 
Exchange are given in lieu of assessing normal fees, and accordingly 
provide incentives to market participants to enter such orders. The 
proposed changes balance the Exchange's desire to provide certain 
incentives to market participants with the costs the Exchange incurs in 
providing such incentives.
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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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    Thus, the proposed change with respect to the elimination of the 
$0.0003 per share executed charge for a midpoint pegged order is 
reasonable because by eliminating the charge within this part of the 
Pricing Schedule, the charge will become the already existing current 
charge of $0.0024 per share executed assessed on member organizations 
that enter orders that execute in PSX, regardless of the listing venue 
of the security. The Exchange also believes that the proposed change is 
consistent with an equitable allocation of fees and is not unfairly 
discriminatory because it applies to all member organizations that 
enter orders that execute in PSX, regardless of the listing venue of 
the security.
    The Exchange believes that eliminating the $0.0003 per share 
executed charge for orders that execute against resting midpoint 
liquidity is reasonable for the reasons discussed above regarding the 
Exchange's need to adjust its credits and fees. The Exchange also 
believes that it is consistent with an equitable allocation of fees and 
is not unfairly discriminatory because it applies to all market 
participants.
    The Exchange believes that adding a $0.0010 per share credit for 
orders with midpoint pegging that provide liquidity is reasonable for 
the reasons discussed above regarding the Exchange's need to adjust its 
credits and fees. Specifically, the Exchange believes that the $0.0010 
per share credit for orders with midpoint pegging will incentivize 
market participants to add liquidity using orders with midpoint 
pegging. The Exchange also believes that the $0.0010 per share credit 
for orders with midpoint pegging is consistent with an equitable 
allocation of fees and is not unfairly discriminatory because it 
applies to all market participants that provide liquidity using orders 
with midpoint pegging, regardless of the listing venue of the security 
of the order.

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 changes to the credits 
provided and charges assessed are intended to reduce the Exchange's 
costs, while still continuing to provide an incentive for members to 
execute shares on PSX. 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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\6\ the Exchange has 
designated this proposal as establishing or changing a due, fee, or 
other charge imposed by the self-regulatory organization on any person, 
whether or not the person is a member of the self-regulatory 
organization, which renders the proposed rule change effective upon 
filing.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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.

[[Page 6150]]

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-2015-08 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Phlx-2015-08. 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-2015-08 and should be 
submitted on or before February 25, 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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-02105 Filed 2-3-15; 8:45 am]
BILLING CODE 8011-01-P