[Federal Register Volume 82, Number 200 (Wednesday, October 18, 2017)]
[Notices]
[Pages 48556-48557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22536]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81860; File No. SR-Phlx-2017-78]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Decrease the 
Qualification Criteria of a Credit Tier and Make Related Changes

October 12, 2017.
    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 October 2, 2017, NASDAQ 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to decrease the level of Consolidated Volume 
required to qualify for a $0.0031 per share executed credit and make 
related changes.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.cchwallstreet.com/ 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 the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to amend the Exchange's 
transaction fees at Section VIII (NASDAQ PSX Fees) of the NASDAQ PHLX 
LLC Pricing Schedule to decrease the level of Consolidated Volume 
required to qualify for a $0.0031 per share executed credit and make 
related changes. Currently, the Exchange provides credits ranging from 
$0.0023 to $0.0031 per share executed to member organizations for 
displayed quotes and orders that provide liquidity through the PSX 
System. The top two credit tiers are the following: (1) A credit of 
$0.0031 per share executed for Quotes/Orders entered by a member 
organization that provides and accesses 0.3% or more of Consolidated 
Volume during the month; and (2) a credit of $0.0029 per share executed 
for Quotes/Orders entered by a member organization that provides and 
accesses 0.25% or more of Consolidated Volume during the month. The 
Exchange is proposing to decrease the level of monthly Consolidated 
Volume required of a member organization to qualify for the $0.0031 per 
share executed credit from 0.3% to 0.25%, which is the level required 
to currently qualify for the $0.0029 per share executed credit tier. As 
a consequence, the Exchange is also proposing to eliminate the $0.0029 
per share executed credit tier.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\3\ in general, and furthers the objectives of 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, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes that the $0.0031 per share executed credit 
provided to a member organization for displayed quotes and orders is 
reasonable because it will remain unchanged, and it is competitive with 
the fees of other exchanges. For example, The Nasdaq Stock Market 
provides its members with credits up to $0.00305 per share executed for 
displayed quotes and orders.\5\ Elimination of the $0.0029 per share 
executed credit provided to a member organization for displayed quotes 
and orders is reasonable because the criteria currently required to 
receive the $0.0029 per share executed credit will be the same as the 
criteria required to receive the $0.0031 per share executed credit. 
Thus, member organizations that currently qualify for $0.0029 per share 
executed credit will qualify for the higher credit under the proposed 
change.
---------------------------------------------------------------------------

    \5\ See Nasdaq Rule 7018(a).
---------------------------------------------------------------------------

    The Exchange believes that decreasing the level of Consolidated 
Volume during the month required to qualify for the $0.0031 per share 
executed credit is an equitable allocation and is not unfairly 
discriminatory because the Exchange is using the reduced Consolidated 
Volume requirement to provide incentive to member organizations to 
participate on the Exchange. The Exchange has observed that the current 
qualification criteria for the $0.0031 per share executed credit and 
the qualification requirement of the $0.0029 per share executed credit 
have not provided adequate incentive. The Exchange believes that 
creating a single credit tier that combines the higher credit with the 
lower Consolidated Volume requirement will be more effective at 
increasing participation on the Exchange. The proposed change will 
apply to all member organizations, any of which may provide the level 
of Consolidated Volume required to qualify for the credit.

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

[[Page 48557]]

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 proposed changes to the credits available to 
member organizations for displayed quotes and orders do not impose a 
burden on competition because the Exchange's execution services are 
completely voluntary and subject to extensive competition both from 
other exchanges and from off-exchange venues. The Exchange has 
determined that the two credit tiers have not been as successful at 
attracting participation on the Exchange. Consequently, the Exchange is 
decreasing the qualification criteria required to receive the $0.0031 
per share executed credit to the level of the $0.0029 per share 
executed credit. This will effectively increase the credit provided to 
member organizations that currently qualify for the $0.0029 per share 
executed credit, while possibly providing additional incentive to 
member organizations that do not provide and access 0.25% or more of 
Consolidated Volume during the month to do so. In sum, the Exchange is 
making it easier for member organizations to receive a credit in an 
effort to increase participation on the Exchange. If the changes 
proposed herein are unattractive to market participants, it is likely 
that the Exchange will lose market share as a result. The Exchange 
notes that competing order execution venues are free to increase their 
credits, or decrease qualification criteria required to receive 
credits, in reaction to the proposed changes. Accordingly, 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.

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)(ii) of the Act.\6\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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-2017-78 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-2017-78. 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 the 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-2017-78, and should be 
submitted on or before November 8, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
---------------------------------------------------------------------------

    \7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-22536 Filed 10-17-17; 8:45 am]
BILLING CODE 8011-01-P