[Federal Register Volume 84, Number 185 (Tuesday, September 24, 2019)]
[Notices]
[Pages 50089-50094]
[FR Doc No: 2019-20574]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86999; File No. SR-NYSE-2019-50]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List To Aggregate Rates and Requirements Across Tapes
A, B and C Securities for Midpoint Passive Liquidity Orders

September 18, 2019.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 3, 2019, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by the self-
regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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

    The Exchange proposes to amend its Price List to (1) aggregate
rates and requirements across Tapes A, B and C securities for Midpoint
Passive Liquidity (``MPL'') Orders, including revising the requirements
for the two existing MPL tiers that provide liquidity to the Exchange,
and (2) add a new tier for MPL Orders across Tapes A, B and C
securities. The Exchange proposes to implement the fee changes
effective September 3, 2019. The proposed rule change is available on
the Exchange's website at www.nyse.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 self-regulatory organization
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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Price List to revise pricing
available for MPL that provide liquidity to the Exchange as follows:
    (1) Revise all MPL tiers so that the respective credits are
available for MPL Orders that add liquidity in Tapes A, B and C
securities;
    (2) Add a new MPL tier with lower requirements for MPL Orders that
add liquidity in Tapes A, B and C securities. Under the proposed tier,
member organizations that have an average daily volume (``ADV'') of MPL
Orders executed on the Exchange that add liquidity (``Adding ADV'')
that is at least 0.0075% of consolidated average daily volume
(``CADV'') \4\ in Tapes A, B and C combined (``US CADV''), excluding
any liquidity added by a Designated Market Maker (``DMM''), would
qualify for a $0.0020 credit;
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    \4\ The terms ``ADV'' and ``CADV'' are defined in footnote * of
the Price List.
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    (3) For the two existing MPL tiers for which qualification is based
on the member organization having Adding ADV in MPL Orders in Tape A
securities that represents a specified percentage of NYSE CADV,
lowering the specified percentages and replacing the requirement of
NYSE CADV with Tapes A, B and C combined; and
    (4) Conform the rates for adding liquidity in Tapes B and C
securities in MPL Orders by eliminating the separate credits for adding
liquidity in Tapes B and C securities in MPL Orders.
    The proposed changes respond to the current competitive environment
where order flow providers have a choice of where to direct liquidity-
providing orders by offering further incentives for member
organizations to send additional liquidity to the Exchange.
    The Exchange proposes to implement the fee changes effective
September 3, 2019.
Competitive Environment
    The Commission has repeatedly expressed its preference for
competition over regulatory intervention in determining prices,
products, and services in the securities markets. In Regulation NMS,
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 broader forms that are most
important to investors and listed companies.'' \5\
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    \5\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
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    As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\6\ Indeed, equity trading is currently dispersed across 13
exchanges,\7\ 31 alternative trading systems,\8\ and numerous broker-
dealer internalizers and wholesalers, all competing for order flow.
Based on publicly-available information, no single exchange has more
than 18% market share (whether including or excluding auction
volume).\9\ Therefore, no exchange possesses significant pricing power
in the execution of equity order flow. More specifically, the
Exchange's market share of intraday trading (i.e., excluding auctions)
in Tape A, B and C combined declined from 9.9% in March 2019 to 9.1% in
July 2019.\10\
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    \6\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
    \7\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \8\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
    \9\ See Cboe Global Markets U.S. Equities Market Volume Summary,
available at http://markets.cboe.com/us/equities/market_share/.
    \10\ See id.
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    The Exchange believes that the ever-shifting market share among the
exchanges from month to month demonstrates that market participants can
move order flow, or discontinue or reduce use of certain categories of
products, in response to fee changes. With respect to non-marketable
order flow that would provide displayed liquidity on an Exchange,
member organizations can choose from any one of the 13 currently
operating registered exchanges to route such order flow. Accordingly,
competitive forces constrain exchange transaction fees that relate to
orders that would provide liquidity on an exchange.
Proposed Rule Change
    To respond to this competitive environment, the Exchange has
established incentives for its member organizations who submit MPL
Orders that provide liquidity on the Exchange, including cross-tape
incentives for member organizations based on submission of orders that
provide displayed and non-displayed liquidity in Tapes B and C
securities.
    For Tape A securities at or above $1.00, the Exchange currently
offers a base rate for MPL Orders that provide liquidity to the
Exchange, excluding MPL Orders from DMMs, and two related MPL tiers for
member organizations that have a minimum amount of Adding ADV of NYSE
CADV in MPL orders. The MPL credits are $0.0010 (base rate), $0.00250
(first Adding ADV tier) and $0.00275 (second tier). Member
organizations that do not meet the Adding ADV thresholds in the two
existing tiers would receive the base rate credit.
    The proposed fee change is designed to attract additional MPL Order
flow to the Exchange by aggregating rates and requirements for MPL
Orders across Tapes A, B and C securities, introducing a new tier rate
for MPL Orders that provide liquidity to the Exchange, and lowering the
Adding ADV requirements for the two existing tiers that would apply
across all three tapes rather than solely Tape A, as described below.

