81 FR 30580 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees as They Apply to the Equity Options Platform
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 95 (May 17, 2016)
Federal Register Volume 81, Issue 95 (May 17, 2016)
| Page Range | 30580-30583 | |
| FR Document | 2016-11543 |
[Federal Register Volume 81, Number 95 (Tuesday, May 17, 2016)] [Notices] [Pages 30580-30583] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-11543] [[Page 30580]] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-77813; File No. SR-BatsEDGX-2016-15] Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees as They Apply to the Equity Options Platform May 11, 2016. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on May 2, 2016, Bats EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. The Exchange has designated the proposed rule change as one establishing or changing a member due, fee, or other charge imposed by the Exchange under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposed rule change effective upon filing with the Commission. 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. \3\ 15 U.S.C. 78s(b)(3)(A)(ii). \4\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to amend the fee schedule applicable to Members \5\ and non-members of the Exchange pursuant to EDGX Rules 15.1(a) and (c). --------------------------------------------------------------------------- \5\ The term ``Member'' is defined as ``any registered broker or dealer that has been admitted to membership in the Exchange.'' See Exchange Rule 1.5(n). --------------------------------------------------------------------------- The text of the proposed rule change is available at the Exchange's Web site at www.batstrading.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 parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its fee schedule for its equity options platform (``EDGX Options'') to: (1) Modify an existing tier and add a new tier to its existing tiered pricing structure; and (2) simplify the Exchange's routing fees, as further described below. Tiered Pricing Changes The Exchange currently offers two pricing tiers under footnotes 1 and 2 of the fee schedule, Customer Volume Tiers and Market Maker Volume Tiers, respectively. Under the tiers, Members that achieve certain volume criteria may qualify for reduced fees or enhanced rebates for Customer \6\ and Market Maker \7\ orders. The Exchange proposes to modify Customer Volume Tier 6 under footnote 1 and to add an additional Market Maker Volume Tier under footnote 2, as further described below. --------------------------------------------------------------------------- \6\ The term ``Customer'' applies to any transaction identified by a Member for clearing in the Customer range at the Options Clearing Corporation (``OCC''), excluding any transaction for a Broker Dealer or a ``Professional'' as defined in Exchange Rule 16.1. \7\ The term ``Market Maker'' applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is registered with the Exchange as a Market Maker as defined in Rule 16.1(a)(37). --------------------------------------------------------------------------- Fee code PC and NC are currently appended to all Customer orders in Penny Pilot Securities \8\ and Non-Penny Pilot Securities,\9\ respectively, and result in a standard rebate of $0.01 per contract. The Customer Volume Tiers in footnote 1 consist of six separate tiers, each providing an enhanced rebate to a Member's Customer orders that yield fee codes PC or NC upon satisfying monthly volume criteria required by the respective tier. For instance, pursuant to Customer Volume Tier 1, the lowest volume tier, a Member will receive a rebate of $0.05 per contract where the Member has an ADV \10\ in Customer orders equal to or greater than 0.10% of average TCV.\11\ --------------------------------------------------------------------------- \8\ The term ``Penny Pilot Security'' applies to those issues that are quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. \9\ The term ``Non-Penny Pilot Security'' applies to those issues that are not Penny Pilot Securities quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. \10\ ``ADV'' means average daily volume calculated as the number of contracts added or removed, combined, per day. \11\ ``TCV'' means total consolidated volume calculated as the volume reported by all exchanges to the consolidated transaction reporting plan for the month for which the fees apply, excluding volume on any day that the Exchange experiences an Exchange System Disruption and on any day with a scheduled early market close. --------------------------------------------------------------------------- Pursuant to Customer Volume Tier 6, a Member currently will receive a rebate of $0.21 per contract where: (1) The Member has an ADV in Customer orders equal to or greater than 0.25% of average TCV; and (2) the Member has an ADV in Market Maker orders equal to or greater than 0.25% of average TCV. In order to encourage the entry of additional orders to the Exchange, Exchange proposes to modify Customer Volume Tier 6 to reduce the criteria necessary to qualify. Specifically, the Exchange proposes to provide the same rebate, $0.21 per contract, as it currently provides for Customer Volume Tier 6, but to provide such rebate where: (1) The Member has an ADV in Customer orders equal to or greater than 0.20% of average TCV; and (2) the Member has an ADV in Market Maker orders equal to or greater than 0.15% of average TCV. The Exchange believes that this change will make Customer Volume Tier 6 more attainable for additional Members. Fee code PM and NM are currently appended to all Market Maker orders in Penny Pilot Securities and Non-Penny Pilot Securities, respectively, and result in a standard fee of $0.19 per contract. The Market Maker Volume Tiers in footnote 2 consist of six separate