[Federal Register Volume 84, Number 103 (Wednesday, May 29, 2019)]
[Notices]
[Pages 24834-24839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11106]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85912; File No. SR-BX-2019-013]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Notice of Filing 
and Immediate Effectiveness of Proposed Rule Change To Amend the 
Exchange's Transaction Fees and Credits at Equity 7, Section 118(a)

May 22, 2019.
    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 May 10, 2019, Nasdaq BX, Inc. (``BX'' 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 amend the Exchange's transaction fees and 
credits at Equity 7, Section 118(a), as described further below.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaqbx.cchwallstreet.com/, at the principal office 
of the Exchange, and at the Commission's Public Reference Room.

[[Page 24835]]

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 Exchange operates on the ``taker-maker'' model, whereby it pays 
credits to members that take liquidity and charges fees to members that 
provide liquidity. Currently, the Exchange has a schedule, at Equity 7, 
Section 118(a), which consists of several different credits that it 
provides for orders in securities priced at $1 or more per share that 
access liquidity on the Exchange and several different charges that it 
assesses for orders in such securities that add liquidity on the 
Exchange. With limited exceptions, the Exchange's system of credits and 
charges presently applies to orders in securities in all Tapes.
    The purpose of the proposed rule change is to amend the Exchange's 
schedule of fees and credits with the objective of increasing net 
incentives for members to remove liquidity from the Exchange in 
securities in Tape B, where the Exchange has seen less activity than it 
has in Tape A and C securities.
Tape B Credits
    The Exchange proposes to achieve its objective of increasing 
removal activity in securities in Tape B, in part, by establishing a 
new series of credits for orders in securities in Tape B that remove 
liquidity from the Exchange (``Tape B Credits''). As is explained 
below, the proposed Tape B Credits will apply in lieu of most of the 
existing generally applicable liquidity removal credits. The existing 
credits will continue to apply, but only as to orders in securities in 
Tapes A and C (the ``Tape A and C Credits''). The proposed Tape B 
Credits will generally be higher than the Tape A and C Credits, which 
again the Exchange proposes as a means of targeting an increase in 
liquidity removal activity in securities in Tape B. The availability of 
the proposed Tape B Credits will also be tied to the level of a 
member's liquidity adding activity in Tape B securities as a means of 
incentivizing liquidity adding activity even as the Exchange proposes 
to increase its charges for orders that add liquidity in Tape B.
    Specifically, the Exchange proposes to adopt the following Tape B 
Credits:
     $0.0026 per share executed for orders that access 
liquidity in securities in Tape B (excluding orders with Midpoint 
pegging and excluding orders that receive price improvement and execute 
against an order with a Non-displayed price) entered by a member that 
adds liquidity in Tape B securities equal to or exceeding 0.025% of 
total Consolidated Volume \3\ during a month; and
---------------------------------------------------------------------------

    \3\ Pursuant to Equity 7, Section 118(a), the term 
``Consolidated Volume'' means the total consolidated volume reported 
to all consolidated transaction reporting plans by all exchanges and 
trade reporting facilities during a month in equity securities, 
excluding executed orders with a size of less than one round lot.
---------------------------------------------------------------------------

