80 FR 61537 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing of Proposed Rule Change Relating to Active Specialized Quote Feed Port Fee

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 197 (October 13, 2015)

Page Range		61537-61539
FR Document		2015-25862
Federal Register, Volume 80 Issue 197 (Tuesday, October 13, 2015)
[Federal Register Volume 80, Number 197 (Tuesday, October 13, 2015)]
[Notices]
[Pages 61537-61539]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-25862]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76083; File No. SR-Phlx-2015-79]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing of Proposed Rule Change Relating to Active Specialized Quote 
Feed Port Fee

October 6, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 23, 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 and II 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to refund Specialists \3\ and Market Makers 
\4\ a certain portion of the variable Active SQF Port Fee that was 
effective and operative in the month of April 2015 and paid by these 
Exchange members. The proposed refund is unique to April 2015 only, and 
arose when a filing to delete the variable Active SQF Port Fee \5\ 
operative on April 1, 2015 was rejected and was then re-filed with the 
operative date of May 1, 2015.
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    \3\ A ``Specialist'' is an Exchange member who is registered as 
an options specialist pursuant to Exchange Rule 1020(a).
    \4\ A ``Market Maker'' includes Registered Options Traders 
(Exchange Rule 1014(b)(i) and (ii)), which includes Streaming Quote 
Traders (Exchange Rule 1014(b)(ii)(A)) and Remote Streaming Quote 
Traders (Exchange Rule 1014(b)(ii)(B)).
    \5\ Exchange fees are found in the NASDAQ OMX PHLX LLC Pricing 
Schedule (``Pricing Schedule'').
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    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 Exchange proposes to refund Specialists and Market Makers a 
certain portion of the variable Active SQF Port Fee that was effective 
and operative in the month of April 2015 and paid by these Exchange 
members. The fees proposed to be refunded (the ``Refund'') represent 
the difference between the variable Active SQF Port Fees that were in 
place in Section VII B. of the Pricing Schedule during the month of 
April 2015 (``variable Active SQF Port Fees''), and the current one 
price Active SQF Fee with the operative date of May 1, 2015 (``Active 
SQF Port Fee''). The Refund is unique to April 2015 only, and arose 
when a filing to delete the monthly variable Active SQF Port Fee 
operative on April 1, 2015 was rejected for reasons unrelated to the 
changes proposed in this filing, and was re-filed with the operative 
date of May 1, 2015.\6\ The Exchange did not intend to impose the 
variable Active SQF Port Fees in April but rather intended to apply the 
Active SQF Port Fee and is, therefore, proposing this unique, one-time 
Refund.
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    \6\ See Securities Exchange Act Release No. 74833 (April 29, 
2015), 80 FR 25749 (May 5, 2015) (SR-Phlx-2015-36) (immediately 
effective filing that, among other things, instituted the one price 
Active SQF Port Fee in lieu of a variable Active SQF Port Fee with 
the operative date of May 1, 2015) (the ``one price Active SQF Fee 
filing''). See also Equity Trader Alerts at http://nasdaqtrader.com/TraderNews.aspx?id=ETA2015-37 and http://www.phlx.com/TraderNews.aspx?id=OTA2015-9 (the ``alerts''). The alerts show how 
some members may have anticipated lower Active SQF Port Fees but had 
to pay higher fees because the filing to delete the variable Active 
SQF Port Fee was initially rejected.
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    SQF is an interface that enables Specialists, Streaming Quote 
Traders (``SQTs'') \7\ and Remote Streaming Quote Traders (``RSQTs'') 
\8\ to connect and send quotes into Phlx XL.\9\ Active SQF Ports are 
ports that receive inbound quotes at any time within that month. Active 
SQF Ports allow users to access information such as execution reports, 
execution report messages, auction notifications, and administrative 
data through a single feed.
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    \7\ An SQT is defined in Exchange Rule 1014(b)(ii)(A) as a 
Registered Options Trader (``ROT'') who has received permission from 
the Exchange to generate and submit option quotations electronically 
in options to which such SQT is assigned.
    \8\ An RSQT is defined in Exchange Rule in 1014(b)(ii)(B) as an 
ROT that is a member or member organization with no physical trading 
floor presence who has received permission from the Exchange to 
generate and submit option quotations electronically in options to 
which such RSQT has been assigned. An RSQT may only submit such 
quotations electronically from off the floor of the Exchange.
    \9\ See Securities Exchange Act Release No. 63034 (October 4, 
2010), 75 FR 62441 (October 8, 2010) (SR-Phlx-2010-124) (notice of 
filing and immediate effectiveness regarding sending certain 
information over SQF).
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    The variable Active SQF Port Fees became operative on April 1, 
2015. The proposal to replace the variable Active SQF Port Fee with the 
current Active SQF Port Fee operative April 1, 2015 was rejected and 
was refiled with the operative date of May 1, 2015.\10\ The Active SQF 
Port Fee with the operative date of May 1, 2015 is not tiered or 
variable but rather is one price akin to other current port fees.\11\ 
The variable Active SQF Port Fee, which like the current Active SQF 
Port Fee is a monthly fee, was therefore in effect only from April 1 to 
April 30, 2015 (the ``April billing period'').
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    \10\ See supra note 6.
    \11\ See, e.g., Order Entry Port Fee and Clearing Trade 
Interface (``CTI'') Port Fee in Section VII B. of the Pricing 
Schedule.
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    The variable Active SQF Fee was implemented in December of last 
year with a delayed operative date of April 1, 2015, in large measure 
to encourage members and member organizations to work through the now-
completed technology refresh (``technology refresh'' or 
``refresh'').\12\ The goal of the technology refresh (to deploy state-
of-the-art hardware and software architecture for a more efficient and 
robust infrastructure) has been met. As the Exchange had anticipated, 
Specialists and Market Makers have benefitted from the efficiency of 
the service that is available to them as a result of the refresh. While 
Specialists and Market Makers were required to make network and other 
technical changes in order to connect to the Phlx

