[Federal Register Volume 80, Number 32 (Wednesday, February 18, 2015)]
[Notices]
[Pages 8744-8746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03231]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74258; File No. SR-NASDAQ-2015-008]


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

February 11, 2015.
    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 2, 2015, 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 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 
nasdaq.cchwallstreet.com at NASDAQ's principal office, and at the 
Commission's Public Reference Room.

[[Page 8745]]

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(a) to modify the fees 
assessed under the rule for securities it trades priced at $1 or more. 
Specifically, NASDAQ proposes to change the fee assessed for CART 
orders in securities listed on NASDAQ (``Tape C''), NYSE (``Tape A'') 
and on exchanges other than NASDAQ and the NYSE (``Tape B'') 
(collectively, the ``Tapes''). In addition, NASDAQ is proposing to 
change the fee assessed for orders in Tape A securities that are routed 
to NYSE and then routed to another venue for execution. Lastly, NASDAQ 
is proposing to change the fee assessed for orders in Tape B securities 
that are routed to NYSEAmex or NYSEArca and then routed to another 
venue for execution.
    CART is a routing option by which orders in securities of all Tapes 
route to the NASDAQ OMX BX Equities Market (``BX'') then the NASDAQ OMX 
PHLX PSX System (``PSX''), and then the System.\3\ The Exchange 
currently assesses no charge for CART orders that execute on BX and 
passes-through all fees assessed and rebates offered by PSX for such 
orders. CART orders executed on PSX result in a pass through charge of 
$0.0024 per share executed.\4\ The Exchange is proposing to now assess 
a set charge of $0.0030 per share executed for CART orders in any Tape 
security that executes on PSX in lieu of passing through credits and 
rebates.
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    \3\ If shares remain un-executed, they are posted to the book or 
cancelled. 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. See Rule 
4758(a)(1)(A)(xi).
    \4\ See NASDAQ OMX PHLX LLC Pricing Schedule, Section 
VIII(a)(1).
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    The Exchange is also proposing to change the fees assessed for Tape 
A securities routed to NYSE and then routed to another venue for 
execution. The Exchange passes through any routing fees charged to 
NASDAQ by NYSE for these orders, which currently is $0.0030 per share 
executed but may vary based on changes to the NYSE fee schedule. NASDAQ 
is proposing to eliminate pass through fees and assess a set fee of 
$0.0030 per share executed. Similarly, NASDAQ is proposing to eliminate 
pass through fees and assess a fee of $0.0030 per share executed for 
orders in Tape B securities that are routed to NYSEAmex or NYSEArca and 
then routed to another venue for execution. The Exchange currently 
passes through any routing fees charged to NASDAQ by NYSEAmex or 
NYSEArca for these orders, which currently is $0.0030 per share 
executed but may vary based on changes to those exchanges' respective 
fee schedules.
2. Statutory Basis
    NASDAQ 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 6(b)(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 the Exchange operates or controls, and is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest; and are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    NASDAQ believes that the proposed changes to the charges assessed 
for CART orders in securities of any Tape that execute on PSX are 
reasonable because they eliminate discounted pricing from the fee 
schedule and more closely aligns [sic] the fee received with the costs 
associated with providing routing services. The Exchange incurs costs 
in operating and supporting the routing function, which are in addition 
to the fees of other exchanges that it incurs when a routed order 
executes on another venue. To cover such costs, the Exchange assesses 
the same fee as is being proposed for other routed orders, such as 
STGY, SCAN, SKNY and SKIP orders, which are assessed a charge of 
$0.0030 per share executed.\7\ Thus, the current pass through fee 
results in a discount to the fee assessed for use of the routing 
function for other routed orders. The Exchange notes that CART orders 
that execute on BX are not assessed a charge, but rather the Exchange 
receives a rebate from BX for the routed execution.\8\ The Exchange 
also believes that the proposed changes are reasonable because they 
remove complexity from the fee schedule and assess a fee that is not 
dependent on knowing what the current liquidity removal rate is on PSX. 
NASDAQ believes that the proposed changes to CART order fees are 
equitably allocated because all member firms that receive an execution 
on PSX will be assessed a fee that is more closely aligned with the 
costs incurred by NASDAQ, as noted above. NASDAQ believes that the 
proposed changes to CART order fees do not discriminate unfairly 
because they eliminate a distinction in the fees whereby discounted 
fees are charged for use of the Exchange's routing functionality. 
Moreover, the proposed changes do not discriminate unfairly because 
they eliminate a distinction in the routing fees whereby some fees are 
fixed and others are based on fee assessed by other markets. As noted 
above, most routing fees are based on a set fee, and are not tied to 
the fees of other markets.
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    \7\ For a description of STGY, SCAN, SKNY and SKIP routing 
strategies, see Rules 4758(a)(1)(A)(i) and (ii) [sic].
    \8\ BX provides rebates to market participants that remove 
liquidity ranging from $0.0004 to $0.0015. See BX Rule 7018(a).
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    The Exchange believes that the change to eliminate pass through 
fees for Tape A securities that are routed to NYSE and then routed to 
another venue for execution, and the change to eliminate pass through 
fees for Tape B securities that are routed to NYSEAmex and NYSEArca and 
then routed to another venue for execution are reasonable because they 
remove complexity from the fee schedule and assess a fee that is not 
dependent on knowing what the current routing rates are on those 
markets. Moreover, the proposed new fees are identical to the fees 
assessed currently. The Exchange believes that the proposed fee changes 
are equitably allocated because all member firms that receive an 
execution on another venue in these securities will be assessed the 
same fee. Lastly, the Exchange believes that the proposed

[[Page 8746]]

changes do not discriminate unfairly because they eliminate a 
distinction in the routing fees whereby some fees are fixed and others 
are based on fee assessed by other markets. As noted above, most of 
NASDAQ's routing fees are based on a set fee, and are not tied to the 
fees of other markets.

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.\9\ 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 changes to routing fees and 
credits do not impose a burden on competition because NASDAQ's routing 
services are optional and are the subject of competition from other 
exchanges and broker-dealers that offer routing services, as well as 
the ability of members to use their own routing capabilities. The 
increased fees for execution of CART orders on PSX are reflective of a 
need to better align the fees received with the costs incurred in 
operating and supporting the routing function. The proposed changes to 
orders in certain Tape securities routed to NYSE, NYSEAmex, and 
NYSEArca do not represent an increase or decrease in fees, but rather, 
like the change to CART orders, removes [sic] an unnecessarily complex 
process to determine the fee assessed with a set fee, which is 
consistent with other NASDAQ routing fees. Under the current fees, a 
member firm must know what the respective fee schedules of PSX, NYSE, 
NYSEAmex and NYSEArca are at any given time. Thus, the changes will 
simplify the fee schedule by providing certainty to the fee assessed. 
For these reasons, NASDAQ does not believe that any of the proposed 
changes will impair the ability of members or competing order execution 
venues to maintain their competitive standing in the financial markets. 
While the Exchange does not believe that the proposed changes will 
result in any burden on competition, if the changes proposed herein are 
unattractive to market participants it is likely that NASDAQ will lose 
market share as a result.
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    \9\ 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

    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)(ii) of the Act.\10\ 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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    \10\ 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-NASDAQ-2015-008 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2015-008. 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 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-2015-008, and should be submitted 
on or before March 11, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03231 Filed 2-17-15; 8:45 am]
BILLING CODE 8011-01-P