81 FR 64218 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market LLC (“BOX”) Options Facility To Specify That All Complex Order Transactions Executed Through the Exchange's Auction Mechanisms Will Be Subject to Section I (Exchange Fees) and II (Liquidity Fees and Credits)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 181 (September 19, 2016)
Federal Register Volume 81, Issue 181 (September 19, 2016)
| Page Range | 64218-64221 | |
| FR Document | 2016-22420 |
[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)] [Notices] [Pages 64218-64221] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-22420] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-78827; File No. SR-BOX-2016-42] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market LLC (``BOX'') Options Facility To Specify That All Complex Order Transactions Executed Through the Exchange's Auction Mechanisms Will Be Subject to Section I (Exchange Fees) and II (Liquidity Fees and Credits) September 13, 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 August 31, 2016, BOX Options Exchange LLC (the ``Exchange'') 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 filed the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal 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 the Substance of the Proposed Rule Change The Exchange is filing with the Securities and Exchange Commission (``Commission'') a proposed rule change to amend the Fee Schedule to specify that all Complex Order transactions executed through the Exchange's auction mechanisms will be subject to Section I (Exchange Fees) and II (Liquidity Fees and Credits) of the BOX Fee Schedule. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at http://boxexchange.com. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Section III (Complex Order Transaction Fees) to specify that all Complex Order transactions executed through the Exchange's auction mechanisms will be subject to Section I (Exchange Fees) and II (Liquidity Fees and Credits) of the BOX Fee Schedule.\5\ The Exchange recently amended its rules to permit Complex Order \6\ transactions to execute through the Facilitation Auction mechanism \7\ and the Exchange is submitting this filing to clarify the fees that are applicable to these transactions. --------------------------------------------------------------------------- \5\ The Exchange notes that it intends to adjust to certain Facilitation and Solicitation fees and credits in the BOX Fee Schedule effective September 1, 2016. \6\ As defined in Rule 7240(a)(5), the term ``Complex Order'' means any order involving the simultaneous purchase and/or sale of two or more different options series in the same underlying security, for the same account, in a ratio that is equal to or greater than one-to-three (.333) and less than or equal to three-to- one (3.00) and for the purpose of executing a particular investment strategy. \7\ See Securities Release No. 78444 (July 29, 2016), 81 FR 51533 (August 4, 2016) (SR-BOX-2016-37). --------------------------------------------------------------------------- Generally, Complex Order transactions are subject to the fees and credits set forth in Section III (Complex Order Transaction Fees) of the BOX Fee Schedule while transactions executed through the Facilitation and Solicitation auction mechanisms are subject to Sections I (Exchange Fees) and II (Liquidity Fees and Credits). The Exchange proposes to add language that clarifies that Complex Order transactions executed through the COPIP and Facilitation auction mechanism \8\ will be subject to Sections I (Exchange Fees) and II (Liquidity Fees and Credits). --------------------------------------------------------------------------- \8\ BOX's auction mechanisms include the Price Improvement Period (``PIP''), Complex Order Price Improvement Period (``COPIP''), Facilitation Auction and Solicitation Auction. The Exchange notes that Complex Orders are currently not permitted in the Solicitation Auction mechanism. --------------------------------------------------------------------------- Under Section I (Exchange Fees), the Exchange proposes the following fees for Complex Order transactions executed through the Facilitation auction mechanism. For Agency Orders \9\ and Facilitation Orders, Public Customer, Professional Customers and Brokers Dealers and Market Makers will not be charged. For Responses in the Facilitation Auction, Public Customers will be charged $0.15, Professional Customer and Broker Dealers will be charged $0.27, and Market Makers are charged $0.20. --------------------------------------------------------------------------- \9\ An Agency Order is the block-size order that an Order Flow Provider ``OFP'' seeks to facilitate as agent through the Facilitation Auction or Solicitation Auction mechanism. --------------------------------------------------------------------------- The Exchange then proposes to treat Complex Order transactions executed through the Facilitation mechanisms in the same manner as single legged Facilitation transactions for liquidity fees and credits, which are applied in addition to any applicable exchange fees as described in Section I of the Fee [[Page 64219]] Schedule. The fee structure for liquidity fees and credits for Complex Orders executed through the Facilitation mechanisms will be as follows: ------------------------------------------------------------------------ Credit for Facilitation and solicitation Fee for adding removing liquidity transactions liquidity (all (all account account types) types) ------------------------------------------------------------------------ Non-Penny Pilot Classes......... $0.95 ($1.00) Penny Pilot Classes............. 