[[Page 61538]]

system via SQF, the Exchange believes that member costs declined 
overall as a result of the more efficient connectivity offered by the 
refresh. The Exchange's proposal to delete the variable Active SQF Port 
Fee, which was re-filed with the operative date of May 1, 2015 because 
of the monthly nature of the fee, reduced the Active SQF Port Fees paid 
by the majority of Market Makers on the Exchange. The Exchange's 
proposal is simply to refund eligible Specialists and Market Makers the 
overage or difference between the variable Active SQF Port Fee that was 
paid in the month of April 2015 and the amount that these Specialist 
and Market Makers would have paid if the Active SQF Port Fee was 
operative on April 1 rather than on May 1 (the ``overage''). Moreover, 
because the current Active SQF Port Fee did not become operative until 
May 1, 2015 and the fee reduction did not occur as intended on April 1, 
Specialists and Market Makers were not able to take advantage of the 
cheaper Active SQF Port Fee and had to pay for the more expensive 
variable Active SQF Port Fee in the April billing period. The Exchange 
believes that the proposed one-time Refund, for the April billing 
period only, is reasonable and proper.
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    \12\ See Securities Exchange Act Release No. 73687 (November 25, 
2014), 79 FR 71485 (December 2, 2014) (SR-Phlx-2014-73) (notice of 
filing and immediate effectiveness that, among other things, during 
the Phlx technology refresh instituted the variable Active SQF Port 
Fee operative on April 1, 2015) (the ``technology refresh filing'').
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    Currently, per Section VII B. of the Pricing Schedule all 
Specialists and Market Makers on the Exchange are subject to an Active 
SQF Port Fee of $1,250 per port per month. Per note 26 in Section VII 
B., which is applicable to this section, the Active SQF Port Fee is 
capped at $42,000 per month. During the April billing period, all 
Specialists and Market Makers on the Exchange were subject to the 
following variable Active SQF Port Fee:

