
[Federal Register Volume 79, Number 80 (Friday, April 25, 2014)]
[Notices]
[Pages 23030-23032]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09397]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71983; File No. SR-NSX-2014-11]


Self-Regulatory Organizations; National Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Its Fee and Rebate Schedule With Respect to Securities Priced at 
$1.00 or Greater

April 21, 2014.
    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 April 15, 2014, National Stock Exchange, Inc. (``NSX[supreg]'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(``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 is proposing to amend its Fee and Rebate Schedule (the 
``Fee Schedule'') issued pursuant to Exchange Rule 16.1. Specifically, 
the Exchange is seeking to amend Section I. (Transaction Fees and 
Rebates) pertaining to the fees charged to Exchange Equity Trading 
Permit (``ETP'') \3\ Holders for providing liquidity and the rebates 
paid to ETP Holders for removing liquidity in securities priced at 
$1.00 or more.
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    \3\ Exchange Rule 1.5 defines ``ETP'' as the Equity Trading 
Permit issued by the Exchange for effecting approved securities 
transactions on the Exchange's trading facilities.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://www.nsx.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 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 Exchange is proposing to amend the current Fee Schedule, 
Section I. to: (i) change the fee structure applicable to ETP Holders 
providing liquidity on the Exchange in securities priced at $1.00 and 
above, retiring the current tiered fee structure and adopting a single 
fee amount of $0.0018 per executed share to be paid by ETP Holders for 
providing liquidity (a ``Maker'') in any security priced at $1.00 and 
above, across all Tapes \4\ and irrespective of the order type used by 
the ETP Holder to add liquidity; and (ii) pay a per executed share 
rebate of $0.0017 to ETP Holders removing liquidity in any security, 
across all Tapes and irrespective of any order types removed by the 
liquidity ``Taker.''
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    \4\ The term ``Tapes'' refers to the designation assigned in the 
Consolidated Tape Association (``CTA'') Plan for reporting trades 
with respect to securities in Networks A, B and C. Tape A securities 
are those listed on the New York Stock Exchange, Inc.; Tape B 
securities are listed on NYSE MKT, formerly NYSE Amex, and regional 
exchanges. Tape C securities are those listed on the NASDAQ Stock 
Market LLC.
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    Prior to these proposed changes, the Fee Schedule provided that, 
for securities prices at $1.00 and above, the ETP Holder paid a per 
share fee for providing liquidity in an amount equal to or surpassing 
certain specified percentages of the ETP Holder's total consolidated 
volume (``TCV'') in one day.\5\ The term ``TCV'' was defined in the Fee 
Schedule as the total consolidated volume calculated as the volume 
reported by all exchanges and trade reporting facilities to a 
consolidated transaction reporting plan. Under the Fee Schedule prior 
to the instant amendment, there was a total of seven fee tiers based on 
specified percentages of TCV; the highest fee for adding liquidity was 
$0.0018 per executed share, based on the ETP Holder adding less than 
0.08% of TCV of liquidity in one day. The six additional tier levels 
operated to reduce the per share fee based on successively higher 
percentages of TCV adding liquidity in one day. The lowest fee of 
$0.0012 per executed share applied to ETP Holders adding 0.52% or more 
of TCV of liquidity in one day. The Fee Schedule further provided that 
an ETP Holder providing liquidity through the use of certain ``Zero 
Display'' order types would pay a fee of $0.0018 per executed share. 
With respect to the rebate paid to ETP Holders removing liquidity on 
the Exchange (``Takers'') in securities prices at $1.00 and above, the 
Fee Schedule prior to the instant amendment provided for a rebate of 
$0.0015 per executed share.\6\
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    \5\ See Exchange Act Release No. 71641 (March 4, 2014); 79 FR 
13353 (March 10, 2014) (SR-NSX-2014-05).
    \6\ The former Fee Schedule specifically included a transaction 
removing a Zero Display Mid-Point Peg Order and a Zero Display 
Market Peg Order from the NSX Book as subject to the $0.0015 rebate 
for removing liquidity.
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    The Exchange is now proposing to amend its transaction fees and 
rebates to adopt one fee in the amount of $0.0018 per executed share, 
applicable to executions by ETP Holders adding liquidity in all 
securities priced at $1.00 and above traded on the Exchange. The fee of 
$0.0018 for adding liquidity will apply without regard to percentages 
of TCV or certain ``dark'' order types, which were considerations that 
impacted the fees in effect prior to the instant rule change. ETP 
Holders removing liquidity in securities priced at or above $1.00 will 
receive a uniform rebate of $0.0017 per executed share which will 
similarly be paid in all instances and without regard to the 
considerations that impacted the rebates paid to ETP Holders under the 
prior fee and rebate structure.
    The Exchange submits that the instant proposal furthers its goals 
of maximizing the effectiveness of its business model, offering 
economic incentives to ETP Holders to access the Exchange and providing 
a high-quality and cost-effective execution venue. The Exchange also 
believes that offering a simplified fee and rebate structure will 
enhance efficiencies on the part of both the Exchange and ETP Holders 
and will operate to provide market participants with clarity and 
transparency into the Exchange's incentives for attracting liquidity to 
its market.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with