tiers, each providing a reduced fee or rebate to a Member's Market Maker orders that yield fee codes PM or NM upon satisfying monthly volume criteria required by the respective tier. For instance, pursuant to Market Maker Volume Tier 1, the lowest volume tier, a Member will pay a reduced fee of $0.16 per contract where the Member has an ADV in Market Maker orders equal to or greater than 0.05% of average TCV. Pursuant to Market Maker Volume Tier 6, the highest volume tier, a Member will receive a rebate of $0.01 per contract where the Member has an ADV in Market Maker orders equal to or greater than 1.10% of average TCV. In addition to the change to the qualifying criteria for Customer Volume Tier 6 set forth above, the Exchange proposes to adopt a new Market Maker Volume Tier with the same criteria as amended Customer Volume Tier 6. Specifically, the Exchange proposes to [[Page 30581]] adopt Market Maker Volume Tier 7, providing a reduced fee of $0.10 per contract where: (1) The Member has an ADV in Customer orders equal to or greater than 0.20% of average TCV; and (2) the Member has an ADV in Market Maker orders equal to or greater than 0.15% of average TCV. As with all other fees and rebates pursuant to footnote 2, the fee would be charged for transactions yielding fee code PM and NM. The Exchange notes that the reduced fee of $0.10 per contract is the same fee as Market Maker Volume Tier 3, which is provided where the Member has an ADV in Market Maker orders equal to or greater than 0.20% of average TCV. By introducing Tier 7, the Exchange is providing an additional mechanism for a Member to achieve this reduced fee. The Exchange also notes that the proposed fee and associated criteria are intended to encourage the entry of both Customer orders and Market Maker orders by providing a hybrid tier that rewards the entry of both. Although the qualifying criteria includes Customer orders, as noted above, the proposed reduced fee of $0.10 per contract would only be awarded to a Member's Market Maker orders that yield fee codes PM or NM upon satisfying the monthly volume criteria (and not such Member's Customer orders). However, as noted above, because the criteria are the same, a Member qualifying for Market Maker Volume Tier 7 would also qualify for Customer Volume Tier 6, and thus would be entitled to enhanced rebates for such Member's Customer orders. In addition to the changes described above, the Exchange proposes to add the phrase ``of average TCV'' to the end of the criteria for existing Market Making Volume Tiers 1 through 6. Although the filing initially adopting such tiers did include the language in describing the applicable criteria, the Exchange believes that such language is appropriate for the fee schedule. This change would ensure that the language of footnote 2 is consistent with footnote 1, which does include this phrase in each Tier's criteria description. The Exchange also proposes to change all references to ``Customer Orders'' to ``Customer orders'' and from ``Market Maker Orders'' to ``Market Maker orders'' throughout footnote 1 and footnote 2. These changes will also ensure consistency on the fee schedule with respect to the word ``order'', which is not contained in any of the defined terms on the fee schedule. Routing Fees The Exchange proposes to modify the fees charged for orders routed away from the Exchange and executed at various away options exchanges. The Exchange currently has specific rates and associated fee codes for each away options exchange.\12\ Such rates are further divided at each options exchange into either two categories in order to differentiate between Customer and Non-Customer \13\ orders or into four categories in order to differentiate between Customer and Non-Customer orders and then into Penny Pilot Securities and Non-Penny Pilot Securities.\14\ In order to simplify routing fees for executions at away options exchanges, the Exchange proposes to charge flat rates for routing to other options exchanges that have been placed into groups based on the approximate cost of routing to such venues. The grouping of away options exchanges is based on the cost of transaction fees assessed by each venue as well as costs to the Exchange for routing (i.e., clearing fees, connectivity and other infrastructure costs, membership fees, etc.) (collectively, ``Routing Costs''). To address different fees at various other options exchanges, the Exchange proposes to adopt five different fees and associated fee codes applicable to routing to away options exchanges, as further described below. --------------------------------------------------------------------------- \12\ Other options exchanges to which the Ewchange routes include: Bats BZX Exchange, Inc. (``BZX Options''), BOX Options Exchange LLC (``BOX''), Chicago Board Options Exchange, Inc. (``CBOE''), C2 Options Exchange, Inc. (``C2''), International Securities Exchange, Inc. (``ISE''), ISE Gemini, LLC (``ISE Gemini''), ISE Mercury, LLC (``ISE Mercury''), Miami International Securities Exchange, LLC (``MIAX'') Nasdaq Options Market LLC (``NOM''), Nasdaq OMX BX LLC (``BX Options''), Nasdaq OMX PHLX LLC (``PHLX''), NYSE Arca, Inc (``ARCA''), and NYSE MKT LLC (``AMEX''). \13\ The term ``Non-Customer'' applies to any transaction that is not a Customer order. \14\ The Exchange notes that it still applies a single rate for order routed to and executed at the newest options exchange, ISE Mercury. --------------------------------------------------------------------------- With respect to Non-Customer orders, the Exchange proposes to adopt two fee codes: (1) Fee code RN, which would result in a fee of $0.85 per contract and would apply to all Non-Customer orders in Penny Pilot Securities; and (2) fee code RO, which would result in a fee of $1.20 per contract and would apply to all Non-Customer orders in Non-Penny Pilot Securities. The