------------------------------------------------------------------------
                                                                Monthly
                  Number of active SQF port                     fee per
                                                                  port
------------------------------------------------------------------------
1............................................................     $2,500
2-6..........................................................      4,000
7 and over...................................................     15,000
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The cap is likewise applicable to the variable Active SQF Port Fee. The 
proposal simply refunds the overage or difference between the variable 
Active SQF Port Fee paid and the fixed Active SQF Port Fee (in each 
instance capped at $42,000).\13\ For example, if Specialist A was 
assessed and paid a variable Active SQF Port Fee of $16,000 for the 
month of April 2015 (4 ports at $4000 per port) whereas he would have 
paid only a $5,000 Active SQF Port Fee if this fee had been operative 
in April (4 ports at $1250 per port), his Refund amount would be 
$11,000. Or, if Market Maker B was assessed and paid a variable Active 
SQF Port Fee of $42,000 for the month of April 2015 (8 ports at $15,000 
per port for an uncapped total of $120,000, to which the cap is 
applied) whereas he would have paid only a $10,000 Active SQF Port Fee 
if this fee had been operative in April (8 ports at $1,250 per port), 
his Refund amount would be $32,000.
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    \13\ A few Specialists and Market Makers hit the cap of $42,000 
for the variable Active SQF Port Fee and the cap of $42,000 for the 
fixed Active SQF Port Fee. As a result, they did not, in fact, pay 
any overage and are not eligible for a Refund.
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    The proposed Refund of overages paid by Specialists and Market 
Makers to the Exchange is, as discussed, uniquely applicable only to 
the April billing period. The Exchange believes that its proposal is 
reasonable and proper under the circumstances, and is consistent with 
the Act.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\14\ in general, and with 
Sections 6(b)(4) and 6(b)(5) of the Act,\15\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which the Exchange operates or controls [sic] and is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest; and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The proposal allows the Exchange to refund, for 
the April billing period only (April 1 to April 30, 2015), overages of 
assessed and paid variable Active SQF Port Fees as compared to Active 
SQF Port Fees. The Exchange believes that its proposal is reasonable, 
proper and correct under the circumstances, and reflects the Exchange's 
continuing efforts to improve its market and market quality in order to 
perfect a free and open market and national market system.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4) and (5).
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    During the April billing period of April 1 to April 30, 2015 the 
Exchange had in place a variable Active SQF Port Fee applicable to 
Specialists and Market Makers that exceeded the current Active SQF Port 
Fee, which became operative on May 1, 2015. This created the overages 
that are proposed to be refunded to eligible Specialists and Market 
Makers. That is, Specialists and Market Makers paid more in April than 
was anticipated by the Exchange and members, as compared to the one 
price Active SQF Port Fee that has been operative since May 1, 2015, 
and the Exchange proposes to refund the difference. Only those 
Specialists and Market Makers that were assessed and in fact paid an 
overage are eligible for the Refund. For example, if Specialist A was 
assessed and paid a variable Active SQF Port Fee of $16,000 for the 
month of April 2015 (4 ports at $4000 per port) whereas he would have 
paid only a $5,000 Active SQF Port Fee if this fee had been operative 
in April (4 ports at $1250 per port), his Refund amount would be 
$11,000. Or, if Market Maker B was assessed and paid a variable Active 
SQF Port Fee of $42,000 for the month of April 2015 (8 ports at $15,000 
per port for an uncapped total of $120,000, to which the cap is 
applied) whereas he would have paid only a $10,000 Active SQF Port Fee 
if this fee had been operative in April (8 ports at $1,250 per port), 
his Refund amount would be $32,000.
    The Exchange believes it is reasonable to refund eligible 
Specialists and Market Makers that were assessed per the Pricing 
Schedule and actually paid an overage. The Exchange's intention was to 
delete the variable Active SQF Port Fee and institute the Active SQF 
Port Fee operative April 1; however, the proposal to do so was 
rejected. The Exchange then filed a proposal that was in fact 
instituted to be operative on May 1, 2015 since the fees regarding the 
Active SQF Ports are monthly. The Exchange believes that it is 
reasonable and equitable to assess all firms the same Active SQF Port 
Fee as opposed to a variable fee and refund the overage to eligible 
Specialists and Market Makers because, as discussed, the variable 
Active SQF Port Fee is more expensive for the great majority of 
Specialists and Market Makers; this was not the expected outcome of the 
technology refresh. In addition, Specialists and Market Makers have, as 
a group, successfully worked with the Exchange through the technology 
refresh and as a result most such members need, and use, fewer ports to 
connect to the Exchange's matching engine.\16\ The

