[Federal Register Volume 77, Number 202 (Thursday, October 18, 2012)]
[Notices]
[Pages 64151-64153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-25653]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68051; File No. SR-BX-2012-067]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Modify 
BX's Fee Schedule Governing Order Execution and Routing

October 12, 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 October 1, 2012, NASDAQ OMX BX, Inc. (``BX'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') a 
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 the 
Substance of the Proposed Rule Change

    BX proposes to modify BX's fee schedule governing order execution 
and routing. BX will implement the proposed change on October 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, the self-regulatory organization 
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 those 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 parts 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 amending its fee schedule governing order execution and 
routing. The general purposes of the fee changes are to (i) encourage 
greater provision of liquidity through BX by expanding BX's Qualified 
Liquidity Provider program, and (ii) increase fees for routing orders 
to the New York Stock Exchange (``NYSE'') to reflect announced price 
increases by that exchange.\3\ All of the changes pertain to securities 
priced at $1 or more per share.
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    \3\ See SR-NYSE-2012-50 (September 26, 2012).
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    First, BX is expanding its Qualified Liquidity Provider program. 
Under the program, a qualifying member is eligible to pay a reduced fee 
for liquidity-providing orders ($0.0015 per share executed versus the 
usual fee of $0.0018 per share executed) entered through an eligible 
market participant identifier (``MPID''). Currently, a Qualified 
Liquidity Provider must have (i) shares of liquidity provided and (ii) 
total shares of liquidity accessed and provided in all securities 
through one or more of its NASDAQ OMX BX Equities System MPIDs that 
represent more than 0.40% and 0.50%, respectively, of the total 
consolidated volume reported to all consolidated transaction reporting 
plans by all exchanges and trade reporting facilities (``Consolidated 
Volume'') during the month. If a member satisfies these criteria, it is 
then eligible to pay the reduced fee for liquidity-providing orders 
entered through a ``Qualified MPID.'' A Qualified MPID is an MPID of a 
Qualified Liquidity Provider through which, for at least 150 
securities, it quotes at the national best bid or offer (``NBBO'') an 
average of at least 25% of the time during regular market hours (9:30 
a.m. through 4:00 p.m.) during the month. Under the proposed change, BX 
will add an additional means of becoming a Qualified Liquidity 
Provider. Specifically, a Qualified Liquidity Provider may also be a 
member with (i) shares of liquidity provided and (ii) total shares of

[[Page 64152]]

liquidity accessed and provided in all securities through one or more 
of its NASDAQ OMX BX Equities System MPIDs that represent more than 
0.35% and 0.45%, respectively, of Consolidated Volume during the month. 
For a member qualifying under this method, a Qualified MPID is an MPID 
through which, for at least 400 securities, the member quotes at the 
NBBO an average of at least 25% of the time during regular market hours 
during the month. The change is designed to encourage more members to 
become active liquidity providers in a wider range of securities, 
thereby enhancing the number of stock [sic] in which BX is able to 
provide liquidity at the NBBO and the depth of such liquidity.
    Second, to reflect recent increases in the fees charged by NYSE 
with respect to orders routed to it by BX, BX is raising the fee for 
BSTG, BSCN, and BTFY orders routed to NYSE from $0.0023 per share 
executed to $0.0025 per share executed; and the fee for BMOP orders 
routed to NYSE from $0.0025 per share executed to $0.0027 per share 
executed.
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 Sections 
6(b)(4) and (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 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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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    BX believes that the proposed expansion of the Qualified Liquidity 
Provider program is reasonable because it will enable fee reductions 
for members that opt to provide and add liquidity and maintain quotes 
at the NBBO to the extent required by either of the two tiers 
established under the program. The proposed change is consistent with 
an equitable allocation of fees because it uses pricing incentives in 
order encourage [sic] usage of the market and the quoting of a range of 
securities at the NBBO for a significant portion of the trading day, 
activities that benefit both the exchange and its other market 
participants. Finally, the proposed change is not unfairly 
discriminatory because the offered pricing reduction does not result in 
an excessive deviation from the otherwise prevailing charge to access 
liquidity, and because the change has the potential to benefit other 
market participants by enhancing market quality.
    The change to routing fees is reasonable because the proposed fees 
for routing orders to NYSE reflect the increase in the fee that will be 
charged by NYSE to BX with respect to such orders. The change is 
consistent with an equitable allocation of fees because it will bring 
the economic attributes of routing orders to NYSE in line with the cost 
of executing orders there. Finally, the change is not unfairly 
discriminatory because it solely applies to members that opt to route 
orders to NYSE.
    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. BX believes that the proposed rule change reflects this 
competitive environment because it is designed to use pricing 
incentives to attract liquidity at the NBBO to BX, and to ensure that 
the charges for use of the BX routing facility to route to NYSE reflect 
an increase in the cost of such routing.

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 is extremely competitive, members may readily opt 
to disfavor BX's execution and routing services if they believe that 
alternatives offer them better value. The proposed change is designed 
to enhance competition by using pricing incentives to encourage greater 
use of BX's trading services. The proposed change is also designed to 
ensure that the charges for use of the BX routing facility to route to 
NYSE reflect an increase in the cost of such routing, thereby ensuring 
that BX does not incur a loss when routing to NYSE.

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.\6\ 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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    \6\ 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 [email protected]. Please include 
File Number SR-BX-2012-067 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-2012-067. 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

[[Page 64153]]

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 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 offices 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-2012-067, and should be submitted on or before 
November 8, 2012.

    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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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-25653 Filed 10-17-12; 8:45 am]
BILLING CODE 8011-01-P