[Federal Register Volume 79, Number 33 (Wednesday, February 19, 2014)]
[Notices]
[Pages 9520-9522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03557]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71526; File No. SR-BX-2014-009]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing of Proposed Rule Change To Amend the Fee Schedule Under Exchange 
Rule 7018(a) With Respect to Transactions in Securities Priced at $1 
per Share or More

February 12, 2014.
    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 3, 2014, 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 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 fee schedule under Exchange Rule 
7018(a) with respect to transactions in securities priced at $1 per 
share or more. The Exchange will implement the proposed rule change on 
February 3, 2014.
    The text of the proposed rule change is also available on the 
Exchange's Web site at http://nasdaqomxbx.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.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange is proposing several changes to its fees for certain 
orders that execute at the New York Stock Exchange (``NYSE''). 
Additionally, the Exchange is proposing to modify the tier regarding 
credit for entering order [sic] that accesses liquidity in the BX 
Equities System.
    Currently, the Exchange charges members for BSTG (includes BSKN 
orders since it is a form of BSTG), BSCN (includes BSKP orders since it 
is a form of BSCN) and BTFY orders that execute at NYSE $0.0025 per 
share executed. The Exchange is proposing to increase the charge 
assessed for all such orders executed at NYSE to $0.0030 per share.
    Also currently, the Exchange charges members for BMOP orders that 
execute at NYSE $0.0027 per share executed. The Exchange is proposing 
to increase the charge assessed for such orders executed at NYSE to 
$0.0035 per share.
    The Exchange is also proposing to modify a tier with respect to the 
rebates it pays for orders that access liquidity in securities priced 
at $1 or more. Currently, a member will receive a credit of $0.0013 per 
share executed when accessing liquidity \3\ if the member (i) has a 
daily average volume of liquidity accessed in all securities during the 
month of 6 million or more shares through one or more of its BX 
Equities System market participant identifiers (``MPIDs''), and (ii) 
adds and/or removes liquidity of 40,000 or more contracts per day 
during the month through BX Options. The Exchange proposes to reduce 
the 40,000 or more contracts per day to 30,000 or more contracts per 
day.
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    \3\ As with other rebate tiers, the tier does not apply to an 
order that executes against a midpoint pegged order, because the 
accessing order receives price improvement.
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    The tier recognizes the prevalence of trading in which members 
simultaneously trade different asset classes within the same strategy. 
Because cash equities and options markets are linked, with liquidity 
and trading patterns on one market affecting those on the other, the 
Exchange believes that a pricing incentive that encourages market 
participant activity in BX Options will also support price discovery 
and liquidity provision in the BX Equities System.
2. Statutory Basis
    BX believes that the proposed rule change is consistent with the 
provisions

[[Page 9521]]

of Section 6 of the Act,\4\ in general, and Sections 6(b)(4) and (b)(5) 
of the Act,\5\ in particular, because 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 that the 
Exchange operates or controls, and it does not unfairly discriminate 
between customers, issuers, brokers or dealers.
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4), (5).
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    The change with respect to the tier for members active in both the 
BX Equities System and BX Options is reasonable because it reflects the 
availability of a price reduction for members that support liquidity on 
both markets. The change is consistent with an equitable allocation of 
fees because the pricing tier requires significant levels of liquidity 
provision, which benefits all market participants, and because activity 
in BX Options also supports price discovery and liquidity provision in 
the BX Equities System due to the increasing propensity of market 
participants to be active in both markets and the influence of each 
market on the pricing of securities in the other. Moreover, making one 
of the provisions of the tier easier to qualify for by reducing from 
40,000 or more to 30,000 or more contracts per day during the month 
through BX options, has the potential to reduce fees for a wider range 
of market participants by introducing a new means of qualifying for a 
lower fee for providing liquidity. The change is not unreasonably 
discriminatory because market participants may qualify for a still 
lower fee without participating in BX Options through participation in 
BX's Qualified Liquidity Provider program.
    The proposed change to fees for certain orders that execute at NYSE 
are reasonable because they reflect a modest increase to such fees. 
Specifically, the proposed change is reasonable because it reflects a 
modest increase of $0.0005 per share, from $0.0025 per share to $0.0030 
per share, in the charge assessed to members executing at NYSE of BSTG, 
BSCN and BTFY orders. The proposed change is also reasonable because it 
reflects a modest increase of $0.0008 per share, from $0.0027 per share 
to $0.0035 per share, in the charge assessed to members executing at 
NYSE of BMOP orders. In addition, the change is equitable and not 
unfairly discriminatory because it affects similarly situated members 
in the same way.
    These fee changes are consistent with an equitable allocation of 
fees and not unfairly discriminatory because the increase will maintain 
the same fee being assessed to members executing at NYSE for BSTG, BSCN 
and BTFY orders. The fee increase for members executing at NYSE for 
BMOP orders is an equitable allocation of fees and not unfairly 
discriminatory because BMOP \6\ is a premium routing option and the fee 
increase is modest.
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    \6\ BX Rule 4758(a)(1)(A)(iii) defines BMOP as a routing option 
under which orders route only to protected quotations and only for 
displayed size. If shares remain unexecuted after routing, they are 
posted to the book. Once on the book, should the order subsequently 
be locked or crossed by another market center, the system will not 
route the order to the locking or crossing market center.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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.\7\ 
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, or rebate opportunities 
available at other venues to be more favorable. 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 competitors are free to modify their own fees in response, and 
because market participants may readily adjust their order routing 
practices, BX believes that the degree to which fee changes in this 
market may impose any burden on competition is extremely limited. In 
this instance, the increases with respect to certain orders coupled 
with the easier to qualify for pricing tier for members active in the 
Exchange's cash equities and options markets enhances the Exchange's 
competitiveness by reducing fees for some and raising fees modestly for 
others. Thus, although price increases, one of the proposed rule 
changes provides incentives for behavior that may allow members to 
reduce their trading costs. Moreover, because there are numerous 
competitive alternatives to the use of the Exchange, it is likely that 
BX will lose market share as a result of the changes if they are 
unattractive to market participants. Accordingly, 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.
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    \7\ 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

    The foregoing change has become effective pursuant to Section 
19(b)(3)(A) of the Act \8\ and paragraph (f) of Rule 19b-4 \9\ 
thereunder. 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f).
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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-2014-009 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-2014-009. 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

[[Page 9522]]

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 
the 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-2014-009 and 
should be submitted on or before March 12, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03557 Filed 2-18-14; 8:45 am]
BILLING CODE 8011-01-P