Exchange notes that the current range of fees applicable to Non-Customer orders routed to other options exchanges is from $0.60 per contract (fee code RF, applicable to Non-Customer orders in Penny Pilot Securities executed at BZX Options) to $1.25 per contract (fee code QG, applicable to Non-Customer orders executed at NOM in Non-Penny Pilot Securities). With respect to Customer orders, the Exchange proposes to adopt three fee codes: (1) Fee code RP, which would result in a fee of $0.25 per contract and would apply to all Customer orders routed to and executed at AMEX, BOX, BX Options, CBOE, ISE Mercury, MIAX or PHLX; (2) fee code RQ, which would result in a fee of $0.70 per contract and would apply to all Customer orders in Penny Pilot Securities routed to and executed at ARCA, BZX Options, C2, ISE, ISE Gemini or NOM; and (3) fee code RR, which would result in a fee of $0.90 per contract and would apply to all Customer orders in Non-Penny Pilot Securities routed to and executed at ARCA, BZX Options, C2, ISE, ISE Gemini or NOM. The Exchange notes that the current range of fees applicable to Customer orders routed to other options exchanges is from no charge per contract (fee code BD, applicable to Customer orders in Non-Penny Pilot Securities executed at BX Options) to $0.94 per contract (fee code RD, applicable to Customer orders executed at BZX Options in Non-Penny Pilot Securities).\15\ --------------------------------------------------------------------------- \15\ The Exchange again notes that it currently applies a single rate for orders routed to and executed at the newest options exchange, ISE Mercury. As such, Customer orders execute at ISE Mercury technically pay the highest rate today, a fee of $0.99 per contract. --------------------------------------------------------------------------- As a general matter, the groupings described above in most instances attempt to differentiate between the Routing Costs applicable to either executions of orders in Penny Pilot Securities versus those in Non-Penny Pilot Securities or between fee ranges typical of exchanges that operate primarily a maker/taker or price/time market model (generally imposing higher fees, including for Customer orders) versus exchanges that operate primarily a pro rata or customer priority market model (generally imposing lower fees, especially for Customer orders). As set forth above, the Exchange's proposed approach to routing fees is to set forth in a simple manner certain flat fees that approximate the cost of routing to other options exchanges. The Exchange will then monitor the fees charged as compared to the costs of its routing services, as well as monitoring for specific fee changes by other options exchanges, and intends to adjust its flat routing fees and/or groupings to ensure that the Exchange's fees do indeed result in a rough approximation of overall Routing Costs, and are not significantly higher or lower in any area. Although there may be instances where the Exchanges [sic] fee to a particular options exchange is indeed significantly higher than the fee charged by such [[Page 30582]] options exchange, the Exchange believes that this is appropriate for several reasons discussed in further detail below, including the simplicity that it will provide Users of the Exchange's routing services. Implementation Date The Exchange proposes to implement these amendments to its fee schedule immediately. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.\16\ Specifically, the Exchange believes that the proposed rule change is consistent with Section 6(b)(4) of the Act,\17\ in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and other persons using any facility or system which the Exchange operates or controls. --------------------------------------------------------------------------- \16\ 15 U.S.C. 78f. \17\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- The Exchange believes its proposed fees and rebates pursuant to the tiered pricing structure are reasonable, fair and equitable, and non- discriminatory. The Exchange operates in a highly competitive market in which market participants may readily send order flow to many competing venues if they deem fees at the Exchange to be excessive. As a new options exchange, the proposed fee structure remains intended to attract order flow to the Exchange by offering market participants a competitive yet simple pricing structure. At the same time, the Exchange believes it is reasonable to incrementally adopt incentives intended to help to contribute to the growth of the Exchange. Volume-based rebates such as those currently maintained on the Exchange have been widely adopted by options exchanges and are equitable because they are open to all Members on an equal basis and provide additional benefits or discounts that are reasonably related to the value of an exchange's market quality associated with higher levels of market activity, such as higher levels of liquidity provision and/or growth patterns, and introduction of higher volumes of orders into the price and volume discovery processes. The proposed modification to the Customer Volume Tier and the proposed addition of Market Maker Volume Tier 7 is each intended to incentivize Members to send additional Customer orders and Market Maker orders to the Exchange in an effort to qualify for the enhanced rebate or lower fee made available by the tiers. The Exchange believes that the proposed tiers are reasonable, fair and equitable, and non-discriminatory, for the reasons set forth above with respect to volume-based pricing generally and because such changes will incentivize participants to further contribute to market quality. The proposed tiers will provide an additional way for market participants to qualify for enhanced rebates or reduced fees. The Exchange also believes that the proposed tiered pricing structure is consistent with pricing previously offered by the Exchange as well as other options exchanges and does not represent a significant departure from such pricing structures.