[Federal Register Volume 81, Number 178 (Wednesday, September 14, 2016)]
[Notices]
[Pages 63231-63233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22025]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78784; File No. SR-Phlx-2016-91]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change Relating to 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

September 8, 2016.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 31, 2016, NASDAQ PHLX LLC (``Phlx'' or the ``Exchange'') 
filed with the Securities and Exchange Commission (the ``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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Pricing Schedule 
under Section VIII, entitled ``NASDAQ PSX FEES,'' (``Pricing 
Schedule'') with respect to execution and routing of orders in 
securities priced at $1 or more per share.
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on September 1, 
2016. 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.

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

[[Page 63232]]

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 add a credit tier for 
order execution and routing applicable to the use of the order 
execution and routing services of the NASDAQ PSX System (``PSX 
System'') by member organizations for all securities traded at $1 or 
more per share.
    Specifically, the Exchange proposes to amend its Pricing Schedule 
to include a new credit tier for providing liquidity through the PSX 
System for displayed quotes/orders. The new credit tier will be for 
$0.0027 per share executed for displayed quotes/orders entered by a 
member organization that provides and accesses 0.15% or more of 
consolidated volume (``Consolidated Volume'') during the month.
    The proposed new credit tier is positioned to fall between two 
similar existing credit tiers. It will provide a higher credit, $0.0027 
per share executed, than an existing credit tier, $0.0025 per share 
executed, but it also has a higher threshold of required activity. The 
new credit tier requires a member to provide and access 0.15% of 
Consolidated Volume during the month versus the existing 0.05% for the 
$0.0025 credit tier.
    Alternatively the new credit tier will provide a lower credit than 
the existing $0.0029 per share executed credit tier, but also has a 
lower required Consolidated Volume threshold. The $0.0029 per share 
executed credit tier requires a member to provide and access 0.25% of 
Consolidated Volume during the month, while the new credit tier only 
requires a member to provide and access 0.15% of Consolidated Volume 
during the month.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of section 6 of the Act,\3\ in general, and with 
section 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 the Exchange operates or controls, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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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 proposed rule change to the credit tiers under the Exchange's 
Pricing Schedule, section VIII, are reflective of the Exchange's 
ongoing efforts to use pricing incentive programs to attract order flow 
to the Exchange and improve market quality. The goal of these pricing 
incentives is to provide meaningful incentives for members to increase 
their participation on the Exchange.
    The Exchange believes that the new credit tier for displayed 
quotes/orders for a member organization providing liquidity through the 
PSX System of $0.0027 per share executed in The NASDAQ Stock Market LLC 
(``Nasdaq'')--listed securities, securities listed on the New York 
Stock Exchange (``NYSE''), and securities listed on exchanges other 
than Nasdaq and NYSE is reasonable because it is consistent with other 
credits that the Exchange provides to members that access and/or 
provide liquidity. As a general principle the Exchange chooses to offer 
credits to members in return for market improving behavior. 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. The proposed credit tier will be 
provided to members that provide and access liquidity in all securities 
of 0.15% or more of Consolidated Volume during the month.
    The Exchange also believes that this proposed rule change is 
consistent with an equitable allocation of fees and are not unfairly 
discriminatory because the new credit tier for non-displayed orders/
quotes 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 
result in any burden on competition that is 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 dozens of different 
competing exchanges and alternative trading systems if they deem 
charges at a particular venue to be excessive, or credit opportunities 
available at other venues to be more favorable. In such an environment, 
the Exchange must continually adjust its charges and credits to remain 
competitive with other exchanges. Because competitors are free to 
modify their own charges and credits in response, and because market 
participants may readily adjust their order routing practices, the 
Exchange believes that the degree to which changes to charges and 
credits in this market may impose any burden on competition is 
extremely limited.
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    \5\ 15 U.S.C. 78f(b)(8).
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    In this instance, the proposed new credit tier for member 
organizations entering orders in the PSX System for displayed orders 
that provide liquidity does not impose a burden on competition because 
Exchange membership is optional and is the subject of competition from 
other exchanges. These adjustments are reflective of the intent to 
increase the order flow on the Exchange. For these reasons, the 
Exchange 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. 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.
    Accordingly, the Exchange does not believe that the proposed rule 
change 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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \6\ and paragraph (f) of Rule 19b-4 \7\ 
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. If the Commission 
takes such action, the

[[Page 63233]]

Commission will institute proceedings to determine whether the proposed 
rule change should be approved or disapproved.
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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-Phlx-2016-91 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-Phlx-2016-91. 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-Phlx-2016-91, and should be 
submitted on or before October 5, 2016.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2016-22025 Filed 9-13-16; 8:45 am]
 BILLING CODE 8011-01-P