MPL Orders
    An MPL Order is defined in Rule 7.31 as a Limit Order that is not
displayed and does not route, with a working price at the midpoint of
the PBBO.\11\
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    \11\ See Rule 7.31(d)(3). Limit Order is defined in Rule
7.31(a)(2).
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MPL Orders That Provide Liquidity
    Currently, for securities at or above $1.00 in Tape A securities,
the Exchange provides a credit of $0.00100 \12\ for all MPL Orders
(other than MPL Orders from DMMs) that add liquidity to the NYSE,
unless one of the higher credits set forth in two tiers that follow in
the Price List apply.
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    \12\ For the sake of consistency, the Exchange proposes to
delete the extra zero in the current Price List.
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    The Exchange proposes to retain this base rate credit but extend
its applicability to all MPL Orders in Tapes A, B and C securities,
other than MPL Orders from DMMs.
    The Exchange further proposes to introduce a new, higher fee of
$0.0020 per share for member organizations that have an Adding ADV in
MPL Orders that is at least 0.0075% of Tapes A, B and C CADV combined,
excluding any liquidity added by DMMs. The proposed tier would be
inserted between the base rate and the two existing tiers, discussed
below.
    For example, in a month where US CADV is 6.1 billion shares, a
member organization has an Adding ADV in MPL Orders that add liquidity
of 500,000 shares in Tapes A, B and C securities. That member
organization's Adding ADV as a percentage of US CADV would accordingly
be 0.0081%, which would qualify for the proposed MPL Adding Tier 3
credit of $0.0020 per share. Prior to proposed change, such a member
organization would have received the non-tier credit of $0.0012 per
share.
    Further, currently a member organization that has Adding ADV in MPL
Orders that is at least 0.030% of NYSE CADV, excluding any liquidity
added by a DMM, would be eligible for a $0.00250 credit.
    The Exchange proposes to retain this credit and revise the
qualifying requirement to having an Adding ADV in MPL Orders that is at
least 0.015% of Tapes A, B and C CADV combined, once again excluding
any liquidity added by a DMM.
    Similarly, under the other current tier, a member organization that
has Adding ADV in MPL Orders that is at least 0.140% of NYSE CADV,
excluding any liquidity added by a DMM, would be eligible for a
$0.00275 credit.
    The Exchange proposes to retain this credit as well and revise the
requirement for qualifying to having an Adding ADV in MPL Orders that
is at least 0.075% of Tapes A, B and C CADV combined, excluding any
liquidity added by a DMM.
    The Exchange notes that the reduction in the percentage of CADV
levels for MPL Adding Tiers 1 and 2 are in line with the Tape A
percentage of all US CADV insofar as the proposed requirement utilizes
a denominator (US CADV) that is almost double the previous denominator
limited to Tape A securities. In July 2019, Tape A CADV was 3.141
billion shares, 51.2% of total US CADV, which was 6.127 billion shares.
MPL Orders That Provide Liquidity in Tapes B and C Securities
    Currently, for securities priced at or above $1.00, the Exchange
offers a credit of $0.0010 per share for executions in each of Tape B
and C securities for MPL Orders that provide liquidity to the Exchange,
unless a specific credit applies.
    Under the Adding Tier 1, the Exchange offers a per tape credit of
$0.0025 per share for an MPL Order on a per tape basis for transactions
in stocks with a per share price of $1.00 or more when adding liquidity
to the Exchange if the member organization has at least 0.10% of Adding
CADV in Tape B or C. For purposes of qualifying for this tier, the
0.10% of Adding CADV could include shares of both an SLP-Prop and an
SLMM \13\ of the same or an affiliated member organization.
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    \13\ Under Rule 107B, a Supplemental Liquidity Provider
(``SLP'') can be either a proprietary trading unit of a member
organization (``SLP-Prop'') or a registered market maker at the
Exchange (``SLMM''). For purposes of the 10% average or more quoting
requirement in assigned securities pursuant to Rule 107B, quotes of
an SLP-Prop and an SLMM of the same member organization are not
aggregated. However, for purposes of adding liquidity for assigned
SLP securities in the aggregate, shares of both an SLP-Prop and an
SLMM of the same member organization are included.
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    The Exchange proposes to delete the reference to the $0.0010 credit
per share for executions in each of Tape B and C securities for MPL
Orders and refer to the portion of the Price List following the
``Executions at the Close Equity Per Share Charge'' section that would
set forth the proposed aggregation of rates for MPL Orders across tapes
described above.
    Similarly, the Exchange proposes to delete the reference to the per
tape credit of $0.0025 per share for an MPL Order on a per tape basis
in Adding Tier 1.
Application and Impact of Transition Period Pricing
    The purpose of these proposed changes are to incentivize member
organizations to trade on the Exchange in MPL Orders in Tapes A, B and
C securities. The proposed new tier for member organizations with
Adding ADV in MPL Orders that is at least 0.0075% of Tapes A, B and C
CADV combined would incentivize member organizations with lower trading
volumes who qualified for the lower base rate the opportunity to
qualify for a higher credit of $0.0020, thereby increasing the number
of orders adding liquidity that are executed on the Exchange and
improving overall liquidity on a public exchange. In addition, the new
proposed tier would encourage member organizations with lower trading
volumes to increase mid-point liquidity, thereby improving overall
market quality and offering price improvement.
    The proposed changes to the two existing MPL tiers to lower the
Adding ADV requirement while expanding it to all three tapes would
increase liquidity-providing MPL Orders in Tapes A, B and C securities,
which would support the quality of price discovery on the Exchange and
provide additional price improvement opportunities for incoming orders.
The Exchange believes that by correlating the amount of credits to the
level of MPL Orders sent by a member organization that add liquidity,
the Exchange's fee structure would incentivize member organizations to
submit more MPL Orders that add liquidity to the Exchange, thereby
increasing the potential for price improvement and execution
opportunities to incoming marketable orders submitted to the Exchange.
    As noted above, the Exchange operates in a competitive and
fragmented market environment, particularly as it relates to attracting
non-marketable orders, which add liquidity to the Exchange. Without
having a view of a member organization's activity on other markets and
off-exchange venues, the Exchange believes the proposed new MPL tier
with a higher rate and lowered amount of Adding ADV requirement spread
across three tapes would provide an incentive for member organizations
to add additional MPL liquidity to the Exchange. Currently, 8 firms
(out of a total 146 member firms) can qualify for the MPL tiers. Based
on the profile of liquidity-adding firms generally, the Exchange
believes that at least 5 additional member organizations could qualify
for the new tiered rate under if