[[Page 61539]]

proposed Refund is a unique, one-time situation that applies only to 
the April billing period. The Exchange believes that its well-
formulated fee structure in the Pricing Schedule, which includes the 
Active SQF Port Fees, continues to work to attract liquidity to the 
Exchange. This benefits market participants and provides the 
opportunity for increased order interaction on the Exchange. The 
Exchange continues to incentivize members and member organizations, 
through the Exchange's Pricing Schedule, to select Phlx as a venue for 
bringing liquidity and trading by offering competitive pricing. Such 
competitive, differentiated pricing exists today on other options 
exchanges. The Exchange's goal is creating and increasing incentives to 
attract orders to the Exchange that will, in turn, benefit all market 
participants through increased liquidity at the Exchange.
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    \16\ Because of the internal technologic configuration and 
technology development required by the technology refresh, a few 
members still need to keep the same number of ports.
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    The Exchange believes that its proposal to refund Specialists and 
Market Makers as discussed is equitable and not unfairly discriminatory 
because the Exchange will refund all Specialists and Market Makers that 
are eligible for such Refunds. A few Specialists and Market Makers hit 
the cap of $42,000 for the variable Active SQF Port Fee and the cap of 
$42,000 for the fixed Active SQF Port Fee. As a result, they did not, 
in fact, pay any overage and are not eligible for a Refund.\17\ The 
Exchange believes that this is equitable because the Refunds will be 
given to all Specialists and Market Makers that are eligible. The 
Exchange believes that this is not unfairly discriminatory because the 
Refunds will be given only to those Specialists and Market Makers that, 
in fact, paid an overage for the April billing period.
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    \17\ See supra note 13.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose an undue burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
    The Exchange believes that offering Specialists and Market Makers 
the opportunity to utilize certain Active SQF Ports and returning to 
eligible Specialists and Market Makers the overages between the 
variable Active SQF Port Fee and fixed Active SQF Port Fee for the 
April billing period does not burden competition. The Exchange 
continues to charge all Specialists and Market Makers the Active SQF 
Port Fee.
    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 by the Exchange 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.
    Finally, in establishing the pricing structure for Active SQF 
Ports, the Exchange has considered the competitive nature of the market 
and believes that it has considered all relevant factors and has not 
considered irrelevant factors in order to establish fair, reasonable, 
and not unreasonably discriminatory fees and an equitable allocation of 
fees among all users. The Exchange believes that its proposal to return 
the overages from the April billing period complement this process.

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

    No written comments were either solicited or received.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

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 protected]. Please 
include File Number SR-Phlx-2015-79 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-2015-79. 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 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; 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-2015-79 and should be 
submitted on or before November 3, 2015.

    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. 2015-25862 Filed 10-9-15; 8:45 am]
BILLING CODE 8011-01-P
61538 Federal Register / Vol. 80, No. 197 / Tuesday, October 13, 2015 / Notices

