80 FR 80432 - Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Fees and Rebates and Tiers Related to BX Options
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 247 (December 24, 2015)
Federal Register Volume 80, Issue 247 (December 24, 2015)
| Page Range | 80432-80440 | |
| FR Document | 2015-32388 |
[Federal Register Volume 80, Number 247 (Thursday, December 24, 2015)] [Notices] [Pages 80432-80440] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-32388] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-76692; File No. SR-BX-2015-081] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Fees and Rebates and Tiers Related to BX Options December 18, 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 December 11, 2015, NASDAQ OMX BX, Inc. (``BX'' 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 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 its Options Pricing at Chapter XV Section 2, entitled ``BX Options Market--Fees and Rebates,'' which governs pricing for BX members using the BX Options Market (``BX Options''). The Exchange proposes to modify certain fees and rebates (per executed contract) and to adopt tiers applicable to fees and rebates (each a ``Tier'' and together the ``Tiers''). The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqomxbx.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 [[Page 80433]] 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 amend its Chapter XV, Section 2 to modify subsection (1) regarding certain fees and rebates \3\ (known as ``fees and rebates'') and to adopt Tiers applicable to certain fees and rebates. The proposed modified fees and rebates (per executed contract) and new Tiers would apply to Customers,\4\ BX Options Market Makers,\5\ and Non-Customers.\6\ One proposed new Tier schedule, consisting of three Tiers, would apply to Penny Pilot Options; and one proposed new Tier schedule, consisting of three Tiers, would apply to Non-Penny Pilot Options.\7\ --------------------------------------------------------------------------- \3\ Fees and rebates are per executed contract. Chapter XV, Section 2(1). \4\ The term ``Customer'' or (``C'') applies to any transaction that is identified by a Participant for clearing in the Customer range at The Options Clearing Corporation (``OCC'') which is not for the account of broker or dealer or for the account of a ``Professional'' (as that term is defined in Chapter I, Section 1(a)(48)). BX Chapter XV. \5\ BX Options Market Makers may also be referred to as ``Market Makers''. The term ``BX Options Market Maker'' or (``M'') means a Participant that has registered as a Market Maker on BX Options pursuant to Chapter VII, Section 2, and must also remain in good standing pursuant to Chapter VII, Section 4. In order to receive Market Maker pricing in all securities, the Participant must be registered as a BX Options Market Maker in at least one security. \6\ Note 1 to Chapter XV, Section 2 states: ``\1\A Non-Customer includes a Professional, Firm, Broker-Dealer and Non-BX Options Market Maker.'' \7\ The Penny Pilot was established in June 2012 and extended in 2015. See Securities Exchange Act Release Nos. 67256 (June 26, 2012), 77 FR 39277 (July 2, 2012) (SR-BX-2012-030) (order approving BX option rules and establishing Penny Pilot); and 75326 (June 29, 2015), 80 FR 38481 (July 6, 2015) (SR-BX-2015-037) (notice of filing and immediate effectiveness extending the Penny Pilot through June 30, 2016). --------------------------------------------------------------------------- Currently, Chapter XV, Section 2 subsection (1) reads as follows: Sec. 2 BX Options Market--Fees and Rebates The following charges shall apply to the use of the order execution and routing services of the BX Options market for all securities. (1) Fees for Execution of Contracts on the BX Options Market Fees and Rebates [Per executed contract] ---------------------------------------------------------------------------------------------------------------- BX Options Customer Market Maker Non-Customer \1\ ---------------------------------------------------------------------------------------------------------------- Penny Pilot Options: Rebate to Add Liquidity................................... \2\ $0.00 \2\ $0.10 N/A Fee to Add Liquidity...................................... \3\ 0.39 \3\ 0.39 $0.45 Rebate to Remove Liquidity................................ 0.34 N/A N/A Fee to Remove Liquidity................................... N/A 0.46 0.46 Non-Penny Pilot Options: Fee to Add Liquidity...................................... \5\ 0.25/$0.85 \5\ 0.50/$0.85 0.88 Rebate to Remove Liquidity................................ 0.70 N/A N/A Fee to Remove Liquidity................................... N/A 0.89 0.89 ---------------------------------------------------------------------------------------------------------------- \1\ A Non-Customer includes a Professional, Firm, Broker-Dealer and Non-BX Options Market Maker. \2\ The Rebate to Add Liquidity will be paid to a Customer or BX Options Market Maker only when the Customer or BX Options Market Maker is contra to a Non-Customer or BX Options Market Maker. \3\ The Fee to Add Liquidity will be assessed to a Customer or BX Options Market Maker only when the Customer or BX Options Market Maker is contra to a Customer. \4\ Reserved \5\ The higher Fee to Add Liquidity will be assessed to a Customer or BX Options Market Maker only when the Customer or BX Options Market Maker is contra to a Customer. The Exchange proposes modifications to its fees and rebates for Penny Pilot Options and for Non-Penny Pilot Options as follows: \8\ --------------------------------------------------------------------------- \8\ The greatest volume options traded on the Exchange and in the options market are Penny Pilot Options, and the Exchange has taken this into account when structuring and modifying its fee and rebate schedule. --------------------------------------------------------------------------- Change 1. For Penny Pilot Options, the Exchange proposes to modify fees and rebates to add Tiers for: (1) Customer Rebates to Add Liquidity; (2) Customer Fees to Add Liquidity; (3) Customer Rebates to Remove Liquidity; and (4) BX Options Market Maker Fees to Remove Liquidity. Change 2. For Non-Penny Pilot Options, the Exchange proposes to modify fees and rebates to add Tiers for: (1) Customer Rebates to Add Liquidity; (2) Customer Fees to Add Liquidity; (3) Customer Rebates to Remove Liquidity; (4) BX Options Marker Maker Fees to Remove Liquidity. The Exchange also proposes to increase the Fee to Add Liquidity for BX Options Market Maker and for Non-Customer. Each specific change is described in detail below. Change 1--Penny Pilot Options: Modify Fees and Rebates To Add Tiers For Penny Pilot Options, the Exchange is proposing to modify fees and rebates for Customer and BX Options Market Maker.\9\ Specifically, the Exchange is proposing to add Tiers for Rebate to Add Liquidity for Customer,\10\ Fee to Add Liquidity for Customer,\11\ and Rebate to Remove [[Page 80434]] Liquidity for Customer. The Exchange is also proposing to add Tiers for Fee to Remove Liquidity for BX Options Market Maker.\12\ The three new Tiers, described below, together make up the ``Penny Pilot Options Tier Schedule''. --------------------------------------------------------------------------- \9\ The Non-Customer Penny Pilot Options pricing will remain unchanged. \10\ The addition of Tiers to Rebate to Add Liquidity for Customer replaces the current fee [sic] ($0.00) and reference to note 2 which are removed. Note 2 will continue to apply to Rebate to Add Liquidity for BX Options Market Maker, but without reference to the note applying to a Customer. Today, Customers do not receive a Rebate to Add Liquidity. \11\ The addition of Tiers to Fee to Add Liquidity for Customer replaces the current fee ($0.39) and reference to note 3 which are removed. Note 3 will continue to apply to Fee to Add Liquidity for BX Options Market Maker, but without reference to the note applying to a Customer. \12\ The addition of tiers to the Fee to Remove Liquidity for the BX Options Market Maker replaces the current per contract fee of 0.46. --------------------------------------------------------------------------- Proposed Tier 1 (``Penny Pilot Tier 1'') will be where a BX Participant (``Participant'') executes less than 0.05% of total industry customer equity and exchange traded fund (``ETF'') option average daily volume (``ADV'') contracts per month. Proposed Penny Pilot Tier 1 will range from $0.00 rebate to $0.46 fee: --the Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker will be $0.00 (no rebate will be paid); --the Fee to Add Liquidity when Customer trading with Customer will be $0.39;``\13\ --------------------------------------------------------------------------- \13\ For Penny Pilot Options, this $0.39 Fee to Add Liquidity when Customer trading with Customer is the same in all three Tiers. --------------------------------------------------------------------------- --the Rebate to Remove Liquidity when Customer trading with Non- Customer, BX Options Market Maker, or Customer will be $0.00; --the Fee to Remove Liquidity when BX Market Maker trading with Customer will be $0.39; and --the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.46.\14\ --------------------------------------------------------------------------- \14\ For Penny Pilot Options, this $0.46 Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be the same in all Tiers. Proposed Tier 2 (``Penny Pilot Tier 2'') will be where Participant executes 0.05% to less than 0.15% of total industry customer equity and ETF option ADV contracts per month. Proposed Penny Pilot Tier 2 will --------------------------------------------------------------------------- range from $0.10 rebate to $0.46 fee: --the Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker will be $0.10; --the Fee to Add Liquidity when Customer trading with Customer will be $0.39; --the Rebate to Remove Liquidity when Customer trading with Non- Customer, BX Options Market Maker, or Customer will be $0.25; --the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.39; and --the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.46. Proposed Tier 3 (``Penny Pilot Tier 3'') will be where Participant executes 0.15% or more of total industry customer equity and ETF option ADV contracts per month. Proposed Penny Pilot Tier 3 will range from $0.20 rebate to $0.46 fee: --the Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker will be $0.20; --the Fee to Add Liquidity when Customer trading with Customer will be $0.39; --the Rebate to Remove Liquidity when Customer trading with Non- Customer, BX Options Market Maker, or Customer will be $0.35; --the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.30; and --the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.46. Change 2--Non-Penny Pilot Options: Modify Fees and Rebates To Add Tiers, Increase Fee To Add Liquidity For Non-Penny Pilot Options, the Exchange is proposing to modify fees and rebates for Customer, BX Options Market Maker, and Non- Customer. Specifically, the Exchange is proposing to add Tiers for Rebate to Add Liquidity for Customer,\15\ Fee to Add Liquidity for Customer,\16\ and Rebate to Remove Liquidity for Customer.\17\ The Exchange is proposing to add Tiers for Fee to Remove Liquidity for BX Market Maker.\18\ The three new Tiers, described below, together make up the ``Non-Penny Pilot Options Tier Schedule''. The Exchange is also proposing a modest ten cent increase to the Fee to Add Liquidity for BX Options Market Maker from $0.50/$0.85 to $0.50/$0.95,\19\ and for Non- Customer from $0.88 to $0.98. --------------------------------------------------------------------------- \15\ The addition of Rebate to Add Liquidity of the Non-Penny Pilot Options part of the fees and rebates schedule is so that the Non-Penny and Penny parts of the schedule both have Rebate to Add Liquidity. The addition of Tiers to Rebate to Add Liquidity in the Non-Penny category applies to Customer only. \16\ The addition of Tiers to Fee to Add Liquidity for Customer replaces the current fee ($0.25/$0.85) and reference to note 5 which are taken out. Note 5 will continue to apply to Fee to Add Liquidity for BX Options Market Maker, but without reference to the note applying to a Customer. The Exchange notes that for Fee to Add Liquidity for Customer the Exchange is replacing a fee ($0.25/$0.85) with Tiers that include Fee to Add Liquidity as well as Rebate to Add Liquidity. \17\ The addition of Tiers to Rebate to Remove Liquidity for Customer replaces the current fee [sic] ($0.70) and reference to it is taken out. \18\ The addition of Tiers to Fee to Remove Liquidity for BX Options Market Maker replaces the current fee ($0.89) and reference to it is taken out. \19\ Per note 5 as modified, the higher Fee to Add Liquidity will be assessed to a BX Options Market Maker only when the BX Options Market Maker is contra to a Customer. --------------------------------------------------------------------------- Proposed Tier 1 (``Non-Penny Pilot Tier 1'') will be where Participant executes less than 0.05% of total industry customer equity and ETF option ADV contracts per month. Proposed Non-Penny Pilot Tier 1 will range from $0.00 rebate to $0.89 fee: --the Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker will be $0.00 (no rebate will be paid); --the Fee to Add Liquidity when Customer trading with Customer will be $0.85; \20\ --------------------------------------------------------------------------- \20\ For Non-Penny Pilot Options, this $0.85 Fee to Add Liquidity when Customer trading with Customer is the same in all three Tiers. --------------------------------------------------------------------------- --the Rebate to Remove Liquidity when Customer trading with Non- Customer, BX Options Market Maker, or Customer will be $0.80; --the Fee to Remove Liquidity when BX Market Maker trading with Customer will be $0.89; and --the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.89.