80 FR 42590 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Section II of the Pricing Schedule
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 137 (July 17, 2015)
Federal Register Volume 80, Issue 137 (July 17, 2015)
| Page Range | 42590-42593 | |
| FR Document | 2015-17496 |
[Federal Register Volume 80, Number 137 (Friday, July 17, 2015)] [Notices] [Pages 42590-42593] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-17496] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75438; File No. SR-Phlx-2015-57] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Section II of the Pricing Schedule July 13, 2015. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on June 30, 2015, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to [[Page 42591]] 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 The Exchange proposes to amend the Exchange's Pricing Schedule at section II, entitled ``Multiply Listed Options Fees,'' \3\ to: (1) Increase the maximum Qualified Contingent Cross (``QCC'') orders rebate which will be paid in a given month; and (2) amend a strategy fee cap related to dividend,\4\ merger,\5\ short stock interest,\6\ reversal and conversion,\7\ jelly roll \8\ and box spread \9\ floor option transaction strategies. --------------------------------------------------------------------------- \3\ These fees include options overlying equities, ETFs, ETNs and indexes which are Multiply Listed. \4\ A dividend strategy is defined as transactions done to achieve a dividend arbitrage involving the purchase, sale and exercise of in-the-money options of the same class, executed the first business day prior to the date on which the underlying stock goes ex-dividend. \5\ A merger strategy is defined as transactions done to achieve a merger arbitrage involving the purchase, sale and exercise of options of the same class and expiration date, executed the first business day prior to the date on which shareholders of record are required to elect their respective form of consideration, i.e., cash or stock. \6\ A short stock interest strategy is defined as transactions done to achieve a short stock interest arbitrage involving the purchase, sale and exercise of in-the-money options of the same class. \7\ Reversal and conversion strategies are transactions that employ calls and puts of the same strike price and the underlying stock. Reversals are established by combining a short stock position with a short put and a long call position that shares the same strike and expiration. Conversions employ long positions in the underlying stock that accompany long puts and short calls sharing the same strike and expiration. \8\ A jelly roll strategy is defined as transactions created by entering into two separate positions simultaneously. One position involves buying a put and selling a call with the same strike price and expiration. The second position involves selling a put and buying a call, with the same strike price, but with a different expiration from the first position. \9\ A box spread strategy is a strategy that synthesizes long and short stock positions to create a profit. Specifically, a long call and short put at one strike is combined with a short call and long put at a different strike to create synthetic long and synthetic short stock positions, respectively. --------------------------------------------------------------------------- While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on July 1, 2015. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects 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 this filing is to: (1) Increase the maximum QCC rebate that will be paid by the Exchange in a given month; and (2) increase the per member organization Monthly Strategy Cap applicable to dividend, merger, short stock interest, reversal and conversion, jelly roll and box spread strategies. QCC Rebate Today, the Exchange pays rebates on QCC Orders based on the following five tier rebate schedule: QCC Rebate Schedule ------------------------------------------------------------------------ Rebate per Tier Threshold contract ------------------------------------------------------------------------ Tier 1..................... 0 to 299,999 contracts in a $0.00 month. Tier 2..................... 300,000 to 499,999 contracts 0.07 in a month. Tier 3..................... 500,000 to 699,999 contracts 0.08 in a month. Tier 4..................... 700,000 to 999,999 contracts 0.09 in a month. Tier 5..................... Over 1,000,000 contracts in a 0.11 month. ------------------------------------------------------------------------ The Exchange pays a rebate on all qualifying executed QCC Orders, including QCC Orders as defined in Exchange Rule 1080(o) \10\ and Floor QCC Orders, as defined in 1064(e),\11\ (collectively ``QCC Orders'') except where the transaction is either: (i) Customer-to-Customer; or (ii) a dividend, merger, short stock interest or reversal or conversion strategy execution. Today, the maximum rebate the Exchange will pay in a given month for QCC Orders is $375,000. Today, QCC Transaction Fees for a Specialist,\12\ Market Maker,\13\ Professional,\14\ Firm \15\ and Broker-Dealer \16\ are $0.20 per contract. --------------------------------------------------------------------------- \10\ A QCC Order is comprised of an order to buy or sell at least 1000 contracts that is identified as being part of a qualified contingent trade, as that term is defined in Rule 1080(o)(3), coupled with a contra-side order to buy or sell an equal number of contracts. The QCC Order must be executed at a price at or between the National Best Bid and Offer and be rejected if a Customer order is resting on the Exchange book at the same price. A QCC Order shall only be submitted electronically from off the floor to the PHLX XL II System. See