[Federal Register Volume 80, Number 36 (Tuesday, February 24, 2015)]
[Notices]
[Pages 9807-9809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03663]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-74292; File No. SR-Phlx-2015-14]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Pricing Schedule Under Section VIII With Respect to
Execution and Routing of Orders in Securities Priced at $1 or More per
Share
February 18, 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 3, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``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 Exchange's Pricing Schedule
under Section VIII, entitled ``NASDAQ OMX PSX FEES,'' with respect to
execution and routing of orders in securities priced at $1 or more per
share.
The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
[[Page 9808]]
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 purpose of the proposed rule change is to amend certain fees
for order execution and routing applicable to the use of the order
execution and routing services of the NASDAQ OMX PSX System (``PSX'')
by member organizations for all securities traded at $1 or more per
share, as well as clarify that consolidated volume does not include the
date of the annual reconstitution of the Russell Investments Indexes.
Specifically, the charge to a member organization entering an order
that executes in PSX will increase from: (i) $0.0024 to $0.0026 per
share executed for shares executed in The NASDAQ Stock Market LLC
(``Nasdaq'')-listed securities; (ii) $0.0024 to $0.0025 per share
executed for shares executed in New York Stock Exchange (``NYSE'')-
listed securities; and (iii) $0.0024 to $0.0026 per share executed for
shares in securities listed on exchanges other than Nasdaq or NYSE. The
Exchange believes that these increases better reflect the costs in
providing rebates to members.
Additionally, the Exchange proposes to clarify that for purposes of
calculating consolidated volume and the extent of a member's trading
activity, expressed as a percentage of, or ratio to, consolidated
volume, the date of the annual reconstitution of the Russell
Investments Indexes (``Russell Reconstitution'') will be excluded from
both total consolidated volume and the member's trading activity. This
change is consistent with the practices of both Nasdaq and the NASDAQ
OMX BX, Inc. (``BX'') exchanges.
Also, the Exchange proposes to make a few clarifications in the
Exchange's Pricing Schedule. Specifically, in section (a)(2) of ``Order
Execution and Routing in All Securities'' under ``VIII. NASDAQ OMX PSX
FEES'', the Exchange proposes to replace the word ``None'' with
``$0.0000 per share executed at NASDAQ OMX BX''. The Exchange believes
this proposed change will serve to enhance market participant's
understanding that there is no charge for shares executed at BX and
reduce any possible confusion in these instances. Additionally, in this
same section for both XDRK and XCST orders, the first column will
clarify that the amounts in the accompanying column are charges for
executions on a venue other than the NASDAQ OMX PSX System, rather than
the current practice of simply indicating that they are a ``charge or
credit'' to a member organization entering such orders. Finally, the
description of the charge to members entering an XDRK order is changed
to ``$0.0007 per share executed''; and the reference to ``shares
executed at a venue other than NASDAQ OMX BX'' is deleted since an XDRK
order cannot execute at BX. These clarifications are all intended to
reduce confusion and make the fee schedule easier to understand.
2. Statutory Basis
The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \3\ in general, and
furthers the objectives of Sections 6(b)(4) and (b)(5) of the Act \4\
in particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities, and it does not unfairly discriminate between customers,
issuers, brokers or dealers.
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\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange is proposing modest increases to the charges that a
member organization entering an order that executes in PSX from: (i)
$0.0024 to $0.0026 per share executed for shares executed in Nasdaq-
listed securities; (ii) $0.0024 to $0.0025 per share executed for
shares executed in NYSE-listed securities; and (iii) $0.0024 to $0.0026
per share executed for shares in securities listed on exchanges other
than Nasdaq or NYSE. The Exchange believes that these modest increases
are reasonable because they reflect the Exchange's need to adjust its
credits and fees in response to the costs and benefits provided by the
Exchange. Additionally, these modest increases are reasonable since by
staggering increases, the Exchange is able to offer reduced rates in
some tapes while balancing the need to fund rebates and operational
costs.
The Exchange believes that the proposed changes are consistent with
an equitable allocation of fees and are not unfairly discriminatory
because they apply to all member organizations that enter orders that
execute in PSX. The Exchange also believes that they are consistent
with equitable allocation of fees and are not unfairly discriminatory
because they apply to all member organizations that enter orders that
execute in PSX.
The Exchange is also proposing to clarify that for purposes of
calculating consolidated volume and the extent of a member's trading
activity, expressed as a percentage of, or ratio to, consolidated
volume, the date of the Russell Reconstitution will be excluded from
both total consolidated volume and the member's trading activity. The
Exchange believes that this clarification is reasonable because it is
consistent with the practices at both Nasdaq and the BX exchanges and
will reduce confusion concerning the Russell Reconstitution.
The Exchange believes that the proposed changes are consistent with
an equitable allocation of fees and are not unfairly discriminatory
because trading volumes on the date of the Russell Reconstitution are
generally far in excess of volumes on other days during the month. As a
result, the trading activity of members that are regular daily
participants in PSX, expressed as a percentage of consolidated volume,
is likely to be lower than their percentage of consolidated volume on
other days during the month. Therefore, including the date of the
Russell Reconstitution in calculations of consolidated volume would
likely make it more difficult for members to achieve particular volume
levels during the month. Accordingly, excluding the date of the Russell
Reconstitution from these calculations will diminish the likelihood of
a de facto price increase from occurring because a member is not able
to reach a volume percentage on that date that it typically reaches on
other trading days during the month. Moreover, excluding the date is
very unlikely to result in a price increase for any members, since a
member that was not, on other days during the month, trading in PSX at
volume levels that would allow it to qualify for rebate tiers, would be
unlikely to achieve percentage volume levels on the date of the Russell
Reconstitution that would increase its overall monthly percentage to
the required levels, even if it was very active on that date.
Finally, the Exchange believes that the remaining changes to the
Pricing Schedule are reasonable because they
[[Page 9809]]
are intended to clarify and reduce confusion through the clarification
as to what is a charge or credit, the clarification that there is no
charge for certain orders executed at BX, as well as to clarify through
the removal of unnecessary language that may add confusion to the
Pricing Schedule. The Exchange also believes that these changes are
consistent with an equitable allocation of fees and are not unfairly
discriminatory because they do not impact fees and serve only to
clarify and reduce possible confusion.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act, as amended.\5\ The Exchange
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,
the Exchange 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, the Exchange believes that the degree to which
fee changes in this market may impose any burden on competition is
extremely limited. In this instance, the modest increases to the
charges assessed are intended to allow the Exchange to help offset its
costs in providing rebates to members. Because there are numerous
competitive alternatives to PSX, it is likely the Exchange would lose
market share and money as a result of changes if they do not reflect
costs.
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\5\ 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
Pursuant to Section 19(b)(3)(A)(ii) of the Act,\6\ the Exchange has
designated this proposal as establishing or changing a due, fee, or
other charge imposed by the self-regulatory organization on any person,
whether or not the person is a member of the self-regulatory
organization, which renders the proposed rule change effective upon
filing.
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\6\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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.
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-Phlx-2015-14 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-Phlx-2015-14. 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-Phlx-2015-14, and should be submitted on
or before March 17, 2015.
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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Brent J. Fields,
Secretary.
[FR Doc. 2015-03663 Filed 2-23-15; 8:45 am]
BILLING CODE 8011-01-P