[Federal Register Volume 79, Number 133 (Friday, July 11, 2014)]
[Notices]
[Pages 40174-40175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-16192]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72549; File No. SR-NASDAQ-2014-069]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify NASDAQ Rule 7018 Fees

July 7, 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 July 1, 2014, The NASDAQ Stock Market LLC (``NASDAQ'' 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

    NASDAQ is proposing to modify NASDAQ Rule 7018 fees assessed for 
execution and routing securities listed on NASDAQ, the New York Stock 
Exchange (``NYSE'') and on exchanges other than NASDAQ and NYSE.
    The text of the proposed rule change is available at  at NASDAQ'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, NASDAQ 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
    NASDAQ is proposing to amend NASDAQ Rule 7018 to modify fees 
assessed for execution and routing securities listed on NASDAQ, NYSE 
(``Tape A'') and on exchanges other than NASDAQ and the NYSE (``Tape 
B''), as well as to make nonsubstantive changes to NASDAQ Rule 
7018(a)(2) and (3) for the purposes of consistency in the manner that 
these subsections are organized within NASDAQ Rule 7018(a) and for 
improved clarity.
    NASDAQ is also proposing to create a new credit tier of $0.0025 per 
share executed for members that provide a daily average of at least 4 
million shares of liquidity, which includes greater than 1.5 million 
shares per day of non-displayed liquidity, excluding midpoint orders. 
The Exchange believes that it does not need to include midpoint orders 
as part of this incentive as the Exchange has ample midpoint liquidity 
available for members to access. The Exchange believes that the 
proposed new fee tier will also encourage market participant activity 
and will also support price discovery and liquidity provision.
    The Exchange also proposes to make nonsubstantive changes to NASDAQ 
Rule 7018(a)(2) and (3) for purposes of consistency in the manner in 
which these subsections are organized and for improved clarity. 
Specifically, the entry in these subsections for ``firms that execute 
against resting midpoint liquidity'' and its corresponding fee of 
$0.0027 per share executed, have been moved-up within both NASDAQ Rule 
7018(a)(2) and (3) verbatim so that within each subsection it will be 
properly situated as falling under the headings ``Charge to enter 
orders that execute in the Nasdaq Market Center'' and ``Charge to 
member entering order that executes in the Nasdaq Market Center'', 
respectively.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\3\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\4\ 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 NASDAQ operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. This proposal is reasonable, equitable and not 
unfairly discriminatory for the reasons noted below.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange's proposal for a new credit tier of $0.0025 per share 
executed for members that provide a daily average of at least 4 million 
shares of liquidity, which includes greater than 1.5 million shares per 
day of non-displayed liquidity, excluding midpoint orders, is 
consistent with an equitable allocation of fees and is not unfairly 
discriminatory because it remains consistent with the Exchange's 
approach of providing a credit to members that provide shares of 
liquidity, which benefits all market participants, and is applicable to 
all such orders and applies uniformly across all markets. Also, the 
Exchange believes it is reasonable to use pricing incentives, such as a 
new tier, because this new tier provides additional opportunities for 
members to increase their participation in the market.
    The Exchange also proposes to make nonsubstantive changes to NASDAQ 
Rule 7018. Specifically, under both NASDAQ Rule 7018(a)(2) and (3) the 
entry for ``firms that execute against resting midpoint liquidity'' and 
its corresponding fee of $0.0027 per share executed, have been moved-up 
within each of these subsections verbatim so that within each 
subsection it will be properly situated as falling under the headings 
``Charge to enter orders that execute in the Nasdaq Market Center'' and 
``Charge to member entering order that executes in the Nasdaq Market 
Center'', respectively. These changes are intended to reflect greater 
consistency in the manner in which these subsections are organized 
within NASDAQ Rule 7018(a) and for improved clarity.

[[Page 40175]]

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

    NASDAQ does not believe that the proposed rule changes will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.\5\ NASDAQ 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, 
NASDAQ 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, NASDAQ believes that the degree to which fee 
changes in this market may impose any burden on competition is 
extremely limited. In this instance, the establishment of a new fee 
tier for members that provide a daily average of at least 4 million 
shares of liquidity, which includes greater than 1.5 million shares per 
day of non-displayed liquidity, excluding midpoint orders, reflects 
this.
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    \5\ 15 U.S.C. 78f(b)(8).
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    Accordingly, NASDAQ 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.

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 change has become effective pursuant to Section 
19(b)(3)(A) of the Act,\6\ and paragraph (f) \7\ of Rule 19b-4, 
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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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 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-NASDAQ-2014-069 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2014-069. 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 
10:00 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-NASDAQ-2014-
069, and should be submitted on or beforeAugust 1, 2014.

    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. 2014-16192 Filed 7-10-14; 8:45 am]
BILLING CODE 8011-01-P