they choose to direct order flow to, and increase quoting on, the
Exchange.
    The proposed changes are not otherwise intended to address other
issues, and the Exchange is not aware of any significant problems that
market participants would have in complying with the proposed changes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\14\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\15\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
    As discussed above, the Exchange operates in a highly fragmented
and competitive market. The Exchange believes that the ever-shifting
market share among the exchanges from month to month demonstrates that
market participants can move order flow, or discontinue or reduce use
of certain categories of products, in response to fee changes. With
respect to non-marketable orders that provide liquidity on an Exchange,
member organizations can choose from any one of the 13 currently
operating registered exchanges to route such order flow. Accordingly,
competitive forces constrain exchange transaction fees that relate to
orders that would provide displayed liquidity on an exchange. Stated
otherwise, changes to exchange transaction fees can have a direct
effect on the ability of an exchange to compete for order flow.
    Given this competitive environment, the proposal represents a
reasonable attempt to attract additional order flow to the Exchange. As
noted, the Exchange's market share of intraday trading (i.e., excluding
auctions) in Tape A, B and C combined declined between March and July
2019.
    Specifically, the Exchange believes that aggregating rates and
requirements across tapes for MPL Orders that provide liquidity to the
Exchange is reasonable because it would streamline the Exchange's Price
List in a manner consistent with the practice on other exchanges where
adding rates are consistent across tapes for the same order types.\16\
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    \16\ For instance, the requirements for the Exchange's affiliate
NYSE National, Inc.'s Adding Tiers 1, 2, and 3 utilize Adding ADV as
a percentage of US CADV, and offer the same credits for adding
displayed liquidity across Tapes A, B and C securities within the
same tier. See https://www.nyse.com/publicdocs/nyse/regulation/nyse/NYSE_National_Schedule_of_Fees.pdf.
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    Further, the Exchange believes the proposed new tier for member
organizations with Adding ADV in MPL orders that is at least 0.0075% of
Tapes A, B and C CADV combined is reasonable because it would
incentivize member organizations with lower trading volumes who receive
the lower base rate if they do not qualify for the MPL adding tiers the
opportunity to qualify for a higher credit of $0.0020, thereby
increasing the number of orders adding liquidity that are executed on
the Exchange and improving overall liquidity on a public exchange. In
addition, the new proposed tier would encourage member organizations
with lower trading volumes to increase mid-point liquidity, thereby
improving overall market quality and offering price improvement.
    Without having a view of a member organization's activity on other
markets and off-exchange venues, the Exchange believes the proposed new
MPL tier with a higher rate and lowered amount of Adding ADV spread
across three tapes would provide an incentive for member organizations
to add additional liquidity from the Exchange in Tape B and C
securities. As previously noted, a number of firms can qualify for the
MPL tiers and additional member organizations could qualify for the new
tiered rate under the proposed criteria if they choose to direct order
flow to, and increase offering the opportunity for price improvement to
incoming orders on, the Exchange.
    Finally, the Exchange believes that the proposed changes to the two
existing MPL tiers to lower the Adding ADV requirement while expanding
it to all three tapes is reasonable because it would increase
liquidity-providing MPL orders in Tapes A, B and C securities, which
would support the quality of price discovery on the Exchange and
provide additional price improvement opportunities for incoming orders.
The Exchange believes that by correlating the amount of credits to the
level of MPL orders sent by a member organization that add liquidity,
the Exchange's fee structure would incentivize member organizations to
submit more MPL orders that add liquidity to the Exchange, thereby
increasing the potential for price improvement and execution
opportunities to incoming marketable orders submitted to the Exchange.
    The Exchange notes that the existing credits for the MPL orders in
Tape A securities remain unchanged and the credits in Tape B and C
securities are in line with the credits the Exchange currently credits
member organizations for adding MPL orders in Tape A securities.
    Finally, the Exchange also believes the proposed non-substantive
changes are reasonable and would not be inconsistent with the public
interest and the protection of investors because investors will not be
harmed and in fact would benefit from increased clarity and
transparency on the Price List, thereby reducing potential confusion.
The Proposal is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees
among its market participants by fostering liquidity provision and
stability in the marketplace. The Exchange believes that, for the
reasons discussed above, the proposed aggregation of rates and
requirements across tapes for MPL Orders would incentivize member
organizations with lower trading volumes who qualified for the lower
base rate the opportunity to qualify for a higher credit of $0.0020,
thereby increasing the number of orders adding liquidity that are
executed on the Exchange and improving overall liquidity on a public
exchange. In addition, the new proposed tier would encourage member
organizations with lower trading volumes to increase mid-point
liquidity, thereby providing customers with a higher quality venue for
price discovery, liquidity, competitive quotes and price improvement.
The proposed change will thereby encourage the submission of additional
liquidity to a national securities exchange, thus promoting price
discovery and transparency and enhancing order execution opportunities
for member organizations from the substantial amounts of liquidity
present on the Exchange. All member organizations would benefit from
the greater amounts of liquidity that will be present on the Exchange,
which would provide greater execution opportunities.
    The Exchange also believes that the proposed new tier for member
organizations with Adding ADV in MPL Orders that is at least 0.0075% of
Tapes A, B and C CADV combined would encourage member organizations
with lower trading volumes who qualified for the lower base rate the
opportunity to qualify for a higher credit of $0.0020, thereby
increasing the number of orders adding liquidity that are executed on

the Exchange and improving overall liquidity on a public exchange. In
addition, the new proposed tier would encourage member organizations
with lower trading volumes to increase mid-point liquidity, thereby
improving overall market quality and offering price improvement. As
previously noted, a number of member organizations are qualifying for
the MPL tiers. Based on the profile of liquidity-adding firms
generally, the Exchange believes additional member organizations could
qualify for the new tiered rate under the proposed criteria if they
choose to direct order flow to, and increase quoting on, the Exchange.
The proposed rate and lower Adding ADV requirement across all three
tapes is also equitable because it would apply equally to all existing
member organizations that add liquidity to the Exchange in MPL Orders.
    Further, the Exchange believes that proposed changes to the two
existing MPL tiers to lower the Adding ADV requirement while expanding
it to all three tapes would increase liquidity-providing MPL Orders in
Tapes A, B and C securities, would support the quality of price
discovery on the Exchange and provide additional price improvement
opportunities for incoming orders, to benefit of all member
organizations. The Exchange believes that the proposal would provide an
equal incentive to all member organizations to send additional MPL
Orders to the Exchange, and that the proposal constitutes an equitable
allocation of fees because all similarly situated member organizations
would be eligible for the same rebates.
The Proposal is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, member
organizations are free to disfavor the Exchange's pricing if they
believe that alternatives offer them better value.
    The proposal does not permit unfair discrimination because the
existing MPL rates as well as the rate for the proposed new tier would
be applied to all similarly situated member organizations and other
market participants, who would all be eligible for the same credit on
an equal basis. Accordingly, no member organization already operating
on the Exchange would be disadvantaged by this allocation of fees.
    The Exchange believes it is not unfairly discriminatory to provide
a higher fee for member organizations under the proposed tier because
the tier would be provided on an equal basis to all member
organizations. Further, the Exchange believes the proposed lower Adding
ADV requirements for the two existing tiers while expanding it to all
three tapes would increase liquidity-providing MPL Orders in Tapes A, B
and C securities, would provide an equal incentive to all member
organizations to send additional MPL Orders to the Exchange, and that
the proposal constitutes an equitable allocation of fees because all
similarly situated member organizations would be eligible for the same
rebates.
    The Exchange also believes that the proposed change is not unfairly
discriminatory because it is reasonably related to the value to the
Exchange's market quality associated with higher volume. Finally, the
submission of orders to the Exchange is optional for member
organizations in that they could choose whether to submit orders to the
Exchange and, if they do, the extent of its activity in this regard.
    Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\17\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed changes would encourage the submission of additional
liquidity to a public exchange, thereby promoting market depth, price
discovery and transparency and enhancing order execution opportunities
for member organizations. As a result, the Exchange believes that the
proposed change furthers the Commission's goal in adopting Regulation
NMS of fostering integrated competition among orders, which promotes
``more efficient pricing of individual stocks for all types of orders,
large and small.'' \18\
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    \17\ 15 U.S.C. 78f(b)(8).
    \18\ Regulation NMS, 70 FR at 37498-99.
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    Intramarket Competition. The proposed changes are designed to
attract additional order flow to the Exchange. The Exchange believes
that the proposed changes would continue to incentivize market
participants to direct order flow to the Exchange. Greater liquidity
benefits all market participants on the Exchange by providing more
trading opportunities and encourages member organizations to send
orders, thereby contributing to robust levels of liquidity, which
benefits all market participants on the Exchange. The proposed credits
would be available to all similarly-situated market participants, and,
as such, the proposed change would not impose a disparate burden on
competition among market participants on the Exchange.
    Intermarket Competition. The Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. As noted,
the Exchange's market share of intraday trading in Tape B and C
securities (excluding auction volume) in Tape A, B and C combined
declined between March and July 2019. In such an environment, the
Exchange must continually adjust its fees and rebates to remain
competitive with other exchanges and with off-exchange venues. 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 does not believe its proposed fee change can
impose any burden on intermarket competition.
    The Exchange believes that the proposed change could promote
competition between the Exchange and other execution venues, including
those that currently offer similar order types and comparable
transaction pricing, by encouraging additional orders to be sent to the
Exchange for execution. The Exchange also believes that the proposed
change is designed to provide the public and investors with a Price
List that is clear and consistent, thereby reducing burdens on the
marketplace and facilitating investor protection.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \19\ of the Act and