Rule 1080(o). See also Securities Exchange Act Release No. 64249 (April 7, 2011), 76 FR 20773 (April 13, 2011) (SR- Phlx-2011-47) (a rule change to establish a QCC Order to facilitate the execution of stock/option Qualified Contingent Trades (``QCTs'') that satisfy the requirements of the trade through exemption in connection with Rule 611(d) of Regulation NMS). \11\ A Floor QCC Order must: (i) Be for at least 1,000 contracts, (ii) meet the six requirements of Rule 1080(o)(3) which are modeled on the QCT Exemption, (iii) be executed at a price at or between the National Best Bid and Offer (``NBBO''); and (iv) be rejected if a Customer order is resting on the Exchange book at the same price. In order to satisfy the 1,000-contract requirement, a Floor QCC Order must be for 1,000 contracts and could not be, for example, two 500-contract orders or two 500-contract legs. See Rule 1064(e). See also Securities Exchange Act Release No. 64688 (June 16, 2011), 76 FR 36606 (June 22, 2011) (SR-Phlx-2011-56). \12\ A ``Specialist'' is an Exchange member who is registered as an options specialist pursuant to Rule 1020(a). \13\ A ``Market Maker'' includes Registered Options Traders (Rule 1014(b)(i) and (ii)), which includes Streaming Quote Traders (see Rule 1014(b)(ii)(A)) and Remote Streaming Quote Traders (see Rule 1014(b)(ii)(B)). Directed Participants are also Market Makers. \14\ The term ``Professional'' means any person or entity that (i) is not a broker or dealer in securities, and (ii) places more than 390 orders in listed options per day on average during a calendar month for its own beneficial account(s). See Rule 1000(b)(14). \15\ The term ``Firm'' applies to any transaction that is identified by a member or member organization for clearing in the Firm range at OCC. \16\ The term ``Broker-Dealer'' applies to any transaction which is not subject to any of the other transaction fees applicable within a particular category. --------------------------------------------------------------------------- The Exchange will continue to pay rebates on QCC Orders as described above. The Exchange proposes to amend the QCC Rebate Schedule to increase the maximum QCC Rebate of $375,000 to $450,000 per month. The Exchange believes that the proposed amendment to its pricing for QCC Orders will enable the Exchange to attract additional QCC Orders. Monthly Strategy Cap Today, the Exchange applies certain strategy caps \17\ to dividend, merger, short stock interest, reversal and conversion, jelly roll and box spread floor option transaction strategy executions in Multiply Listed [[Page 42592]] Options.\18\ The Exchange further separately caps each member organization for dividend, merger, short stock interest, reversal and conversion, jelly roll and box spread strategy executions in Multiply Listed Options, combined in a month when trading in their own proprietary accounts (``Monthly Strategy Cap'') at $60,000.\19\ The Exchange proposes to increase the Monthly Strategy Cap from $60,000 to $65,000 per member organization, per month. --------------------------------------------------------------------------- \17\ To qualify for a strategy cap, the buy and sell side of a transaction must originate from the Exchange floor. \18\ Fees paid by a Specialist, Market Maker, Professional, Firm and Broker-Dealer for floor option transaction in Multiply Listed Options are capped at $1,500 for dividend, merger and short stock interest strategies executed on the same trading day in the same options class when such members are trading in their own proprietary accounts. The Exchange will continue to cap at $700 the fees paid by Specialist, Market Maker, Professional, Firm and Broker-Dealer for reversal and conversion, jelly roll and box spread floor option transaction strategies that are executed on the same trading day in the same options class. \19\ Reversal and conversion, jelly roll and box spread strategy executions are not included in the Monthly Strategy Cap for a Firm. Reversal and conversion, jelly roll and box spread strategy executions are included in the Monthly Firm Fee Cap. All dividend, merger, short stock interest, reversal and conversion, jelly roll and box spread strategy executions are excluded from the Monthly Market Maker Cap. Firms are subject to a maximum fee of $75,000 (``Monthly Firm Fee Cap''). Specialists and Market Makers are subject to a ``Monthly Market Maker Cap'' of $500,000 for: (i) Electronic and floor Option Transaction Charges; and (ii) QCC Transaction Fees. --------------------------------------------------------------------------- Despite increasing the cap, the Exchange believes that offering members and member organizations the opportunity to continue to cap transaction fees will benefit Phlx members and the Phlx market by encouraging members to transact greater liquidity. 2. Statutory Basis The Exchange believes that its proposal to amend its Pricing Schedule is consistent with section 6(b) of the Act \20\ in general, and furthers the objectives of section 6(b)(4) and (b)(5) of the Act \21\ 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 Phlx operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78f(b). \21\ 15 U.S.C. 78f(b)(4), (5). --------------------------------------------------------------------------- QCC Rebates The Exchange believes that it is reasonable to increase the maximum amount of the QCC Rebate the Exchange would pay a market participant in a given month from $375,000 to $450,000 because the Exchange believes it will attract additional QCC Orders to the Exchange. The Exchange believes that it is equitable and not unfairly discriminatory to increase the maximum amount of the QCC Rebate the Exchange would pay a market participant in a given month from $375,000 to $450,000 because all qualifying market participants