\21\ --------------------------------------------------------------------------- \21\ For Non-Penny Pilot Options, this $0.89 Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be the same in all Tiers. Proposed Tier 2 (``Non-Penny Pilot Tier 2'') will be where Participant executes 0.05% to less than 0.15% of total industry customer equity and ETF option ADV contracts per month. Proposed Non- --------------------------------------------------------------------------- Penny Pilot Tier 2 will range from $0.10 rebate to $0.89 fee: --the Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker will be $0.10; --the Fee to Add Liquidity when Customer trading with Customer will be $0.85; --the Rebate to Remove Liquidity when Customer trading with Non- Customer, BX Options Market Maker, or Customer will be $0.80; --the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.89; and --the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.89. Proposed Tier 3 (``Non-Penny Pilot Tier 3'') will be where Participant executes 0.15% or more of total industry customer equity and ETF option ADV contracts per month. Proposed Non-Penny Pilot Tier 3 will range from $0.20 rebate to $0.89 fee: [[Page 80435]] --the Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker will be $0.20; --the Fee to Add Liquidity when Customer trading with Customer will be $0.85; --the Rebate to Remove Liquidity when Customer trading with Non- Customer, BX Options Market Maker, or Customer will be $0.80; --the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.60; and --the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.89. As proposed, Chapter XV, Section 2 subsection (1) will read as follows: Sec. 2 BX Options Market--Fees and Rebates The following charges shall apply to the use of the order execution and routing services of the BX Options market for all securities. (1) Fees for Execution of Contracts on the BX Options Market Fees and Rebates [Per executed contract] ---------------------------------------------------------------------------------------------------------------- BX Options Customer Market Maker Non-Customer \1\ ---------------------------------------------------------------------------------------------------------------- Penny Pilot Options: Rebate to Add Liquidity................................... # \2\ $0.10 N/A Fee to Add Liquidity...................................... # \3\ 0.39 $0.45 Rebate to Remove Liquidity................................ # N/A N/A Fee to Remove Liquidity................................... N/A # 0.46 Non-Penny Pilot Options: Rebate to Add Liquidity................................... * N/A N/A Fee to Add Liquidity...................................... * \5\ 0.50/$0.95 0.98 Rebate to Remove Liquidity................................ * N/A N/A Fee to Remove Liquidity................................... N/A * 0.89 ---------------------------------------------------------------------------------------------------------------- \1\ A Non-Customer includes a Professional, Firm, Broker-Dealer and Non-BX Options Market Maker. \2\ The Rebate to Add Liquidity will be paid to a BX Options Market Maker only when the BX Options Market Maker is contra to a Non-Customer or BX Options Market Maker. \3\ The Fee to Add Liquidity will be assessed to a BX Options Market Maker only when the BX Options Market Maker is contra to a Customer. \4\ Reserved. \5\ The higher Fee to Add Liquidity will be assessed to a BX Options Market Maker only when the BX Options Market Maker is contra to a Customer. # Penny Pilot Options Tier Schedule -------------------------------------------------------------------------------------------------------------------------------------------------------- Rebate to add Rebate to remove Fee to remove Fee to remove liquidity Fee to add liquidity liquidity liquidity liquidity -------------------------------------------------------------------------------------------------------------------------------------------------------- When............................... Customer.............. Customer.............. Customer............. BX Options Market BX Options Market Maker. Maker. Trading with....................... Non-Customer or BX Customer.............. Non-Customer, BX Customer............. Non-Customer or BX Options Market Maker. Options Market Options Market Maker, or Customer. Maker. Tier 1: Participant executes less than $0.00................. $0.39................. $0.00................ $0.39................ $0.46. 0.05% of total industry customer equity and ETF option ADV contracts per month. Tier 2: Participant executes 0.05% to $0.10................. $0.39................. $0.25................ $0.39................ $0.46. less than 0.15% of total industry customer equity and ETF option ADV contracts per month. Tier 3: Participant executes 0.15% or $0.20................. $0.39................. $0.35................ $0.30................ $0.46. more of total industry customer equity and ETF option ADV contracts per month. -------------------------------------------------------------------------------------------------------------------------------------------------------- # Penny Pilot Options Tier Schedule * Non-Penny Pilot Options Tier Schedule -------------------------------------------------------------------------------------------------------------------------------------------------------- Rebate to add Rebate to remove Fee to remove Fee to remove liquidity Fee to add liquidity liquidity liquidity liquidity -------------------------------------------------------------------------------------------------------------------------------------------------------- When............................... Customer.............. Customer.............. Customer............. BX Options Market BX Options Market Maker. Maker. [[Page 80436]] Trading with....................... Non-Customer or BX Customer.............. Non-Customer, BX Customer............. Non-Customer or BX Options Market Maker. Options Market Options Market Maker, or Customer. Maker. Tier 1: Participant executes less than $0.00................. $0.85................. $0.80................ $0.89................ $0.89. 0.05% of total industry customer equity and ETF option ADV contracts per month. Tier 2: Participant executes 0.05% to $0.10................. $0.85................. $0.80................ $0.89................ $0.89. less than 0.15% of total industry customer equity and ETF option ADV contracts per month. Tier 3: Participant executes 0.15% or $0.20................. $0.85................. $0.80................ $0.60................ $0.89. more of total industry customer equity and ETF option ADV contracts per month. -------------------------------------------------------------------------------------------------------------------------------------------------------- The Exchange is adopting these fees and rebates at this time because it believes that they will provide incentives for execution of contracts on the BX Options Market. The Exchange believes that its proposal should provide increased opportunities for participation in executions on the Exchange, facilitating the ability of the Exchange to bring together participants and encourage more robust competition for orders. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,\22\ in general, and with Section 6(b)(4) and 6(b)(5) of the Act,\23\ 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, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78f. \23\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, for example, the Commission indicated that market forces should generally determine the price of non-core market data because national market system regulation ``has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.'' \24\ Likewise, in NetCoalition v. NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir. 2010), the D.C. Circuit upheld the Commission's use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a cost-based approach.\25\ As the court emphasized, the Commission ``intended in Regulation NMS that `market forces, rather than regulatory requirements' play a role in determining the market data . . . to be made available to investors and at what cost.'' \26\ --------------------------------------------------------------------------- \24\ Exchange Act Release No. 34-51808 (June 9, 2005) (``Regulation NMS Adopting Release''). \25\ See NetCoalition, 615 F.3d at 534. \26\ Id. at 537. --------------------------------------------------------------------------- Further, ``[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers'. . . .'' \27\ Although the Court and the SEC were discussing the cash equities markets, the Exchange believes that, as discussed above, these views apply with equal force to the options markets. --------------------------------------------------------------------------- \27\ NetCoalition I, 615 F.3d at 539 (quoting ArcaBook Order, 73 FR at 74782-74783). --------------------------------------------------------------------------- The Exchange believes that its proposal should provide increased opportunities for participation in executions on the Exchange, facilitating the ability of the Exchange to bring together participants and encourage more robust competition for orders. Change 1--Penny Pilot Options: Modify Fees and Rebates For Penny Pilot Options, the Exchange is proposing to modify fees and rebates for Customer and BX Options Market Maker. Specifically, the Exchange is proposing to add Tiers for Rebate to Add Liquidity for Customer, Fee to Add Liquidity for Customer, and Rebate to Remove Liquidity for Customer. The Exchange is also proposing to add Tiers for Fee to Remove Liquidity for BX Market Maker. The three new Tiers make up the Penny Pilot Options Tier Schedule. In particular, proposed Penny Pilot Tier 1 will be where a Participant executes less than 0.05% of total industry customer equity and ETF option ADV contracts per month, and will range from $0.00 rebate to $0.46 fee.\28\ Proposed Penny Pilot Tier 2 will [[Page 80437]] be where Participant executes 0.05% to less than 0.15% of total industry customer equity and ETF option ADV contracts per month, and will range from $0.10 rebate to $0.46 fee.\29\ Proposed Penny Pilot Tier 3 will be where Participant executes 0.15% or more of total industry customer equity and ETF option ADV contracts per month, and will range from $0.20 rebate to $0.46 fee.\30\ --------------------------------------------------------------------------- \28\ The Rebate to Add Liquidity when Customer trading with Non- Customer or BX Options Market Maker will be $0.00; the Fee to Add Liquidity when Customer trading with Customer will be $0.39 (same across all tiers); the Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer will be $0.00; the Fee to Remove Liquidity when BX Market Maker trading with Customer will be $0.39; and the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.46 (same across all Tiers). \29\ The Rebate to Add Liquidity when Customer trading with Non- Customer or BX Options Market Maker will be $0.10; the Fee to Add Liquidity when Customer trading with Customer will be $0.39; the Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer will be $0.25; the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.39; and the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.46. \30\ The Rebate to Add Liquidity when Customer trading with Non- Customer or BX Options Market Maker will be $0.20; the Fee to Add Liquidity when Customer trading with Customer will be $0.39; the Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer will be $0.35; the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.30; and the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.46. --------------------------------------------------------------------------- In adding the new Tiers in the Penny Pilot Options Tier Schedule, the current pricing will be replaced with the proposed Tier Schedule and is no longer used. Tiers replace the current rebate ($0.00) in Rebate to Add Liquidity for Customer (no rebate is offered today), and reference to note 2 is removed.\31\ Tiers replace the current fee ($0.39) to Fee to Add Liquidity for Customer and reference to note 3 is removed and will not apply with this proposal.\32\ Certain references in Notes 2 and 3 to Customer are removed, and as such the notes no longer make sense for Rebate to Add Liquidity and for Customer Fee to Add Liquidity for Customer.