     $0.0024 per share executed for orders that access 
liquidity in securities in Tape B (excluding orders with Midpoint 
pegging and excluding orders that receive price improvement and execute 
against an order with a Non-displayed price) entered by a member that 
adds liquidity equal to or exceeding an average daily volume of 50,000 
shares during a month.
    The Exchange also proposes to eliminate the following two existing 
credits, which apply specifically to orders in securities in Tape B, 
insofar as the Exchange will replace these existing credits with the 
higher proposed Tape B Credits:
     $0.0019 per share executed for orders that access 
liquidity in securities in Tape B (excluding orders with Midpoint 
pegging and excluding orders that receive price improvement and execute 
against an order with a Non-displayed price) entered by a member that: 
(i) Accesses liquidity equal to or exceeding 0.15% of total 
Consolidated Volume during a month; and (ii) accesses 20% more 
liquidity as a percentage of Consolidated Volume than the member 
accessed in December 2018; and
     $0.0019 per share executed for orders that access 
liquidity in securities in Tape B (excluding orders with Midpoint 
pegging and excluding orders that receive price improvement and execute 
against an order with a Non-displayed price) entered by a member that, 
during a given month: (i) Has a total volume (accessing and adding 
liquidity) equal to or exceeding 0.40% of total Consolidated Volume 
during that month; (ii) has a total volume that is at least 20% greater 
(as a percentage of Consolidated Volume) than its total volume in 
December 2018; and (iii) of the 20% or more increase in total volume 
described in (ii) herein, at least 30% is attributable to adding 
liquidity.
    Lastly, as noted above, the proposed Tape B Credits will not 
supplant all of the existing credits. Instead, the Exchange proposes 
that the following existing credits will continue to apply to orders in 
securities in Tape B (as well as to orders in Tapes A and C):
     $0.0000 per share executed for an order that receives 
price improvement and executes against an order with a Non-displayed 
price; and
     $0.0000 per share executed for an order with Midpoint 
pegging that removes liquidity.
Change to Tape A and C Credit
    Additionally, the Exchange proposes to amend its existing $0.0001 
per share executed ``catch-all'' credit that applies to ``all other 
orders'' that remove liquidity from the Exchange. The Exchange proposes 
to amend the credit so that it applies to an order in securities in 
Tapes A and C (excluding an order with midpoint pegging and excluding 
an order that receives price improvement and execute against an order 
with a non-displayed price) that remove liquidity from the Exchange 
that are entered by a member that adds at least an average daily volume 
of 50,000 shares to the Exchange during a month. The Exchange proposes 
these changes to incentivize members to engage in meaningful liquidity 
adding activity during a month.
New Fee for Removing Liquidity From the Exchange
    As explained above, the Exchange presently operates on the taker-
maker model, such that it currently does not charge a fee for 
executions on the Exchange of orders that remove liquidity from the 
Exchange. However, the Exchange now proposes to establish such a fee 
for members that do not add a meaningful amount of liquidity to the 
Exchange during a month. The purpose of the fee is to help ensure that, 
as the Exchange seeks to establish new Tape B Credits to incentivize 
liquidity removal in Tape B securities, and also seeks to offset the 
costs of those Tape B Credits by increasing fees for adding Tape B 
liquidity, the Exchange continues to provide incentives to members to 
add meaningful amounts of liquidity to the Exchange each month.
    Specifically, the Exchange proposes to charge a fee of $0.0003 per 
share

[[Page 24836]]