are entitled to obtain this rebate if they transact a qualifying number of QCC Orders. All market participants are eligible to transact QCC Orders. Monthly Strategy Cap The Exchange's proposal to increase the Monthly Strategy Cap from $60,000 to $65,000 is reasonable because, despite the increase to the cap, the Exchange will continue to offer members an opportunity to lower their fees related to the execution of strategy transactions. For example, when a member incurs transaction fees in the amount of $65,000 in a given month related to strategy executions, the member will not pay for additional strategy executions for the remainder of that month as a result of the fee cap. The Exchange's proposal to increase the Monthly Strategy Cap from $60,000 to $65,000 is equitable and not unfairly discriminatory because the Exchange would continue to offer members the opportunity to cap their floor equity options transaction in Multiply Listed Options fees for all strategies. Customers are excluded because they are not assessed a floor Options Transaction Charge.\22\ Excluding Firm floor Options Transaction Charges in Multiply Listed Options related to reversal and conversion, jelly roll and box spread strategies from the Monthly Strategy Cap is reasonable, equitable and not unfairly discriminatory because these fees would continue to be capped as part of the Monthly Firm Fee Cap, which applies only to Firms. The Exchange believes that the exclusion of Firm floor Options Transaction Charges in Multiply Listed Options related to reversal and conversion, jelly roll and box spread strategies from the Monthly Strategy Cap is equitable and not unfairly discriminatory because Firms, unlike other market participants, have the ability to cap transaction fees up to $75,000 per month.\23\ The Exchange would include floor option transaction charges related to reversal and conversion, jelly roll and box spread strategies in the Monthly Strategy Cap for Professionals, and Broker Dealers, when such members are trading in their own proprietary accounts, because these market participants are not subject to the Monthly Firm Fee Cap or other similar cap. While Specialists and Market Makers are subject to a Monthly Market Maker Cap on both electronic and floor options transaction charges, reversal and conversion, jelly roll and box spread transactions are excluded from the Monthly Market Maker Cap [sic].\24\ For the reasons described above, the Exchange believes continuing to include reversal and conversion, jelly roll and box spread strategies in the Monthly Firm Fee Cap is reasonable, equitable and not unfairly discriminatory because the cap provides an incentive for Firms to transact floor transactions on the Exchange, which brings increased liquidity and order flow to the floor for the benefit of all market participants.\25\ --------------------------------------------------------------------------- \22\ See Section II of the Pricing Schedule. \23\ Firms are subject to a maximum fee of $75,000 (``Monthly Firm Fee Cap''). Firm Floor Option Transaction Charges and QCC Transaction Fees, in the aggregate, for one billing month will not exceed the Monthly Firm Fee Cap per member organization when such members are trading in their own proprietary account. All dividend, merger, and short stock interest strategy executions will be excluded from the Monthly Firm Fee Cap. Reversal and conversion, jelly roll and box spread strategy executions (as defined in this Section II) will be included in the Monthly Firm Fee Cap. QCC Transaction Fees are included in the calculation of the Monthly Firm Fee Cap. \24\ Id. \25\ Firms are eligible to cap floor options transactions charges and QCC Transaction Fees as part of the Monthly Firm Fee Cap. QCC Transaction Fees apply to QCC Orders as defined in Exchange Rule 1080(o) and Floor QCC Orders as defined in 1064(e). See Section II of the Pricing Schedule. --------------------------------------------------------------------------- The Exchange believes that its proposal to continue to apply strategy fee caps to orders originating from the Exchange floor is reasonable because certain members pay floor brokers to execute trades on the Exchange floor, thereby incurring costs related to this business model. The Exchange believes that offering fee caps to members executing floor transactions would defray brokerage costs associated with executing strategy transactions and continue to incentivize members to utilize the floor for certain executions.\26\ The Exchange believes that its proposal to continue to apply the fee cap to Multiply Listed Options orders originating from the Exchange floor is equitable and not unfairly discriminatory because today, the fee caps are only applicable for floor transactions. The Exchange believes that a requirement that both the buy and sell sides of the order originate from the [[Page 42593]] floor to qualify for the fee cap constitutes equal treatment of members. --------------------------------------------------------------------------- \26\ The fee cap is applied to options transaction charges where buy and sell sides originate from the Exchange floor. See proposed rule text in section II of the Pricing Schedule. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that its proposal to increase the maximum QCC Rebate does not impose a burden on competition. The Exchange's proposal should encourage market participants to transact a greater number of QCC Orders in order to obtain QCC Rebates. All market participants are eligible to transact QCC Orders. The Exchange does not believe that the proposed rule change to the Monthly Strategy Cap will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act because the proposed changes apply uniformly to all members that incur transaction charges, except Firms.