\33\ The Exchange is also substituting the current fee ($0.46) to Fee to Remove Liquidity for BX Options Market Maker by putting it in the tier schedule. Deleting the rebates and fees from the fees and rebates structure for Penny Pilot Options is reasonable where they have been replaced by the new Tiers structure to incentivize Participants to send order flow to the Exchange. --------------------------------------------------------------------------- \31\ The rule text of note 2 is amended to reflect the removal of certain references to Customer. \32\ The rule text of note 3 is amended to reflect the removal of certain references to Customer. \33\ Notes 2 and 3 continue to apply, to Rebate to Add Liquidity for BX Options Market Maker and to Fee to Add Liquidity for BX Options Market Maker, respectively, but without deleted references to Customer. --------------------------------------------------------------------------- The Exchange believes that the proposed Tiers in the Penny Pilot Options Tier Schedule are reasonable in that they reflect a structure that is not novel in the options markets but rather is similar to that of other options markets and competitive with what is offered by other exchanges.\34\ In addition, the Exchange believes that making changes to add Tiers applicable to the Customer in terms of Rebate to Add Liquidity, Fee to Add Liquidity, and Rebate to Remove Liquidity, is reasonable because it encourages the desired Customer behavior by attracting Customer interest to the Exchange. Customer activity enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. --------------------------------------------------------------------------- \34\ See, e.g., the MIAX fee schedule at http://www.miaxoptions.com/sites/default/files/fee-schedules/MIAX_Options_Fee_Schedule_10012015.pdf and the BOX fee schedule at http://boxexchange.com/assets/BOX_Fee_Schedule1.pdf. --------------------------------------------------------------------------- Establishing Penny Pilot Tiers for Rebate to Add Liquidity for Customer, Fee to Add Liquidity for Customer, and Rebate to Remove Liquidity for Customer, and Penny Pilot Tiers for Fee to Remove Liquidity for BX Options Market Maker is reasonable. It encourages market participant behavior through progressive tiered fees and rebates using an accepted methodology among options exchanges.\35\ The proposed Tiers in the Penny Pilot Options Tier Schedule, which have been discussed at length, clearly reflect the progressively increasing nature of Participant executions structured for the purpose of attracting order flow to the Exchange. --------------------------------------------------------------------------- \35\ See, e.g., fee and rebate schedules of other options exchanges, including, but not limited to, NASDAQ Options Market (``NOM''), NASDAQ OMX PHLX LLC (``Phlx''), and Chicago Board Options Exchange (``CBOE''). --------------------------------------------------------------------------- The Penny Pilot Tiers are reasonable in that they are set up to incentivize Participants to direct liquidity to the Exchange. That is, as Participants execute more of total industry customer equity and ETF option ADV contracts per month on the Exchange, they can in certain categories earn higher rebates and be assessed lower fees. For example, the Penny Pilot Tier 3 Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker is higher ($0.20) that [sic] the Penny Pilot Tier 1 Rebate to Add Liquidity ($0.00), which offer [sic] no rebate today. The Penny Pilot Tiers are set up in a similar progressive manner for Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer. And, the Fee to Remove Liquidity when BX Option Market Maker trading with Customer is lesser for Tier 3 ($0.30) than for Tier 1 ($0.39).\36\ --------------------------------------------------------------------------- \36\ The remaining categories of Fee to Add Liquidity when Customer trading with Customer and Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker reflect the same fee in each Penny Pilot Tier, whether 1, 2, or 3 ($0.39 and $0.46, respectively). --------------------------------------------------------------------------- For Penny Pilot Options, establishing the Customer-related and BX Options Market Maker-related fee and rebate changes, which includes the new Tiers, is equitable and not unfairly discriminatory. This is because the Exchange's proposal to assess fees and pay rebates according to Penny Pilot Tiers 1, 2, and 3 will apply uniformly to all similarly situated Participants. BX Options Market Makers would be assessed a Fee to Remove Liquidity according to the Penny Pilot Tiers, and Customers would earn a Rebate to Add Liquidity and a Rebate to Remove Liquidity according to the same Tiers per the Penny Pilot Options Tier Schedule . The fee and rebate schedule as proposed continues to reflect differentiation among different market participants. The Exchange believes that the differentiation is equitable and not unfairly discriminatory, as well as reasonable, and notes that unlike others (e.g. Non-Customers) some market participants like BX Options Market Makers commit to various obligations. For example, transactions of a BX Options Market Maker must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and BX Options Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings. Further, all BX Options Market Makers are designated as specialists on BX for all purposes under the Act or rules thereunder.\37\ --------------------------------------------------------------------------- \37\ See Chapter VII, Section 5, entitled ``Obligations of Market Makers''. --------------------------------------------------------------------------- The Exchange believes that by making the proposed Penny Pilot Options changes, it is incentivizing Participants to execute more volume on the Exchange to further enhance liquidity in this market. [[Page 80438]] Change 2--Non-Penny Pilot Options: Modify Fees and Rebates For Non-Penny Pilot Options, the Exchange is proposing to modify fees and rebates for Customer and BX Options Market Maker. Specifically, the Exchange is proposing to add Tiers for Rebate to Add Liquidity for Customer, Fee to Add Liquidity for Customer,\38\ and Rebate to Remove Liquidity for Customer. The Exchange is also proposing to add Tiers for Fee to Remove Liquidity for BX Market Maker. The three new Tiers make up the Non-Penny Pilot Options Tier Schedule. --------------------------------------------------------------------------- \38\ The addition of Rebate to Add Liquidity of the Non-Penny Pilot Options part of the fees and rebates schedule is so that the Non-Penny and Penny parts of the schedule both have Rebate to Add Liquidity. The addition of Tiers to Rebate to Add Liquidity in the Non-Penny category applies to Customer only. --------------------------------------------------------------------------- In particular, proposed Non-Penny Pilot Tier 1 will be where Participant executes less than 0.05% of total industry customer equity and ETF option ADV contracts per month, and will range from $0.00 rebate to $0.89 fee.\39\ The Proposed Non-Penny Pilot Tier 2 will be where Participant executes 0.05% to less than 0.15% of total industry customer equity and ETF option ADV contracts per month, and will range from $0.10 rebate to $0.89 fee.\40\ Proposed Non-Penny Pilot Tier 3 will be where Participant executes 0.15% or more of total industry customer equity and ETF option ADV contracts per month, and will range from $0.20 rebate to $0.89 fee.\41\ --------------------------------------------------------------------------- \39\ The Rebate to Add Liquidity when Customer trading with Non- Customer or BX Options Market Maker will be $0.00 ; the Fee to Add Liquidity when Customer trading with Customer will be $0.85 (same across all Tiers); the Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer will be $0.80; the Fee to Remove Liquidity when BX Market Maker trading with Customer will be $0.89; and the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.89 (same across all Tiers). \40\ The Rebate to Add Liquidity when Customer trading with Non- Customer or BX Options Market Maker will be $0.10; the Fee to Add Liquidity when Customer trading with Customer will be $0.85; the Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer will be $0.80; the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.89; and the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.89. \41\ The Rebate to Add Liquidity when Customer trading with Non- Customer or BX Options Market Maker will be $0.20; the Fee to Add Liquidity when Customer trading with Customer will be $0.85; the Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer will be $0.80; the Fee to Remove Liquidity when BX Options Market Maker trading with Customer will be $0.60; and the Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker will be $0.89. --------------------------------------------------------------------------- In adding the new Tiers in the Non-Penny Pilot Options Tier Schedule, the current pricing will be replaced with the proposed Tier Schedule and is no longer used. Tiers replace the current fee ($0.25/ $0.85) to Fee to Add Liquidity for Customer \42\ and reference to note 5 is removed.\43\ Certain references in note 5 to Customer are removed as they are no longer needed.\44\ Tiers replace the current Rebate to Remove Liquidity for Customer and the current rebate ($0.70) is removed. Tiers replace the current Fee to Remove Liquidity for BX Options Market Maker and the current fee ($0.89) is removed. Deleting the rebates and fees from the fees and rebates structure for Non-Penny Pilot Options is reasonable where they have been replaced by the new Tiers structure to incentivize Participants bringing flow to the Exchange. The Exchange is also reasonably increasing by ten cents (to $0.95) the Fee to Add Liquidity for BX Options Market Maker when the BX Options market maker is contra to a Customer, and increasing by ten cents (to $0.98) the Fee to Add Liquidity for Non-Customer. --------------------------------------------------------------------------- \42\ The Exchange notes that for Fee to Add Liquidity for Customer the Exchange is replacing a fee ($0.25/$0.85) with Tiers that include Fee to Add Liquidity as well as Rebate to Add Liquidity. \43\ The rule text of note 5 is amended to reflect the removal of certain references to Customer. \44\ Note 5 continues to apply, however, to Fee to Add Liquidity for BX Options Market Maker, but without reference to the note applying to a Customer. --------------------------------------------------------------------------- The Exchange believes that the proposed Tiers in the Non-Penny Pilot Options Tier Schedule are reasonable in that they reflect a structure that is not novel in the options markets but rather is similar to and competitive with what is offered by other exchanges.\45\ In addition, the Exchange believes that making changes to add Tiers applicable to the Customer in terms of Rebate to Add Liquidity, Fee to Add Liquidity, and Rebate to Remove Liquidity, is reasonable because it encourages the desired Customer behavior by attracting Customer interest to the Exchange. Customer activity enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity of these market participants in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. --------------------------------------------------------------------------- \45\ See, e.g., the MIAX fee schedule at http://www.miaxoptions.com/sites/default/files/fee-schedules/MIAX_Options_Fee_Schedule_10012015.pdf and the BOX fee schedule at http://boxexchange.com/assets/BOX_Fee_Schedule1.pdf. --------------------------------------------------------------------------- Establishing Non-Penny Pilot Tiers for Rebate to Add Liquidity for Customer, Fee to Add Liquidity for Customer, and Rebate to Remove Liquidity for Customer, and Non-Penny Pilot Tiers for Fee to Remove Liquidity for BX Options Market Maker is reasonable. It encourages market participant behavior through progressive tiered fees and rebates using an accepted methodology among options exchanges.\46\ The proposed Tiers in the Non-Penny Pilot Options Tier Schedule, which have been discussed at length, clearly reflect the progressively increasing nature of Participant executions structured for the purpose of attracting flow to the Exchange. --------------------------------------------------------------------------- \46\ See, e.g., fee and rebate schedules of other options exchanges, including, but not limited to, NOM, Phlx, and CBOE. --------------------------------------------------------------------------- The Non-Penny Pilot Tiers are reasonable in that they are set up to incentivize Participants to direct liquidity to the Exchange. That is, as Participants execute more of total industry customer equity and ETF option ADV contracts per month on the Exchange, they can in certain categories earn higher rebates and be assessed lower fees. For example, the Non-Penny Pilot Tier 3 Rebate to Add Liquidity when Customer trading with Non-Customer or BX Options Market Maker is, similarly to the equivalent Penny Pilot Tier category, higher ($0.20) that [sic] the Non-Penny Pilot Tier 1 Rebate to Add Liquidity ($0.00). The Non-Penny Pilot Tiers are set up in a similar progressive manner for Fee to Remove Liquidity when BX Options Market Maker trading with Customer being assessed a lesser fee for Tier 3 ($0.60) than for Tier 1 ($0.89).