81 FR 72135 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use of Bats EDGX Exchange, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 202 (October 19, 2016)

Page Range		72135-72138
FR Document		2016-25237
Federal Register, Volume 81 Issue 202 (Wednesday, October 19, 2016)
[Federal Register Volume 81, Number 202 (Wednesday, October 19, 2016)]
[Notices]
[Pages 72135-72138]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-25237]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79090; File No. SR-BatsEDGX-2016-55]


Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice 
of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees 
for Use of Bats EDGX Exchange, Inc.

October 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 September 30, 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.
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    \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).
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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).
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    \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).
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    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

[[Page 72136]]

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 modify its fee schedule in order to: (i) 
Add the definition of OCC Customer Volume or OCV, to the Definitions 
section of the fee schedule; and (ii) amend Footnote 1 to: (A) Modify 
the criteria for the Cross-Asset Add Volume Tier to reflect the new 
definition of OCV; and (B) establish a Single MPID Cross-Asset Tier.
OCC Customer Volume Definition
    The Exchange proposes to add the definition of ``OCC Customer 
Volume'' or ``OCV'' to the definition section of its fee schedule. OCC 
Customer Volume or OCV will be defined as the total equity and Exchange 
Traded Fund (``ETF'') options volume that clears in the Customer \6\ 
range at the Options Clearing Corporation (``OCC'') for the month for 
which the fees apply, excluding volume on any day that the Exchange 
experiences an Exchange System Disruption \7\ and on any day with a 
scheduled early market close, using the definition of Customer as 
provided under the Exchange's fee schedule for EDGX Options.
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    \6\ As defined in the fee schedule for the Exchange's equity 
options platform (``EDGX Options'') available at http://www.batsoptions.com/support/fee_schedule/edgx/.
    \7\ An ``Exchange System Disruption'' means ``any day that the 
Exchange's system experiences a disruption that lasts for more than 
60 minutes during Regular Trading Hours.'' See the Exchange's fee 
schedule available at http://batstrading.com/support/fee_schedule/edgx/.
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Footnote One
    The Exchange determines the liquidity adding rebate that it will 
provide to Members using the Exchange's tiered pricing structure. 
Currently, the Exchange provides various rebates under Footnote 1 of 
the fee schedule for a Member dependent on the Member's ADV \8\ as a 
percentage of the TCV \9\ for orders that yield fee codes B, V, Y, 3, 4 
and ZA. The Exchange currently has none Add Volume Tiers. Under such 
pricing structure, a Member will receive a rebate of anywhere between 
$0.0025 and $0.0033 per share executed, depending on the volume tier 
for which such Member qualifies.
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    \8\ As defined in the Exchange's fee schedule available at 
http://batstrading.com/support/fee_schedule/edgx/.
    \9\ Id.
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    Cross-Asset Tier Amendments. Footnote 1 of the fee schedule 
includes a Cross-Asset Tier under which Members may receive an enhanced 
rebate of $0.0028 where they have on EDGX Options an ADV in Firm \10\ 
orders equal to or greater than 0.10% of average TCV and an ADAV \11\ 
equal to or greater than 0.12% of average TCV. The Exchange proposes to 
replace the term TCV with the new defined term OCV (discussed above). 
As amended, Members must have on EDGX Options an ADV in Firm orders 
equal to or greater than 0.15% of average OCV. Because, OCV is a by 
definition, a smaller amount than TCV, the Exchange proposes to 
slightly increase the volume percentage required to attain the first 
prong of the tier from 0.10% to 0.15%. Doing so will keep tier's 