\27\ Excluding Firm floor options transactions in Multiply Listed Options related to reversal and conversion, jelly roll and box spread strategies from the Monthly Strategy Cap does not create an undue burden on competition because these fees would continue to be capped as part of the Monthly Firm Fee Cap. The Exchange believes the proposal is consistent with robust competition and does not provide any unnecessary burden on competition. Further, certain floor members pay floor brokers to execute trades on the Exchange floor, thereby incurring costs related to this business model. The Exchange believes that offering fee caps to members executing floor transactions and not electronic executions does not create an unnecessary burden on competition because the fee caps defray brokerage costs associated with executing strategy transactions. Also, requiring that both the buy and sell sides of the order originate from the floor to qualify for the fee cap constitutes equal treatment of members. --------------------------------------------------------------------------- \27\ Customers are not assessed options transaction charges in section II of the Pricing Schedule. --------------------------------------------------------------------------- The Exchange operates in a highly competitive market, comprised of twelve options exchanges, in which market participants can easily and readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or rebates to be inadequate. Accordingly, the fees that are assessed and the rebates paid by the Exchange described in the above proposal are influenced by these robust market forces and therefore must remain competitive with fees charged and rebates paid by other venues and therefore must continue to be reasonable and equitably allocated to those members that opt to direct orders to the Exchange rather than competing venues. 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.\28\ 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. --------------------------------------------------------------------------- \28\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File Number SR-Phlx-2015-57 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-Phlx-2015-57. 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-Phlx-2015-57, and should be submitted on or before August 7, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\29\ --------------------------------------------------------------------------- \29\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-17496 Filed 7-16-15; 8:45 am] BILLING CODE 8011-01-P
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Options Exchange LLC (‘‘BOX’’) and shorter time if such action is consistent Internet Web site (http://www.sec.gov/
BATS Exchange ‘‘BATS’’).18 with the protection of investors and the rules/sro.shtml). Copies of the
Furthermore, the Exchange believes this public interest. The Exchange has asked submission, all subsequent
proposed rule change will benefit the Commission to waive the 30-day amendments, all written statements
investors by providing additional operative delay so that the proposal may with respect to the proposed rule
methods to trade options on ETFs, and become operative immediately upon change that are filed with the
by providing them with valuable risk filing. The Exchange stated that waiver Commission, and all written
management tools. Specifically, the of the operative delay will permit the communications relating to the
Exchange believes that market Exchange to list and trade certain ETF proposed rule change between the
participants on the Exchange would options on the same basis as other Commission and any person, other than
benefit from the introduction and options markets.23 The Commission those that may be withheld from the
availability of options on ETFs in a believes the waiver of the operative public in accordance with the
manner that is similar to equities delay is consistent with the protection provisions of 5 U.S.C. 552, will be
exchanges and will provide investors of investors and the public interest. available for Web site viewing and
with a venue on which to trade options Therefore, the Commission hereby printing in the Commission’s Public
on these products. For all the reasons waives the operative delay and Reference Room, 100 F Street NE.,
stated above, the Exchange does not designates the proposal operative upon Washington, DC 20549 on official
believe that the proposed rule changes filing.24 business days between the hours of
will impose any burden on competition At any time within 60 days of the 10:00 a.m. and 3:00 p.m. Copies of such
not necessary or appropriate in filing of the proposed rule change, the filing also will be available for
furtherance of the purposes of the Act, Commission summarily may inspection and copying at the principal
and believes the proposed change will temporarily suspend such rule change if office of the Exchange. All comments
enhance competition. it appears to the Commission that such received will be posted without change;
action is necessary or appropriate in the the Commission does not edit personal
C. Self-Regulatory Organization’s public interest, for the protection of
Statement on Comments on the identifying information from
investors, or otherwise in furtherance of submissions. You should submit only
Proposed Rule Change Received From the purposes of the Act. If the
Members, Participants, or Others information that you wish to make
Commission takes such action, the available publicly. All submissions
No written comments were solicited Commission shall institute proceedings should refer to File Number SR–
or received with respect to the proposed to determine whether the proposed rule NYSEArca–2015–60, and should be
rule change. change should be approved or submitted on or before August 7, 2015.