\47\ --------------------------------------------------------------------------- \47\ The remaining categories of Fee to Add Liquidity when Customer trading with Customer, Rebate to Remove Liquidity when Customer trading with Non-Customer, BX Options Market Maker, or Customer, and Fee to Remove Liquidity when BX Options Market Maker trading with Non-Customer or BX Options Market Maker reflect the same rates in each Non-Penny Pilot Tier, whether 1, 2, or 3 ($0.85, $0.80, and $0.89, respectively). --------------------------------------------------------------------------- For Non-Penny Pilot Options, establishing the Customer-related and BX Options Market Maker-related fee and rebate changes, which includes the new Tiers, is equitable and not unfairly discriminatory. This is because the Exchange's proposal to assess fees and pay rebates according to Non-Penny Pilot Tiers 1, 2, and 3 will apply similarly to all similarly situated Participants. BX Options Market Makers would be assessed a Fee to Remove Liquidity according to the Non-Penny Pilot Tiers, and Customers would earn a Rebate to Add Liquidity and a Rebate [[Page 80439]] to Remove Liquidity and be assessed a Fee to Add Liquidity according to the same Tiers per the Non-Penny Pilot Options Tier Schedule. The fee and rebate schedule as proposed continues to reflect differentiation among different market participants. The Exchange believes that the differentiation is equitable and not unfairly discriminatory, as well as reasonable, and notes that unlike others (e.g. Non-Customers) some market participants like BX Options Market Makers commit to various obligations. For example, transactions of a BX Market Maker must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings. Further, all Market Makers are designated as specialists on BX for all purposes under the Act or rules thereunder.\48\ --------------------------------------------------------------------------- \48\ See Chapter VII, Section 5, entitled ``Obligations of Market Makers''. --------------------------------------------------------------------------- The Exchange believes that by making the proposed Non-Penny Pilot Options changes, it is incentivizing Participants to execute more volume on the Exchange to further enhance liquidity in this market. 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. Specifically, the Exchange does not believe that its proposal to make changes to its Penny Pilot Options and Non-Penny Pilot Options fees and rebates and to establish Tiers for such fees and rebates will impose any undue burden on competition, as discussed below. The Exchange operates in a highly competitive market in which many sophisticated and knowledgeable market participants can readily and do send order flow to competing exchanges if they deem fee levels or rebate incentives at a particular exchange to be excessive or inadequate. Additionally, new competitors have entered the market and still others are reportedly entering the market shortly. These market forces ensure that the Exchange's fees and rebates remain competitive with the fee structures at other trading platforms. In that sense, the Exchange's proposal is actually pro-competitive because the Exchange is simply continuing its fees and rebates and establishing Tiers for Penny Pilot Options and Non-Penny Pilot Options in order to remain competitive in the current environment. 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. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In terms of intra-market competition, the Exchange notes that price differentiation among different market participants operating on the Exchange (e.g., Customer, BX Options Market Maker, Non-Customer) is reasonable. Customer activity, for example, enhances liquidity on the Exchange for the benefit of all market participants and benefits all market participants by providing more trading opportunities, which attracts market makers. An increase in the activity of these market participants (particularly in response to pricing) in turn facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. Moreover, unlike others (e.g. Non-Customers) each BX Options Market Maker commits to various obligations. These obligations include, for example, transactions of a BX Market Maker must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings.\49\ --------------------------------------------------------------------------- \49\ See Chapter VII, Section 5, entitled ``Obligations of Market Makers''. Further, all Market Makers are designated as specialists on BX for all purposes under the Act or rules thereunder. See Chapter VII, Section 2. --------------------------------------------------------------------------- In this instance, the proposed changes to the fees and rebates for execution of contracts on the Exchange, and establishing Tiers for such fees and rebates, do not impose a burden on competition because the Exchange's execution and routing services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. If the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. Additionally, the changes proposed herein are pro- competitive to the extent that they continue to allow the Exchange to promote and maintain order executions. 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 Pursuant to Section 19(b)(3)(A)(ii) of the Act,\50\ the Exchange has designated this proposal as establishing or changing a due, fee, or other charge imposed by the self-regulatory organization on any person, whether or not the person is a member of the self-regulatory organization, which renders the proposed rule change effective upon filing. --------------------------------------------------------------------------- \50\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- 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: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) 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. 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 [[Page 80440]] Send an email to [email protected]. Please include File Number SR-BX-2015-081 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BX-2015-081. 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 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-BX-2015-081, and should be submitted on or before January 14, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\51\ --------------------------------------------------------------------------- \51\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-32388 Filed 12-23-15; 8:45 am] BILLING CODE 8011-01-P
![80432 Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices
believes the proposed price collar IV. Solicitation of Comments For the Commission, by the Division of
thresholds, which would be based on Trading and Markets, pursuant to delegated
the numerical guidelines set forth in Interested persons are invited to authority.10
Rule 7.10(c)(1), would also remove submit written data, views, and Robert W. Errett,
impediments to and perfect the arguments concerning the foregoing, Deputy Secretary.
mechanism of a fair and orderly market including whether the proposed rule [FR Doc. 2015–32386 Filed 12–23–15; 8:45 am]
and protect investors and the public change is consistent with the Act. BILLING CODE 8011–01–P
interest because they would reduce the Comments may be submitted by any of
potential for a Trading Halt Auction to the following methods:
be a clearly erroneous execution. To this SECURITIES AND EXCHANGE
Electronic Comments COMMISSION
end, the Exchange’s proposal is similar
to how BATS prices its Halt Auctions, • Use the Commission’s Internet [Release No. 34–76692; File No. SR–BX–
which are also subject to collar price comment form (http://www.sec.gov/ 2015–081]
ranges that are based on the numerical rules/sro.shtml); or
guidelines for clearly erroneous Self-Regulatory Organizations;
• Send an email to rule-comments@ NASDAQ OMX BX, Inc.; Notice of Filing
executions. The Exchange further sec.gov. Please include File Number SR–
believes that using the last consolidated and Immediate Effectiveness of
NYSEARCA–2015–121 on the subject Proposed Rule Change Regarding
sale price as the reference price for the
line. Fees and Rebates and Tiers Related to
Trading Halt Auction price collar
thresholds would remove impediments Paper Comments BX Options
to and perfect the mechanism of a fair December 18, 2015.
and orderly market because • Send paper comments in triplicate
to Secretary, Securities and Exchange Pursuant to Section 19(b)(1) of the
determinations of whether an execution Securities Exchange Act of 1934
is clearly erroneous are also based on Commission, 100 F Street NE.,
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
price movements away from the Washington, DC 20549–1090.
notice is hereby given that, on December
consolidated last sale prices. All submissions should refer to File 11, 2015, NASDAQ OMX BX, Inc. (‘‘BX’’
B. Self-Regulatory Organization’s Number SR–NYSEARCA–2015–121. or ‘‘Exchange’’) filed with the Securities
Statement on Burden on Competition This file number should be included on and Exchange Commission (‘‘SEC’’ or
the subject line if email is used. To help ‘‘Commission’’) the proposed rule
The Exchange does not believe that the Commission process and review change as described in Items I, II, and
the proposed rule change will impose your comments more efficiently, please III below, which Items have been
any burden on competition that is not use only one method. The Commission prepared by the Exchange. The
necessary or appropriate in furtherance will post all comments on the Commission is publishing this notice to
of the purposes of the Act. The Commission’s Internet Web site (http:// solicit comments on the proposed rule
proposed change is not designed to www.sec.gov/rules/sro.shtml). Copies of change from interested persons.
address any competitive issue but rather the submission, all subsequent I. Self-Regulatory Organization’s
to provide for a price protection amendments, all written statements Statement of the Terms of Substance of
mechanism to prevent Trading Halt with respect to the proposed rule the Proposed Rule Change
Auctions from occurring at prices that change that are filed with the
could be a clearly erroneous execution. The Exchange proposes to amend its
Commission, and all written
Options Pricing at Chapter XV Section
C. Self-Regulatory Organization’s communications relating to the
2, entitled ‘‘BX Options Market—Fees
Statement on Comments on the proposed rule change between the and Rebates,’’ which governs pricing for
Proposed Rule Change Received From Commission and any person, other than BX members using the BX Options
Members, Participants, or Others those that may be withheld from the Market (‘‘BX Options’’). The Exchange
public in accordance with the proposes to modify certain fees and
No written comments were solicited provisions of 5 U.S.C. 552, will be rebates (per executed contract) and to
or received with respect to the proposed available for Web site viewing and adopt tiers applicable to fees and rebates
rule change. printing in the Commission’s Public (each a ‘‘Tier’’ and together the ‘‘Tiers’’).
III. Date of Effectiveness of the Reference Room, 100 F Street NE., The text of the proposed rule change
Proposed Rule Change and Timing for Washington, DC 20549, on official is available on the Exchange’s Web site
Commission Action business days between the hours of at http://nasdaqomxbx.cchwall
10:00 a.m. and 3:00 p.m. Copies of the street.com/, at the principal office of the
Within 45 days of the date of filing will also be available for Exchange, and at the Commission’s
publication of this notice in the Federal inspection and copying at the NYSE’s Public Reference Room.
Register or within such longer period principal office and on its Internet Web
up to 90 days (i) as the Commission may II. Self-Regulatory Organization’s
site at www.nyse.com. All comments Statement of the Purpose of, and
designate if it finds such longer period received will be posted without change;
to be appropriate and publishes its Statutory Basis for, the Proposed Rule
the Commission does not edit personal Change
reasons for so finding or (ii) as to which identifying information from
mstockstill on DSK4VPTVN1PROD with NOTICES
the self-regulatory organization submissions. You should submit only In its filing with the Commission, the
consents, the Commission will: Exchange included statements
information that you wish to make
(A) By order approve or disapprove concerning the purpose of and basis for
available publicly. All submissions
the proposed rule change, or the proposed rule change and discussed
should refer to File Number SR–
(B) institute proceedings to determine NYSEARCA–2015–121 and should be 10 17 CFR 200.30–3(a)(12).
whether the proposed rule change submitted on or before January 14, 2016. 1 15 U.S.C. 78s(b)(1).
should be disapproved. 2 17 CFR 240.19b–4.