0.40 (0.45) ------------------------------------------------------------------------ Complex Order transactions executed through the Facilitation mechanism will be assessed a ``removal'' credit only if the Agency Order does not trade with their contra order. Responses to Complex Order transactions executed through the Facilitation mechanism shall be charged the ``add'' fee. Finally, the Exchange is proposing to make additional non- substantive changes to the Fee Schedule. Specifically, the Exchange is renumbering certain footnotes to accommodate the above proposed changes to the Fee Schedule. 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act, in general, and Section 6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it provides for the equitable allocation of reasonable dues, fees, and other charges among BOX Participants and other persons using its facilities and does not unfairly discriminate between customers, issuers, brokers or dealers. --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Exchange believes that the proposal to specify that Complex Order transactions executed through the Exchange's COPIP and Facilitation mechanisms are subject to fees and credits in Sections I (Exchange Fees) and II (Liquidity Fees and Credits) is reasonable, equitable and not unfairly discriminatory. The new ability for Complex Order transactions to execute through the Facilitation Auction mechanism is similar to Complex Orders executing through the COPIP. As such, the Exchange believes it is reasonable for the fees for Complex Orders executed through the Facilitation mechanism to mimic the current COPIP transaction fees.\11\ In the BOX Fee Schedule, COPIP transactions are not subject to Section III (Complex Order Transactions) and are instead treated the same as PIP transactions. Additionally, the Exchange believes the proposed fees will allow the Exchange to be competitive with other exchanges and to apply fees and credits in a manner that is equitable among all BOX Participants. The proposed fees are intended to attract Complex Orders to the Exchange by offering market participants incentives to submit their Complex Orders through the Exchange's Facilitation auction mechanism. The Exchange believes it is appropriate to provide incentives for market participants to submit orders to the auction mechanisms, resulting in greater liquidity and ultimately benefiting all Participants trading on the Exchange. --------------------------------------------------------------------------- \11\ See Securities Exchange Release No. 71312 (January 15, 2014), 79 FR 3649 (January 22, 2014) (SR-BOX-2014-01), where the Exchange established fees for Complex Orders submitted to the PIP in the BOX Fee Schedule. --------------------------------------------------------------------------- Exchange Fees Currently, the Exchange does not charge any market participant a fee for their Facilitation Orders; however the Exchange charges varying fees for Responses in the Facilitation mechanism depending on the account type of the response. The Exchange believes it is reasonable, equitable and not unfairly discriminatory to charge higher exchange fees for responders to Complex Orders in the Facilitation auction than for initiators of these orders. The Exchange believes its proposed fees are reasonable as they are identical to the fees charged for single legged orders executed through the Facilitation auction mechanism on the Exchange.\12\ --------------------------------------------------------------------------- \12\ See BOX Fee Schedule Sections I.C. and II.B. --------------------------------------------------------------------------- The Exchange also believes that charging Professional Customers and Broker Dealers higher fees than Public Customers for Complex Order Responses in the Facilitation auction mechanism is equitable and not unfairly discriminatory. Professional Customers, while Public Customers by virtue of not being Broker Dealers, generally engage in trading activity more similar to Broker Dealer proprietary trading accounts. The Exchange believes that the higher level of trading activity from these Participants will draw a greater amount of BOX system resources, and the Exchange aims to recover its costs by assessing Professional Customers and Broker Dealers higher fees for these orders. The Exchange believes it is equitable and not unfairly discriminatory to charge Public Customers less than Market Makers, Broker Dealers and Professional Customers for their Complex Order Responses