subparagraph (f)(2) of Rule 19b-4 \20\ thereunder, because it
establishes a due, fee, or other charge imposed by the Exchange.
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(2).
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    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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \21\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \21\ 15 U.S.C. 78s(b)(2)(B).
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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<EMAIL_ADDRESS>Please include
File Number SR-NYSE-2019-50 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-NYSE-2019-50. 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-NYSE-2019-50 and should be submitted on
or before October 15, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Jill M. Petersen,
Assistant Secretary.
[FR Doc. 2019-20574 Filed 9-23-19; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 227 (Friday, November 25, 2011)]
[Notices]
[Pages 72729-72731]
[FR Doc No: 2011-30350]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29866; File No. 812-13929]

SEI Investments Management Corporation, et al.

November 18, 2011.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION:  Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from rule 12d1-2(a)
under the Act.

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SUMMARY: Summary of Application: Applicants request an order to permit
open-end management investment companies relying on rule 12d1-2 under
the Act to invest in certain financial instruments.

Applicants: SEI Investments Management Corporation (``SIMC''); SEI
Investments Distribution Co. (``SIDCo.''); SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Institutional International Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, SEI Alpha Strategy
Portfolios, LP (``SASP''), and Adviser Managed Trust (``AMT'') (each a
``Trust'' and collectively the ``Trusts'').

DATES: Filing Dates: The application was filed on July 27, 2011.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on December 13, 2011 and should be accompanied by proof of service
on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090; Applicants: Timothy D. Barto, Esq., SEI
Investments Management Corporation, One Freedom Valley Drive, Oaks, PA
19456.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel,
at<PHONE_NUMBER>, or Mary Kay Frech, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Office of Investment Company
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations

    1. Each Trust is registered under the Act as an open-end management
investment company and is organized as a Massachusetts business trust,
with the exception of AMT, which is organized as a Delaware statutory
trust, and SASP, which is organized as a Delaware limited partnership.
SIMC, a Delaware corporation, is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (``Advisers
Act''), and currently serves as investment adviser to each existing
Applicant Fund (as defined below). SIDCo., a Pennsylvania corporation,
is registered as a broker-dealer under the Securities Exchange Act of
1934 (the ``Exchange Act'') and serves as the distributor for the
existing Applicant Funds.
    2. Applicants request the exemption to the extent necessary to
permit any existing or future series of the Trusts and any other
existing or future registered open-end investment company or series
thereof that (a) is advised by SIMC or any person controlling,
controlled by or under common control with SIMC (any such adviser or
SIMC, an ``Adviser''); \1\ (b) invests in other registered open-end
investment companies (``Underlying Funds'') in reliance on section
12(d)(1)(G) of the Act; and (c) is also eligible to invest in
securities (as defined in section 2(a)(36) of the Act) in reliance on
rule 12d1-2 under the Act (each an ``Applicant Fund''), to also invest,
to the extent consistent with its investment objectives, policies,
strategies and limitations, in financial instruments that may not be
securities within the meaning of section 2(a)(36) of the Act (``Other
Investments'').\2\ Applicants also request that the order exempt any
entity controlling, controlled by or under common control with SIDCo.
that now or in the future acts as principal underwriter with respect to
the transactions described in the application.
---------------------------------------------------------------------------

    \1\ Any other Adviser also will be registered under the Advisers
Act.
    \2\ Every existing entity that currently intends to rely on the
requested order is named as an applicant. Any existing or future
entity that relies on the order in the future will do so only in
accordance with the terms and conditions in the application.
---------------------------------------------------------------------------

    3. Consistent with its fiduciary obligations under the Act, each
Applicant Fund's board of trustees or directors will review the
advisory fees charged by the Applicant Fund's Adviser to ensure that
they are based on services provided that are in addition to, rather
than duplicative of, services provided pursuant to the advisory
agreement of any investment company in which the Applicant Fund may
invest.