\18\ --------------------------------------------------------------------------- \18\ See, e.g., Bats BZX Options Fee Schedule, Footnote 1, Customer Add Volume Tier 5, which provides an enhanced rebate to Customer orders on BZX Options based on both Customer volume and Market Maker volume. The BZX Options Fee Schedule is available at: http://www.batsoptions.com/support/fee_schedule/bzx/. --------------------------------------------------------------------------- With respect to the proposed routing structure, the Exchange again notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues or providers of routing services if they deem fee levels to be excessive. As explained above, the Exchange proposes to approximate the cost of routing to other options exchanges, including other applicable costs to the Exchange for routing, in order to provide a simplified and easy to understand pricing model. The Exchange believes that a pricing model based on approximate Routing Costs is a reasonable, fair and equitable approach to pricing. Specifically, the Exchange believes that its proposal to modify fees is fair, equitable and reasonable because the fees are generally an approximation of the cost to the Exchange for routing orders to such exchanges. The Exchange believes that its flat fee structure for orders routed to various venues is a fair and equitable approach to pricing, as it will provide certainty with respect to execution fees at groups of away options exchanges. In order to achieve its flat fee structure, taking all costs to the Exchange into account, the Exchange will necessarily charge a higher premium to route to certain options exchanges than to others. As a general matter, the Exchange believes that the proposed fees will allow it to recoup and cover its costs of providing routing services to such exchanges and to make some additional profit in exchange for the services it provides. The Exchange also believes that the proposed fee structure for orders routed to and executed at these away options exchanges is fair and equitable and not unreasonably discriminatory in that it applies equally to all Members. Finally, the Exchange notes that it intends to consistently evaluate its routing fees, including profit and loss attributable to routing, as applicable, in connection with the operation of a flat fee routing service, and would consider future adjustments to the proposed pricing structure to the extent it was recouping a significant profit or loss from routing to away options exchanges. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes the proposed amendments to its fee schedule would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, the proposal is a competitive proposal that is seeking to further the growth of the Exchange and to simplify the Exchange's fees for routing orders to away options exchanges. With respect to the tiered pricing changes, the Exchange has structured the proposed fees and rebates to attract additional volume in Market Maker and Customer orders, however, the Exchange believes that its pricing for all capacities is competitive with that offered by other options exchanges. With respect to the proposed routing fee structure, the Exchange believes that the proposed fees are competitive in that they will provide a simple approach to routing pricing that some Members may favor. Additionally, Members may opt to disfavor the Exchange's pricing, including pricing for transactions on the Exchange as well as routing fees, if they believe that alternatives offer them better value. In particular, with respect to routing services, such services are available to Members from other broker-dealers as well as other options exchanges. The Exchange also notes that Members may choose to mark their orders as ineligible for routing to avoid incurring routing fees.\19\ Accordingly, the Exchange does not believe that the proposed change will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. --------------------------------------------------------------------------- \19\ See Exchange Rule 21.1(d)(7) (describing ``Book Only'' orders) and Exchange Rule 21.9(a)(1) (describing the Exchange's routing process, which requires orders to be designated as available for routing). --------------------------------------------------------------------------- [[Page 30583]] C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act \20\ and paragraph (f)(2) of Rule 19b-4 thereunder.\21\ At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(3)(A). \21\ 17 CFR 240.19b-4(f). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic CommentsUse the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to [email protected]. Please include File No. SR-BatsEDGX-2016-15 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 No. SR-BatsEDGX-2016-15. 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 No. SR-BatsEDGX-2016-15, and should be submitted on or before June 7, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\22\ --------------------------------------------------------------------------- \22\15 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-11543 Filed 5-16-16; 8:45 am] BILLING CODE 8011-01-P
![30580 Federal Register / Vol. 81, No. 95 / Tuesday, May 17, 2016 / Notices
SECURITIES AND EXCHANGE statements may be examined at the Member has an ADV 10 in Customer
COMMISSION places specified in Item IV below. The orders equal to or greater than 0.10% of
Exchange has prepared summaries, set average TCV.11
[Release No. 34–77813; File No. SR–
BatsEDGX–2016–15] forth in Sections A, B, and C below, of Pursuant to Customer Volume Tier 6,
the most significant parts of such a Member currently will receive a rebate