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![Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices 80433
any comments it received on the subsection (1) regarding certain fees and Sec. 2 BX Options Market—Fees and
proposed rule change. The text of these rebates 3 (known as ‘‘fees and rebates’’) Rebates
statements may be examined at the and to adopt Tiers applicable to certain
places specified in Item IV below. The fees and rebates. The proposed modified The following charges shall apply to
Exchange has prepared summaries, set fees and rebates (per executed contract) the use of the order execution and
forth in sections A, B, and C below, of and new Tiers would apply to routing services of the BX Options
the most significant aspects of such Customers,4 BX Options Market market for all securities.
statements. Makers,5 and Non-Customers.6 One
(1) Fees for Execution of Contracts on
A. Self-Regulatory Organization’s proposed new Tier schedule, consisting
the BX Options Market
Statement of the Purpose of, and of three Tiers, would apply to Penny
Statutory Basis for, the Proposed Rule Pilot Options; and one proposed new
Change Tier schedule, consisting of three Tiers,
would apply to Non-Penny Pilot
1. Purpose Options.7
The Exchange proposes to amend its Currently, Chapter XV, Section 2
Chapter XV, Section 2 to modify subsection (1) reads as follows:
FEES AND REBATES
[Per executed contract]
BX Options
Customer Non-Customer 1
Market Maker
Penny Pilot Options:
Rebate to Add Liquidity .................................................................................................... 2 $0.00 2 $0.10 N/A
Fee to Add Liquidity ......................................................................................................... 3 0.39 3 0.39 $0.45
Rebate to Remove Liquidity ............................................................................................. 0.34 N/A N/A
Fee to Remove Liquidity .................................................................................................. N/A 0.46 0.46
Non-Penny Pilot Options:
Fee to Add Liquidity ......................................................................................................... 5 0.25/$0.85 5 0.50/$0.85 0.88
Rebate to Remove Liquidity ............................................................................................. 0.70 N/A N/A
Fee to Remove Liquidity .................................................................................................. N/A 0.89 0.89
1A Non-Customer includes a Professional, Firm, Broker-Dealer and Non-BX Options Market Maker.
2 The Rebate to Add Liquidity will be paid to a Customer or BX Options Market Maker only when the Customer or BX Options Market Maker is
contra to a Non-Customer or BX Options Market Maker.
3 The Fee to Add Liquidity will be assessed to a Customer or BX Options Market Maker only when the Customer or BX Options Market Maker
is contra to a Customer.
4 Reserved
5 The higher Fee to Add Liquidity will be assessed to a Customer or BX Options Market Maker only when the Customer or BX Options Market
Maker is contra to a Customer.
The Exchange proposes modifications Change 2. For Non-Penny Pilot Each specific change is described in
to its fees and rebates for Penny Pilot Options, the Exchange proposes to detail below.
Options and for Non-Penny Pilot modify fees and rebates to add Tiers for: Change 1—Penny Pilot Options: Modify
Options as follows: 8 (1) Customer Rebates to Add Liquidity; Fees and Rebates To Add Tiers
Change 1. For Penny Pilot Options, (2) Customer Fees to Add Liquidity; (3)
Customer Rebates to Remove Liquidity; For Penny Pilot Options, the
the Exchange proposes to modify fees Exchange is proposing to modify fees
and rebates to add Tiers for: (1) (4) BX Options Marker Maker Fees to
and rebates for Customer and BX
Customer Rebates to Add Liquidity; (2) Remove Liquidity. The Exchange also
Options Market Maker.9 Specifically,
Customer Fees to Add Liquidity; (3) proposes to increase the Fee to Add the Exchange is proposing to add Tiers
Customer Rebates to Remove Liquidity; Liquidity for BX Options Market Maker for Rebate to Add Liquidity for
and (4) BX Options Market Maker Fees and for Non-Customer. Customer,10 Fee to Add Liquidity for
to Remove Liquidity. Customer,11 and Rebate to Remove
3 Fees and rebates are per executed contract. as a BX Options Market Maker in at least one account when structuring and modifying its fee and
Chapter XV, Section 2(1). security. rebate schedule.
4 The term ‘‘Customer’’ or (‘‘C’’) applies to any 6 Note 1 to Chapter XV, Section 2 states: ‘‘1A Non- 9 The Non-Customer Penny Pilot Options pricing
transaction that is identified by a Participant for Customer includes a Professional, Firm, Broker- will remain unchanged.
10 The addition of Tiers to Rebate to Add
clearing in the Customer range at The Options Dealer and Non-BX Options Market Maker.’’
Clearing Corporation (‘‘OCC’’) which is not for the 7 The Penny Pilot was established in June 2012 Liquidity for Customer replaces the current fee [sic]
account of broker or dealer or for the account of a and extended in 2015. See Securities Exchange Act ($0.00) and reference to note 2 which are removed.
‘‘Professional’’ (as that term is defined in Chapter Release Nos. 67256 (June 26, 2012), 77 FR 39277 Note 2 will continue to apply to Rebate to Add
Liquidity for BX Options Market Maker, but
mstockstill on DSK4VPTVN1PROD with NOTICES
I, Section 1(a)(48)). BX Chapter XV. (July 2, 2012) (SR–BX–2012–030) (order approving
without reference to the note applying to a
5 BX Options Market Makers may also be referred BX option rules and establishing Penny Pilot); and
Customer. Today, Customers do not receive a
to as ‘‘Market Makers’’. The term ‘‘BX Options 75326 (June 29, 2015), 80 FR 38481 (July 6, 2015) Rebate to Add Liquidity.
Market Maker’’ or (‘‘M’’) means a Participant that (SR–BX–2015–037) (notice of filing and immediate 11 The addition of Tiers to Fee to Add Liquidity
has registered as a Market Maker on BX Options effectiveness extending the Penny Pilot through for Customer replaces the current fee ($0.39) and
pursuant to Chapter VII, Section 2, and must also June 30, 2016). reference to note 3 which are removed. Note 3 will
remain in good standing pursuant to Chapter VII, 8 The greatest volume options traded on the
continue to apply to Fee to Add Liquidity for BX
Section 4. In order to receive Market Maker pricing Exchange and in the options market are Penny Pilot Options Market Maker, but without reference to the
in all securities, the Participant must be registered Options, and the Exchange has taken this into note applying to a Customer.
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![80434 Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices
Liquidity for Customer. The Exchange is Proposed Tier 3 (‘‘Penny Pilot Tier 3’’) $0.95,19 and for Non-Customer from
also proposing to add Tiers for Fee to will be where Participant executes $0.88 to $0.98.
Remove Liquidity for BX Options 0.15% or more of total industry Proposed Tier 1 (‘‘Non-Penny Pilot
Market Maker.12 The three new Tiers, customer equity and ETF option ADV Tier 1’’) will be where Participant
described below, together make up the contracts per month. Proposed Penny executes less than 0.05% of total
‘‘Penny Pilot Options Tier Schedule’’. Pilot Tier 3 will range from $0.20 rebate industry customer equity and ETF
Proposed Tier 1 (‘‘Penny Pilot Tier 1’’) to $0.46 fee: option ADV contracts per month.
will be where a BX Participant Proposed Non-Penny Pilot Tier 1 will
—the Rebate to Add Liquidity when
(‘‘Participant’’) executes less than 0.05% range from $0.00 rebate to $0.89 fee:
Customer trading with Non-Customer —the Rebate to Add Liquidity when
of total industry customer equity and or BX Options Market Maker will be
exchange traded fund (‘‘ETF’’) option Customer trading with Non-Customer
$0.20; or BX Options Market Maker will be
average daily volume (‘‘ADV’’) contracts
per month. Proposed Penny Pilot Tier 1 —the Fee to Add Liquidity when $0.00 (no rebate will be paid);
will range from $0.00 rebate to $0.46 Customer trading with Customer will —the Fee to Add Liquidity when
fee: be $0.39; Customer trading with Customer will
—the Rebate to Remove Liquidity when be $0.85; 20
—the Rebate to Add Liquidity when —the Rebate to Remove Liquidity when
Customer trading with Non-Customer,
Customer trading with Non-Customer Customer trading with Non-Customer,
BX Options Market Maker, or
or BX Options Market Maker will be BX Options Market Maker, or
Customer will be $0.35;
$0.00 (no rebate will be paid); Customer will be $0.80;
—the Fee to Add Liquidity when —the Fee to Remove Liquidity when BX
—the Fee to Remove Liquidity when BX
Customer trading with Customer will Options Market Maker trading with
Market Maker trading with Customer
be $0.39;‘‘13 Customer will be $0.30; and
will be $0.89; and
—the Rebate to Remove Liquidity when —the Fee to Remove Liquidity when BX —the Fee to Remove Liquidity when BX
Customer trading with Non-Customer, Options Market Maker trading with Options Market Maker trading with
BX Options Market Maker, or Non-Customer or BX Options Market Non-Customer or BX Options Market
Customer will be $0.00; Maker will be $0.46. Maker will be $0.89.21
—the Fee to Remove Liquidity when BX Change 2—Non-Penny Pilot Options: Proposed Tier 2 (‘‘Non-Penny Pilot
Market Maker trading with Customer Modify Fees and Rebates To Add Tiers, Tier 2’’) will be where Participant
will be $0.39; and Increase Fee To Add Liquidity executes 0.05% to less than 0.15% of
—the Fee to Remove Liquidity when BX total industry customer equity and ETF
Options Market Maker trading with For Non-Penny Pilot Options, the option ADV contracts per month.
Non-Customer or BX Options Market Exchange is proposing to modify fees Proposed Non-Penny Pilot Tier 2 will
Maker will be $0.46.14 and rebates for Customer, BX Options range from $0.10 rebate to $0.89 fee:
Proposed Tier 2 (‘‘Penny Pilot Tier 2’’) Market Maker, and Non-Customer. —the Rebate to Add Liquidity when
will be where Participant executes Specifically, the Exchange is proposing Customer trading with Non-Customer
0.05% to less than 0.15% of total to add Tiers for Rebate to Add Liquidity or BX Options Market Maker will be
industry customer equity and ETF for Customer,15 Fee to Add Liquidity for $0.10;
option ADV contracts per month. Customer,16 and Rebate to Remove —the Fee to Add Liquidity when
Proposed Penny Pilot Tier 2 will range Liquidity for Customer.17 The Exchange Customer trading with Customer will
from $0.10 rebate to $0.46 fee: is proposing to add Tiers for Fee to be $0.85;
Remove Liquidity for BX Market —the Rebate to Remove Liquidity when
—the Rebate to Add Liquidity when
Maker.18 The three new Tiers, described Customer trading with Non-Customer,
Customer trading with Non-Customer
below, together make up the ‘‘Non- BX Options Market Maker, or
or BX Options Market Maker will be
Penny Pilot Options Tier Schedule’’. Customer will be $0.80;
$0.10;
The Exchange is also proposing a —the Fee to Remove Liquidity when BX
—the Fee to Add Liquidity when
modest ten cent increase to the Fee to Options Market Maker trading with
Customer trading with Customer will
Add Liquidity for BX Options Market Customer will be $0.89; and
be $0.39; —the Fee to Remove Liquidity when BX
Maker from $0.50/$0.85 to $0.50/
—the Rebate to Remove Liquidity when Options Market Maker trading with
Customer trading with Non-Customer, 15 The addition of Rebate to Add Liquidity of the Non-Customer or BX Options Market
BX Options Market Maker, or Non-Penny Pilot Options part of the fees and Maker will be $0.89.