criteria relatively unchanged from its current requirements. Lastly, 
the Exchange will continue to require Members to also have an ADAV 
equal to or greater than 0.12% of average TCV on the Exchange.
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    \10\ As defined in EDGX Option's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/edgx/.
    \11\ Exchange's fee schedule available at http://batstrading.com/support/fee_schedule/edgx/.
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    Single MPID Cross-Asset Investor Tier. The Exchange proposes to add 
new tier to Footnote 1 to be called the Single MPID Cross-Asset Tier. 
Under the proposed tier, a Member may would receive an enhanced rebate 
of $0.0030 per share where that Member's: (i) Market Participant 
Identifier (``MPID'') has on EDGX Options an ADAV in Market Maker \12\ 
orders equal to or greater than 0.12% of average OCV; and (ii) an ADAV 
equal to or greater than 0.12% of average TCV.
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    \12\ As defined in EDGX Option's fee schedule available at 
http://www.batsoptions.com/support/fee_schedule/edgx/.
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Implementation Date
    The Exchange proposes to implement the amendments to its fee 
schedule on October 3, 2016.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the objectives of Section 6 of the Act,\13\ in general, and 
furthers the objectives of Section 6(b)(4),\14\ in particular, as it is 
designed to provide for the equitable allocation of reasonable dues, 
fees and other charges among its Members and other persons using its 
facilities. The Exchange also notes that it operates in a highly-
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee levels at a particular 
venue to be excessive. The Exchange believes that the proposed rates 
are equitable and non-discriminatory in that they apply uniformly to 
all Members.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed modifications to the tiered 
pricing structure are reasonable, fair and equitable, and non-
discriminatory. The proposed fee structure remains intended to attract 
order flow to the Exchange by offering market participants a 
competitive pricing structure. The Exchange believes it is reasonable 
to offer and incrementally modify incentives intended to help to 
contribute to the growth of the Exchange. Volume-based rebates such as 
that proposed herein have been widely adopted by exchanges, including 
the Exchange, 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: (i) The value to an exchange's market quality; 
(ii) associated higher levels of market activity, such as higher levels 
of liquidity provisions and/or growth patterns; and (iii) introduction 
of higher volumes of orders into the price and volume discovery 
processes.
    The Exchange believes adopting a definition of OCV and utilizing 
OCV in lieu of TCV for its Cross-Asset Tier is reasonable, fair and 
equitable, and non-discriminatory because the Exchange also proposed to 
modify the tier's related criteria in order to maintain substantially 
identical requirements to qualify for the tier. Competitors of the 
Exchange also use similar calculations and the proposed qualifications 
do not represent a significant departure from such pricing 
structures.\15\ The Exchange believes that the proposed qualifications 
are reasonable, fair and equitable, and non-discriminatory, and will 
provide additional transparency to Members regarding the calculations 
used to determine volume levels for purposes of the proposed tiered 
pricing model.
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    \15\ NYSE Amex Options Customer volume tiers require a specific 
``Customer Electronic ADV as a % of Industry Customer Equity and ETF 
Options ADV''. https://www.nyse.com/publicdocs/nyse/markets/amex-options/NYSE_Amex_Options_Fee_Schedule.pdf. Nasdaq NOM Options 
Customer volume tiers require a specific percentage of ``total 
industry customer equity and ETF option average daily volume 
(''ADV'') contracts per day in a month.'' http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing.
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    The Exchange believes that the proposed Single MIPID Cross-Asset 
Tier is reasonable, fair and equitable, and non-discriminatory. The 
increased liquidity from this proposed tier also