Self-Regulatory Organizations; Bats statements. of $0.21 per contract where: (1) The
EDGX Exchange, Inc.; Notice of Filing Member has an ADV in Customer orders
A. Self-Regulatory Organization’s equal to or greater than 0.25% of
and Immediate Effectiveness of a
Statement of the Purpose of, and the average TCV; and (2) the Member has an
Proposed Rule Change Related to Fees
as They Apply to the Equity Options Statutory Basis for, the Proposed Rule ADV in Market Maker orders equal to or
Platform Change greater than 0.25% of average TCV. In
1. Purpose order to encourage the entry of
May 11, 2016. additional orders to the Exchange,
Pursuant to Section 19(b)(1) of the The Exchange proposes to amend its Exchange proposes to modify Customer
Securities Exchange Act of 1934 (the fee schedule for its equity options Volume Tier 6 to reduce the criteria
‘‘Act’’),1 and Rule 19b–4 thereunder,2 platform (‘‘EDGX Options’’) to: (1) necessary to qualify. Specifically, the
notice is hereby given that on May 2, Modify an existing tier and add a new Exchange proposes to provide the same
2016, Bats EDGX Exchange, Inc. (the tier to its existing tiered pricing rebate, $0.21 per contract, as it currently
‘‘Exchange’’ or ‘‘EDGX’’) filed with the structure; and (2) simplify the provides for Customer Volume Tier 6,
Securities and Exchange Commission Exchange’s routing fees, as further but to provide such rebate where: (1)
(‘‘Commission’’) the proposed rule described below. The Member has an ADV in Customer
change as described in Items I, II and III orders equal to or greater than 0.20% of
below, which Items have been prepared Tiered Pricing Changes average TCV; and (2) the Member has an
by the Exchange. The Exchange has ADV in Market Maker orders equal to or
designated the proposed rule change as The Exchange currently offers two
pricing tiers under footnotes 1 and 2 of greater than 0.15% of average TCV. The
one establishing or changing a member Exchange believes that this change will
due, fee, or other charge imposed by the the fee schedule, Customer Volume
Tiers and Market Maker Volume Tiers, make Customer Volume Tier 6 more
Exchange under Section 19(b)(3)(A)(ii) attainable for additional Members.
of the Act 3 and Rule 19b–4(f)(2) respectively. Under the tiers, Members
Fee code PM and NM are currently
thereunder,4 which renders the that achieve certain volume criteria may
appended to all Market Maker orders in
proposed rule change effective upon qualify for reduced fees or enhanced
Penny Pilot Securities and Non-Penny
filing with the Commission. The rebates for Customer 6 and Market
Pilot Securities, respectively, and result
Commission is publishing this notice to Maker 7 orders. The Exchange proposes
in a standard fee of $0.19 per contract.
solicit comments on the proposed rule to modify Customer Volume Tier 6
The Market Maker Volume Tiers in
change from interested persons. under footnote 1 and to add an
footnote 2 consist of six separate tiers,
additional Market Maker Volume Tier
I. Self-Regulatory Organization’s each providing a reduced fee or rebate
under footnote 2, as further described
Statement of the Terms of Substance of to a Member’s Market Maker orders that
below.
the Proposed Rule Change yield fee codes PM or NM upon
Fee code PC and NC are currently satisfying monthly volume criteria
The Exchange filed a proposal to appended to all Customer orders in required by the respective tier. For
amend the fee schedule applicable to Penny Pilot Securities 8 and Non-Penny instance, pursuant to Market Maker
Members 5 and non-members of the Pilot Securities,9 respectively, and Volume Tier 1, the lowest volume tier,
Exchange pursuant to EDGX Rules result in a standard rebate of $0.01 per a Member will pay a reduced fee of
15.1(a) and (c). contract. The Customer Volume Tiers in $0.16 per contract where the Member
The text of the proposed rule change
footnote 1 consist of six separate tiers, has an ADV in Market Maker orders
is available at the Exchange’s Web site
each providing an enhanced rebate to a equal to or greater than 0.05% of
at www.batstrading.com, at the
Member’s Customer orders that yield fee average TCV. Pursuant to Market Maker
principal office of the Exchange, and at
codes PC or NC upon satisfying monthly Volume Tier 6, the highest volume tier,
the Commission’s Public Reference
volume criteria required by the a Member will receive a rebate of $0.01
Room.
respective tier. For instance, pursuant to per contract where the Member has an
II. Self-Regulatory Organization’s Customer Volume Tier 1, the lowest ADV in Market Maker orders equal to or
Statement of the Purpose of, and volume tier, a Member will receive a greater than 1.10% of average TCV.
Statutory Basis for, the Proposed Rule rebate of $0.05 per contract where the In addition to the change to the
Change qualifying criteria for Customer Volume
In its filing with the Commission, the 6 The term ‘‘Customer’’ applies to any transaction Tier 6 set forth above, the Exchange
Exchange included statements identified by a Member for clearing in the Customer proposes to adopt a new Market Maker
range at the Options Clearing Corporation (‘‘OCC’’), Volume Tier with the same criteria as
concerning the purpose of and basis for excluding any transaction for a Broker Dealer or a
the proposed rule change and discussed ‘‘Professional’’ as defined in Exchange Rule 16.1. amended Customer Volume Tier 6.
any comments it received on the 7 The term ‘‘Market Maker’’ applies to any Specifically, the Exchange proposes to
proposed rule change. The text of these transaction identified by a Member for clearing in
the Market Maker range at the OCC, where such 10 ‘‘ADV’’ means average daily volume calculated
jstallworth on DSK7TPTVN1PROD with NOTICES
Member is registered with the Exchange as a Market as the number of contracts added or removed,
1 15 U.S.C. 78s(b)(1). Maker as defined in Rule 16.1(a)(37). combined, per day.
