[Federal Register Volume 76, Number 3 (Wednesday, January 5, 2011)]
[Notices]
[Pages 615-617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33257]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63617; File No. SR-BX-2010-092]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
Fees for the NASDAQ OMX BX Equities System

December 29, 2010.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 616]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 22, 2010, NASDAQ OMX BX, Inc. (``BX'') 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 BX. 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

    BX proposes to modify pricing for BX members using the NASDAQ OMX 
BX Equities System. BX will implement the proposed change on January 3, 
2011. The text of the proposed rule change is available at http://nasdaqomxbx.cchwallstreet.com, at BX's principal office, 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, BX 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. BX 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
    BX is proposing to modify its fees for trades that execute at 
prices at or above $1. BX has a pricing model under which members are 
charged for the execution of quotes/orders posted on the BX book (i.e., 
quotes/orders that provide liquidity), while members receive a rebate 
for orders that access liquidity. Since BX introduced this pricing 
model in 2009, several other exchanges have emulated it, including the 
EDGX Exchange, the BATS-Y Exchange, and the CBOE Stock Exchange 
(``CBSX'').
    Effective November 1, 2010, BX increased the rebate for accessing 
liquidity to $0.0002 per share executed and introduced a tiered pricing 
structure for the fee to add liquidity, under which members adding a 
daily average of more than 50 million shares of liquidity during a 
month are charged $0.00025 per share executed, while members adding a 
daily average of 50 million or fewer shares during the month are 
charged $0.0004 per share executed. Effective January 3, 2011, BX will 
revert to non-tiered pricing structure, but will make significant 
changes to the levels of its rebate for accessing liquidity and its 
charge for liquidity provision. Specifically, for all market 
participants, the fee to add liquidity will be $0.0018 per share 
executed, and the rebate for accessing liquidity will be $0.0014 per 
share executed. The fee changes are reflective of the ongoing intense 
level of competition for order flow in the cash equities markets, and 
specifically among exchanges that provide rebates to market 
participants accessing liquidity.\3\
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    \3\ See, e.g., Securities Exchange Act Release No. 63160 
(October 22, 2010), 75 FR 66817 (October 29, 2010) (SR-CBOE-2010-
093) (adopting fees identical to the fees proposed in this filing).
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2. Statutory Basis
    BX 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) 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 BX operates or controls. The impact of the price changes upon the 
net fees paid by a particular market participant will depend upon a 
number of variables, including the relative availability of liquidity 
on BX and other venues, and the prices of the market participant's 
quotes and orders relative to the national best bid and offer (i.e., 
its propensity to add or remove liquidity). Although the change 
increases the fee for orders that provide liquidity, it provides an 
offsetting increase in the rebate for orders accessing liquidity. As a 
result of the change, BX's fees and rebates for stocks priced above $1 
will match those that have been in effect on a competing venue for 
several months.\6\
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
    \6\ See supra n.3.
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    BX notes that it operates in a highly competitive market in which 
market participants can readily direct order flow to competing venues 
if they deem fee levels at a particular venue to be excessive. 
Accordingly, if particular market participants object to the proposed 
fee changes, they can avoid paying the fees by directing orders to 
other venues. BX believes that its fees continue to be reasonable and 
equitably allocated to members on the basis of whether they opt to 
direct orders to BX.

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

    BX 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. Because the market 
for order execution and routing is extremely competitive, members may 
readily direct orders to BX's competitors if they believe that 
competitors offer more favorable pricing. The change is a direct 
competitive response to fee changes implemented at one of BX's 
competitors.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor 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 e-mail to [email protected]. Please include 
File Number SR-BX-2010-092 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary,

[[Page 617]]

Securities and Exchange Commission, 100 F Street, NE., Washington, DC 
20549-1090.

All submissions should refer to File Number SR-BX-2010-092. This file 
number should be included on the subject line if e-mail 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 
a.m. and 3 p.m. Copies of the filing will also be available for 
inspection and copying at the principal office of the self-regulatory 
organization. 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-
2010-092 and should be submitted on or before January 26, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33257 Filed 1-4-11; 8:45 am]
BILLING CODE 8011-01-P