[[Page 72137]]

benefits all investors by deepening the EDGX Options and the Exchange's 
liquidity pools, offering additional flexibility for all investors to 
enjoy cost savings, supporting the quality of price discovery, 
promoting market transparency and improving investor protection. Such 
pricing programs thereby reward a Member's growth pattern on the 
Exchange and such increased volume increases potential revenue to the 
Exchange, and will allow the Exchange to continue to provide and 
potentially expand the incentive programs operated by the Exchange. To 
the extent a Member participates on EDGX Options and not EDGX Equities, 
the Exchange believes that the proposal is still reasonable, equitably 
allocated and non-discriminatory with respect to such Member based on 
the overall benefit to the Exchange resulting from the success of EDGX 
Options. As noted above, such success allows the Exchange to continue 
to provide and potentially expand its existing incentive programs to 
the benefit of all participants on the Exchange, whether they 
participate on EDGX Options or not. The proposed tier is also fair and 
equitable in that membership in EDGX Options is available to all market 
participants which would provide them with access to the benefits on 
EDGX Equities provided by the proposed changes, as described above, 
even where a member of EDGX Equities is not necessarily eligible for 
the proposed increased rebates on the Exchange. Further, the proposed 
changes will result in Members receiving either the same or an 
increased rebate than they would currently receive.
    The Exchange further believes that the proposed addition of the 
Single MPID Cross Asset Tier represents an equitable allocation of 
reasonable dues, fees, and other charges among Members and other 
persons using its facilities because it rewards Members with order flow 
characteristics that contribute meaningfully to price discovery on the 
Exchange. In other words, Members that post a substantial amount of 
liquidity and primarily post liquidity are valuable Members to the EDGX 
Options and EDGX Equities Exchanges and the marketplace in terms of 
liquidity provision. By applying the tier on a single MPID rather than 
across a Member's entire trading activity, the Exchange is also 
allowing more Members to potentially receive the enhanced rebates for 
their trading activity related to liquidity provision. The Single MPID 
Cross Asset Tier also encourages Members to primarily add liquidity in 
order to satisfy the ADAV as a percentage of OCV. Such increased volume 
increases potential revenue to the Exchange, and would allow the 
Exchange to spread its administrative and infrastructure costs over a 
greater number of shares, leading to lower per share costs. These lower 
per share costs would allow the Exchange to pass on the savings to 
Members in the form of higher rebates. The increased liquidity also 
benefits all investors by deepening the Exchange's liquidity pool, 
offering additional flexibility for all investors to enjoy cost 
savings, supporting the quality of price discovery, promoting market 
transparency and improving investor protection. Volume-based rebates 
such as the ones proposed herein have been widely adopted in the cash 
equities markets, and are equitable because they are open to all 
Members on an equal basis and provide discounts that are reasonably 
related to the value to an exchange's market quality associated with 
higher levels of market activity, such as higher levels of liquidity 
provision and introduction of higher volumes of orders into the price 
and volume discovery processes.
    In addition, the rebate is also reasonable in that other exchanges 
likewise employ similar pricing mechanisms based on a Member's 
MPID.\16\ Finally, the Exchange also believes that the proposed Single 
MPID Investor Tier is non-discriminatory in that it would apply equally 
to all Members.
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    \16\ See Bats BZX Exchange, Inc. fee schedule available at 
http://batstrading.com/support/fee_schedule/bzx/ (offering a Single 
MPID Investor Tier with volume requirements based on MPID).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe its proposed amendment to its fee 
schedule would impose any burden on competition that is not necessary 
or appropriate in furtherance of the purposes of the Act. The Exchange 
does not believe that the proposed changes represents a significant 
departure from previous pricing offered by the Exchange or pricing 
offered by the Exchange's competitors. Additionally, Members may opt to 
disfavor the Exchange's pricing if they believe that alternatives offer 
them better value. The Exchange believes that its proposal would not 
burden intramarket competition because the proposed rate would apply 
uniformly to all Members. The Exchange does not believe that the 
proposed new tiers and standard removal rates would burden competition, 
but instead, enhances competition, as they are intended to increase the 
competitiveness of and draw additional volume to the Exchange. As 
stated above, the Exchange notes that it operates in a highly 
competitive market in which market participants can readily direct 
order flow to competing venues if they deem fee structures to be 
unreasonable or excessive. The proposed changes are generally intended 
to draw additional liquidity to the Exchange. The Exchange does not 
believe the proposed tiers and standard rates would burden intramarket 
competition as they would apply to all Members uniformly.
    The Exchange does not believe that the proposed new Single MPID 
Cross-Asset Add Tier would burden competition, but instead, enhances 
competition, as it is intended to increase the competitiveness of and 
draw additional volume to the Exchange and EDGX Options. The Exchange 
does not believe that its proposal would burden intramarket competition 
because the proposed rebate would apply uniformly to all Members that 
achieve the objective criteria of the Single MPID Investor Tier.
    Lastly, the Exchange believes that its proposal to amend the 
qualification criteria for the Cross-Asset Tier to incorporate OCV 
would not impose any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because the 
Exchange also proposed to modify the tier's related criteria in order 
to maintain substantially identical requirements to qualify for the 
tier.