to the Facilitation Auction mechanism. The securities markets generally, and BOX in particular, have historically aimed to improve markets for investors and develop various features within the market structure for Public Customer benefit. The Exchange believes that charging lower fees to Public Customers is reasonable and, ultimately, will benefit all Participants trading on the Exchange by attracting Public Customer order flow. Finally, the Exchange believes it is equitable and not unfairly discriminatory for BOX Market Makers to be assessed lower fees than Professional Customers and Broker Dealers for Complex Order Responses in the Facilitation auction mechanism because of the significant contributions to overall market quality that Market Makers provide. Specifically, Market Makers can provide higher volumes of liquidity and lowering their fees will help attract a higher level of Market Maker order flow to the BOX Book and create liquidity, which the Exchange believes will ultimately benefit all Participants trading on BOX. Liquidity Fees and Credits The Exchange believes the proposed liquidity fees and credits for Complex Orders executed through the Facilitation auction mechanism are equitable and not unfairly discriminatory. Specifically, the Exchange believes the liquidity fees and credits fee structure aims to attract order flow to the Facilitation mechanism, potentially providing greater liquidity within the overall BOX Market to the benefit of all BOX market participants. The Exchange notes that the proposed fees and credits for Complex Order transactions executed through the Facilitation mechanism offset one another in any particular transaction. The result is that BOX will collect a fee from Participants that add liquidity on BOX and credit another Participant an equal amount for removing liquidity. Stated otherwise, the collection of these liquidity fees will not directly result in revenue to BOX, [[Page 64220]] but will simply allow BOX to provide the credit incentive to Participants in order to attract order flow. The Exchange believes it is appropriate to provide incentives to market participants to direct order flow to remove liquidity from BOX, similar to various and widely- used, exchange-sponsored payment for order flow programs. Further, the Exchange believes that fees for adding liquidity on BOX will not deter Participants from seeking to add liquidity to the BOX market so that they may interact with those participants seeking to remove liquidity. The Exchange continues to believe it is reasonable to establish different fees and credits for Facilitation transactions in Penny Pilot Classes compared to transactions in Non-Penny Pilot Classes. The Exchange makes this distinction throughout the BOX Fee Schedule, including the liquidity fees and credits for PIP and COPIP Transactions. The Exchange believes it is reasonable to establish higher fees and credits for Non-Penny Pilot Classes because these Classes are typically less actively traded and have wider spreads. The Exchange believes that offering a higher rebate will incentivize order flow in Non-Penny Pilot issues on the Exchange, ultimately benefitting all Participants trading on BOX. Further, the Exchange continues to believe it is reasonable, equitable and not unfairly discriminatory to only assess liquidity fees and credits on Agency Orders that do not trade with their contra order, and the Responses to these Orders. As stated above, liquidity fees and credits are meant to incentivize order flow, and the Exchange believes incentives are not necessary for internalized orders in these mechanisms that only trade against their contra order. Additionally, other Exchanges also make this distinction in their Facilitation auction mechanism.\13\ --------------------------------------------------------------------------- \13\ See ISE Schedule of Fees at http://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf. Under the ISE Fee Schedule, in the equivalent of Penny Pilot Classes, the initiator receives a ``break-up'' rebate only for contracts that are submitted to the Facilitation and Solicitation mechanisms that do not trade with their contra order. The responder fee for these Orders is only applied to any contracts for which the rebate is provided. --------------------------------------------------------------------------- Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing exchanges. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is designed to provide greater specificity and precision within the Fee Schedule with respect to the fees that will be applicable to Complex Order transactions executed through the Exchange's Facilitation auction mechanism. The Exchange believes that adopting these fees will not impose a burden on competition among various Exchange Participants. The proposed fees are meant to mimic the fees currently assessed for single legged orders executed through the Facilitation auction mechanism. Submitting an order through an auction mechanism is entirely voluntary and Participants can determine which type of order they wish to submit, if any, to the Exchange. Further, the Exchange believes that the proposed fees will enhance competition between exchanges because it is designed to allow the Exchange to better compete with other exchanges for Complex Order flow. In this regard, the new feature which allows Complex Order transactions to execute through the Facilitation mechanism is being introduced by the Exchange and BOX is unable to absolutely determine the impact that the proposed fees proposed herein will have on trading. That said, however, the Exchange believes that the proposed fees would not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 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 The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Exchange Act \14\ and Rule 19b-4(f)(2) thereunder,\15\ because it establishes or changes a due, or fee. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A)(ii). \15\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further 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 Send an email to [email protected]. Please include File Number SR-BOX-2016-42 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-BOX-2016-42. 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 [[Page 64221]] available publicly. All submissions should refer to File Number SR-BOX- 2016-42, and should be submitted on or before October 11, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\16\ --------------------------------------------------------------------------- \16\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2016-22420 Filed 9-16-16; 8:45 am] BILLING CODE 8011-01-P
![64218 Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices
exclusion.39 According to the MSRB, it ‘‘Act’’),1 and Rule 19b–4 thereunder,2 A. Self-Regulatory Organization’s
was the MSRB’s intent to include the notice is hereby given that on August Statement of the Purpose of, and
exclusion in the proposed rule change, 31, 2016, BOX Options Exchange LLC Statutory Basis for, the Proposed Rule
thus the MSRB submitted Amendment (the ‘‘Exchange’’) filed with the Change
No. 1 in order to conform the proposed Securities and Exchange Commission 1. Purpose
description of the RTRS Academic Data (‘‘Commission’’) the proposed rule
Product in the RTRS facility with the The Exchange proposes to amend
change as described in Items I, II, and
description thereof in the Notice of Section III (Complex Order Transaction
III below, which Items have been
Filing.40 Fees) to specify that all Complex Order
prepared by the Exchange. The transactions executed through the
As noted by the MSRB, Amendment Exchange filed the proposed rule change
No. 1 is consistent with the purpose of Exchange’s auction mechanisms will be
pursuant to Section 19(b)(3)(A)(ii) of the subject to Section I (Exchange Fees) and
the proposed rule change and does not Act,3 and Rule 19b–4(f)(2) thereunder,4
raise any significant new issues not II (Liquidity Fees and Credits) of the
which renders the proposal effective BOX Fee Schedule.5 The Exchange
already addressed by commenters.41
upon filing with the Commission. The recently amended its rules to permit
For the foregoing reasons, the
Commission finds good cause for Commission is publishing this notice to Complex Order 6 transactions to execute
approving the proposed rule change, as solicit comments on the proposed rule through the Facilitation Auction
modified by Amendment No. 1, on an change from interested persons. mechanism 7 and the Exchange is
accelerated basis, pursuant to Section submitting this filing to clarify the fees
I. Self-Regulatory Organization’s that are applicable to these transactions.
19(b)(2) of the Act. Statement of the Terms of the Substance Generally, Complex Order
VII. Conclusion of the Proposed Rule Change transactions are subject to the fees and
It is therefore ordered, pursuant to credits set forth in Section III (Complex
The Exchange is filing with the
Section 19(b)(2) of the Act,42 that the Order Transaction Fees) of the BOX Fee
Securities and Exchange Commission
proposed rule change, as modified by Schedule while transactions executed
(‘‘Commission’’) a proposed rule change through the Facilitation and Solicitation
Amendment No. 1 (SR–MSRB–2016–09) to amend the Fee Schedule to specify
be, and hereby is, approved on an auction mechanisms are subject to
that all Complex Order transactions Sections I (Exchange Fees) and II
accelerated basis. executed through the Exchange’s (Liquidity Fees and Credits). The
For the Commission, pursuant to delegated auction mechanisms will be subject to Exchange proposes to add language that
authority.43 Section I (Exchange Fees) and II clarifies that Complex Order
Robert W. Errett, (Liquidity Fees and Credits) of the BOX transactions executed through the
Deputy Secretary. Fee Schedule. The text of the proposed COPIP and Facilitation auction
[FR Doc. 2016–22419 Filed 9–16–16; 8:45 am] rule change is available from the mechanism 8 will be subject to Sections
BILLING CODE 8011–01–P principal office of the Exchange, at the I (Exchange Fees) and II (Liquidity Fees
Commission’s Public Reference Room and Credits).