Customer will be $0.25; rebates schedule is so that the Non-Penny and Proposed Tier 3 (‘‘Non-Penny Pilot
—the Fee to Remove Liquidity when BX Penny parts of the schedule both have Rebate to
Add Liquidity. The addition of Tiers to Rebate to Tier 3’’) will be where Participant
Options Market Maker trading with
Add Liquidity in the Non-Penny category applies to executes 0.15% or more of total industry
Customer will be $0.39; and Customer only. customer equity and ETF option ADV
—the Fee to Remove Liquidity when BX 16 The addition of Tiers to Fee to Add Liquidity
contracts per month. Proposed Non-
Options Market Maker trading with for Customer replaces the current fee ($0.25/$0.85) Penny Pilot Tier 3 will range from $0.20
Non-Customer or BX Options Market and reference to note 5 which are taken out. Note
rebate to $0.89 fee:
Maker will be $0.46. 5 will continue to apply to Fee to Add Liquidity
for BX Options Market Maker, but without reference
to the note applying to a Customer. The Exchange 19 Per note 5 as modified, the higher Fee to Add
12 The addition of tiers to the Fee to Remove notes that for Fee to Add Liquidity for Customer the Liquidity will be assessed to a BX Options Market
mstockstill on DSK4VPTVN1PROD with NOTICES
Liquidity for the BX Options Market Maker replaces Exchange is replacing a fee ($0.25/$0.85) with Tiers Maker only when the BX Options Market Maker is
the current per contract fee of 0.46. that include Fee to Add Liquidity as well as Rebate contra to a Customer.
13 For Penny Pilot Options, this $0.39 Fee to Add to Add Liquidity. 20 For Non-Penny Pilot Options, this $0.85 Fee to
Liquidity when Customer trading with Customer is 17 The addition of Tiers to Rebate to Remove Add Liquidity when Customer trading with
the same in all three Tiers. Liquidity for Customer replaces the current fee [sic] Customer is the same in all three Tiers.
14 For Penny Pilot Options, this $0.46 Fee to ($0.70) and reference to it is taken out. 21 For Non-Penny Pilot Options, this $0.89 Fee to
Remove Liquidity when BX Options Market Maker 18 The addition of Tiers to Fee to Remove Remove Liquidity when BX Options Market Maker
trading with Non-Customer or BX Options Market Liquidity for BX Options Market Maker replaces the trading with Non-Customer or BX Options Market
Maker will be the same in all Tiers. current fee ($0.89) and reference to it is taken out. Maker will be the same in all Tiers.
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![Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices 80435
—the Rebate to Add Liquidity when —the Fee to Remove Liquidity when BX Sec. 2 BX Options Market—Fees and
Customer trading with Non-Customer Options Market Maker trading with Rebates
or BX Options Market Maker will be Customer will be $0.60; and
$0.20; The following charges shall apply to
—the Fee to Remove Liquidity when BX the use of the order execution and
—the Fee to Add Liquidity when
Options Market Maker trading with routing services of the BX Options
Customer trading with Customer will
be $0.85; Non-Customer or BX Options Market market for all securities.
—the Rebate to Remove Liquidity when Maker will be $0.89.
Customer trading with Non-Customer, (1) Fees for Execution of Contracts on
As proposed, Chapter XV, Section 2
BX Options Market Maker, or the BX Options Market
subsection (1) will read as follows:
Customer will be $0.80;
FEES AND REBATES
[Per executed contract]
BX Options
Customer Non-Customer 1
Market Maker
Penny Pilot Options:
Rebate to Add Liquidity .................................................................................................... # 2 $0.10 N/A
Fee to Add Liquidity ......................................................................................................... # 3 0.39 $0.45
Rebate to Remove Liquidity ............................................................................................. # N/A N/A
Fee to Remove Liquidity .................................................................................................. N/A # 0.46
Non-Penny Pilot Options:
Rebate to Add Liquidity .................................................................................................... * N/A N/A
Fee to Add Liquidity ......................................................................................................... * 5 0.50/$0.95 0.98
Rebate to Remove Liquidity ............................................................................................. * N/A N/A
Fee to Remove Liquidity .................................................................................................. N/A * 0.89
1A Non-Customer includes a Professional, Firm, Broker-Dealer and Non-BX Options Market Maker.
2 TheRebate to Add Liquidity will be paid to a BX Options Market Maker only when the BX Options Market Maker is contra to a Non-Customer
or BX Options Market Maker.
3 The Fee to Add Liquidity will be assessed to a BX Options Market Maker only when the BX Options Market Maker is contra to a Customer.
4 Reserved.
5 The higher Fee to Add Liquidity will be assessed to a BX Options Market Maker only when the BX Options Market Maker is contra to a
Customer.
# PENNY PILOT OPTIONS TIER SCHEDULE
Rebate to add Rebate to remove Fee to remove Fee to remove
Fee to add liquidity
liquidity liquidity liquidity liquidity
When ................................................... Customer ............. Customer ............. Customer .............. BX Options Market BX Options Market
Maker. Maker.
Trading with ........................................ Non-Customer or Customer .............. Non-Customer, BX Customer .............. Non-Customer or
BX Options Mar- Options Market BX Options Mar-
ket Maker. Maker, or Cus- ket Maker.
tomer.
Tier 1:
Participant executes less than $0.00 .................... $0.39 .................... $0.00 .................... $0.39 .................... $0.46.
0.05% of total industry cus-
tomer equity and ETF option
ADV contracts per month.
Tier 2:
Participant executes 0.05% to $0.10 .................... $0.39 .................... $0.25 .................... $0.39 .................... $0.46.
less than 0.15% of total indus-
try customer equity and ETF
option ADV contracts per
month.
Tier 3:
Participant executes 0.15% or $0.20 .................... $0.39 .................... $0.35 .................... $0.30 .................... $0.46.
more of total industry customer
equity and ETF option ADV
contracts per month.
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# PENNY PILOT OPTIONS TIER SCHEDULE
* NON-PENNY PILOT OPTIONS TIER SCHEDULE
Rebate to add Fee to add Rebate to remove Fee to remove Fee to remove
liquidity liquidity liquidity liquidity liquidity
When ................................................... Customer ............. Customer ............. Customer .............. BX Options Market BX Options Market
Maker. Maker.
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![80436 Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices
# PENNY PILOT OPTIONS TIER SCHEDULE—Continued
* NON-PENNY PILOT OPTIONS TIER SCHEDULE
Rebate to add Fee to add Rebate to remove Fee to remove Fee to remove
liquidity liquidity liquidity liquidity liquidity
Trading with ........................................ Non-Customer or Customer .............. Non-Customer, BX Customer .............. Non-Customer or
BX Options Mar- Options Market BX Options Mar-
ket Maker. Maker, or Cus- ket Maker.
tomer.
Tier 1:
Participant executes less than $0.00 .................... $0.85 .................... $0.80 .................... $0.89 .................... $0.89.
0.05% of total industry cus-
tomer equity and ETF option
ADV contracts per month.
Tier 2:
Participant executes 0.05% to $0.10 .................... $0.85 .................... $0.80 .................... $0.89 .................... $0.89.
less than 0.15% of total indus-
try customer equity and ETF
option ADV contracts per
month.
Tier 3:
Participant executes 0.15% or $0.20 .................... $0.85 .................... $0.80 .................... $0.60 .................... $0.89.
more of total industry customer
equity and ETF option ADV
contracts per month.
The Exchange is adopting these fees competition in its broader forms that are apply with equal force to the options
and rebates at this time because it most important to investors and listed markets.
believes that they will provide companies.’’ 24 Likewise, in The Exchange believes that its
incentives for execution of contracts on NetCoalition v. NYSE Arca, Inc., 615 proposal should provide increased
the BX Options Market. The Exchange F.3d 525 (D.C. Cir. 2010), the D.C. opportunities for participation in
believes that its proposal should Circuit upheld the Commission’s use of executions on the Exchange, facilitating
provide increased opportunities for a market-based approach in evaluating the ability of the Exchange to bring
participation in executions on the the fairness of market data fees against together participants and encourage
Exchange, facilitating the ability of the a challenge claiming that Congress more robust competition for orders.
Exchange to bring together participants mandated a cost-based approach.25 As
and encourage more robust competition Change 1—Penny Pilot Options: Modify
the court emphasized, the Commission Fees and Rebates
for orders. ‘‘intended in Regulation NMS that
2. Statutory Basis ‘market forces, rather than regulatory For Penny Pilot Options, the
requirements’ play a role in determining Exchange is proposing to modify fees
The Exchange believes that the and rebates for Customer and BX
proposed rule change is consistent with the market data . . . to be made
Options Market Maker. Specifically, the
the provisions of Section 6 of the Act,22 available to investors and at what
Exchange is proposing to add Tiers for
in general, and with Section 6(b)(4) and cost.’’ 26 Rebate to Add Liquidity for Customer,
6(b)(5) of the Act,23 in particular, in that Further, ‘‘[n]o one disputes that Fee to Add Liquidity for Customer, and
it provides for the equitable allocation competition for order flow is ‘fierce.’ Rebate to Remove Liquidity for
of reasonable dues, fees and other . . . As the SEC explained, ‘[i]n the U.S. Customer. The Exchange is also
charges among members and issuers and national market system, buyers and proposing to add Tiers for Fee to
other persons using any facility or sellers of securities, and the broker- Remove Liquidity for BX Market Maker.
system which the Exchange operates or dealers that act as their order-routing The three new Tiers make up the Penny
controls, and is not designed to permit agents, have a wide range of choices of Pilot Options Tier Schedule.
unfair discrimination between where to route orders for execution’; In particular, proposed Penny Pilot
customers, issuers, brokers, or dealers. [and] ‘no exchange can afford to take its Tier 1 will be where a Participant
The Commission and the courts have market share percentages for granted’ executes less than 0.05% of total
repeatedly expressed their preference because ‘no exchange possesses a industry customer equity and ETF
for competition over regulatory monopoly, regulatory or otherwise, in option ADV contracts per month, and
intervention in determining prices, the execution of order flow from broker will range from $0.00 rebate to $0.46
products, and services in the securities dealers’. . . .’’ 27 Although the Court fee.28 Proposed Penny Pilot Tier 2 will
markets. In Regulation NMS, for and the SEC were discussing the cash
example, the Commission indicated that 28 The Rebate to Add Liquidity when Customer
equities markets, the Exchange believes trading with Non-Customer or BX Options Market
mstockstill on DSK4VPTVN1PROD with NOTICES
market forces should generally
that, as discussed above, these views Maker will be $0.00; the Fee to Add Liquidity when
determine the price of non-core market Customer trading with Customer will be $0.39
data because national market system 24 Exchange Act Release No. 34–51808 (June 9,
(same across all tiers); the Rebate to Remove
regulation ‘‘has been remarkably 2005) (‘‘Regulation NMS Adopting Release’’).