2 17 CFR 240.19b–4. 8 The term ‘‘Penny Pilot Security’’ applies to 11 ‘‘TCV’’ means total consolidated volume
3 15 U.S.C. 78s(b)(3)(A)(ii).
those issues that are quoted pursuant to Exchange calculated as the volume reported by all exchanges
4 17 CFR 240.19b–4(f)(2). Rule 21.5, Interpretation and Policy .01. to the consolidated transaction reporting plan for
5 The term ‘‘Member’’ is defined as ‘‘any 9 The term ‘‘Non-Penny Pilot Security’’ applies to the month for which the fees apply, excluding
registered broker or dealer that has been admitted those issues that are not Penny Pilot Securities volume on any day that the Exchange experiences
to membership in the Exchange.’’ See Exchange quoted pursuant to Exchange Rule 21.5, an Exchange System Disruption and on any day
Rule 1.5(n). Interpretation and Policy .01. with a scheduled early market close.
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![Federal Register / Vol. 81, No. 95 / Tuesday, May 17, 2016 / Notices 30581
adopt Market Maker Volume Tier 7, from the Exchange and executed at With respect to Customer orders, the
providing a reduced fee of $0.10 per various away options exchanges. The Exchange proposes to adopt three fee
contract where: (1) The Member has an Exchange currently has specific rates codes: (1) Fee code RP, which would
ADV in Customer orders equal to or and associated fee codes for each away result in a fee of $0.25 per contract and
greater than 0.20% of average TCV; and options exchange.12 Such rates are would apply to all Customer orders
(2) the Member has an ADV in Market further divided at each options routed to and executed at AMEX, BOX,
Maker orders equal to or greater than exchange into either two categories in BX Options, CBOE, ISE Mercury, MIAX
0.15% of average TCV. As with all other order to differentiate between Customer or PHLX; (2) fee code RQ, which would
fees and rebates pursuant to footnote 2, and Non-Customer 13 orders or into four result in a fee of $0.70 per contract and
the fee would be charged for categories in order to differentiate would apply to all Customer orders in
transactions yielding fee code PM and between Customer and Non-Customer Penny Pilot Securities routed to and
NM. orders and then into Penny Pilot executed at ARCA, BZX Options, C2,
The Exchange notes that the reduced Securities and Non-Penny Pilot ISE, ISE Gemini or NOM; and (3) fee
fee of $0.10 per contract is the same fee Securities.14 In order to simplify routing code RR, which would result in a fee of
as Market Maker Volume Tier 3, which fees for executions at away options $0.90 per contract and would apply to
is provided where the Member has an exchanges, the Exchange proposes to all Customer orders in Non-Penny Pilot
ADV in Market Maker orders equal to or charge flat rates for routing to other Securities routed to and executed at
greater than 0.20% of average TCV. By options exchanges that have been ARCA, BZX Options, C2, ISE, ISE
introducing Tier 7, the Exchange is placed into groups based on the Gemini or NOM. The Exchange notes
providing an additional mechanism for approximate cost of routing to such that the current range of fees applicable
a Member to achieve this reduced fee. venues. The grouping of away options to Customer orders routed to other
The Exchange also notes that the exchanges is based on the cost of options exchanges is from no charge per
proposed fee and associated criteria are transaction fees assessed by each venue contract (fee code BD, applicable to
intended to encourage the entry of both as well as costs to the Exchange for Customer orders in Non-Penny Pilot
Customer orders and Market Maker routing (i.e., clearing fees, connectivity Securities executed at BX Options) to
orders by providing a hybrid tier that and other infrastructure costs, $0.94 per contract (fee code RD,
rewards the entry of both. Although the membership fees, etc.) (collectively, applicable to Customer orders executed
qualifying criteria includes Customer ‘‘Routing Costs’’). To address different at BZX Options in Non-Penny Pilot
orders, as noted above, the proposed fees at various other options exchanges, Securities).15
reduced fee of $0.10 per contract would the Exchange proposes to adopt five As a general matter, the groupings
only be awarded to a Member’s Market different fees and associated fee codes described above in most instances
Maker orders that yield fee codes PM or applicable to routing to away options attempt to differentiate between the
NM upon satisfying the monthly volume exchanges, as further described below. Routing Costs applicable to either
criteria (and not such Member’s With respect to Non-Customer orders, executions of orders in Penny Pilot
Customer orders). However, as noted the Exchange proposes to adopt two fee Securities versus those in Non-Penny
above, because the criteria are the same, codes: (1) Fee code RN, which would Pilot Securities or between fee ranges
a Member qualifying for Market Maker result in a fee of $0.85 per contract and typical of exchanges that operate
Volume Tier 7 would also qualify for would apply to all Non-Customer orders primarily a maker/taker or price/time
Customer Volume Tier 6, and thus in Penny Pilot Securities; and (2) fee market model (generally imposing
would be entitled to enhanced rebates code RO, which would result in a fee of higher fees, including for Customer
for such Member’s Customer orders. $1.20 per contract and would apply to orders) versus exchanges that operate
In addition to the changes described all Non-Customer orders in Non-Penny primarily a pro rata or customer priority
above, the Exchange proposes to add the Pilot Securities. The Exchange notes market model (generally imposing lower
phrase ‘‘of average TCV’’ to the end of that the current range of fees applicable fees, especially for Customer orders).