disapproved.
III. Date of Effectiveness of the For the Commission, by the Division of
Proposed Rule Change and Timing for IV. Solicitation of Comments Trading and Markets, pursuant to delegated
Commission Action authority.25
Interested persons are invited to
Because the proposed rule change submit written data, views, and Brent J. Fields,
does not (i) significantly affect the arguments concerning the foregoing, Secretary.
protection of investors or the public including whether the proposed rule [FR Doc. 2015–17494 Filed 7–16–15; 8:45 am]
interest; (ii) impose any significant change is consistent with the Act. BILLING CODE 8011–01–P
burden on competition; and (iii) become Comments may be submitted by any of
operative for 30 days from the date on the following methods:
which it was filed, or such shorter time SECURITIES AND EXCHANGE
Electronic Comments COMMISSION
as the Commission may designate, it has
become effective pursuant to section • Use the Commission’s Internet
comment form (http://www.sec.gov/ [Release No. 34–75438; File No. SR–Phlx–
19(b)(3)(A) of the Act 19 and Rule 19b– 2015–57]
4(f)(6) thereunder.20 rules/sro.shtml); or
A proposed rule change filed • Send an email to rule-comments@ Self-Regulatory Organizations;
pursuant to Rule 19b–4(f)(6) under the sec.gov. Please include File Number SR– NASDAQ OMX PHLX LLC; Notice of
Act 21 normally does not become NYSEArca–2015–60 on the subject line. Filing and Immediate Effectiveness of
operative for 30 days after the date of its Paper Comments Proposed Rule Change Relating to
filing. However, Rule 19b–4(f)(6)(iii) 22 Section II of the Pricing Schedule
permits the Commission to designate a • Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities July 13, 2015.
18 See Securities Exchange Act Release Nos.
and Exchange Commission, 100 F Street Pursuant to section 19(b)(1) of the
74509 (March 13, 2015), 80 FR 14425 (March 19, NE., Washington, DC 20549–1090. Securities Exchange Act of 1934
2015) (SR–MIAX–2015–04); 74553 (March 20, 2015) All submissions should refer to File (‘‘Act’’),1 and Rule 19b–4 thereunder,2
80 FR 16072 (March 26, 2015) (SR–Phlx–2015–27);
74832 (April 29, 2015), 80 FR 25738 (May 5, 2015)
Number SR–NYSEArca–2015–60. This notice is hereby given that on June 30,
(SR–ISE–2015–16); 75132 (June 9, 2015), 80 FR file number should be included on the 2015, NASDAQ OMX PHLX LLC
34175 (June 15, 2015) (SR–BOX–2015–21), 75166, subject line if email is used. To help the (‘‘Phlx’’ or ‘‘Exchange’’) filed with the
(June 12, 2015), 80 FR 34946 (June 18, 2015) (SR– Commission process and review your Securities and Exchange Commission
BATS–2015–43).
19 15 U.S.C. 78s(b)(3)(A).
comments more efficiently, please use (‘‘SEC’’ or ‘‘Commission’’) the proposed
only one method. The Commission will
srobinson on DSK5SPTVN1PROD with NOTICES
20 17 CFR 240.19b–4(f)(6). As required under Rule rule change as described in Items I, II,
19b–4(f)(6)(iii), the Exchange provided the post all comments on the Commission’s and III below, which Items have been
Commission with written notice of its intent to file prepared by the Exchange. The
the proposed rule change, along with a brief 23 See
supra note 18. Commission is publishing this notice to
description and the text of the proposed rule 24 For
purposes only of waiving the 30-day
change, at least five business days prior to the date operative delay, the Commission has also
of filing of the proposed rule change. considered the proposed rule’s impact on
25 17 CFR 200.30–3(a)(12).