executed for an order in securities in any Tape (excluding an order 
with midpoint pegging and excluding an order that receives price 
improvement and execute against an order with a non-displayed price) 
that removes liquidity from the Exchange and that is entered by a 
member that does not add at least an average daily volume of 50,000 
shares to the Exchange during a month. The fee would apply unless a 
member's liquidity adding activity on the Exchange qualifies it for a 
liquidity removal credit.
    As an example of the operation of the proposed liquidity removal 
fee, a member that adds an average daily volume of 49,000 shares in any 
Tape to the Exchange would pay a $0.0003 fee per share executed for all 
of its orders that remove liquidity from the Exchange during that 
month. If in the subsequent month, however, the member increases its 
average daily volume of shares added to the Exchange to 50,000 shares, 
then it would no longer pay that $0.0003 fee, but it would instead 
qualify for the $0.0001 per share executed credit on its orders in 
securities in Tapes A and C that remove liquidity from the Exchange and 
the $0.0024 per share executed credit on its orders in securities in 
Tape B that remove liquidity from the Exchange during that month 
(excluding orders with Midpoint pegging and excluding orders that 
receive price improvement and execute against an order with a Non-
displayed price).
Tape B Charges
    As a means of offsetting the costs of providing the Tape B Credits, 
the Exchange proposes to establish a new series of charges for 
displayed and non-displayed orders in securities in Tape B that add 
liquidity to the Exchange (``Tape B Charges''). As is explained below, 
the proposed Tape B Charges will apply in lieu of most of the existing 
generally applicable liquidity adding charges. The existing charges 
will continue to apply, but only as to orders in securities in Tapes A 
and C (the ``Tape A and C Charges''). The proposed Tape B Charges are 
similarly structured to the existing Tape A and C Charges, which are 
also tied to liquidity adding activity, except that the Tape B charges 
will generally be higher than the Tape A and C Charges. Again, the 
Exchange proposes higher Tape B Charges as a means of offsetting the 
costs of its efforts to increase liquidity removal activity in 
securities in Tape B. However, relative to each other, the new 
displayed order charges will be lower for members that add higher 
volumes of Tape B liquidity during a month.
    Specifically, the Exchange proposes to adopt the following Tape B 
Charges:
     $0.0026 per share executed for a displayed order in 
securities in Tape B entered by a member that adds Tape B liquidity 
equal to or exceeding 0.025% total Consolidated Volume during a month;
     $0.0028 per share executed for a displayed order in 
securities in Tape B entered by a member that adds Tape B liquidity 
that is less than 0.025% total Consolidated Volume during a month; and
     $0.0028 per share executed for a non-displayed order in 
securities in Tape B (other than orders with Midpoint pegging) entered 
by a member that adds Tape B liquidity equal to or exceeding 0.025% 
total Consolidated Volume during a month.
    Lastly, as noted above, the proposed Tape B Charges will not 
supplant all of the existing charges. Instead, the Exchange proposes 
that following existing charges will continue to apply to orders in 
securities in Tape B (as well as to orders in Tapes A and C):
     $0.0005 per share executed for an order with Midpoint 
pegging entered by a member that adds 0.02% of total Consolidated 
Volume of non-displayed liquidity excluding a buy (sell) order that 
receives an execution price that is lower (higher) than the midpoint of 
the NBBO;
     $0.0015 per share executed for an order with Midpoint 
pegging entered by entered by other member excluding a buy (sell) order 
that receives an execution price that is lower (higher) than the 
midpoint of the NBBO;
     $0.0024 per share executed for a buy (sell) order with 
Midpoint pegging that receives an execution price that is lower 
(higher) than the midpoint of the NBBO;
     $0.0030 per share executed for all other non-displayed 
orders; and
     charges for BSTG, BSCN, BMOP, BTFY, BCRT, BDRK, and BCST 
orders that execute in a venue other than the Nasdaq BX Equities 
System.
Change to Tape A & C Charge
    The Exchange presently charges a $0.0017 per share executed fee for 
displayed orders entered by a member that adds liquidity equal to or 
exceeding 0.15% of total Consolidated Volume during a month as well as 
a $0.0014 per share executed fee for displayed orders entered by a 
member that adds liquidity equal to or exceeding 0.25% of total 
Consolidated Volume during a month.\4\ The Exchange proposes to 
increase the level of total Consolidated Volume that triggers the 
$0.0014 per share executed fee from 0.25% to 0.35%. The Exchange 
believes that increasing the volume threshold for a member to qualify 
for the lower $0.0014 per share executed fee would incentivize firms to 
add additional liquidity to the Exchange.
---------------------------------------------------------------------------

    \4\ Going forward, these charges will apply only to securities 
in Tapes A and C.
---------------------------------------------------------------------------