Applicants' Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered
investment company (``acquiring company'') may acquire securities of
another investment company (``acquired company'') if such securities
represent more than 3% of the acquired company's outstanding voting
stock or more than 5% of the acquiring company's total assets, or if
such securities, together with the securities of other investment
companies, represent more than 10% of the acquiring company's total
assets. Section 12(d)(1)(B) of the Act provides that no registered
open-end investment company may sell its securities to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock, or cause more than
10% of the acquired company's voting stock to be owned by investment
companies and companies controlled by them.
    2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1)
will not apply to securities of an acquired company purchased by an
acquiring company if: (a) The acquired company and acquiring company
are part of the same group of investment companies; (b) the acquiring
company holds only securities of acquired companies that are part of
the same group of investment companies, government securities, and
short-term paper; (c) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not
excessive under rules adopted pursuant to section 22(b) or section
22(c) of the Act by a securities association registered under section
15A of the Exchange Act or by the Commission; and (d) the acquired
company has a policy that prohibits it from acquiring securities of
registered open-end investment companies or registered unit investment
trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
    3. Rule 12d1-2 under the Act permits a registered open-end
investment company or a registered unit investment trust that relies on
section 12(d)(1)(G) of the Act to acquire, in addition to securities
issued by another registered investment company in the same group of
investment companies, government securities, and short-term paper: (a)
Securities issued by an investment company that is not in the same
group of investment companies, when the acquisition is in reliance on
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (b) securities (other
than securities issued by an investment company); and (c) securities
issued by a money market fund, when the acquisition is in reliance on
rule 12d1-1 under the Act. For the purposes of rule 12d1-2,
``securities'' means any security as defined in section 2(a)(36) of the
Act.
    4. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction from any provision of the Act, or
from any rule under the Act, if such exemption is necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policy and
provisions of the Act.
    5. Applicants state that the Applicant Funds will comply with rule
12d1-2 under the Act, but for the fact that the Applicant Funds may
invest a portion of their assets in Other Investments. Applicants
request an order under section 6(c) of the Act for an exemption from
rule 12d1-2(a) to allow the Applicant Funds to invest in Other
Investments while investing in Underlying Funds. Applicants assert that
permitting the Applicant Funds to invest in Other Investments as
described in the application would not raise any of the concerns that
the requirements of section 12(d)(1) were designed to address.

Applicants' Condition

    Applicants agree that any order granting the requested relief will
be subject to the following condition:
    Applicants will comply with all provisions of rule 12d1-2 under the
Act, except for paragraph (a)(2) to the extent

that it restricts any Applicant Fund from investing in Other
Investments as described in the application.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30350 Filed 11-23-11; 8:45 am]
BILLING CODE 8011-01-P


Rethinking the NFIP:  Strawman Policy Options
Community-Based Insurance Policy Options
Description of Policy Theme:
--------------------------------------------------------------------------------
Who pays the cost for development at the beach?
--------------------------------------------------------------------------------
Establishing a direct link between the land use and construction decisions of a community and the full cost of flood would require communities to balance development decisions with the potential for increased risk, and the cost of that risk.
--------------------------------------------------------------------------------
This policy option seeks to broaden the participation of various entities in weighing the economic benefits and costs of floodplain development.  The current National Flood Insurance Program (NFIP) structure disperses roles and responsibilities among a variety of actors, and municipal land-use decisions do not account for the full cost of flood.  Coupling of private construction decisions and the cost of insurance exists to a limited degree, but inherent program subsidies and industry practices constrain the effectiveness of this link.
Strawman Policy Options:
   * Municipal-level Insurance Model:  The Federal Government would identify flood risk, provide guidance to manage that risk, and offer insurance against flooding across a municipality.
   * Cap and Trade Model:  The Federal Government would identify the flood risk and loss caps per State, and provide flood disaster aid to States that comply with Federal flood risk caps.  States manage their flood risk individually.
   * Watershed-based Insurance Model:  Every property is actuarially rated across the watershed and all communities within the watershed receive an annual insurance bill reflecting their shared risk.
   * State-based Regulatory Insurance Model:  States would design their own flood programs. The design could be left entirely to the State, with the Federal Government only setting minimum standards for benefits paid to property owners after a loss, or the Federal Government dictating one or more frameworks for delivery.


[Federal Register Volume 80, Number 44 (Friday, March 6, 2015)]
[Notices]
[Pages 12162-12163]
[FR Doc No: 2015-05251]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 12635-002]

Moriah Hydro Corporation; Notice of Application Tendered for
Filing With the Commission and Soliciting Additional Study Requests

February 27, 2015.
    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection.
    a. Type of Application: Original Major License.
    b. Project No.: 12635-002.
    c. Date filed: February 13, 2015 .
    d. Applicant: Moriah Hydro Corporation.
    e. Name of Project: Mineville Energy Storage Project.
    f. Location: The project would be located in an abandoned
subterranean mine complex \1\ in the town of Moriah, Essex County, New
York. No federal lands are occupied by project works or located within
the project boundary.
---------------------------------------------------------------------------

    \1\ The existing mine complex is composed of the interconnected
Old Bed, Bonanza open pit, and Harmony mines.
---------------------------------------------------------------------------

    g. Filed Pursuant to: Federal Power Act 16 U.S.C. 791(a)-825(r).
    h. Applicant Contact: James A. Besha, P.E., President, Moriah Hydro
Corporation, 5 Washington Square, Albany, NY 12205; or at (518) 456-
7712.
    i. FERC Contact: John Mudre,<PHONE_NUMBER> or<EMAIL_ADDRESS>    j. Cooperating agencies: Federal, state, local, and tribal agencies
with jurisdiction and/or special expertise with respect to
environmental issues that wish to cooperate in the preparation of the
environmental document should follow the instructions for filing such
requests described in item l below. Cooperating agencies should note
the Commission's policy that agencies that cooperate in the preparation
of the environmental document cannot also intervene. See, 94 FERC ]
61,076 (2001).
    k. Pursuant to section 4.32(b)(7) of 18 CFR of the Commission's
regulations, if any resource agency, Indian Tribe, or person believes
that an additional scientific study should be conducted in order to
form an adequate factual basis for a complete analysis of the
application on its merit, the resource agency, Indian Tribe, or person
must file a request for a study with the Commission not later than 60
days from the date of filing of the application, and serve a copy of
the request on the applicant.
    l. Deadline for filing additional study requests and requests for
cooperating agency status: April 14, 2015.
    The Commission strongly encourages electronic filing. Please file
additional study requests and requests for cooperating agency status
using the Commission's eFiling system at http://www.ferc.gov/docs-filing/efiling.asp. For assistance, please contact FERC Online Support
at<EMAIL_ADDRESS>(866) 208-3676 (toll free), or (202)
502-8659 (TTY). In lieu of electronic filing, please send a paper copy
to: Secretary, Federal Energy Regulatory Commission, 888 First Street
NE., Washington, DC 20426. The first page of any filing should include
docket number P-12635-002.
    m. The application is not ready for environmental analysis at this
time.
    n. The proposed project consists of: (1) An upper reservoir located
within the upper portion of the mine between elevations 495 and 1,095
feet above mean sea level (msl), with a surface area of 4 acres and a
storage capacity of 2,448 acre-feet; (2) a lower reservoir in the lower
portion of the mine between elevations -1,075 and -1,555 feet msl, with
a surface area of 5.1 acres and a storage capacity of 2,448 acre-feet;
(3) a 14-foot-diameter and 2,955-foot-long upper reservoir shaft
connecting the upper reservoir to the high-pressure penstock located
below the powerhouse chamber floor; (4) a 14-foot-diameter and 2,955-
foot-long lower reservoir shaft connecting the lower reservoir and the
lower reservoir ventilation tunnel; (5) two 6-foot-diameter emergency
evacuation shafts located between the powerhouse chamber and the
electrical equipment chamber; (6) a 25-foot-diameter main shaft
extending 2,955 feet from the surface down to the powerhouse chamber;
(7) 15-foot-diameter high- and low-pressure steel penstocks embedded
beneath the powerhouse chamber floor; (8) a 320-foot-long by 80-foot-
wide powerhouse chamber, containing 100 reversible pump-turbine units,
each with a nameplate generating capacity of 2.4 megawatts; (9) a 274-
foot-long by 36-foot-wide underground electrical equipment chamber
adjacent to the powerhouse chamber; (10) an inclined electrical tunnel
connecting the electrical equipment chamber to a new 115-kilovolt (kV)
substation constructed adjacent to an existing single circuit 115-kV
transmission line located about one horizontal mile from the
underground powerhouse chamber; and (11) appurtenant facilities. The
project would operate as a closed-loop system to meet energy demands
and grid control requirements. The project would

