[Federal Register Volume 78, Number 49 (Wednesday, March 13, 2013)]
[Notices]
[Pages 15999-16001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-05714]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69053; File No. SR-BX-2013-019]


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 Routing

March 7, 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 February 27, 2013, 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 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

    BX proposes to amend BX's fee schedule governing order routing. BX 
will implement the proposed change on February 27, 2013. 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 III 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 routing to 
establish fees for routing orders using its two new order routing 
strategies, BDRK and BCST.\3\ All of the changes pertain to securities 
priced at $1 or more per share.
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    \3\ BDRK orders, pursuant to Rule 4758(a)(1)(A)(viii), check the 
System for available shares and simultaneously route to certain 
destinations on the System routing table that are not posting 
Protected Quotations within the meaning of Regulation NMS (i.e. 
``dark venues'' or ``dark pools''). BCST orders, pursuant to Rule 
4758(a)(1)(A)(ix), check the System for available shares and 
simultaneously route to select dark venues and to certain low cost 
exchanges. See Securities Exchange Act Release No. 68840 (February 
6, 2013), 78 FR 9961 (February 12, 2013) (SR-BX-2013-008).
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    With respect to BDRK and BCST orders that access liquidity in the 
BX Equities System, members will receive a credit of $0.0014 per share 
executed. With respect to BDRK and BCST orders that execute on a venue 
other than the BX Equities System, members will be charged $0.0010 per 
share. With respect to BDRK and BCST orders that provide liquidity in 
the BX Equities System, members will be charged no differently than 
other orders that provide liquidity. Specifically, members will be 
charged

[[Page 16000]]

$0.0015 or $0.0018 per share for orders that provide displayed 
liquidity (based on the MPID's eligibility for the Qualified Liquidity 
Provider rate), $0.0025 per share for orders that provide non-displayed 
liquidity, or $0.0015 per share for midpoint orders that provide 
liquidity.
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 6(b)(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.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposed pricing for BDRK and BCST orders executed on BX is 
reasonable because it is the same as the current pricing for other 
routed order types, namely BSTG, BSCN, BMOP, BTFY and BCRT orders, 
executed on BX. The proposed fee for BDRK and BCST orders that execute 
on a venue other than BX is slightly more ($0.0003) than BTFY orders 
that execute on venues other than BX and much less than the fees for 
BSTG, BSCN and BMOP orders, which is reasonable because BDRK and BCST 
orders are routed only to low cost venues. Although BX will incur 
different costs depending upon the venues on which these routed orders 
are executed, BX is adopting a flat rate structure. Taking its costs 
into account, BX may operate at a slight gain or a slight loss for 
orders routed to and executed at other venues. BX believes that its 
proposed fees are reasonable because they are an approximation of the 
maximum fees BX will be charged for such executions, including its own 
costs. As a general matter, BX believes that the proposed fees will 
allow it to recoup and cover its costs of providing routing services 
and the value that [sic] provides to its participants who choose 
routing services.
    The proposed pricing for BDRK and BCST orders is consistent with an 
equitable allocation of fees and is not unfairly discriminatory because 
the pricing, which is the same for all BX participants applies solely 
to members that opt to route BDRK and BCST orders. Moreover, the lower 
cost of these routing strategies as compared with other existing 
routing strategies is not unfairly discriminatory because it is 
consistent with the lower costs associated with routing to the venues 
that are accessed by the new strategies.
    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 ensure that the 
charges for use of the BX routing facility to route reflect changes 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 routing is extremely competitive, members may readily opt to 
disfavor BX's routing services if they believe that alternatives offer 
them better value. Moreover, by introducing new routing options and 
charging fees that BX believes to be reasonable, BX believes that it is 
increasing its competitiveness vis-[agrave]-vis other trading venues. 
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 competing 
order execution venues to maintain their competitive standing in the 
financial markets. BX also does not believe that the proposal raises 
issues of competition among its own market participants, because the 
proposal applies fee and credits equally to all participants.

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 is effective upon filing pursuant to 
Section 19(b)(3)(A) \6\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \7\ thereunder, because it establishes a due, fee, or other charge 
imposed by BX.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such 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.

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-2013-019 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-2013-019. 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 20549-1090, 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

[[Page 16001]]

submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-BX-
2013-019, and should be submitted on or before April 3, 2013.

    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. 2013-05714 Filed 3-12-13; 8:45 am]
BILLING CODE 8011-01-P