system via SQF, the Exchange believes only a $5,000 Active SQF Port Fee if Fee applicable to Specialists and Market
that member costs declined overall as a this fee had been operative in April (4 Makers that exceeded the current Active
result of the more efficient connectivity ports at $1250 per port), his Refund SQF Port Fee, which became operative
offered by the refresh. The Exchange’s amount would be $11,000. Or, if Market on May 1, 2015. This created the
proposal to delete the variable Active Maker B was assessed and paid a overages that are proposed to be
SQF Port Fee, which was re-filed with variable Active SQF Port Fee of $42,000 refunded to eligible Specialists and
the operative date of May 1, 2015 for the month of April 2015 (8 ports at Market Makers. That is, Specialists and
because of the monthly nature of the fee, $15,000 per port for an uncapped total Market Makers paid more in April than
reduced the Active SQF Port Fees paid of $120,000, to which the cap is was anticipated by the Exchange and
by the majority of Market Makers on the applied) whereas he would have paid members, as compared to the one price
Exchange. The Exchange’s proposal is only a $10,000 Active SQF Port Fee if Active SQF Port Fee that has been
simply to refund eligible Specialists and this fee had been operative in April (8 operative since May 1, 2015, and the
Market Makers the overage or difference ports at $1,250 per port), his Refund Exchange proposes to refund the
between the variable Active SQF Port amount would be $32,000. difference. Only those Specialists and
Fee that was paid in the month of April The proposed Refund of overages paid Market Makers that were assessed and
2015 and the amount that these by Specialists and Market Makers to the in fact paid an overage are eligible for
Specialist and Market Makers would Exchange is, as discussed, uniquely the Refund. For example, if Specialist A
have paid if the Active SQF Port Fee applicable only to the April billing was assessed and paid a variable Active
was operative on April 1 rather than on period. The Exchange believes that its SQF Port Fee of $16,000 for the month
May 1 (the ‘‘overage’’). Moreover, proposal is reasonable and proper under of April 2015 (4 ports at $4000 per port)
because the current Active SQF Port Fee the circumstances, and is consistent whereas he would have paid only a
did not become operative until May 1, with the Act.
$5,000 Active SQF Port Fee if this fee
2015 and the fee reduction did not 2. Statutory Basis had been operative in April (4 ports at
occur as intended on April 1, Specialists $1250 per port), his Refund amount
The Exchange believes that the
and Market Makers were not able to take would be $11,000. Or, if Market Maker
proposed rule change is consistent with
advantage of the cheaper Active SQF B was assessed and paid a variable
the provisions of Section 6 of the Act,14
Port Fee and had to pay for the more Active SQF Port Fee of $42,000 for the
in general, and with Sections 6(b)(4) and
expensive variable Active SQF Port Fee month of April 2015 (8 ports at $15,000
6(b)(5) of the Act,15 in particular, in that
in the April billing period. The per port for an uncapped total of
it provides for the equitable allocation
Exchange believes that the proposed $120,000, to which the cap is applied)
of reasonable dues, fees and other
one-time Refund, for the April billing whereas he would have paid only a
charges among members and issuers and
period only, is reasonable and proper. other persons using any facility or $10,000 Active SQF Port Fee if this fee
Currently, per Section VII B. of the system which the Exchange operates or had been operative in April (8 ports at
Pricing Schedule all Specialists and controls [sic] and is designed to prevent $1,250 per port), his Refund amount
Market Makers on the Exchange are fraudulent and manipulative acts and would be $32,000.
subject to an Active SQF Port Fee of practices, to promote just and equitable The Exchange believes it is reasonable
$1,250 per port per month. Per note 26 principles of trade, to foster cooperation to refund eligible Specialists and Market
in Section VII B., which is applicable to and coordination with persons engaged Makers that were assessed per the
this section, the Active SQF Port Fee is in regulating, clearing, settling, Pricing Schedule and actually paid an
capped at $42,000 per month. During processing information with respect to, overage. The Exchange’s intention was
the April billing period, all Specialists and facilitating transactions in to delete the variable Active SQF Port
and Market Makers on the Exchange securities, to remove impediments to Fee and institute the Active SQF Port
were subject to the following variable and perfect the mechanism of a free and Fee operative April 1; however, the
Active SQF Port Fee: open market and a national market proposal to do so was rejected. The
system, and, in general, to protect Exchange then filed a proposal that was
Monthly
Number of active SQF port fee per investors and the public interest; and is in fact instituted to be operative on May
port not designed to permit unfair 1, 2015 since the fees regarding the
discrimination between customers, Active SQF Ports are monthly. The
1 .................................................... $2,500 issuers, brokers, or dealers. The Exchange believes that it is reasonable
2–6 ................................................ 4,000 proposal allows the Exchange to refund, and equitable to assess all firms the
7 and over .................................... 15,000
for the April billing period only (April same Active SQF Port Fee as opposed to
1 to April 30, 2015), overages of a variable fee and refund the overage to
The cap is likewise applicable to the assessed and paid variable Active SQF eligible Specialists and Market Makers
variable Active SQF Port Fee. The Port Fees as compared to Active SQF because, as discussed, the variable
proposal simply refunds the overage or Port Fees. The Exchange believes that its Active SQF Port Fee is more expensive
difference between the variable Active proposal is reasonable, proper and for the great majority of Specialists and
SQF Port Fee paid and the fixed Active correct under the circumstances, and Market Makers; this was not the
SQF Port Fee (in each instance capped reflects the Exchange’s continuing expected outcome of the technology
at $42,000).13 For example, if Specialist efforts to improve its market and market
refresh. In addition, Specialists and
A was assessed and paid a variable quality in order to perfect a free and Market Makers have, as a group,
Active SQF Port Fee of $16,000 for the
mstockstill on DSK4VPTVN1PROD with NOTICES