the criteria for existing Market Making to Non-Customer orders routed to other As set forth above, the Exchange’s
Volume Tiers 1 through 6. Although the options exchanges is from $0.60 per proposed approach to routing fees is to
filing initially adopting such tiers did contract (fee code RF, applicable to set forth in a simple manner certain flat
include the language in describing the Non-Customer orders in Penny Pilot fees that approximate the cost of routing
applicable criteria, the Exchange Securities executed at BZX Options) to to other options exchanges. The
believes that such language is $1.25 per contract (fee code QG, Exchange will then monitor the fees
appropriate for the fee schedule. This applicable to Non-Customer orders charged as compared to the costs of its
change would ensure that the language executed at NOM in Non-Penny Pilot routing services, as well as monitoring
of footnote 2 is consistent with footnote Securities). for specific fee changes by other options
1, which does include this phrase in exchanges, and intends to adjust its flat
each Tier’s criteria description. The 12 Other options exchanges to which the routing fees and/or groupings to ensure
Exchange also proposes to change all Ewchange routes include: Bats BZX Exchange, Inc. that the Exchange’s fees do indeed
(‘‘BZX Options’’), BOX Options Exchange LLC result in a rough approximation of
references to ‘‘Customer Orders’’ to (‘‘BOX’’), Chicago Board Options Exchange, Inc.
‘‘Customer orders’’ and from ‘‘Market (‘‘CBOE’’), C2 Options Exchange, Inc. (‘‘C2’’), overall Routing Costs, and are not
Maker Orders’’ to ‘‘Market Maker International Securities Exchange, Inc. (‘‘ISE’’), ISE significantly higher or lower in any area.
orders’’ throughout footnote 1 and Gemini, LLC (‘‘ISE Gemini’’), ISE Mercury, LLC Although there may be instances where
(‘‘ISE Mercury’’), Miami International Securities the Exchanges [sic] fee to a particular
footnote 2. These changes will also Exchange, LLC (‘‘MIAX’’) Nasdaq Options Market
options exchange is indeed significantly
jstallworth on DSK7TPTVN1PROD with NOTICES
ensure consistency on the fee schedule LLC (‘‘NOM’’), Nasdaq OMX BX LLC (‘‘BX
with respect to the word ‘‘order’’, which Options’’), Nasdaq OMX PHLX LLC (‘‘PHLX’’), higher than the fee charged by such
is not contained in any of the defined NYSE Arca, Inc (‘‘ARCA’’), and NYSE MKT LLC
(‘‘AMEX’’). 15 The Exchange again notes that it currently
terms on the fee schedule. 13 The term ‘‘Non-Customer’’ applies to any
applies a single rate for orders routed to and
Routing Fees transaction that is not a Customer order. executed at the newest options exchange, ISE
14 The Exchange notes that it still applies a single Mercury. As such, Customer orders execute at ISE
The Exchange proposes to modify the rate for order routed to and executed at the newest Mercury technically pay the highest rate today, a
fees charged for orders routed away options exchange, ISE Mercury. fee of $0.99 per contract.
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![Federal Register / Vol. 81, No. 95 / Tuesday, May 17, 2016 / Notices 30583
C. Self-Regulatory Organization’s Commission and any person, other than (‘‘Fee Schedule’’). The Exchange
Statement on Comments on the those that may be withheld from the proposes to implement the fee change
Proposed Rule Change Received From public in accordance with the effective May 2, 2016. The proposed
Members, Participants, or Others provisions of 5 U.S.C. 552, will be change is available on the Exchange’s
The Exchange has not solicited, and available for Web site viewing and Web site at www.nyse.com, at the
does not intend to solicit, comments on printing in the Commission’s Public principal office of the Exchange, and at
this proposed rule change. The Reference Room, 100 F Street NE., the Commission’s Public Reference
Exchange has not received any written Washington, DC 20549, on official Room.
comments from members or other business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the II. Self-Regulatory Organization’s
interested parties.