Liquidity when Customer trading with Non-
successful in promoting market Customer, BX Options Market Maker, or Customer
25 See NetCoalition, 615 F.3d at 534.
will be $0.00; the Fee to Remove Liquidity when
26 Id. at 537.
BX Market Maker trading with Customer will be
22 15 U.S.C. 78f. 27 NetCoalition I, 615 F.3d at 539 (quoting $0.39; and the Fee to Remove Liquidity when BX
23 15 U.S.C. 78f(b)(4) and (5). ArcaBook Order, 73 FR at 74782–74783). Options Market Maker trading with Non-Customer
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![Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices 80437
be where Participant executes 0.05% to The Exchange believes that the to Add Liquidity ($0.00), which offer
less than 0.15% of total industry proposed Tiers in the Penny Pilot [sic] no rebate today. The Penny Pilot
customer equity and ETF option ADV Options Tier Schedule are reasonable in Tiers are set up in a similar progressive
contracts per month, and will range that they reflect a structure that is not manner for Rebate to Remove Liquidity
from $0.10 rebate to $0.46 fee.29 novel in the options markets but rather when Customer trading with Non-
Proposed Penny Pilot Tier 3 will be is similar to that of other options Customer, BX Options Market Maker, or
where Participant executes 0.15% or markets and competitive with what is Customer. And, the Fee to Remove
more of total industry customer equity offered by other exchanges.34 In Liquidity when BX Option Market
and ETF option ADV contracts per addition, the Exchange believes that Maker trading with Customer is lesser
month, and will range from $0.20 rebate making changes to add Tiers applicable for Tier 3 ($0.30) than for Tier 1
to $0.46 fee.30 to the Customer in terms of Rebate to ($0.39).36
In adding the new Tiers in the Penny Add Liquidity, Fee to Add Liquidity,
and Rebate to Remove Liquidity, is For Penny Pilot Options, establishing
Pilot Options Tier Schedule, the current the Customer-related and BX Options
pricing will be replaced with the reasonable because it encourages the
desired Customer behavior by attracting Market Maker-related fee and rebate
proposed Tier Schedule and is no longer changes, which includes the new Tiers,
used. Tiers replace the current rebate Customer interest to the Exchange.
Customer activity enhances liquidity on is equitable and not unfairly
($0.00) in Rebate to Add Liquidity for discriminatory. This is because the
Customer (no rebate is offered today), the Exchange for the benefit of all
market participants and benefits all Exchange’s proposal to assess fees and
and reference to note 2 is removed.31
market participants by providing more pay rebates according to Penny Pilot
Tiers replace the current fee ($0.39) to
trading opportunities, which attracts Tiers 1, 2, and 3 will apply uniformly
Fee to Add Liquidity for Customer and
market makers. An increase in the to all similarly situated Participants. BX
reference to note 3 is removed and will
not apply with this proposal.32 Certain activity of these market participants in Options Market Makers would be
references in Notes 2 and 3 to Customer turn facilitates tighter spreads, which assessed a Fee to Remove Liquidity
are removed, and as such the notes no may cause an additional corresponding according to the Penny Pilot Tiers, and
longer make sense for Rebate to Add increase in order flow from other market Customers would earn a Rebate to Add
Liquidity and for Customer Fee to Add participants. Liquidity and a Rebate to Remove
Liquidity for Customer.33 The Exchange Establishing Penny Pilot Tiers for Liquidity according to the same Tiers
is also substituting the current fee Rebate to Add Liquidity for Customer, per the Penny Pilot Options Tier
($0.46) to Fee to Remove Liquidity for Fee to Add Liquidity for Customer, and Schedule .
BX Options Market Maker by putting it Rebate to Remove Liquidity for
The fee and rebate schedule as
in the tier schedule. Deleting the rebates Customer, and Penny Pilot Tiers for Fee
proposed continues to reflect
and fees from the fees and rebates to Remove Liquidity for BX Options
Market Maker is reasonable. It differentiation among different market
structure for Penny Pilot Options is participants. The Exchange believes that
reasonable where they have been encourages market participant behavior
through progressive tiered fees and the differentiation is equitable and not
replaced by the new Tiers structure to unfairly discriminatory, as well as
incentivize Participants to send order rebates using an accepted methodology
among options exchanges.35 The reasonable, and notes that unlike others
flow to the Exchange. (e.g. Non-Customers) some market
proposed Tiers in the Penny Pilot
Options Tier Schedule, which have participants like BX Options Market
or BX Options Market Maker will be $0.46 (same Makers commit to various obligations.
across all Tiers). been discussed at length, clearly reflect
29 The Rebate to Add Liquidity when Customer the progressively increasing nature of For example, transactions of a BX
trading with Non-Customer or BX Options Market Participant executions structured for the Options Market Maker must constitute a
Maker will be $0.10; the Fee to Add Liquidity when purpose of attracting order flow to the course of dealings reasonably calculated
Customer trading with Customer will be $0.39; the to contribute to the maintenance of a
Rebate to Remove Liquidity when Customer trading
Exchange.
with Non-Customer, BX Options Market Maker, or The Penny Pilot Tiers are reasonable fair and orderly market, and BX Options
Customer will be $0.25; the Fee to Remove in that they are set up to incentivize Market Makers should not make bids or
Liquidity when BX Options Market Maker trading Participants to direct liquidity to the offers or enter into transactions that are
with Customer will be $0.39; and the Fee to Remove
Liquidity when BX Options Market Maker trading
Exchange. That is, as Participants inconsistent with such course of
with Non-Customer or BX Options Market Maker execute more of total industry customer dealings. Further, all BX Options Market
will be $0.46. equity and ETF option ADV contracts Makers are designated as specialists on
30 The Rebate to Add Liquidity when Customer
per month on the Exchange, they can in BX for all purposes under the Act or
trading with Non-Customer or BX Options Market certain categories earn higher rebates
Maker will be $0.20; the Fee to Add Liquidity when
rules thereunder.37
Customer trading with Customer will be $0.39; the and be assessed lower fees. For
The Exchange believes that by making
Rebate to Remove Liquidity when Customer trading example, the Penny Pilot Tier 3 Rebate
the proposed Penny Pilot Options
with Non-Customer, BX Options Market Maker, or to Add Liquidity when Customer
Customer will be $0.35; the Fee to Remove changes, it is incentivizing Participants
trading with Non-Customer or BX
Liquidity when BX Options Market Maker trading to execute more volume on the
with Customer will be $0.30; and the Fee to Remove Options Market Maker is higher ($0.20)
that [sic] the Penny Pilot Tier 1 Rebate Exchange to further enhance liquidity in
Liquidity when BX Options Market Maker trading
with Non-Customer or BX Options Market Maker this market.
will be $0.46. 34 See, e.g., the MIAX fee schedule at http://
mstockstill on DSK4VPTVN1PROD with NOTICES
31 The rule text of note 2 is amended to reflect
www.miaxoptions.com/sites/default/files/fee- 36 The remaining categories of Fee to Add
the removal of certain references to Customer. schedules/MIAX_Options_Fee_Schedule_ Liquidity when Customer trading with Customer
32 The rule text of note 3 is amended to reflect 10012015.pdf and the BOX fee schedule at http:// and Fee to Remove Liquidity when BX Options
the removal of certain references to Customer. boxexchange.com/assets/BOX_Fee_Schedule1.pdf. Market Maker trading with Non-Customer or BX
33 Notes 2 and 3 continue to apply, to Rebate to 35 See, e.g., fee and rebate schedules of other Options Market Maker reflect the same fee in each
Add Liquidity for BX Options Market Maker and to options exchanges, including, but not limited to, Penny Pilot Tier, whether 1, 2, or 3 ($0.39 and
Fee to Add Liquidity for BX Options Market Maker, NASDAQ Options Market (‘‘NOM’’), NASDAQ $0.46, respectively).
respectively, but without deleted references to OMX PHLX LLC (‘‘Phlx’’), and Chicago Board 37 See Chapter VII, Section 5, entitled
Customer. Options Exchange (‘‘CBOE’’). ‘‘Obligations of Market Makers’’.
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![80438 Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices
Change 2—Non-Penny Pilot Options: In adding the new Tiers in the Non- increase in order flow from other market
Modify Fees and Rebates Penny Pilot Options Tier Schedule, the participants.
For Non-Penny Pilot Options, the current pricing will be replaced with the Establishing Non-Penny Pilot Tiers for
Exchange is proposing to modify fees proposed Tier Schedule and is no longer Rebate to Add Liquidity for Customer,
and rebates for Customer and BX used. Tiers replace the current fee Fee to Add Liquidity for Customer, and
Options Market Maker. Specifically, the ($0.25/$0.85) to Fee to Add Liquidity for Rebate to Remove Liquidity for
Exchange is proposing to add Tiers for Customer 42 and reference to note 5 is Customer, and Non-Penny Pilot Tiers
Rebate to Add Liquidity for Customer, removed.43 Certain references in note 5 for Fee to Remove Liquidity for BX
Fee to Add Liquidity for Customer,38 to Customer are removed as they are no Options Market Maker is reasonable. It
and Rebate to Remove Liquidity for longer needed.44 Tiers replace the encourages market participant behavior
current Rebate to Remove Liquidity for through progressive tiered fees and
Customer. The Exchange is also
Customer and the current rebate ($0.70) rebates using an accepted methodology
proposing to add Tiers for Fee to
is removed. Tiers replace the current among options exchanges.46 The
Remove Liquidity for BX Market Maker.
Fee to Remove Liquidity for BX Options proposed Tiers in the Non-Penny Pilot
The three new Tiers make up the Non-
Market Maker and the current fee Options Tier Schedule, which have
Penny Pilot Options Tier Schedule.
In particular, proposed Non-Penny ($0.89) is removed. Deleting the rebates been discussed at length, clearly reflect
Pilot Tier 1 will be where Participant and fees from the fees and rebates the progressively increasing nature of
executes less than 0.05% of total structure for Non-Penny Pilot Options is Participant executions structured for the
industry customer equity and ETF reasonable where they have been purpose of attracting flow to the
replaced by the new Tiers structure to Exchange.
option ADV contracts per month, and
incentivize Participants bringing flow to The Non-Penny Pilot Tiers are
will range from $0.00 rebate to $0.89
the Exchange. The Exchange is also reasonable in that they are set up to
fee.39 The Proposed Non-Penny Pilot incentivize Participants to direct
Tier 2 will be where Participant reasonably increasing by ten cents (to
$0.95) the Fee to Add Liquidity for BX liquidity to the Exchange. That is, as
executes 0.05% to less than 0.15% of Participants execute more of total
total industry customer equity and ETF Options Market Maker when the BX
Options market maker is contra to a industry customer equity and ETF
option ADV contracts per month, and option ADV contracts per month on the
will range from $0.10 rebate to $0.89 Customer, and increasing by ten cents
(to $0.98) the Fee to Add Liquidity for Exchange, they can in certain categories
fee.40 Proposed Non-Penny Pilot Tier 3 earn higher rebates and be assessed
will be where Participant executes Non-Customer.
