[Federal Register Volume 76, Number 3 (Wednesday, January 5, 2011)]
[Notices]
[Pages 615-617]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-33257]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63617; File No. SR-BX-2010-092]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Modify
Fees for the NASDAQ OMX BX Equities System
December 29, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
[[Page 616]]
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 22, 2010, NASDAQ OMX BX, Inc. (``BX'') 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 BX. 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 Substance
of the Proposed Rule Change
BX proposes to modify pricing for BX members using the NASDAQ OMX
BX Equities System. BX will implement the proposed change on January 3,
2011. The text of the proposed rule change is available at http://nasdaqomxbx.cchwallstreet.com, at BX'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, BX 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. BX 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
BX is proposing to modify its fees for trades that execute at
prices at or above $1. BX has a pricing model under which members are
charged for the execution of quotes/orders posted on the BX book (i.e.,
quotes/orders that provide liquidity), while members receive a rebate
for orders that access liquidity. Since BX introduced this pricing
model in 2009, several other exchanges have emulated it, including the
EDGX Exchange, the BATS-Y Exchange, and the CBOE Stock Exchange
(``CBSX'').
Effective November 1, 2010, BX increased the rebate for accessing
liquidity to $0.0002 per share executed and introduced a tiered pricing
structure for the fee to add liquidity, under which members adding a
daily average of more than 50 million shares of liquidity during a
month are charged $0.00025 per share executed, while members adding a
daily average of 50 million or fewer shares during the month are
charged $0.0004 per share executed. Effective January 3, 2011, BX will
revert to non-tiered pricing structure, but will make significant
changes to the levels of its rebate for accessing liquidity and its
charge for liquidity provision. Specifically, for all market
participants, the fee to add liquidity will be $0.0018 per share
executed, and the rebate for accessing liquidity will be $0.0014 per
share executed. The fee changes are reflective of the ongoing intense
level of competition for order flow in the cash equities markets, and
specifically among exchanges that provide rebates to market
participants accessing liquidity.\3\
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\3\ See, e.g., Securities Exchange Act Release No. 63160
(October 22, 2010), 75 FR 66817 (October 29, 2010) (SR-CBOE-2010-
093) (adopting fees identical to the fees proposed in this filing).
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2. Statutory Basis
BX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\4\ in general, and with Section
6(b)(4) of the Act,\5\ 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 BX operates or controls. The impact of the price changes upon the
net fees paid by a particular market participant will depend upon a
number of variables, including the relative availability of liquidity
on BX and other venues, and the prices of the market participant's
quotes and orders relative to the national best bid and offer (i.e.,
its propensity to add or remove liquidity). Although the change
increases the fee for orders that provide liquidity, it provides an
offsetting increase in the rebate for orders accessing liquidity. As a
result of the change, BX's fees and rebates for stocks priced above $1
will match those that have been in effect on a competing venue for
several months.\6\
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\4\ 15 U.S.C. 78f.
\5\ 15 U.S.C. 78f(b)(4).
\6\ See supra n.3.
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BX notes that it operates in a highly competitive market in which
market participants can readily direct order flow to competing venues
if they deem fee levels at a particular venue to be excessive.
Accordingly, if particular market participants object to the proposed
fee changes, they can avoid paying the fees by directing orders to
other venues. BX believes that its fees continue to be reasonable and
equitably allocated to members on the basis of whether they opt to
direct orders to BX.
B. Self-Regulatory Organization's Statement on Burden on Competition
BX 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. Because the market
for order execution and routing is extremely competitive, members may
readily direct orders to BX's competitors if they believe that
competitors offer more favorable pricing. The change is a direct
competitive response to fee changes implemented at one of BX's
competitors.
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 rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\7\ 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 Commission shall
institute proceedings to determine whether the proposed rule should be
approved or disapproved.
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\7\ 15 U.S.C. 78s(b)(3)(a)(ii).
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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 e-mail to [email protected]. Please include
File Number SR-BX-2010-092 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary,
[[Page 617]]
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090.
All submissions should refer to File Number SR-BX-2010-092. This file
number should be included on the subject line if e-mail 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
a.m. and 3 p.m. Copies of the filing will also be available for
inspection and copying at the principal office of the self-regulatory
organization. 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-BX-
2010-092 and should be submitted on or before January 26, 2011.
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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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-33257 Filed 1-4-11; 8:45 am]
BILLING CODE 8011-01-P