[Federal Register Volume 77, Number 49 (Tuesday, March 13, 2012)]
[Notices]
[Pages 14843-14845]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-6032]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66537; File No. SR-BX-2012-016]


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

March 8, 2012
    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 March 1, 2012, The NASDAQ OMX BX, Inc. (``BX'' 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 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 its fees for orders that are routed using 
BX's BTFY order routing strategy. BX will implement the proposed change 
immediately on March 1, 2012. 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 orders that are routed using 
BX's BTFY order routing strategy. BTFY is a routing

[[Page 14844]]

option under which orders check the BX book for available shares only 
if so instructed by the entering firm and are thereafter routed out to 
destinations on the routing table established by BX from time to time 
for the BTFY strategy. If shares remain un-executed after routing, they 
are posted to the BX book and do not thereafter route out. The BTFY 
routing table is focused on destinations with low execution charges.
    Currently, BX charges $0.0022 per share executed for BTFY orders 
that execute at the New York Stock Exchange (``NYSE''), but NYSE 
charges BX $0.0023 per share executed for such orders.\3\ Accordingly, 
the cost to BX of routing BTFY orders to NYSE is currently in excess of 
the amount that BX charges. While this pricing incentive was introduced 
to encourage members to use BX routing services, it was not intended to 
be permanent. Accordingly, BX is proposing to increase the fee for 
routing BTFY orders to NYSE to $0.0023 per share executed, to match the 
fee that NYSE charges.
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    \3\ http://usequities.nyx.com/markets/nyse-equities/trading-fees.
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    Similarly, BX currently charges $0.0005 per share executed for BTFY 
orders routed to destinations other than NYSE, The NASDAQ Stock Market 
(``NASDAQ''), or NASDAQ OMX PSX (``PSX''). As noted above, the BTFY 
routing table is focused on lower cost destinations, which currently 
include the EDGA Exchange (``EDGA''). Because BX's charge is lower than 
the $0.0007 per share executed charge assessed by EDGA,\4\ and because 
BX did not intend to institute a permanent pricing incentive with 
regard to orders routed to EDGA, BX is increasing the charge to route 
to venues other than NYSE, NASDAQ, or PSX to $0.0007 per share 
executed. BX notes that the new charge, as well as the $0.0005 charge 
that it replaces, exceed the cost of routing to certain other venues to 
which the BTFY routing strategy may route from time to time, and 
therefore BX earns a profit on routing to such destinations. However, 
in light of losses that were formerly incurred when routing to EDGA, BX 
believes that the change will bring the fee in closer alignment to its 
average costs.
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    \4\ http://www.directedge.com/Membership/FeeSchedule/EDGAFeeSchedule.aspx.
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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,\5\ in general, and with Sections 
6(b)(4) and (5) of the Act,\6\ 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, and is not designed to permit 
unfair discrimination between customers, issuers, brokers or dealers. 
All similarly situated members are subject to the same fee structure, 
and access to BX is offered on fair and non-discriminatory terms.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposed change in the fee for routing BTFY orders to NYSE is 
reasonable because it will result in a routing fee that is equal to the 
fee charged to BX when routing BTFY orders to NYSE. Similarly, the 
proposed change in the fee for routing BTFY orders to destinations 
other than NYSE, NASDAQ, and PSX is reasonable because it will result 
in a routing fee that is more consistent with the average costs 
incurred by BX when routing to such destinations. The new fee matches 
the cost incurred by BX to route to some destinations and exceeds the 
cost of routing to other destinations to which the BTFY routing 
strategy may route from time to time. However, BX believes that the 
change will bring the fee in closer alignment to its average costs.
    Moreover, the proposed change in the fee for routing BTFY orders to 
NYSE is consistent with an equitable allocation of fees because the fee 
in question is charged solely to members that use the BTFY routing 
strategy, and is being adjusted to match the fee charged to BX when 
routing orders to NYSE. Similarly, the proposed change in the fee for 
routing BTFY orders to destinations other than NYSE, NASDAQ, and PSX is 
consistent with an equitable allocation of fees because the fee in 
question is charged solely to members that use the BTFY routing 
strategy, and is being adjusted to achieve a closer alignment between 
the charge and the costs incurred by BX when routing to these 
destinations. Finally, BX believes that the changes to both fees are 
not unfairly discriminatory because they only affect members that use 
the BTFY strategy, and are therefore directly related to the service 
provided to such members by the Exchange.
    Finally, BX 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. In such an 
environment, BX 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 numerous alternatives exist to the routing 
services offered by BX, if BX increases its fees to an excessive 
extent, it will lose customers to its competitors. Accordingly, BX 
believes that competitive market forces help to ensure that the fees it 
charges for routing are reasonable, equitably allocated, and non-
discriminatory.

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 routing is extremely competitive, members may readily opt to 
disfavor BX's execution and routing services if they believe that 
alternatives offer them better value. For this reason and the reasons 
discussed in connection with the statutory basis for the proposed rule 
change, BX does not believe that the proposed changes will impair the 
ability of members or competitors 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

    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:

[[Page 14845]]

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BX-2012-016 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-BX-2012-016. 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 
a.m. and 3 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-BX-2012-016 and should be 
submitted on or before April 3, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6032 Filed 3-12-12; 8:45 am]
BILLING CODE 8011-01-P