Reorganization of Schedule
    To effectuate the foregoing changes in a way that is readily 
comprehensible to members, the Exchange proposes to reorganize and re-
format Equity 7, Section 118(a). Specifically, the Exchange proposes to 
indicate in a chart the applicability of each credit and charge to 
securities in Tapes A, B, and C. Where a credit or charge does not 
apply to securities in a particular Tape, the chart will so indicate 
with the term ``N/A.''
    The Exchange also proposes to re-format and emphasize in bold type 
the headings for the credits and fees that comprise the schedule so 
that members can distinguish these sections more easily. Finally, the 
Exchange proposes to insert a new heading--``Other charges for entering 
orders in the Nasdaq BX Equities System''--that will apply to charges 
for BSTG, BSCN, BMOP, BTFY, BCRT, BDRK, and BCST orders that execute in 
a venue other than the Nasdaq BX Equities System.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\5\ in general, and furthers the objectives of 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, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its

[[Page 24837]]

broader forms that are most important to investors and listed 
companies.'' \7\
---------------------------------------------------------------------------

    \7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting 
Release'').
---------------------------------------------------------------------------

    Likewise, in NetCoalition v. Securities and Exchange Commission \8\ 
(``NetCoalition'') the D.C. Circuit upheld the Commission's use of a 
market-based approach in evaluating the fairness of market data fees 
against a challenge claiming that Congress mandated a cost-based 
approach.\9\ As the court emphasized, the Commission ``intended in 
Regulation NMS that `market forces, rather than regulatory 
requirements' play a role in determining the market data . . . to be 
made available to investors and at what cost.'' \10\
---------------------------------------------------------------------------

    \8\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \9\ See NetCoalition, at 534-535.
    \10\ Id. at 537.
---------------------------------------------------------------------------

    Further, ``[n]o one disputes that competition for order flow is 
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market 
system, buyers and sellers of securities, and the broker-dealers that 
act as their order-routing agents, have a wide range of choices of 
where to route orders for execution'; [and] `no exchange can afford to 
take its market share percentages for granted' because `no exchange 
possesses a monopoly, regulatory or otherwise, in the execution of 
order flow from broker dealers'. . . .'' \11\ Although the court and 
the SEC were discussing the cash equities markets, the Exchange 
believes that these views apply with equal force to the options 
markets.
---------------------------------------------------------------------------

    \11\ Id. at 539 (quoting Securities Exchange Act Release No. 
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) 
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------

Tape B Credits and Charges
    The Exchange believes that it is reasonable to establish a new 
system of Tape B Credits and Tape B Charges, which will largely 
supplant the schedule of credits and charges that applies presently to 
orders in Tape B securities. The Exchange has designed this new system 
of Tape B Credits and Tape B Charges to provide new incentives to 
members to increase their liquidity removal activity in Tape B 
securities, while also maintaining significant levels of liquidity 
adding activity on the Exchange.
    The Exchange believes that the proposed Tape B Credits are 
reasonable because they are structured similarly to existing liquidity 
removal credits in that they apply only when members achieve certain 
thresholds of participation on the Exchange. Increased participation on 
the Exchange will help to improve transparency and price discovery and 
will enhance execution opportunities for members on the Exchange. In 
particular, it is reasonable for the Exchange to propose to tie the 
availability of Tape B Credits to a member achieving certain thresholds 
of liquidity addition, rather than certain levels of liquidity removal 
(as is the case with existing credits), because the Exchange seeks to 
ensure that as it provides higher removal credits for orders in 
securities in Tape B, it also maintains adequate incentives for members 
to continue to add liquidity to the Exchange.
    Moreover, the Exchange believes that is reasonable, equitable, and 
not unfairly discriminatory to propose higher credits to members that 
remove Tape B liquidity than it does to members that remove liquidity 
in securities in Tapes A and C because the Exchange has experienced 
less activity in Tape B securities relative to Tapes A and C securities 
and it wishes to specifically target increased activity with respect to 
Tape B securities.
    The Exchange believes that its proposals are equitable and not 
unfairly discriminatory because they will apply to all similarly 
situated member firms. That is, any member may qualify for receipt of 
the higher credits by achieving the requisite volume of liquidity 
adding activity during a month.\12\ Moreover, the proposed change is 
equitable because it will incentivize members to engage in market-
improving behavior.
---------------------------------------------------------------------------

