[Federal Register Volume 81, Number 160 (Thursday, August 18, 2016)]
[Notices]
[Pages 55245-55247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19689]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78567; File No. SR-NASDAQ-2016-115]


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

August 12, 2016.
    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 August 10, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 amend Nasdaq Rule 7018(a) to add a new 
credit tier for a combination of accessing and providing liquidity in 
securities of all three Tapes.\3\
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    \3\ There are three Tapes, which are based on the listing venue 
of the security: Tape C securities are Nasdaq-listed; Tape A 
securities are New York Stock Exchange (``NYSE'')-listed; and Tape B 
securities are listed on exchanges other than Nasdaq and NYSE.
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    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 55246]]

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
    The purpose of the proposed rule change is to add a new credit tier 
for the use of the order execution and routing services of the Nasdaq 
Market Center by members for all securities priced at $1 or more that 
it trades. The Exchange proposes to amend Nasdaq Rule 7018(a)(1), (2), 
and (3) to add a new credit tier for a combination of accessing and 
providing liquidity in securities of all three Tapes. Specifically, 
this new credit tier will be added to the Nasdaq rule book under each 
of Nasdaq Rule 7018(a)(1), (2), and (3) in the part entitled ``Credit 
to member for displayed quotes/orders (other than Supplemental Orders 
or Designated Retail Orders) that provide liquidity''.
    The new credit tier will be for $0.0027 per share executed and will 
be available for a member (i) with shares of liquidity accessed in all 
securities through one or more of its Nasdaq Market Center market 
participant identifiers (``MPIDs'') that represent more than 0.65% of 
consolidated volume (``Consolidated Volume'') during the month, and 
(ii) with shares of liquidity provided in all securities through one or 
more of its Nasdaq Market Center MPIDs that represent more than 0.10% 
of Consolidated Volume during the month.
    As a general principle, the Exchange chooses to offer credits to 
members in return for market improving behavior. Under Rule 7018(a), 
the various credits the Exchange provides for members require them to 
significantly contribute to market quality by accessing and providing 
liquidity at certain levels of Consolidated Volume through one or more 
of its [sic] Nasdaq Market Center MPIDs.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\4\ in general, and furthers the objectives of 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 the Exchange 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(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    The credits Nasdaq provides are designed to improve market quality 
for all market participants, and Nasdaq allocates its credits in a 
manner that it believes are the most likely to achieve that result. 
Specifically, the Exchange believes that the proposed rule change to 
add a new credit tier of $0.0027 per share executed is reasonable 
because it is consistent with other credits that the Exchange provides 
to members that access and/or provide liquidity. As discussed 
previously, as a general principle the Exchange chooses to offer 
credits to members in return for market improving behavior. Under Rule 
7018(a), the various credits the Exchange provides for members require 
them to significantly contribute to market quality by accessing and/or 
providing certain levels of Consolidated Volume through one or more of 
its [sic] Nasdaq Market Center MPIDs, and volume.
    The proposed credit will be provided to members that not only 
access liquidity in all securities through one or more of its [sic] 
Nasdaq Market Center MPIDs of more than 0.65% of Consolidated Volume 
during the month, but also that contribute to the Exchange by providing 
liquidity in all securities through one or more of its [sic] Nasdaq 
Market Center MPIDs of more than 0.10% of Consolidated Volume during 
the month.
    The Exchange believes that the proposed $0.0027 per share executed 
credit is an equitable allocation and is not unfairly discriminatory 
because a member achieving this credit tier will be both accessing and 
providing liquidity, which should be beneficial to other members as 
this both encourages more liquidity on the Exchange, as well as 
increasing the likelihood that members [sic] resting limit orders may 
be accessed by members seeking to attain this credit tier. The Exchange 
seeks to encourage such behavior.
    Additionally, the Exchange believes that the proposed new credit 
tier is an equitable allocation and is not unfairly discriminatory 
because the new credit tier is uniformly available to all members and 
affects all members equally and in the same way. Additionally, the 
proposed new credit tier will further encourage market participant 
activity and will also support price discovery and liquidity provision.

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. In terms of inter-market 
competition, 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 changes to the credits provided for the use 
of the order execution and routing services of the Nasdaq Market Center 
by members for all securities priced at $1 or more that it trades are 
reflective of the intense competition among trading venues in capturing 
order flow. Moreover, the proposed rule change does not impose a burden 
on competition because Exchange membership is optional and is also the 
subject of competition from other trading venues. For these reasons, 
the Exchange 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. Moreover, 
because there are numerous competitive alternatives to the use of the 
Exchange, it is likely that the Exchange will lose market share as a 
result of the changes if they are unattractive to market participants.

[[Page 55247]]

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.\6\ 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)(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-2016-115 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-2016-115. 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 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-NASDAQ-2016-115, and should 
be submitted on or before September 8, 2016.
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    \7\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19689 Filed 8-17-16; 8:45 am]
 BILLING CODE 8011-01-P