[[Page 23031]]

the provisions of Section 6(b) of the Act,\7\ in general and, in 
particular, Section 6(b)(4) of the Act,\8\ which requires that the 
rules of a national securities exchange provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and issuers and other persons using its facilities, and with 
Section 6(b)(5) of the Act,\9\ which requires, among other things, that 
the rules of a national securities exchange not permit unfair 
discrimination between customers, issuers, brokers, or dealers, and be 
designed to promote just and equitable principles of trade, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78(f)(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange submits that its proposal to meets the requirement 
under Section 6(b)(4) of the Act that fees assessed by the Exchange be 
reasonable. Specifically, the Exchange proposes to adopt a uniform fee 
of $0.0018 per executed share applicable to ETP Holders proving 
liquidity on the Exchange in securities priced at $1.00 and above. The 
Exchange believes that the fee is reasonable. In fact, a fee of $0.0018 
per executed share was contained in the pre-amendment tiered fee 
structure, applicable to executions constituting added liquidity of 
less than 0.08% of the ETP Holder's TCV in one day. The Exchange 
believes that, while the prior Fee Schedule provided for lower per 
share fees as the ETP Holder's added liquidity increased as a 
percentage of TCV, it is reasonable for the Exchange to adopt a single 
tier-based fee amount within that structure and apply it to all 
executions adding liquidity. The Exchange states that it seeks to 
encourage more activity by liquidity providers, which in turn will 
result in more ETP Holders accessing the Exchange to remove liquidity. 
As noted by the Exchange, the fee will apply in a non-discriminatory 
manner to all ETP Holders that enter an order on the Exchange in any 
security priced at or above $1.00.
    The Exchange further submits that adopting a single uniform rebate 
of $0.0017 per executed share for ETP Holders removing liquidity is a 
reasonable rebate and satisfies the requirements of Section 6(b)(4) of 
the Act. Specifically, the proposed rebate amount is an attempt by the 
Exchange to attract greater order flow by incentivizing ETP Holders to 
access the NSX market. Combined with the proposed restructuring of the 
fees that will be charged liquidity providers, the Exchange aspires to 
increase liquidity and improve price discovery. The Exchange notes that 
the proposed structure promotes clarity and transparency into the fees 
and rebates to which ETP Holders will be subject, thereby operating to 
increase marketplace efficiency and informed decision-making about a 
choice of execution venues.
    The Exchange further submits that its proposal meets the 
requirements of Section 6(b)(5) of the Act. By seeking to attract more 
liquidity to the NSX market through the proposed amendment, the 
Exchange is seeking to improve execution quality, price discovery and 
cost-effectiveness. The Exchange believes that this amendment will, 
therefore, further the purposes of Section 6(b)(5) in that it does not 
permit unfair competition between customers, issuers, brokers or 
dealers and is designed to promote just and equitable principles of 
trade, and remove impediments to and perfect the mechanism of a free 
and open market and a national market system.

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 that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The Exchange 
believes, in fact, that the proposed change will operate to enhance 
rather than burden competition by continuing to position the Exchange 
as a cost-effective trading venue. By adopting a single fee of $0.0018 
per executed share for adding liquidity and a single rebate of $0.0017 
for removing liquidity, the Exchange seeks to provide a simplified fee 
and rebate structure that is transparent to ETP Holders and market 
participants. These are factors that operate to enhance rather than 
burden competition.
    The Exchange submits that adopting a more streamlined fee and 
rebate structure for securities priced at or above $1.00 will promote 
greater competition in the equity securities markets and incentivize 
increased liquidity and improved execution quality on the Exchange 
through an equitable allocation of reasonable economic incentives.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited or received written comments on the 
proposed rule change from ETP Holders or others.

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

    The proposed rule change has taken effect upon filing pursuant to 
Section 19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 
19b-4.\11\ At any time within 60 days of the filing of such 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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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR. 240.19b-4.
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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 rule-comments@sec.gov. Please include 
File Number SR-NSX-2014-11 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-NSX-2014-11. 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

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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-NSX-2014-11, and should be submitted on or before May 
16, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09397 Filed 4-24-14; 8:45 am]
BILLING CODE 8011-01-P