21 17 CFR 240.19b–4(f)(6). 1 15 U.S.C. 78s(b)(1).
efficiency, competition, and capital formation. See
22 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f). 2 17 CFR 240.19b–4.
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![42592 Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices
Options.18 The Exchange further because the Exchange believes it will would include floor option transaction
separately caps each member attract additional QCC Orders to the charges related to reversal and
organization for dividend, merger, short Exchange. conversion, jelly roll and box spread
stock interest, reversal and conversion, The Exchange believes that it is strategies in the Monthly Strategy Cap
jelly roll and box spread strategy equitable and not unfairly for Professionals, and Broker Dealers,
executions in Multiply Listed Options, discriminatory to increase the maximum when such members are trading in their
combined in a month when trading in amount of the QCC Rebate the Exchange own proprietary accounts, because these
their own proprietary accounts would pay a market participant in a market participants are not subject to
(‘‘Monthly Strategy Cap’’) at $60,000.19 given month from $375,000 to $450,000 the Monthly Firm Fee Cap or other
The Exchange proposes to increase the because all qualifying market similar cap. While Specialists and
Monthly Strategy Cap from $60,000 to participants are entitled to obtain this Market Makers are subject to a Monthly
$65,000 per member organization, per rebate if they transact a qualifying Market Maker Cap on both electronic
month. number of QCC Orders. All market and floor options transaction charges,
Despite increasing the cap, the participants are eligible to transact QCC reversal and conversion, jelly roll and
Exchange believes that offering Orders. box spread transactions are excluded
members and member organizations the Monthly Strategy Cap from the Monthly Market Maker Cap
opportunity to continue to cap [sic].24 For the reasons described above,
transaction fees will benefit Phlx The Exchange’s proposal to increase the Exchange believes continuing to
members and the Phlx market by the Monthly Strategy Cap from $60,000 include reversal and conversion, jelly
encouraging members to transact greater to $65,000 is reasonable because, roll and box spread strategies in the
liquidity. despite the increase to the cap, the Monthly Firm Fee Cap is reasonable,
Exchange will continue to offer equitable and not unfairly
2. Statutory Basis members an opportunity to lower their discriminatory because the cap provides
The Exchange believes that its fees related to the execution of strategy an incentive for Firms to transact floor
proposal to amend its Pricing Schedule transactions. For example, when a transactions on the Exchange, which
is consistent with section 6(b) of the member incurs transaction fees in the brings increased liquidity and order
Act 20 in general, and furthers the amount of $65,000 in a given month flow to the floor for the benefit of all
objectives of section 6(b)(4) and (b)(5) of related to strategy executions, the market participants.25
the Act 21 in particular, in that it member will not pay for additional
The Exchange believes that its
provides for the equitable allocation of strategy executions for the remainder of
proposal to continue to apply strategy
reasonable dues, fees and other charges that month as a result of the fee cap.
The Exchange’s proposal to increase fee caps to orders originating from the
among members and issuers and other
the Monthly Strategy Cap from $60,000 Exchange floor is reasonable because
persons using any facility or system
to $65,000 is equitable and not unfairly certain members pay floor brokers to
which Phlx operates or controls, and is
discriminatory because the Exchange execute trades on the Exchange floor,
not designed to permit unfair
would continue to offer members the thereby incurring costs related to this
discrimination between customers,
opportunity to cap their floor equity business model. The Exchange believes
issuers, brokers, or dealers.