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 \17\ and paragraph (f) of Rule 19b-4 
thereunder.\18\ 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

[[Page 72138]]

investors, or otherwise in furtherance of the purposes of the Act.
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f).
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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-BatsEDGX-2016-55 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-BatsEDGX-2016-55. 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-BatsEDGX-2016-55, and should 
be submitted on or before November 9, 2016.
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    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-25237 Filed 10-18-16; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices 72135

charge Professional Customers for QCC Electronic Comments SECURITIES AND EXCHANGE
transactions.12 COMMISSION
The Exchange notes that it operates in • Use the Commission’s Internet
comment form (http://www.sec.gov/ [Release No. 34–79090; File No. SR–
a highly competitive market in which BatsEDGX–2016–55]
market participants can readily favor rules/sro.shtml); or
competing venues. In such an • Send an email to rule-comments@ Self-Regulatory Organizations; Bats
environment, the Exchange must sec.gov. Please include File Number SR– EDGX Exchange, Inc.; Notice of Filing
continually review, and consider NYSEMKT–2016–91 on the subject line. and Immediate Effectiveness of a
adjusting, its fees and credits to remain Proposed Rule Change to Fees for Use
competitive with other exchanges. Paper Comments of Bats EDGX Exchange, Inc.
Because competitors are free to modify • Send paper comments in triplicate October 13, 2016.
their own fees in response, and because to Brent J. Fields, Secretary, Securities
market participants may readily adjust Pursuant to Section 19(b)(1) of the
and Exchange Commission, 100 F Street Securities Exchange Act of 1934 (the
their order routing practices, the degree
NE., Washington, DC 20549–1090. ‘‘Act’’),1 and Rule 19b–4 thereunder,2
to which fee changes in this market may
impose any burden on competition is All submissions should refer to File notice is hereby given that on
extremely limited. For the reasons September 30, 2016, Bats EDGX
Number SR–NYSEMKT–2016–91. This
described above, the Exchange believes Exchange, Inc. (the ‘‘Exchange’’ or
file number should be included on the
that the proposed rule change reflects ‘‘EDGX’’) filed with the Securities and
subject line if email is used. To help the
this competitive environment. Exchange Commission (‘‘Commission’’)
Commission process and review your the proposed rule change as described
C. Self-Regulatory Organization’s comments more efficiently, please use in Items I, II and III below, which Items
Statement on Comments on the only one method. The Commission will have been prepared by the Exchange.
Proposed Rule Change Received From post all comments on the Commission’s The Exchange has designated the
Members, Participants, or Others Internet Web site (http://www.sec.gov/ proposed rule change as one
rules/sro.shtml). Copies of the establishing or changing a member due,
No written comments were solicited submission, all subsequent
or received with respect to the proposed fee, or other charge imposed by the
amendments, all written statements Exchange under Section 19(b)(3)(A)(ii)
rule change. with respect to the proposed rule of the Act 3 and Rule 19b–4(f)(2)
III. Date of Effectiveness of the change that are filed with the thereunder,4 which renders the
Proposed Rule Change and Timing for Commission, and all written proposed rule change effective upon
Commission Action communications relating to the filing with the Commission. The
proposed rule change between the Commission is publishing this notice to
The foregoing rule change is effective
Commission and any person, other than solicit comments on the proposed rule
upon filing pursuant to Section
those that may be withheld from the change from interested persons.
19(b)(3)(A)13 of the Act and
subparagraph (f)(2) of Rule 19b–414 public in accordance with the I. Self-Regulatory Organization’s
thereunder, because it establishes a due, provisions of 5 U.S.C. 552, will be Statement of the Terms of Substance of
fee, or other charge imposed by the available for Web site viewing and the Proposed Rule Change
Exchange. printing in the Commission’s Public
The Exchange filed a proposal to
At any time within 60 days of the Reference Room, 100 F Street NE.,
amend the fee schedule applicable to
filing of such proposed rule change, the Washington, DC 20549 on official Members 5 and non-members of the
Commission summarily may business days between the hours of Exchange pursuant to EDGX Rules
temporarily suspend such rule change if 10:00 a.m. and 3:00 p.m. Copies of such 15.1(a) and (c).
it appears to the Commission that such filing also will be available for The text of the proposed rule change
action is necessary or appropriate in the inspection and copying at the principal is available at the Exchange’s Web site
public interest, for the protection of office of the Exchange. All comments at www.batstrading.com, at the
investors, or otherwise in furtherance of received will be posted without change; principal office of the Exchange, and at
the purposes of the Act. If the the Commission does not edit personal the Commission’s Public Reference
Commission takes such action, the identifying information from Room.
Commission shall institute proceedings submissions. You should submit only
under Section 19(b)(2)(B)15 of the Act to II. Self-Regulatory Organization’s
information that you wish to make Statement of the Purpose of, and
determine whether the proposed rule available publicly. All submissions
change should be approved or Statutory Basis for, the Proposed Rule
should refer to File Number SR– Change
disapproved. NYSEMKT–2016–91, and should be
submitted on or before November 9, In its filing with the Commission, the
IV. Solicitation of Comments Exchange included statements
2016.
Interested persons are invited to concerning the purpose of and basis for
submit written data, views, and For the Commission, by the Division of the proposed rule change and discussed
arguments concerning the foregoing, Trading and Markets, pursuant to delegated any comments it received on the
including whether the proposed rule authority.16 proposed rule change. The text of these
sradovich on DSK3GMQ082PROD with NOTICES

