
[Federal Register Volume 80, Number 238 (Friday, December 11, 2015)]
[Notices]
[Pages 77057-77058]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31282]



[[Page 77057]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76586; File No. SR-NASDAQ-2015-147]


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

December 8, 2015.
    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 November 30, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or the 
``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.
---------------------------------------------------------------------------

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

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

    Nasdaq is proposing changes to amend Nasdaq Rule 7018(a), governing 
fees and credits assessed for execution and routing of securities.
    While these amendments are effective upon filing, the Exchange has 
designated the proposed amendments to be operative on December 1, 2015.
    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.

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 Exchange proposes to amend Nasdaq Rule 7018, governing fees and 
credits assessed for execution and routing of securities listed on 
Nasdaq,\3\ listed on the New York Stock Exchange (``NYSE'') \4\ and 
listed on exchanges other than Nasdaq and NYSE \5\ (collectively, the 
``Tapes'').
---------------------------------------------------------------------------

    \3\ Nasdaq Rule 7018(a)(1).
    \4\ Nasdaq Rule 7018(a)(2).
    \5\ Nasdaq Rule 7018(a)(3).
---------------------------------------------------------------------------

    The purpose of the proposed rule change is to increase a current 
credit tier for all three Tapes from $0.0029 per share executed to 
$0.00295 per share executed. Specifically, this credit tier is 
available to members for displayed quotes/orders (other than 
supplemental orders or designated retail orders) that provide liquidity 
and, as stated in Nasdaq Rule 7018(a)(1), (2) and (3), ``Adds Customer, 
Professional, Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity 
in Penny Pilot Options and/or Non-Penny Pilot Options of 1.15% or more 
of total industry ADV in the customer clearing range for Equity and ETF 
option contracts per day in a month on the Nasdaq Options Market''.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 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, for example, the Commission indicated that market forces should 
generally determine the price of non-core market data because national 
market system regulation ``has been remarkably successful in promoting 
market competition in its broader forms that are most important to 
investors and listed companies.'' \8\ Likewise, in NetCoalition v. NYSE 
Arca, Inc., 615 F.3d 525 (D.C. Cir. 2010), (``NetCoalition'') the DC 
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\ Exchange Act Release No. 34-51808 (June 9, 2005) 
(``Regulation NMS Adopting Release'').
    \9\ See NetCoalition, at 534.
    \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 ArcaBook Order, 73 FR at 74782-74783).
---------------------------------------------------------------------------

    Nasdaq believes that the proposed rule change to Nasdaq Rule 
7018(a)(1), (2) and (3) is reasonable because it is competitive with 
the credits of other exchanges and also may result in increased 
participation in the marketplace. Currently, for all three Tapes a 
member receives a credit of $0.0029 per share executed for displayed 
quotes/orders (other than supplemental orders or designated retail 
orders) that provide liquidity and, as stated in Nasdaq Rule 
7018(a)(1), (2) and (3), the member ``Adds Customer, Professional, 
Firm, Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny 
Pilot Options and/or Non- Penny Pilot Options of 1.15% or more of total 
industry ADV in the customer clearing range for Equity and ETF option 
contracts per day in a month on the Nasdaq Options Market''. Under the 
proposal, the credit will increase to $0.00295 per share executed.
    The Exchange also believes that the proposed rule change is an 
equitable allocation and is not unfairly discriminatory because the 
Exchange will provide the same credit to all similarly situated members 
and is available across all Tapes.

[[Page 77058]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in a burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.\12\ 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 credit opportunities available at other venues to be 
more favorable. In such an environment, the Exchange must continually 
adjust its fees and credits 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 and credits 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.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    In this instance, the proposed change to the credits provided for 
all three Tapes to member firms for displayed quotes/orders (other than 
supplemental orders or designated retail orders) that provide 
liquidity, does not impose a burden on competition because the 
Exchange's execution services are voluntary and subject to extensive 
competition both from other exchanges and from off-exchange venues. In 
sum, if the change proposed herein is 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 
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

    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.\13\ 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-NASDAQ-2015-147 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-2015-147. 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-2015-147, and should 
be submitted on or before January 4, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-31282 Filed 12-10-15; 8:45 am]
 BILLING CODE 8011-01-P