options transaction in Multiply Listed that offering fee caps to members
QCC Rebates Options fees for all strategies. Customers executing floor transactions would
The Exchange believes that it is are excluded because they are not defray brokerage costs associated with
reasonable to increase the maximum assessed a floor Options Transaction executing strategy transactions and
amount of the QCC Rebate the Exchange Charge.22 Excluding Firm floor Options continue to incentivize members to
would pay a market participant in a Transaction Charges in Multiply Listed utilize the floor for certain executions.26
given month from $375,000 to $450,000 Options related to reversal and The Exchange believes that its proposal
conversion, jelly roll and box spread to continue to apply the fee cap to
18 Fees paid by a Specialist, Market Maker,
strategies from the Monthly Strategy Multiply Listed Options orders
Professional, Firm and Broker-Dealer for floor Cap is reasonable, equitable and not originating from the Exchange floor is
option transaction in Multiply Listed Options are
unfairly discriminatory because these equitable and not unfairly
capped at $1,500 for dividend, merger and short discriminatory because today, the fee
stock interest strategies executed on the same fees would continue to be capped as
trading day in the same options class when such part of the Monthly Firm Fee Cap, caps are only applicable for floor
members are trading in their own proprietary which applies only to Firms. The transactions. The Exchange believes that
accounts. The Exchange will continue to cap at
Exchange believes that the exclusion of a requirement that both the buy and sell
$700 the fees paid by Specialist, Market Maker, sides of the order originate from the
Professional, Firm and Broker-Dealer for reversal Firm floor Options Transaction Charges
and conversion, jelly roll and box spread floor in Multiply Listed Options related to
option transaction strategies that are executed on reversal and conversion, jelly roll and short stock interest strategy executions will be
the same trading day in the same options class. excluded from the Monthly Firm Fee Cap. Reversal
19 Reversal and conversion, jelly roll and box box spread strategies from the Monthly and conversion, jelly roll and box spread strategy
spread strategy executions are not included in the Strategy Cap is equitable and not executions (as defined in this Section II) will be
Monthly Strategy Cap for a Firm. Reversal and unfairly discriminatory because Firms, included in the Monthly Firm Fee Cap. QCC
conversion, jelly roll and box spread strategy unlike other market participants, have Transaction Fees are included in the calculation of
executions are included in the Monthly Firm Fee the Monthly Firm Fee Cap.
Cap. All dividend, merger, short stock interest,
the ability to cap transaction fees up to 24 Id.
reversal and conversion, jelly roll and box spread $75,000 per month.23 The Exchange 25 Firms are eligible to cap floor options
srobinson on DSK5SPTVN1PROD with NOTICES
strategy executions are excluded from the Monthly transactions charges and QCC Transaction Fees as
Market Maker Cap. Firms are subject to a maximum 22 See
Section II of the Pricing Schedule. part of the Monthly Firm Fee Cap. QCC Transaction
fee of $75,000 (‘‘Monthly Firm Fee Cap’’). 23 Firms
are subject to a maximum fee of $75,000 Fees apply to QCC Orders as defined in Exchange
Specialists and Market Makers are subject to a (‘‘Monthly Firm Fee Cap’’). Firm Floor Option Rule 1080(o) and Floor QCC Orders as defined in
‘‘Monthly Market Maker Cap’’ of $500,000 for: (i) Transaction Charges and QCC Transaction Fees, in 1064(e). See Section II of the Pricing Schedule.
Electronic and floor Option Transaction Charges; the aggregate, for one billing month will not exceed 26 The fee cap is applied to options transaction
and (ii) QCC Transaction Fees. the Monthly Firm Fee Cap per member organization charges where buy and sell sides originate from the
20 15 U.S.C. 78f(b).
when such members are trading in their own Exchange floor. See proposed rule text in section II
21 15 U.S.C. 78f(b)(4), (5). proprietary account. All dividend, merger, and of the Pricing Schedule.
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![Federal Register / Vol. 80, No. 137 / Friday, July 17, 2015 / Notices 42593
floor to qualify for the fee cap robust market forces and therefore must submission, all subsequent
constitutes equal treatment of members. remain competitive with fees charged amendments, all written statements
and rebates paid by other venues and with respect to the proposed rule
B. Self-Regulatory Organization’s
therefore must continue to be reasonable change that are filed with the
Statement on Burden on Competition
and equitably allocated to those Commission, and all written
The Exchange does not believe that members that opt to direct orders to the communications relating to the
the proposed rule change will impose Exchange rather than competing venues. proposed rule change between the
any burden on competition not Commission and any person, other than
necessary or appropriate in furtherance C. Self-Regulatory Organization’s those that may be withheld from the
of the purposes of the Act. The Statement on Comments on the public in accordance with the
Exchange believes that its proposal to Proposed Rule Change Received From provisions of 5 U.S.C. 552, will be
increase the maximum QCC Rebate does Members, Participants, or Others available for Web site viewing and
not impose a burden on competition. Written comments were neither printing in the Commission’s Public
The Exchange’s proposal should solicited nor received. Reference Room, 100 F Street NE.,
encourage market participants to Washington, DC 20549, on official
transact a greater number of QCC Orders III. Date of Effectiveness of the
business days between the hours of
in order to obtain QCC Rebates. All Proposed Rule Change and Timing for
10:00 a.m. and 3:00 p.m. Copies of such
market participants are eligible to Commission Action
filing also will be available for
transact QCC Orders. The foregoing rule change has become inspection and copying at the principal
The Exchange does not believe that effective pursuant to section offices of the Exchange. All comments
the proposed rule change to the 19(b)(3)(A)(ii) of the Act.28 At any time received will be posted without change;
Monthly Strategy Cap will impose any within 60 days of the filing of the the Commission does not edit personal
burden on competition not necessary or proposed rule change, the Commission identifying information from
appropriate in furtherance of the summarily may temporarily suspend submissions. You should submit only
purposes of the Act because the such rule change if it appears to the information that you wish to make
proposed changes apply uniformly to all Commission that such action is available publicly. All submissions
members that incur transaction charges, necessary or appropriate in the public should refer to File Number SR–Phlx–
except Firms.27 Excluding Firm floor interest, for the protection of investors, 2015–57, and should be submitted on or
options transactions in Multiply Listed or otherwise in furtherance of the before August 7, 2015.
