81 FR 2271 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Chapter VIII of the Pricing Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 10 (January 15, 2016)

[Federal Register Volume 81, Number 10 (Friday, January 15, 2016)]
[Notices]
[Pages 2271-2273]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-00643]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76867; File No. SR-Phlx-2015-115]


Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change To Amend 
Chapter VIII of the Pricing Schedule

January 11, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 29, 2015, NASDAQ OMX PHLX LLC

[[Page 2272]]

(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III, below, which Items have been 
prepared by the Exchange. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Chapter VIII of the Pricing Schedule 
to clarify the connectivity options and application of the fees 
assessed thereunder.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Chapter VIII of the Pricing Schedule provides the charges Phlx 
assesses for equity securities market connectivity to systems operated 
by Phlx. Phlx is amending Chapter VIII of the Pricing Schedule in four 
ways: (1) To clarify the term ``port pair''; (2) to clarify the 
connectivity options available under the rule; (3) to eliminate 
internet ports as a connectivity option; and (4) to eliminate rule text 
concerning a waiver of fees of limited duration that has since expired.
    First, Phlx is proposing to clarify the use of the term ``port 
pair.'' For certain ports under Chapter VIII of the Pricing Schedule 
that are used for either trading or data, Phlx additionally provides a 
disaster recovery port at no cost. Such a disaster recovery port 
provides connectivity to Phlx's disaster recovery location in the event 
of a failure of Phlx's primary trading infrastructure. Phlx has 
provided disaster recovery ports at no cost since 2010 to encourage 
member organization to maintain such connectivity in the event of a 
market disruption so that the market as a whole could continue to 
operate. In the interest of clarity, the Exchange is proposing to 
eliminate the term port pair and to separately list disaster recovery 
ports as a connectivity option available at no cost under the rule.
    Second, Phlx is reorganizing and adding language to Chapter VIII of 
the Pricing Schedule to list all connectivity provided by Phlx under 
the rule, which is currently subsumed in a connectivity option and 
related fee. Specifically, the Exchange currently offers connectivity 
for $400 per port, per month for each port pair other than Multicast 
ITCH data feed pairs. Under the $400 per port, per month connectivity 
option a member organization may subscribe to an OUCH protocol trading 
port, a FIX Trading Port (either a FIX or FIX Lite protocol),\3\ RASH 
protocol trading port, and DROP ports. Phlx is listing separately each 
of the options available under the rule.\4\
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    \3\ A FIX port is a trading port using a FIX-based 
telecommunication protocol. FIX, an abbreviation for Financial 
Information eXchange, is a standard message protocol that defines an 
electronic message exchange for communicating securities 
transactions between two parties. Phlx offers two FIX-based trading 
ports, which vary based on messaging formats and capability. Phlx is 
proposing to list these two protocols as options under the rule that 
a member organization may select when subscribing to a FIX trading 
port.
    \4\ The Exchange is also deleting rule text concerning a port 
fee waiver of this connectivity option, which has since expired.
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    Similarly, Phlx offers trading ports that may be used only in test 
mode. Member organizations may subscribe to these test mode trading 
ports at no cost, which are exclusively used for testing purposes and 
may not be used for trading in securities in the System. The Exchange 
is adding rule text noting that these test ports may be subscribed to 
under the rule. The Exchange also provides data retransmission ports at 
no cost. Data retransmission ports allow a subscriber to replay market 
data, in the event the data was missed in a live feed or for 
verification purposes. Data retransmission ports only allow replay of 
the current trading day and do not provide data concerning prior 
trading days' data. The Exchange is adding rule text noting that data 
retransmission ports may be subscribed to under the rule.
    Third, Phlx is proposing to eliminate Internet Ports. Internet 
ports are based on outdated technology and Phlx does not have any 
subscribers to this connectivity method.
    Fourth, the Exchange is proposing to eliminate rule text concerning 
a fee waiver of all Access Services fees for the first full six months 
during which Phlx's equities trading market, NASDAQ OMX PSX, operates. 
NASDAQ OMX PSX began operations in October, 2010.\5\ Thus, the Exchange 
is proposing to eliminate the unneeded text.
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    \5\ Securities Exchange Act Release No. 62877 (September 9, 
2010), 75 FR 56633 (September 16, 2010) (SR-Phlx-2010-79).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\6\ in general, and furthers the objectives of 
Sections 6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system which Phlx operates or controls, and is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \6\ 15 U.S.C. 78f (b).
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that the clarifying changes to the rule 
protect investors and the public interest because they explicitly 
describe the fees assessed for all ports under the rule. Describing all 
services covered by the rule will serve to avoid investor confusion 
over the scope of what connectivity options are available, and the 
costs of such options. The Exchange notes that it is not adding new 
connectivity options or functionality, but is rather describing more 
specifically what is currently offered under the rule. In this regard, 
the Exchange is adding new rule text that describes all functionality 
available under each subparagraph of the rule, and is reorganizing some 
rule text under the rule in an effort to make the rule clearer. The 
Exchange notes that much of the new text concerns testing ports, and 
ports used in the event of a disaster or hardware failure. These ports 
help ensure that a fair and orderly market is

[[Page 2273]]

maintained by allowing member organizations to test their systems prior 
to connecting to the live trading environment, and to provide backup 
connectivity in the event of a failure or disaster. Thus, the Exchange 
believes the proposed clarifying changes are consistent with the 
protection of investors and the public interest.
    The Exchange believes that the proposed deletion of the Internet 
Port connectivity option is reasonable, equitably allocated, and not 
unfairly discriminatory because there are no subscribers to this 
connectivity option, which is based on outdated means of connecting to 
the Exchange. As a consequence, no member organizations will be 
impacted by deletion of the connectivity option. Likewise, the Exchange 
believes that the proposed deletion of the expired Access Services fee 
waiver rule text is reasonable, equitably allocated, and not unfairly 
discriminatory because the waiver is no longer in effect and therefore 
no member organizations will be impacted by the deletion. The Exchange 
notes that it is not altering the charges assessed for the remaining 
connectivity options under Chapter VIII of the Pricing Schedule.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Specifically, Phlx is making 
clarifying changes to Chapter VIII of the Pricing Schedule, which does 
not impose any burden on competition whatsoever. To the contrary, the 
proposed change facilitates competition by clarifying what connectivity 
options are provided by the Exchange, thereby informing other market 
venues a better understanding of what connectivity options are 
available for Phlx. With that better understanding, other market venues 
may improve existing connectivity options or offer new connectivity 
options to compete with Phlx. Accordingly, the proposed changes do not 
inhibit market participants' ability to compete among each other, nor 
do they impose any burden on competition among market venues, but 
rather may promote competition among market venues.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \8\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\9\ 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.
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    \8\ 15 U.S.C. 78s(b)(3)(a)(iii).
    \9\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-Phlx-2015-115 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2015-115. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-Phlx-2015-115 and should be 
submitted on or before February 5, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-00643 Filed 1-14-16; 8:45 am]
 BILLING CODE 8011-01-P