open market and national market successfully worked with the Exchange
month of April 2015 (4 ports at $4000 system. through the technology refresh and as a
per port) whereas he would have paid During the April billing period of result most such members need, and
April 1 to April 30, 2015 the Exchange use, fewer ports to connect to the
13 A few Specialists and Market Makers hit the

cap of $42,000 for the variable Active SQF Port Fee
had in place a variable Active SQF Port Exchange’s matching engine.16 The
and the cap of $42,000 for the fixed Active SQF Port
14 15 U.S.C. 78f.
Fee. As a result, they did not, in fact, pay any 16 Because of the internal technologic

overage and are not eligible for a Refund. 15 15 U.S.C. 78f(b)(4) and (5). configuration and technology development required

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Federal Register / Vol. 80, No. 197 / Tuesday, October 13, 2015 / Notices 61539

proposed Refund is a unique, one-time The Exchange operates in a highly • Send an email to rule-comments@
situation that applies only to the April competitive market, comprised of sec.gov. Please include File Number SR–
billing period. The Exchange believes twelve options exchanges, in which Phlx–2015–79 on the subject line.
that its well-formulated fee structure in market participants can easily and
Paper Comments
the Pricing Schedule, which includes readily direct order flow to competing
the Active SQF Port Fees, continues to venues if they deem fee levels at a • Send paper comments in triplicate
work to attract liquidity to the particular venue to be excessive or to Secretary, Securities and Exchange
Exchange. This benefits market rebates to be inadequate. Accordingly, Commission, 100 F Street NE.,
participants and provides the the fees that are assessed by the Washington, DC 20549–1090.
opportunity for increased order Exchange are influenced by these robust All submissions should refer to File
interaction on the Exchange. The market forces and therefore must remain Number SR–Phlx–2015–79. This file
Exchange continues to incentivize competitive with fees charged and number should be included on the
members and member organizations, rebates paid by other venues and subject line if email is used. To help the
through the Exchange’s Pricing therefore must continue to be reasonable Commission process and review your
Schedule, to select Phlx as a venue for and equitably allocated to those comments more efficiently, please use
bringing liquidity and trading by members that opt to direct orders to the only one method. The Commission will
offering competitive pricing. Such Exchange rather than competing venues. post all comments on the Commission’s
competitive, differentiated pricing exists Finally, in establishing the pricing Internet Web site (http://www.sec.gov/
today on other options exchanges. The structure for Active SQF Ports, the rules/sro.shtml). Copies of the
Exchange’s goal is creating and Exchange has considered the submission, all subsequent
increasing incentives to attract orders to competitive nature of the market and amendments, all written statements
the Exchange that will, in turn, benefit believes that it has considered all with respect to the proposed rule
all market participants through relevant factors and has not considered change that are filed with the
increased liquidity at the Exchange. irrelevant factors in order to establish Commission, and all written
The Exchange believes that its fair, reasonable, and not unreasonably communications relating to the
proposal to refund Specialists and discriminatory fees and an equitable proposed rule change between the
Market Makers as discussed is equitable allocation of fees among all users. The Commission and any person, other than
and not unfairly discriminatory because Exchange believes that its proposal to those that may be withheld from the
the Exchange will refund all Specialists return the overages from the April public in accordance with the