change is consistent with the Act. Robert W. Errett,
1 15 U.S.C. 78s(b)(1).
Comments may be submitted by any of Deputy Secretary.
2 17 CFR 240.19b–4.
the following methods: [FR Doc. 2016–25238 Filed 10–18–16; 8:45 am] 3 15 U.S.C. 78s(b)(3)(A)(ii).
BILLING CODE 8011–01–P 4 17 CFR 240.19b–4(f)(2).
12 See supra note 7. 5 The term ‘‘Member’’ is defined as ‘‘any
13 15 U.S.C. 78s(b)(3)(A).
registered broker or dealer that has been admitted
14 17 CFR 240.19b–4(f)(2).
to membership in the Exchange.’’ See Exchange
15 15 U.S.C. 78s(b)(2)(B). 16 17 CFR 200.30–3(a)(12). Rule 1.5(n).

VerDate Sep<11>2014 17:39 Oct 18, 2016 Jkt 241001 PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 E:\FR\FM\19OCN1.SGM 19OCN1
72138 Federal Register / Vol. 81, No. 202 / Wednesday, October 19, 2016 / Notices

investors, or otherwise in furtherance of For the Commission, by the Division of could cause a financial loss or
the purposes of the Act. Trading and Markets, pursuant to delegated settlement disruption and, therefore,
authority.19 threaten the stability of the U.S.
IV. Solicitation of Comments Robert W. Errett, financial system. One way OCC
Interested persons are invited to Deputy Secretary. manages such risks is by collecting
submit written data, views, and [FR Doc. 2016–25237 Filed 10–18–16; 8:45 am] collateral to protect against potential
arguments concerning the foregoing, BILLING CODE 8011–01–P losses stemming from the default of a
including whether the proposed rule clearing member or its customers. OCC
change is consistent with the Act. obtains this collateral by collecting
Comments may be submitted by any of SECURITIES AND EXCHANGE margin from its clearing members, or
the following methods: COMMISSION from deposits in lieu of margin of
[Release No. 34–79096; File No. SR–OCC– clearing members’ customers through
Electronic Comments: 2016–802] OCC’s escrow deposit program. OCC
• Use the Commission’s Internet states that the users of its escrow
Self-Regulatory Organizations; The deposit program are customers of
comment form (http://www.sec.gov/
Options Clearing Corporation; Notice clearing members who, through the
rules/sro.shtml); or
of No Objection to Advance Notice escrow deposit program, are permitted
• Send an email to rule-comments@ Filing Concerning The Options to collateralize eligible positions
sec.gov. Please include File Number SR– Clearing Corporation’s Escrow Deposit directly with OCC (instead of with the
BatsEDGX–2016–55 on the subject line. Program relevant clearing member who would, in
Paper Comments October 13, 2016.
turn, deposit margin at OCC). OCC
states that when a customer of a clearing
• Send paper comments in triplicate The Options Clearing Corporation
(‘‘OCC’’) filed on August 15, 2016 with member makes a deposit in lieu of
to Secretary, Securities and Exchange margin through OCC’s escrow deposit
Commission, 100 F Street NE., the Securities and Exchange
Commission (‘‘Commission’’) advance program, the relevant positions are
Washington, DC 20549–1090. excluded from the clearing member’s
notice SR–OCC–2016–802 (‘‘Advance
All submissions should refer to File Notice’’) pursuant to Section 806(e)(1) of margin requirement at OCC. OCC
Number SR–BatsEDGX–2016–55. This the Payment, Clearing, and Settlement believes that the escrow deposit
file number should be included on the Supervision Act of 2010 (‘‘Payment, program therefore provides users of
subject line if email is used. To help the Clearing and Settlement Supervision OCC’s services with a means to more