have an average annual generation of 421 gigawatt-hours (GWh). The
average pumping power used by the project would be 554 GWh.
    o. A copy of the application is available for review at the
Commission in the Public Reference Room or may be viewed on the
Commission's Web site at http://www.ferc.gov using the ``eLibrary''
link. Enter the docket number excluding the last three digits in the
docket number field to access the document. For assistance, contact
FERC Online Support. A copy is also available for inspection and
reproduction at the address in item h above.
    You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to this or other pending projects. For assistance, contact FERC
Online Support.
    p. Procedural schedule: The application will be processed according
to the following preliminary Hydro Licensing Schedule. Revisions to the
schedule will be made as appropriate.

Issue Notice of Acceptance or Deficiency April 2015
Request Additional Information April 2015
Issue Acceptance Letter July 2015
Issue Scoping Document 1 for comments August 2015
Comments on Scoping Document 1 September 2015
Issue Scoping Document 2 October 2015
Issue notice of ready for environmental analysis October 2015
Commission issues EA, draft EA, or draft EIS April 2016
Comments on EA, draft EA, or draft EIS June 2016
Commission issues final EA or final EIS August 2016

Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2015-05251 Filed 3-5-15; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 81, Number 80 (Tuesday, April 26, 2016)]
[Notices]
[Pages 24681-24684]
[FR Doc No: 2016-09598]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77662; File No. SR-NASDAQ-2016-051]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Nasdaq Rule 7014

April 20, 2016.
    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 April 4, 2016, 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 Substance
of the Proposed Rule Change

    Nasdaq is proposing changes to amend Nasdaq Rule 7014 to remove the
Investor Support Program (``ISP''), to add the Small Cap Incentive
Program (``SCIP''), and to amend both the Qualified Market Maker
(``QMM'') Program and the National Best Bid or Offer (``NBBO'')
Program.
    The changes are being filed for immediate effectiveness and will
become operative April 1, 2016.
    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 purpose of the proposed rule change is to amend Nasdaq Rule
7014 by removing the ISP, adding the SCIP, as well as amending both the
QMM Program and the NBBO Program.
ISP
    The Exchange proposes to eliminate the ISP from Nasdaq Rule
7014(a). The purpose of the ISP was to enable Nasdaq members to earn a
monthly ISP credit for providing additional liquidity to Nasdaq and
increasing the Nasdaq-traded volume of what are generally considered to
be retail and institutional investor orders in exchange-traded
securities (``targeted liquidity''). However, the Exchange has
determined that the ISP no longer serves its intended purpose and that
members are availing themselves of other programs. Specifically,
changes to the QMM Program have in many circumstances made the ISP
rebates obsolete.
    The Exchange also proposes to amend Nasdaq Rule 7014 to remove ISP
references throughout the rule.
SCIP
    The Exchange proposes to add the SCIP as Nasdaq Rule 7014(a). The
SCIP will be for Nasdaq market markers (``Nasdaq Market Makers'') \3\
registered in Nasdaq-listed companies with a market capitalization
(``cap'') of less than $100 million. The Exchange will update the
Nasdaq-listed company symbols list \4\ every six months via an Equity
Trader Alert. The initial list is being created using data culled from
the end of January 2016. However, the Exchange may remove symbols for
companies that are delisted, halted for an extended period of time or
for other listing-related matters at any time.
---------------------------------------------------------------------------

    \3\ See Nasdaq Rule 4612.
    \4\ See http://www.nasdaqtrader.com/Trader.aspx?id=SCIPPilot.
---------------------------------------------------------------------------

    Nasdaq Market Makers registered in a SCIP symbol will receive an
additional displayed liquidity rebate of $0.0005 per share executed for
executions at or above $1.00 (``SCIP Rebate'') if their percent of time
at the NBBO is above 50% for the month (``NBBO Test''). The SCIP Rebate
will be in addition to all other applicable displayed rebates.
    For shares executed below $1.00, Nasdaq Market Makers will be
subject to the following rates: (i) The rebate to add liquidity will be
0.10% (10 basis points) of the total dollar volume; and (ii) the fee to
remove liquidity will be 0.25% (25 basis points) of the total dollar
volume.
    There will be no fee for quotes and orders executed in the Nasdaq
Opening or Closing Cross (collectively, the ``Nasdaq Crosses''), or any
other cross (e.g., trading halt, limit up-limit down) for Nasdaq Market
Makers that meet the NBBO Test in SCIP symbols. Market-on-close and
limit-on-close orders executed in the Nasdaq Closing Cross and market-
on-open, limit-on-open, good-till-cancelled, and immediate-or-cancel
orders executed in the Nasdaq Opening Cross are not eligible for the
SCIP Rebate. These orders are considered ``passive'' orders in the
Nasdaq Crosses or orders that are swept into the Nasdaq Crosses. All
other orders are orders specifically designated to become active or
execute in the cross and will receive the SCIP Rebate if they otherwise
so qualify.
Impact of SCIP on the Tick Pilot
    The SCIP will take effect on April 1, just prior to the April 4
effectiveness of the data collection phase of the Tick Pilot.\5\ Nasdaq
believes that the SCIP is fully consistent with both the effective
operation and the important policy objectives of the Tick Pilot. Nasdaq
actively supports the SEC's goal of studying the impact of nickel
trading increments on the trading of small capitalization securities,
including those that will benefit from the SCIP proposed here.
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    \5\ On May 6, 2015, the Commission issued an order approving a
Plan to Implement a Tick Size Pilot Program (``Plan''), as modified
by the Commission, to be implemented within one year after the date
of publication of the order for a two-year Pilot Period (the ``Tick
Pilot''). See Securities Exchange Act Release No. 74892 (May 6,
2015), 80 FR 27513 (May 13, 2015). The start of the data collection
is determined by the terms of the Plan.
---------------------------------------------------------------------------