The Exchange believes that the lower fees. For example, the Non-Penny
0.15% or more of total industry Pilot Tier 3 Rebate to Add Liquidity
customer equity and ETF option ADV proposed Tiers in the Non-Penny Pilot
Options Tier Schedule are reasonable in when Customer trading with Non-
contracts per month, and will range Customer or BX Options Market Maker
from $0.20 rebate to $0.89 fee.41 that they reflect a structure that is not
is, similarly to the equivalent Penny
novel in the options markets but rather
Pilot Tier category, higher ($0.20) that
38 The addition of Rebate to Add Liquidity of the is similar to and competitive with what
[sic] the Non-Penny Pilot Tier 1 Rebate
Non-Penny Pilot Options part of the fees and is offered by other exchanges.45 In
rebates schedule is so that the Non-Penny and to Add Liquidity ($0.00). The Non-
addition, the Exchange believes that
Penny parts of the schedule both have Rebate to Penny Pilot Tiers are set up in a similar
Add Liquidity. The addition of Tiers to Rebate to making changes to add Tiers applicable
progressive manner for Fee to Remove
Add Liquidity in the Non-Penny category applies to to the Customer in terms of Rebate to
Liquidity when BX Options Market
Customer only. Add Liquidity, Fee to Add Liquidity,
39 The Rebate to Add Liquidity when Customer Maker trading with Customer being
and Rebate to Remove Liquidity, is
trading with Non-Customer or BX Options Market assessed a lesser fee for Tier 3 ($0.60)
Maker will be $0.00 ; the Fee to Add Liquidity
reasonable because it encourages the than for Tier 1 ($0.89).47
when Customer trading with Customer will be desired Customer behavior by attracting For Non-Penny Pilot Options,
$0.85 (same across all Tiers); the Rebate to Remove Customer interest to the Exchange. establishing the Customer-related and
Liquidity when Customer trading with Non- Customer activity enhances liquidity on
Customer, BX Options Market Maker, or Customer BX Options Market Maker-related fee
will be $0.80; the Fee to Remove Liquidity when
the Exchange for the benefit of all and rebate changes, which includes the
BX Market Maker trading with Customer will be market participants and benefits all new Tiers, is equitable and not unfairly
$0.89; and the Fee to Remove Liquidity when BX market participants by providing more discriminatory. This is because the
Options Market Maker trading with Non-Customer trading opportunities, which attracts
or BX Options Market Maker will be $0.89 (same Exchange’s proposal to assess fees and
across all Tiers).
market makers. An increase in the pay rebates according to Non-Penny
40 The Rebate to Add Liquidity when Customer activity of these market participants in Pilot Tiers 1, 2, and 3 will apply
trading with Non-Customer or BX Options Market turn facilitates tighter spreads, which similarly to all similarly situated
Maker will be $0.10; the Fee to Add Liquidity when may cause an additional corresponding Participants. BX Options Market Makers
Customer trading with Customer will be $0.85; the
Rebate to Remove Liquidity when Customer trading would be assessed a Fee to Remove
with Non-Customer or BX Options Market Maker
with Non-Customer, BX Options Market Maker, or
will be $0.89.
Liquidity according to the Non-Penny
Customer will be $0.80; the Fee to Remove Pilot Tiers, and Customers would earn
42 The Exchange notes that for Fee to Add
Liquidity when BX Options Market Maker trading
with Customer will be $0.89; and the Fee to Remove Liquidity for Customer the Exchange is replacing a a Rebate to Add Liquidity and a Rebate
Liquidity when BX Options Market Maker trading fee ($0.25/$0.85) with Tiers that include Fee to Add
with Non-Customer or BX Options Market Maker Liquidity as well as Rebate to Add Liquidity. 46 See, e.g., fee and rebate schedules of other
43 The rule text of note 5 is amended to reflect
will be $0.89. options exchanges, including, but not limited to,
41 The Rebate to Add Liquidity when Customer the removal of certain references to Customer. NOM, Phlx, and CBOE.
mstockstill on DSK4VPTVN1PROD with NOTICES
44 Note 5 continues to apply, however, to Fee to
trading with Non-Customer or BX Options Market 47 The remaining categories of Fee to Add
Maker will be $0.20; the Fee to Add Liquidity when Add Liquidity for BX Options Market Maker, but Liquidity when Customer trading with Customer,
Customer trading with Customer will be $0.85; the without reference to the note applying to a Rebate to Remove Liquidity when Customer trading
Rebate to Remove Liquidity when Customer trading Customer. with Non-Customer, BX Options Market Maker, or
with Non-Customer, BX Options Market Maker, or 45 See, e.g., the MIAX fee schedule at http:// Customer, and Fee to Remove Liquidity when BX
Customer will be $0.80; the Fee to Remove www.miaxoptions.com/sites/default/files/fee- Options Market Maker trading with Non-Customer
Liquidity when BX Options Market Maker trading schedules/MIAX_Options_Fee_Schedule_ or BX Options Market Maker reflect the same rates
with Customer will be $0.60; and the Fee to Remove 10012015.pdf and the BOX fee schedule at http:// in each Non-Penny Pilot Tier, whether 1, 2, or 3
Liquidity when BX Options Market Maker trading boxexchange.com/assets/BOX_Fee_Schedule1.pdf. ($0.85, $0.80, and $0.89, respectively).
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![80440 Federal Register / Vol. 80, No. 247 / Thursday, December 24, 2015 / Notices
• Send an email to rule-comments@ SECURITIES AND EXCHANGE to maintain a valid address on file with
sec.gov. Please include File Number SR– COMMISSION the Commission as required by
BX–2015–081 on the subject line. Commission rules (Rule 301 of
[File No. 500–1]
Regulation S–T, 17 CFR 232.301 and
Paper Comments Section 5.4 of EDGAR Filer Manual). As
Bioject Medical Technologies, Inc.,
• Send paper comments in triplicate Black Castle Developments Holdings, of December 9, 2015, the common stock
to Brent J. Fields, Secretary, Securities Inc. (n/k/a ingXabo Corporation), of BCDH was quoted on OTC Link, had
Catalyst Resource Group, Inc., SSI seven market makers, and was eligible
and Exchange Commission, 100 F Street
International, Ltd., Strike Axe, Inc., and for the ‘‘piggyback’’ exception of
NE., Washington, DC 20549–1090.
Viper Powersports, Inc.; Order of Exchange Act Rule 15c2–11(f)(3).
All submissions should refer to File Suspension of Trading It appears to the Commission that
Number SR–BX–2015–081. This file there is a lack of current and accurate
number should be included on the December 22, 2015. information concerning the securities of
subject line if email is used. To help the It appears to the Securities and Catalyst Resource Group, Inc. (‘‘CATA’’)
Commission process and review your Exchange Commission (‘‘Commission’’) (CIK No. 106311), a Florida corporation
comments more efficiently, please use that there is a lack of current and located in Huntington Beach, California
only one method. The Commission will accurate information concerning the with a class of securities registered with
securities of Bioject Medical the Commission pursuant to Exchange
post all comments on the Commission’s
Technologies, Inc. (‘‘BJCT 1’’) (CIK No. Act Section 12(g) because it is
Internet Web site (http://www.sec.gov/ 810084), an Oregon corporation located
rules/sro.shtml). Copies of the delinquent in its periodic filings with
in Tigard, Oregon with a class of the Commission, having not filed any
submission, all subsequent securities registered with the
amendments, all written statements periodic reports since it filed a Form
Commission pursuant to Exchange Act 10–Q for the period ended June 30,
with respect to the proposed rule Section 12(g) because it is delinquent in 2012. On February 19, 2015,
change that are filed with the its periodic filings with the Corporation Finance sent a delinquency
Commission, and all written Commission, having not filed any letter to CATA requesting compliance
communications relating to the periodic reports since it filed a Form with its periodic filing requirements but
proposed rule change between the 10–Q for the period ended September CATA did not receive the delinquency
Commission and any person, other than 30, 2011. On April 28, 2015, the letter due to its failure to maintain a
those that may be withheld from the Commission’s Division of Corporation valid address on file with the
public in accordance with the Finance (‘‘Corporation Finance’’) sent a Commission as required by Commission
provisions of 5 U.S.C. 552, will be delinquency letter to BJCT requesting rules (Rule 301 of Regulation S–T, 17
available for Web site viewing and compliance with its periodic filing CFR 232.301 and Section 5.4 of EDGAR
printing in the Commission’s Public requirements but BJCT did not receive Filer Manual). As of December 9, 2015,
Reference Room, 100 F Street NE., the delinquency letter due to its failure
the common stock of CATA was quoted
Washington, DC 20549 on official to maintain a valid address on file with
on OTC Link, had seven market makers,
business days between the hours of the Commission as required by
and was eligible for the ‘‘piggyback’’
Commission rules (Rule 301 of
10:00 a.m. and 3:00 p.m. Copies of such exception of Exchange Act Rule 15c2–
Regulation S–T, 17 CFR 232.301 and
filing also will be available for 11(f)(3).
Section 5.4 of EDGAR Filer Manual). As
inspection and copying at the principal of December 9, 2015, the common stock It appears to the Commission that
office of the Exchange. All comments of BJCT was quoted on OTC Link there is a lack of current and accurate
received will be posted without change; operated by OTC Markets Group Inc. information concerning the securities of
the Commission does not edit personal (formerly ‘‘Pink Sheets’’) (‘‘OTC Link’’), SSI International, Ltd. (‘‘SSIT’’) (CIK No.
identifying information from had ten market makers, and was eligible 1455982), a revoked Nevada corporation
submissions. You should submit only for the ‘‘piggyback’’ exception of located in Reno, Nevada with a class of
information that you wish to make Exchange Act Rule 15c2–11(f)(3). securities registered with the
available publicly. All submissions It appears to the Commission that Commission pursuant to Exchange Act
should refer to File Number SR–BX– there is a lack of current and accurate Section 12(g) because it is delinquent in
2015–081, and should be submitted on information concerning the securities of its periodic filings with the
or before January 14, 2016. Black Castle Developments Holdings, Commission, having not filed any
Inc. (n/k/a ingXabo Corporation) periodic reports since it filed a Form
For the Commission, by the Division of 10–K for the period ended October 31,
(‘‘BCDH’’) (CIK No. 1072971), a Nevada
Trading and Markets, pursuant to delegated 2011. On February 19, 2015,
authority.51
corporation located in Fresno, California
with a class of securities registered with Corporation Finance sent a delinquency
Robert W. Errett, the Commission pursuant to Exchange letter to SSIT requesting compliance
Deputy Secretary. Act Section 12(g) because it is with its periodic filing requirements but
[FR Doc. 2015–32388 Filed 12–23–15; 8:45 am] delinquent in its periodic filings with SSIT did not receive the delinquency
BILLING CODE 8011–01–P the Commission, having not filed any letter due to its failure to maintain a
periodic reports since it filed a Form valid address on file with the
10–12G on April 16, 2012. On February Commission as required by Commission
mstockstill on DSK4VPTVN1PROD with NOTICES
19, 2015, Corporation Finance sent a rules (Rule 301 of Regulation S–T, 17
delinquency letter to BCDH requesting CFR 232.301 and Section 5.4 of EDGAR
compliance with its periodic filing Filer Manual). As of December 9, 2015,
requirements but BCDH did not receive the common stock of SSIT was quoted
the delinquency letter due to its failure on OTC Link, had three market makers,
and was eligible for the ‘‘piggyback’’
1 The short form of each issuer’s name is also its exception of Exchange Act Rule 15c2–
51 17 CFR 200.30–3(a)(12). stock symbol. 11(f)(3).
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Document Created: 2015-12-24 02:25:38
Document Modified: 2015-12-24 02:25:38
| 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 80432 |
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