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Federal Register / Vol. 86, No. 31 / Thursday, February 18, 2021 / Notices
jbell on DSKJLSW7X2PROD with NOTICES

qualify for Tier 1 rebates as it added 0.80% of Consolidated Volume exclusive of sub-dollar volume. Insofar as the proposal would provide for the Exchange to apply the calculation results that are most advantageous to the QMM, the Exchange in this example would apply the Tier 1 rebate to the QMM.
Proposed Amendments to Existing Transaction Credits In addition to the above, the Exchange proposes to amend three of the credits it offers to members in displayed quotes or orders in securities in all three Tapes other than Supplemental Orders or Designated Retail Orders that add liquidity to the Exchange, as set forth in Equity 7, Section 118a.
First, the Exchange proposes to amend a credit it presently offers of $0.00295 per share executed to a member with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent 0.90% or more of Consolidated Volume during the month, which includes shares of liquidity provided with respect to securities that are listed on exchanges other than Nasdaq or NYSE that represent 0.25% or more of Consolidated Volume. The Exchange proposes to decrease the threshold percentage of Consolidated Volume necessary to qualify for this credit from 0.90% to 0.85%. The Exchange proposes to lower this threshold to render it easier for members to qualify for the $0.00295 per share executed credit. More members may seek to attain this credit to the extent that it is more accessible to them.
If more members increase their liquidity adding activity on the Exchange to attain this credit, then the quality of the market will improve, to the benefit of all participants.
Second, the Exchange proposes to amend a credit it presently offers of $0.0029 per share executed to a member with shares of liquidity provided in all securities through one or more of its Nasdaq Market Center MPIDs that represent more than 0.70% of Consolidated Volume during the month.
The Exchange proposes to decrease the threshold percentage of Consolidated Volume necessary to qualify for this credit from 0.70% to 0.675%. The Exchange also proposes to lower this threshold to render it easier for members to qualify for the $0.0029 per share executed credit. Again, more members may seek to attain this credit to the extent that it is more accessible to them. If more members increase their liquidity adding activity on the Exchange to attain this credit, then the
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quality of the market will improve, to the benefit of all participants.
Third, the Exchange proposes to amend a credit it presently offers of $0.0025 per share executed to a member that provides a daily average of at least 4 million shares of liquidity, of which greater than 1.5 million shares per day must comprise non-displayed liquidity, excluding midpoint orders. The Exchange proposes to amend the credit to state that the greater than 1.5 million shares per day requirement may be satisfied, not only by adding nondisplayed liquidity excluding midpoint orders, but also by using Midpoint Extended Life Orders MELOs. The Exchange proposes this change to provide a new incentive for members to increase significant liquidity each day in MELO Orders, as well as to render the credit easier for members to attain, thereby enticing more members to try to grow their liquidity adding activity on the Exchange to do so. To the extent that the proposed amended credit succeeds in increasing the number of its members that attain the credit, and in increasing the volume of liquidity provided to the Exchange, then the quality of the market will improve for all participants.
New Proposed Growth Tier Finally, the Exchange proposes to amend Equity 7, Section 118a, to establish a new $0.0029 per share executed credit to a member, for displayed quotes or orders in securities in all three Tapes other than Supplemental Orders or Designated Retail Orders that add liquidity to the Exchange, to the extent that the member, through one or more of its Nasdaq Market Center MPIDs: i Provides shares of liquidity in all securities that represent equal to or greater than 0.65% of Consolidated Volume during the month; ii increases its average daily volume of MELO
Orders executed by 150% or more during the month relative to the month of January 2021; and iii executes an average daily volume of at least 750,000
shares in MELO Orders for the month.
The Exchange intends for this new credit to encourage members to grow the extent to which they utilize the MELO
Order Type on the Exchange, and to reward those members that do so in significant volumes. The Exchange believes that any ensuing increase in MELO liquidity on the Exchange will improve the quality of the Nasdaq market generally as well as the experiences of those members that choose to interact with the market through MELO. To the extent that the proposed new credit succeeds in having its members attain the credit, and in
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increasing the volume of liquidity provided to the Exchange, then the quality of the market will improve for all participants.
2. Statutory Basis The Exchange believes that its proposals are consistent with Section 6b of the Act,7 in general, and further the objectives of Sections 6b4 and 6b5 of the Act,8 in particular, in that they provide for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The proposals are also consistent with Section 11A of the Act relating to the establishment of the national market system for securities.
The Proposals Are Reasonable The Exchanges proposals are reasonable in several respects. As a threshold matter, the Exchange is subject to significant competitive forces in the market for equity securities transaction services that constrain its pricing determinations in that market.
The fact that this market is competitive has long been recognized by the courts.
In NetCoalition v. Securities and Exchange Commission, the D.C. Circuit stated as follows: no one disputes that competition for order flow is fierce. . . . As the SEC explained, in the U.S. national market system, buyers and sellers of securities, and the brokerdealers 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 . . . . 9
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 7 15

U.S.C. 78fb.
U.S.C. 78fb4 and 5.
9 NetCoalition v. SEC, 615 F.3d 525, 539 D.C. Cir.
2010 quoting Securities Exchange Act Release No.
59039 December 2, 2008, 73 FR 74770, 7478283
December 9, 2008 SRNYSEArca200621.
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