    The SCIP will not disrupt researchers' ability to study the impact
of nickel trading on small capitalization stocks. There are well-
established statistical techniques that allow researchers to control
for changes in conditions unrelated to the variable of interest, i.e.,
changes in trading conditions unrelated to nickel trading increments.
Statisticians use control variables and modeling techniques to control
particularities and idiosyncrasies that are inherent to all observed
data that stem from conditions exogenous to the variable of interest
(nickel increments).
    Apart from the SCIP, researchers will be required to control for
macro events such as changes in interest rates, the imposition of a
financial transaction tax, or a decrease in the taxation rate of
capital gains. Researchers will also use

these techniques to contend with changes in market conditions like high
volatility and increased trading volumes driven by unpredictable
isolated events or continuing conditions. Changes in Exchange pricing
programs are no different from the changed conditions that economists
normally expect to encounter in any study period, and future Tick Pilot
researchers can deal with them effectively.
    In fact, the Tick Pilot study might be negatively impacted by
attempts to hold trading conditions constant throughout the data
collection phase. If the goal of the study is to understand the effect
of nickel increments, it is important that the pilot occur under real
world conditions. Holding prices constant would actually create
artificial conditions rather than real world ones. Researchers will be
required to take into account a wide variety of changes, price changes
are no different. Conversely, maintaining artificial conditions
throughout the study period would skew later research results,
rendering them inapposite for application to the real world conditions
that will be restored after the study period ends. Finally, Nasdaq
notes that the impact of the SCIP should also be negligible because it
is going in before the start of the Tick Pilot data collection period,
so it will have no statistical impact.
QMM Program
    Currently, under the QMM Program for a member to be designated as a
QMM it must quote at the NBBO at least 25% of the time during regular
market hours in an average of at least 1,000 securities per day during
the month on a single market participant identifier (``MPID''). The
Exchange proposes to modify this requirement to allow for the
aggregation of all of a member's MPIDs to determine the number of
securities for purposes of the 25% NBBO requirement.
    Specifically, a firm currently must on a single MPID quote 1,000
distinct securities. The Exchange is proposing to allow each MPID a
firm uses to count towards the 1,000 securities requirement. For
example, if a member has four MPIDs and each MPID quotes in a single
security at the NBBO for 30% of the time during regular market hours
this will count as four of the required 1,000 securities. However, if a
member has two MPIDs and one MPID quotes in a security at the NBBO for
15% of the time during regular market hours and the other MPID quotes
in the same security for 20% of the time during regular market hours,
that member would not be considered to have met the 25% NBBO
requirement and neither security would count towards the 1,000
securities requirement.\6\
---------------------------------------------------------------------------

    \6\ Aggregation of MPIDs is used frequently by Nasdaq and other
exchanges to assess whether a firm has, in its entirety, satisfied a
volume-based threshold. See Nasdaq Rule 7018(a) and (d)(2); see also
Preface to Phlx Pricing Schedule (Common Ownership Aggregation).
---------------------------------------------------------------------------

NBBO Program
    The Exchange proposes to increase the NBBO Program credit in Nasdaq
Rule 7014(g) from the $0.0002 to $0.0004 per share executed. This
credit applies to New York Stock Exchange LLC (``NYSE'')--listed
securities and in securities listed on exchanges other than Nasdaq and
NYSE.
Definitions and Certifications
    The Exchange also proposes to remove most of the definitions
included under Nasdaq Rule 7014(h) and the Nasdaq Rule 7014(i)
certification \7\ because they are no longer applicable.
---------------------------------------------------------------------------

    \7\ Specifically, Nasdaq proposes to delete the definitions in
Nasdaq Rule 7014(h)(1)-(4), 7014(h)(6), and 7014(h)(8), as well as
the certification in Nasdaq Rule 7014(i).
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\8\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act, \9\ 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 its facilities which
the Exchange operates or controls, and is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 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 broader forms that are most
important to investors and listed companies.'' \10\
---------------------------------------------------------------------------

    \10\ Securities Exchange Act Release No. 34-51808 (June 9, 2005)
(``Regulation NMS Adopting Release'').
---------------------------------------------------------------------------

    Likewise, in NetCoalition v. Securities and Exchange Commission
\11\ (``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.\12\ 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.'' \13\
---------------------------------------------------------------------------

    \11\ NetCoalition v. SEC 615 F.3d 525 (D.C. Cir. 2010).
    \12\ Id. at 534-535.
    \13\ 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'. . . .'' \14\
---------------------------------------------------------------------------

    \14\ Id. at 539 (quoting ArcaBook Order, 73 FR at 74782-74783).
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ISP
    The Exchange believes that the proposed rule change to eliminate
the ISP is reasonable because Nasdaq has determined that this program,
which was intended to enable Nasdaq members to earn a monthly fee
credit for providing targeted liquidity, no longer serves its intended
purpose and that members can instead avail themselves of other
potentially higher rebates such as those available in connection with
the QMM Program.
    The Exchange also believes that the elimination of the ISP is
equitable and not unfairly discriminatory because its elimination will
apply uniformly and it will no longer be available for any market
participants. Furthermore, no members currently receive credits under
the ISP so no members will be impacted by its elimination.
    Also, the Exchange believes that eliminating references to the ISP
throughout Nasdaq Rule 7014 is reasonable because it will lessen market
participant confusion regarding the elimination of the ISP.
SCIP
    The SCIP is intended to encourage Nasdaq Market Makers to improve
market quality for Nasdaq-listed companies with market caps of under
$100 million. Nasdaq believes that this program will benefit market
participants and the market quality of the individual securities in the
program.
    The proposed rule change is to add the SCIP as Nasdaq Rule 7014(a).