and also on the Exchange’s Internet Web Under Section I (Exchange Fees), the
SECURITIES AND EXCHANGE site at http://boxexchange.com. Exchange proposes the following fees
COMMISSION for Complex Order transactions
II. Self-Regulatory Organization’s executed through the Facilitation
[Release No. 34–78827; File No. SR–BOX– Statement of the Purpose of, and
2016–42]
auction mechanism. For Agency
Statutory Basis for, the Proposed Rule Orders 9 and Facilitation Orders, Public
Self-Regulatory Organizations; BOX Change Customer, Professional Customers and
Options Exchange LLC; Notice of Brokers Dealers and Market Makers will
In its filing with the Commission, the not be charged. For Responses in the
Filing and Immediate Effectiveness of
Exchange included statements Facilitation Auction, Public Customers
a Proposed Rule Change To Amend
concerning the purpose of and basis for will be charged $0.15, Professional
the Fee Schedule on the BOX Market
LLC (‘‘BOX’’) Options Facility To the proposed rule change and discussed Customer and Broker Dealers will be
Specify That All Complex Order any comments it received on the charged $0.27, and Market Makers are
Transactions Executed Through the proposed rule change. The text of these charged $0.20.
Exchange’s Auction Mechanisms Will statements may be examined at the The Exchange then proposes to treat
Be Subject to Section I (Exchange places specified in Item IV below. The Complex Order transactions executed
Fees) and II (Liquidity Fees and Exchange has prepared summaries, set through the Facilitation mechanisms in
Credits) forth in Sections A, B, and C below, of the same manner as single legged
the most significant aspects of such Facilitation transactions for liquidity
September 13, 2016. statements. fees and credits, which are applied in
Pursuant to Section 19(b)(1) of the addition to any applicable exchange fees
Securities Exchange Act of 1934 (the as described in Section I of the Fee
39 See Notice of Filing. in the BOX Fee Schedule effective September 1, 7 See Securities Release No. 78444 (July 29, 2016),
40 See MSRB Amendment Letter. 2016. 81 FR 51533 (August 4, 2016) (SR–BOX–2016–37).
41 Id. 6 As defined in Rule 7240(a)(5), the term 8 BOX’s auction mechanisms include the Price
mstockstill on DSK3G9T082PROD with NOTICES
42 15 U.S.C. 78s(b)(2). ‘‘Complex Order’’ means any order involving the Improvement Period (‘‘PIP’’), Complex Order Price
43 17 CFR 200.30–3(a)(12). simultaneous purchase and/or sale of two or more Improvement Period (‘‘COPIP’’), Facilitation
Auction and Solicitation Auction. The Exchange
1 15 U.S.C. 78s(b)(1). different options series in the same underlying
notes that Complex Orders are currently not
2 17 CFR 240.19b–4. security, for the same account, in a ratio that is
permitted in the Solicitation Auction mechanism.
3 15 U.S.C. 78s(b)(3)(A)(ii). equal to or greater than one-to-three (.333) and less 9 An Agency Order is the block-size order that an
4 17 CFR 240.19b–4(f)(2). than or equal to three-to-one (3.00) and for the Order Flow Provider ‘‘OFP’’ seeks to facilitate as
5 The Exchange notes that it intends to adjust to purpose of executing a particular investment agent through the Facilitation Auction or
certain Facilitation and Solicitation fees and credits strategy. Solicitation Auction mechanism.