filing also will be available for Statement of the Purpose of, and
III. Date of Effectiveness of the inspection and copying at the principal Statutory Basis for, the Proposed Rule
Proposed Rule Change and Timing for office of the Exchange. All comments Change
Commission Action received will be posted without change;
the Commission does not edit personal In its filing with the Commission, the
The foregoing rule change has become
identifying information from self-regulatory organization included
effective pursuant to Section 19(b)(3)(A)
submissions. You should submit only statements concerning the purpose of,
of the Act 20 and paragraph (f)(2) of Rule
19b–4 thereunder.21 At any time within information that you wish to make and basis for, the proposed rule change
60 days of the filing of the proposed rule available publicly. All submissions and discussed any comments it received
change, the Commission summarily may should refer to File No. SR–BatsEDGX– on the proposed rule change. The text
temporarily suspend such rule change if 2016–15, and should be submitted on or of those statements may be examined at
it appears to the Commission that such before June 7, 2016. the places specified in Item IV below.
action is necessary or appropriate in the The Exchange has prepared summaries,
For the Commission, by the Division of
public interest, for the protection of Trading and Markets, pursuant to delegated set forth in sections A, B, and C below,
investors, or otherwise in furtherance of authority.22 of the most significant parts of such
the purposes of the Act. Robert W. Errett, statements.
IV. Solicitation of Comments Deputy Secretary. A. Self-Regulatory Organization’s
[FR Doc. 2016–11543 Filed 5–16–16; 8:45 am] Statement of the Purpose of, and the
Interested persons are invited to
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
submit written data, views, and
Change
arguments concerning the foregoing,
including whether the proposed rule SECURITIES AND EXCHANGE 1. Purpose
change is consistent with the Act. COMMISSION
Comments may be submitted by any of The purpose of this filing is to modify
the following methods: [Release No. 34–77814; File No. SR– the definition of a Firm Facilitation
NYSEMKT–2016–50] trade to include Broker-Dealers, which
Electronic Comments would be consistent with the treatment
• Use the Commission’s Internet Self-Regulatory Organizations; NYSE of such transactions on another options
comment form (http://www.sec.gov/ MKT LLC; Notice of Filing and
market. The Exchange proposes to
rules/sro.shtml); or Immediate Effectiveness of Proposed
implement the change effective on May
• Send an email to rule-comments@ Change Modifying the NYSE Amex
2, 2016.
sec.gov. Please include File No. SR- Options Fee Schedule
The current Fee Schedule defines a
BatsEDGX–2016–15 on the subject line. May 11, 2016. ‘‘Firm Facilitation’’ trade as ‘‘a Manual
Paper Comments Pursuant to section 19(b)(1) 1 of the trade that is executed in open outcry, in
Securities Exchange Act of 1934 (the which one counterparty clears in the
• Send paper comments in triplicate
‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Firm range at the OCC, the other
to Secretary, Securities and Exchange
notice is hereby given that, on April 28, counterparty clears in the Customer
Commission, 100 F Street NE.,
2016, NYSE MKT LLC (the ‘‘Exchange’’ range at the OCC, and both
Washington, DC 20549–1090.
or ‘‘NYSE MKT’’) filed with the counterparties have the same Clearing
All submissions should refer to File No. Securities and Exchange Commission
SR–BatsEDGX–2016–15. This file Member symbol or identification.’’ 4
(the ‘‘Commission’’) the proposed rule Firm Facilitation trades are not subject
number should be included on the change as described in Items I, II, and
subject line if email is used. To help the to transaction charges and are only
III below, which Items have been subject to Royalty Fees.5
Commission process and review your prepared by the self-regulatory
comments more efficiently, please use organization. The Commission is The Exchange proposes to modify the
only one method. The Commission will publishing this notice to solicit definition of Firm Facilitation to
post all comments on the Commission’s comments on the proposed rule change include Manual trades clearing in the
Internet Web site (http://www.sec.gov/ from interested persons.
rules/sro.shtml). Copies of the 4 See Fee Schedule, Terms and Definitions,
submission, all subsequent I. Self-Regulatory Organization’s available here, https://www.nyse.com/publicdocs/
amendments, all written statements Statement of the Terms of Substance of nyse/markets/amex-options/
the Proposed Rule Change NYSE_Amex_Options_Fee_Schedule.pdf.
jstallworth on DSK7TPTVN1PROD with NOTICES
with respect to the proposed rule 5 See id., Fee Schedule, sections I. A. and B.
change that are filed with the The Exchange proposes to modify the (providing that Firm Facilitation trades are
Commission, and all written NYSE Amex Options Fee Schedule executed at the rate of $0.00 per contract) and K.
communications relating to the (providing that Firm Facilitation trades are subject
to Royalty Fees). The Exchange notes that Royalty
proposed rule change between the 2215 CFR 200.30–3(a)(12). Fees (or license fees) apply to certain classes of
1 15 U.S.C. 78s(b)(1). options and such fees are passed-on by the
20 15 U.S.C. 78s(b)(3)(A). 2 15 U.S.C. 78a.
Exchange to the actual participants executing the
21 17 CFR 240.19b–4(f). 3 17 CFR 240.19b–4. trade.
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Document Created: 2018-02-07 15:05:56
Document Modified: 2018-02-07 15:05:56
| 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 | 81 FR 30580 |
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