    \12\ Additionally, the Exchange believes that it is reasonable 
and equitable for it to eliminate its two existing $0.0019 per share 
executed credits for orders in Tape B securities entered by members 
that increase their levels of participation on the Exchange over 
time because these credits will be replaced by substantially higher 
Tape B Credits that will be easier for members to achieve.
---------------------------------------------------------------------------

    Likewise, the Exchange believes it is reasonable, equitable, and 
not unfairly discriminatory to establish new charges for displayed and 
non-displayed orders in securities in Tape B entered by members that 
add liquidity to the Exchange. The Exchange formulated the Tape B 
Charges similarly to the existing Tape A and C Charges in that they 
trigger when members add liquidity equal to or exceeding certain 
threshold volumes. Moreover, it is equitable and not unfairly 
discriminatory for the Exchange to charge higher fees to members that 
add Tape B liquidity than it does to members that add liquidity in 
securities in Tapes A and C because these new Tape B Charges will help 
the Exchange to specifically offset the costs of the new, higher Tape B 
Credits. The Exchange notes that it will also offset some of the added 
costs of the Tape B Charges by tying the availability of the Tape B 
Credits to members that achieve or maintain certain monthly levels of 
liquidity adding activity.
    The Exchange also believes that these proposals are not unfairly 
discriminatory because they will apply to all similarly situated member 
firms. Any member will be entitled to receive the new credits or incur 
the new fees if they add certain minimum levels of liquidity in a 
month. Conversely, any member may avoid imposition of the new fees by 
reducing or avoiding liquidity-adding activity.
Liquidity Removal Fee
    The Exchange believes it is reasonable to charge its members a fee 
for removing liquidity from the Exchange even though the Exchange 
otherwise operates on a taker-maker model. Although the concept of a 
liquidity removal fee is new to the Exchange, it is not novel on taker-
maker exchanges. Indeed, the Exchange notes that the proposed fee is 
similar to a liquidity removal fee that NYSE National recently imposed 
on its members.\13\
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 34-85674 (Apr. 17, 
2019); 84 FR 16903 (Apr. 23, 2019) (SR-NYSENAT-2019-09) (imposing 
fee for ETP Holders that remove liquidity from the Exchange unless a 
better tiered credit or fee applies).
---------------------------------------------------------------------------

    Additionally, the Exchange believes that the proposed fee is 
reasonable because it is intended to incentivize members that engage 
primarily in liquidity removal activity on the Exchange to also 
maintain a meaningful level of liquidity adding activity as well. In 
particular, the Exchange believes that its members would seek to avoid 
incurring the proposed fee, and instead qualify for a liquidity removal 
credit, by increasing the extent to which it adds liquidity to the 
Exchange.
    The Exchange believes that the proposed fee is equitable and not 
unfairly discriminatory because it would apply to all similarly 
situated members and because any member may avoid imposition of the fee 
by adding the requisite level of liquidity to the Exchange during a 
month.\14\
---------------------------------------------------------------------------

    \14\ Relatedly, the Exchange believes that it is reasonable to 
amend its existing $0.0001 per share executed catch all credit so 
that it applies (i) only to orders in securities in Tapes A and C 
and (ii) only to members that add at least an average daily volume 
of 50,000 shares to the Exchange in a month.
---------------------------------------------------------------------------

Changes to Tape A and C Fees and Charges
    The Exchange believes that it is reasonable to amend its existing 
$0.0001 per share executed ``catch-all'' credit so that it applies only 
to orders in