VerDate Sep<11>2014 21:47 Sep 16, 2016 Jkt 238001 PO 00000 Frm 00093 Fmt 4703 Sfmt 4703 E:\FR\FM\19SEN1.SGM 19SEN1](https://thefederalregister.org/doc/81_FR_64399/page/1.svg)
![Federal Register / Vol. 81, No. 181 / Monday, September 19, 2016 / Notices 64221
available publicly. All submissions two additional rebate Tiers applicable to Customers, Non-Customers,5 BX
should refer to File Number SR–BOX– Rebate to Remove Liquidity, and modify Options Market Makers,6 or Firms.7
2016–42, and should be submitted on or the existing volume criteria and rebate Currently, Chapter XV, Section 2,
before October 11, 2016. amounts per Tier; and (b) modify Note subsection (1), has a SPY Options Tier
For the Commission, by the Division of 1 through Note 6; within the SPY Schedule that has three Tiers and six
Trading and Markets, pursuant to delegated Options Tier Schedule. Notes. The Exchange proposes in the
authority.16 current filing to modify the Tiers and
While changes to the Pricing
Robert W. Errett, Notes to give BX Participants
Schedule pursuant to this proposal are
Deputy Secretary. (‘‘Participants’’) additional rebate and
effective upon filing, the Exchange has
fee options, and each specific change is
[FR Doc. 2016–22420 Filed 9–16–16; 8:45 am] designated these changes to be operative
described in detail below.
BILLING CODE 8011–01–P on September 1, 2016.
The text of the proposed rule change Change 1—Penny Pilot Options: In SPY
is available on the Exchange’s Web site Options Tier Schedule Adopt Two
SECURITIES AND EXCHANGE at http://nasdaqbx.cchwallstreet.com/, Additional Rebate Tiers and Modify
COMMISSION at the principal office of the Exchange, Existing Volume Criteria and Rebate
and at the Commission’s Public Amounts per Tiers [sic]
[Release No. 34–78819; File No. SR–BX–
2016–049] Reference Room. In Change 1, the Exchange proposes
modifications to its current SPY Options
Self-Regulatory Organizations; II. Self-Regulatory Organization’s Tier Schedule 8 to indicate that this
NASDAQ BX, Inc.; Notice of Filing and Statement of the Purpose of, and particular schedule will have two
Immediate Effectiveness of Proposed Statutory Basis for, the Proposed Rule additional tiers for the Rebate to
Rule Change Regarding Tiers Related Change Remove Liquidity, namely Tiers 4 and
to SPY Options 5. The Exchange proposes also to
In its filing with the Commission, the
Exchange included statements modify existing Tiers 1 through 3. By
September 13, 2016.
concerning the purpose of and basis for doing so, the Exchange proposes to have
Pursuant to Section 19(b)(1) of the a Rebate to Remove Liquidity of $0.01
Securities Exchange Act of 1934 the proposed rule change and discussed
any comments it received on the to $0.52 per contract over five Tiers,
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 whereas now the rebates are $0.10 to
notice is hereby given that, on August proposed rule change. The text of these
$0.51 per contract over three Tiers. The
31, 2016, NASDAQ BX, Inc. (‘‘BX’’ or statements may be examined at the
proposed five Tier structure for Rebate
‘‘Exchange’’) filed with the Securities places specified in Item IV below. The
to Remove Liquidity offers a more
and Exchange Commission (‘‘SEC’’ or Exchange has prepared summaries, set
graduated Tier structure to further
‘‘Commission’’) the proposed rule forth in sections A, B, and C below, of
incentivize Participants to bring SPY
change as described in Items I, II, and the most significant aspects of such
Options volume to the Exchange.
III below, which Items have been statements. Today, Tier 1 to the Rebate to Remove
prepared by the Exchange. The Liquidity indicates that a Participant
A. Self-Regulatory Organization’s
Commission is publishing this notice to [sic] removes less than 1500 SPY
Statement of the Purpose of, and
solicit comments on the proposed rule Options contracts per day in the
Statutory Basis for, the Proposed Rule
change from interested persons. customer range can earn a rebate of
Change
I. Self-Regulatory Organization’s $0.10 per contract. The Exchange
Statement of the Terms of Substance of 1. Purpose proposes to modify Tier 1 so that going
the Proposed Rule Change forward a Participant that removes less
The Exchange proposes to amend
than 500 SPY Options contracts per day
The Exchange proposes to amend its Chapter XV, Section 2, to modify fees
in the customer range can earn a rebate
Options Pricing at Chapter XV Section and rebates (per executed contract) for
of $0.01 per contract.