Specifically, the SCIP will provide for an additional $0.0005 per share
executed credit if a Nasdaq Market Maker satisfies the NBBO Test (as
described previously). The SCIP Rebate will be in addition to all other
applicable displayed rebates. Nasdaq believes that this credit is
reasonable because the SCIP Rebate is material enough to incentivize
market maker behavior to improve the markets in these securities. The
Exchange also believes that the proposed credit is reasonable because
it will serve as an effective incentive to Nasdaq Market Makers to
provide more liquidity and align the program with improving the NBBO.
Increasing such liquidity is reflective of the Exchange's desire to
improve liquidity in Nasdaq small cap stocks.
    The Exchange believes that the above proposed rule change is
equitable and not unfairly discriminatory because the SCIP will apply
uniformly to all similarly situated members. Nasdaq Market Members that
elect to satisfy the NBBO Test will receive the SCIP Rebate. This
credit is available to all members that are registered market makers on
an equal basis and provides an additional credit for activity that
improves the Exchange's market quality in small cap Nasdaq-listed
symbols through increased activity at the NBBO. In this regard, the
SCIP encourages higher levels of liquidity provision into the price
discovery process and is consistent with the overall goals of enhancing
market quality.
    The SCIP also provides for a credit to Nasdaq Market Makers that
add liquidity of 0.10% of the total dollar value for shares executed
below $1.00, as well as a fee for Nasdaq Market Makers that add
liquidity of 0.25% of the total dollar value for shares executed below
$1.00. The Exchange believes that this credit and fee are reasonable
because taken as a whole they should incentivize market maker behavior
to improve the markets in these securities.
    The Exchange believes that the proposed rule change above is
equitable and not unfairly discriminatory because the Exchange will
apply the same credit and fee uniformly and for all similarly situated
members. Specifically, the above credit and fee are applicable to all
Nasdaq Market Makers on an equal basis and the Exchange believes that,
taken together, will overall encourage activity that improves the
Exchange's market quality in small cap Nasdaq-listed symbols through
increased activity at the NBBO. The credit is available to all members
on an equal basis and provides an additional credit for activity that
improves the Exchange's market quality through increased activity at
the NBBO, while the fee will be applied uniformly for all Nasdaq Market
Makers that elect to remove liquidity in shares executed under $1.00.
    Additionally, Nasdaq believes it is reasonable that there will be
no fee for all quotes and orders executed in the Nasdaq Crosses, or any
other cross for Nasdaq Market Makers that meet the NBBO Test in SCIP
symbols, because it is reflective of the Exchange's desire to provide
further incentive to members to quote and execute orders in crosses
that meet the NBBO Test in SCIP symbols. This is also reflective of the
Exchange's goal to improve market quality through the use of reduced
fees, as well as of the Exchange's efforts to incentivize market
participants to improve market quality.
    The Exchange believes that the above proposed rule change, as
described above, is equitable and not unfairly discriminatory because
the Exchange will uniformly assess no fee across all similarly situated
members.
    Additionally, Nasdaq believes that it is reasonable that all quotes
and orders exclude market-on-close and limit-on-close orders executed
in the Nasdaq Closing Cross and market-on-open, limit-on-open, good-
till-cancelled, and immediate-or-cancel orders executed in the Nasdaq
Opening Cross because these orders are considered ``passive'' orders in
the Nasdaq Crosses (i.e., orders that were swept into the Nasdaq
Crosses). All other orders are orders specifically designated to become
active or execute in the cross.
    The Exchange also believes that this proposed rule change is
equitable and not unfairly discriminatory because the exclusion of
these quotes and passive orders from the Nasdaq Opening Cross and the
Nasdaq Closing Cross, as specified above, will be applied uniformly
across all similarly situated members.
    The overall effect of the SCIP will be to encourage higher levels
of liquidity provision into the price discovery process and is
consistent with the overall goals of enhancing market quality.
QMM Program
    Nasdaq believes that the proposed rule change to modify the QMM
Program requirement to allow for the aggregation of all of a member's
MPIDs to determine the number of securities for purposes of the 25%
NBBO requirement is reasonable because it may increase the number of
potential members than can qualify under the program. This, in turn,
will improve Nasdaq market quality by rewarding members that provide
significant market-improving order flow with a rebate.
    The Exchange also believes the proposed rule change is equitable
and not unfairly discriminatory because the easier to achieve amended
qualification criteria for the QMM Program will apply uniformly to all
similarly situated members and members that meet the qualification
criteria will be eligible for the QMM rebate.
NBBO Program
    The Exchange also believes that the proposed rule change to
increase the NBBO Program credit in Nasdaq Rule 7014(g) from the
$0.0002 to $0.0004 per share executed and which applies to NYSE--listed
securities and in securities listed on exchanges other than Nasdaq and
NYSE is reasonable because the increase to the credit although modest,
is likely to incentivize more NBBO setting on Nasdaq and thus improve
price formation on the Exchange.
    The Exchange also believes the proposed rule change is equitable
and not unfairly discriminatory because it is available to all members
that qualify for this NBBO Program rebate.
Definitions and Certifications
    The Exchange also believes that the proposed rule change to remove
most of the definitions included under Nasdaq Rule 7014(h) and the
Nasdaq Rule 7014(i) certification \15\ are reasonable since they are no
longer applicable. Keeping them in the rule book would only serve to
potentially increase confusion for market participants.
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    \15\ See note 7 above.
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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.\16\ 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.
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    \16\ 15 U.S.C. 78f(b)(8).
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    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.
    In this instance, the amendments to Nasdaq Rule 7014, which include
the elimination of the ISP, the addition of the SCIP, as well as
amendments to both the QMM Program and the NBBO Program, do 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. The Exchange believes that the
competition among exchanges and other venues will help to drive price
formation and overall execution quality higher for investors.
    Rather than placing a burden on competition, the proposed changes
to the programs included under Nasdaq Rule 7014, including to certain
of the fees and rebates contained therein, are reflective of the fierce
competition among market venues to attract order flow to the benefit of
all market participants. Overall, the proposed changes to the incentive
programs under Rule 7014 are designed to improve their effectiveness in
achieving their stated purposes. If any of the changes proposed herein
are unattractive to market participants, it is likely that the Exchange
will lose market share as a result.
    In sum, if the rule 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.\17\ 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.
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    \17\ 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 email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2016-051 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2016-051. 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 offices 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-2016-
051, and should be submitted on or before May 17, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-09598 Filed 4-25-16; 8:45 am]
 BILLING CODE 8011-01-P