[[Page 24838]]

securities in Tapes A and C that remove liquidity from the Exchange and 
only to the extent that members add at least an average daily volume of 
50,000 shares to the Exchange during a month. The Exchange intends for 
the proposed change to parallel the new $0.0024 per share executed 
catch-all credit that it proposes for orders that remove liquidity in 
Tape B securities entered by members that add at least an average daily 
volume of 50,000 shares to the Exchange during a month. The Exchange 
intends for both of these credits to incentivize members to engage in a 
meaningful baseline volume of liquidity adding activity during a month. 
As noted above, the Exchange believes that it is equitable and non-
discriminatory for the Exchange to provide a higher catch-all remove 
credit to orders in Tape B securities than it does to orders in Tapes A 
and C securities as a means of targeting an increase in Tape B removal 
activity. The proposed change is equitable and non-discriminatory 
because the amended credit will be available to all similarly situated 
members and any member may qualify for the amended credit by satisfying 
its liquidity addition criteria. Moreover, the proposed change is 
equitable because it will incentivize members to engage in market-
improving behavior.
    The Exchange believes that it is reasonable to increase the total 
Consolidated Volume threshold necessary to trigger its existing $0.0014 
per share executed fee that the Exchange charges for a displayed order 
(going forward, in securities in Tapes A and C only) that adds 
liquidity entered by a member that adds liquidity equal to or exceeding 
0.25% of total Consolidated Volume during a month. The proposed 
increase in qualifying total Consolidated Volume will increase member 
incentives to add liquidity to the Exchange. The Exchange notes that 
the fee remains unchanged and therefore continues to be reasonable. The 
Exchange believes that increase to the total Consolidated Volume 
requirement is an equitable allocation and is not unfairly 
discriminatory because the Exchange will apply the same fee to all 
similarly situated members. Any member may choose to avoid the fee by 
adding less than the level of Consolidated Volume that will trigger it. 
Moreover, the proposed change is equitable because it will incentivize 
members to engage in market-improving behavior.
Reorganization of Schedule
    The Exchange believes that it is reasonable to reorganize and re-
format Equity 7, Section 118(a) so that it implements the foregoing 
changes in a manner that is readily comprehensible to readers. The 
Exchange believes that the proposed reorganization is equitable and 
non-discriminatory in that the proposal changes will render the fee 
schedule easier to read and understand for all members.

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 proposed changes to the Exchange's charges 
assessed and credits available to member firms for execution of 
securities in Tape B 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 intends for the proposed changes, in the aggregate, to 
increase member incentives to remove Tape B liquidity from the Exchange 
while maintaining adequate incentives for members to continue to add 
meaningful levels of liquidity to the Exchange. The Exchange proposes 
to achieve these objectives by adding a new system of Tape B Credits 
that are significantly higher than the credits presently available to 
members with orders that remove Tape B liquidity from the Exchange. It 
also intends to establish new and higher Tape B Charges to offset the 
costs of the new Tape B Credits, but it proposes to offset the costs of 
the new Tape B Charges, in part, by tying the availability of the new 
Tape B Credits to members adding certain threshold volumes of liquidity 
to the Exchange.
    The Exchange's efforts to incentivize market-improving activity are 
not limited to orders in securities in Tape B. Indeed, the Exchange 
proposes to modify the $0.001 ``catch-all'' credit applicable to orders 
that remove liquidity in securities in Tapes A and C so that it is 
available only to firms that also make meaningful contributions to 
liquidity on the Exchange, and it proposes to establish a liquidity 
removal fee for orders in securities in all Tapes for members that fail 
to make baseline contributions to liquidity. Finally, the Exchange 
proposes to increase the total Consolidated Volume threshold that 
triggers a $0.0014 per share executed fee for a displayed order in 
securities in Tapes A and C entered by a member that adds liquidity to 
the Exchange.
    In the aggregate, all of these changes are procompetitive and 
reflective of the Exchange's efforts to make it an attractive and 
vibrant venue to market participants.
    In sum, if the changes proposed herein are unattractive to market 
participants, it is likely that the Exchange will lose market share as 
a result. 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.\15\
---------------------------------------------------------------------------

    \15\ 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.

[[Page 24839]]

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-BX-2019-013 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-BX-2019-013. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-BX-2019-013 and should be submitted on 
or before June 19, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11106 Filed 5-28-19; 8:45 am]
BILLING CODE 8011-01-P