2, entitled ‘‘BX Options Market—Fees options overlying SPY to: (a) Adopt two Today, Tier 2 to the Rebate to Remove
and Rebates,’’ which governs pricing for additional rebate Tiers applicable to Liquidity indicates that a Participant
BX members using the BX Options Rebate to Remove Liquidity, and modify [sic] removes 1500 to not more than
Market (‘‘BX Options’’). The Exchange the existing volume criteria and rebate 2999 SPY Options contracts per day in
proposes to modify fees and rebates (per amounts per Tier; and (b) modify Note the customer range can earn a rebate of
executed contract) for options overlying 1 through Note 6; within the SPY $0.42 per contract. The Exchange
Standard and Poor’s® Depositary Options Tier Schedule. The Tiers,
Receipts/SPDRs® (‘‘SPY’’) 3 to: (a) Adopt described below along with the Notes, 5 Note 1 to Chapter XV, Section 2 states: ‘‘1A Non-
together make up the ‘‘SPY Options Tier Customer includes a Professional, Broker-Dealer
16 17 CFR 200.30–3(a)(12). Schedule.’’ The proposed SPY Options and Non-BX Options Market Maker.’’
1 15 U.S.C. 78s(b)(1). 6 The term ‘‘BX Options Market Maker’’ or (‘‘M’’)
Tier Schedule rebates would apply to
2 17 CFR 240.19b–4. means a Participant that has registered as a Market
3 Options overlying SPY are based on the SPDR
Customers 4 that remove liquidity from Maker on BX Options pursuant to Chapter VII,
exchange-traded fund (‘‘ETF’’), and are Penny Pilot Section 2, and must also remain in good standing
Options. The SPY ETF represents ownership in the Pilot); and 78036 (June 10, 2016), 81 FR 39308 (June pursuant to Chapter VII, Section 4. In order to
SPDR S&P 500 Trust, a unit investment trust that 16, 2016) (SR–BX–2016–021) (notice of filing and receive Market Maker pricing in all securities, the
generally corresponds to the price and yield immediate effectiveness extending the Penny Pilot Participant must be registered as a BX Options
mstockstill on DSK3G9T082PROD with NOTICES
performance of the SPDR S&P 500 Index. ‘‘SPDR®,’’ through December 31, 2016). Market Maker in at least one security. BX Chapter
‘‘Standard & Poor’s®,’’ ‘‘S&P®,’’ ‘‘S&P 500®,’’ and 4 The term ‘‘Customer’’ or (‘‘C’’) applies to any XV.
7 The term ‘‘Firm’’ or (‘‘F’’) applies to any
‘‘Standard & Poor’s 500’’ are registered trademarks transaction that is identified by a Participant for
of Standard & Poor’s Financial Services LLC. The clearing in the Customer range at The Options transaction that is identified by a Participant for
Penny Pilot was established in June 2012 and Clearing Corporation (‘‘OCC’’) which is not for the clearing in the Firm range at OCC. BX Chapter XV.
extended through 2016. See Securities Exchange account of broker or dealer or for the account of a 8 The Penny Pilot Options Tier Schedule, Select
Act Release Nos. 67256 (June 26, 2012), 77 FR ‘‘Professional’’ (as that term is defined in Chapter Symbols Options Tier Schedule, and Non-Penny
39277 (July 2, 2012) (SR–BX–2012–030) (order I, Section 1(a)(48)). BX Chapter XV. This is known Pilot Options Tier Schedule pricing will remain
approving BX option rules and establishing Penny as being marked in the Customer range. unchanged.
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Document Created: 2016-09-17 02:30:14
Document Modified: 2016-09-17 02:30:14
| 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 64218 |
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