and Market Makers that are eligible for billing period complement this process. provisions of 5 U.S.C. 552, will be
such Refunds. A few Specialists and available for Web site viewing and
Market Makers hit the cap of $42,000 for C. Self-Regulatory Organization’s
Statement on Comments on the printing in the Commission’s Public
the variable Active SQF Port Fee and Reference Room, 100 F Street NE.,
the cap of $42,000 for the fixed Active Proposed Rule Change Received From
Members, Participants, or Others Washington, DC 20549, on official
SQF Port Fee. As a result, they did not, business days between the hours of
in fact, pay any overage and are not No written comments were either 10:00 a.m. and 3:00 p.m. Copies of the
eligible for a Refund.17 The Exchange solicited or received. filing also will be available for
believes that this is equitable because inspection and copying at the principal
the Refunds will be given to all III. Date of Effectiveness of the
Proposed Rule Change and Timing for office of the Exchange. All comments
Specialists and Market Makers that are received will be posted without change;
eligible. The Exchange believes that this Commission Action
the Commission does not edit personal
is not unfairly discriminatory because Within 45 days of the date of identifying information from
the Refunds will be given only to those publication of this notice in the Federal submissions. You should submit only
Specialists and Market Makers that, in Register or within such longer period (i) information that you wish to make
fact, paid an overage for the April as the Commission may designate up to available publicly. All submissions
billing period. 90 days of such date if it finds such should refer to File Number SR–Phlx–
B. Self-Regulatory Organization’s longer period to be appropriate and 2015–79 and should be submitted on or
Statement on Burden on Competition publishes its reasons for so finding or before November 3, 2015.
(ii) as to which the Exchange consents,
The Exchange does not believe that For the Commission, by the Division of
the Commission shall: (a) By order Trading and Markets, pursuant to delegated
the proposed rule change will impose
approve or disapprove such proposed authority.18
an undue burden on competition not
rule change, or (b) institute proceedings Robert W. Errett,
necessary or appropriate in furtherance
to determine whether the proposed rule
of the purposes of the Act. Deputy Secretary.
The Exchange believes that offering change should be disapproved.
[FR Doc. 2015–25862 Filed 10–9–15; 8:45 am]
Specialists and Market Makers the IV. Solicitation of Comments BILLING CODE 8011–01–P
opportunity to utilize certain Active
SQF Ports and returning to eligible Interested persons are invited to
Specialists and Market Makers the submit written data, views, and SECURITIES AND EXCHANGE
overages between the variable Active arguments concerning the foregoing, COMMISSION
SQF Port Fee and fixed Active SQF Port including whether the proposed rule
mstockstill on DSK4VPTVN1PROD with NOTICES

Fee for the April billing period does not change is consistent with the Act. Submission for OMB Review;
burden competition. The Exchange Comments may be submitted by any of Comment Request
continues to charge all Specialists and the following methods:
Market Makers the Active SQF Port Fee. Upon Written Request, Copies Available
Electronic Comments From: Securities and Exchange
by the technology refresh, a few members still need • Use the Commission’s Internet Commission, Office of FOIA Services,
to keep the same number of ports. comment form (http://www.sec.gov/
17 See supra note 13. rules/sro.shtml); or 18 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 21:23 Oct 09, 2015 Jkt 238001 PO 00000 Frm 00206 Fmt 4703 Sfmt 4703 E:\FR\FM\13OCN1.SGM 13OCN1
Document Created: 2018-02-27 08:48:06
Document Modified: 2018-02-27 08:48:06
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 61537