Options related to reversal and purposes of the Act. If the Commission For the Commission, by the Division of
conversion, jelly roll and box spread takes such action, the Commission shall Trading and Markets, pursuant to delegated
strategies from the Monthly Strategy institute proceedings to determine authority.29
Cap does not create an undue burden on whether the proposed rule should be Robert W. Errett,
competition because these fees would approved or disapproved. Deputy Secretary.
continue to be capped as part of the
Monthly Firm Fee Cap. The Exchange IV. Solicitation of Comments [FR Doc. 2015–17496 Filed 7–16–15; 8:45 am]
BILLING CODE 8011–01–P
believes the proposal is consistent with Interested persons are invited to
robust competition and does not submit written data, views, and
provide any unnecessary burden on arguments concerning the foregoing,
SECURITIES AND EXCHANGE
competition. Further, certain floor including whether the proposed rule
COMMISSION
members pay floor brokers to execute change is consistent with the Act.
trades on the Exchange floor, thereby Comments may be submitted by any of [Release No. 34–75443; File No. SR–
incurring costs related to this business the following methods: NYSEMKT–2015–22]
model. The Exchange believes that
Electronic Comments Self-Regulatory Organizations; NYSE
offering fee caps to members executing
floor transactions and not electronic • Use the Commission’s Internet MKT LLC; Notice of Filing of
comment form (http://www.sec.gov/ Amendment No. 2 and Order Granting
executions does not create an
rules/sro.shtml); or Accelerated Approval of a Proposed
unnecessary burden on competition
because the fee caps defray brokerage • Send an email to rule-comments@ Rule Change, as Modified by
sec.gov. Please include File Number SR– Amendment No. 2, To Amend
costs associated with executing strategy
Phlx–2015–57 on the subject line. NYSEMKT Rule 13—Equities and
transactions. Also, requiring that both
Related Rules Governing Order Types
the buy and sell sides of the order Paper Comments and Modifiers
originate from the floor to qualify for the
fee cap constitutes equal treatment of • Send paper comments in triplicate
July 13, 2015.
members. to Secretary, Securities and Exchange
The Exchange operates in a highly Commission, 100 F Street NE., I. Introduction
competitive market, comprised of Washington, DC 20549–1090. On March 24, 2015, NYSE MKT LLC
twelve options exchanges, in which All submissions should refer to File (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
market participants can easily and Number SR–Phlx–2015–57. This file with the Securities and Exchange
readily direct order flow to competing number should be included on the Commission (‘‘Commission’’), pursuant
venues if they deem fee levels at a subject line if email is used. To help the to section 19(b)(1) of the Securities
Commission process and review your
srobinson on DSK5SPTVN1PROD with NOTICES
particular venue to be excessive or Exchange Act of 1934 (‘‘Act’’) 1 and Rule
rebates to be inadequate. Accordingly, comments more efficiently, please use 19b–4 thereunder,2 a proposed rule
the fees that are assessed and the rebates only one method. The Commission will change to amend Exchange Rule 13—
paid by the Exchange described in the post all comments on the Commission’s Equities, and related Exchange rules,
above proposal are influenced by these Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the 29 17 CFR 200.30–3(a)(12).
27 Customers 1 15 U.S.C. 78s(b)(1).
are not assessed options transaction
charges in section II of the Pricing Schedule. 28 15 U.S.C. 78s(b)(3)(A)(ii). 2 17 CFR 240.19b–4.
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Document Created: 2018-02-23 09:21:39
Document Modified: 2018-02-23 09:21:39
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 42590 |
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