Commission process and review your Act’’) 1 and Rule 19b–4(n)(1)(i) 2 under efficiently use cash or securities they
comments more efficiently, please use the Securities Exchange Act of 1934 may have available.
only one method. The Commission will (‘‘Exchange Act’’) to implement changes As described by OCC in the Advance
post all comments on the Commission’s to its escrow deposit program. The Notice, the purpose of the proposed
Internet Web site (http://www.sec.gov/ Advance Notice was published for change is to improve the resiliency of
rules/sro.shtml). Copies of the comment in the Federal Register on OCC’s escrow deposit program (‘‘EDP’’).
submission, all subsequent September 20, 2016.3 The Commission First, OCC states that the changes would
amendments, all written statements did not receive any comments on the increase OCC’s visibility into and
with respect to the proposed rule Advance Notice. This publication serves control over collateral deposits made
change that are filed with the as notice of no objection to the Advance under the escrow deposit program. As
Commission, and all written Notice. described in the Advance Notice,
communications relating to the currently, securities deposits in the EDP
proposed rule change between the I. Description of the Advance Notice
(‘‘specific deposits’’) are held at either
Commission and any person, other than OCC is the sole clearing agency for the the Depository Trust Company (‘‘DTC’’)
those that may be withheld from the U.S. listed options markets and a or custodian banks, and cash deposits in
public in accordance with the systemically important financial market the EDP (‘‘escrow deposits’’) are held at
provisions of 5 U.S.C. 552, will be utility. OCC seeks to manage risks that custodian banks. While OCC currently
available for Web site viewing and can verify the value of the securities
printing in the Commission’s Public 1 12 U.S.C. 5465(e)(1). The Financial Stability
deposited at DTC through DTC’s
Reference Room, 100 F Street NE., Oversight Council designated OCC a systemically
important financial market utility on July 18, 2012.
systems, it lacks similar visibility into
Washington, DC 20549, on official See Financial Stability Oversight Council 2012 cash and securities held in custodian
business days between the hours of Annual Report, Appendix A, http:// bank accounts, relying instead on the
10:00 a.m. and 3:00 p.m. Copies of the www.treasury.gov/initiatives/fsoc/Documents/ custodian banks to verify the value of
2012%20Annual%20Report.pdf. Therefore, OCC is
filing also will be available for required to comply with the Payment, Clearing and such collateral. The proposed changes
inspection and copying at the principal Settlement Supervision Act and file advance would require securities in the EDP to
office of the Exchange. All comments notices with the Commission. See 12 U.S.C. be held at DTC, providing OCC with
received will be posted without change; 5465(e). increased visibility into the collateral, as
2 17 CFR 240.19b–4(n)(1)(i).
the Commission does not edit personal 3 See Securities Exchange Act Release No. 78834
OCC will be able to view, validate, and
identifying information from (September 14, 2016), 81 FR 64536 (September 20, value the collateral in real time and
submissions. You should submit only 2016) (File No. SR–OCC–2016–802). OCC also filed perform the controls currently
information that you wish to make a proposed rule change with the Commission performed by custodian banks. As stated
sradovich on DSK3GMQ082PROD with NOTICES

available publicly. All submissions pursuant to Section 19(b)(1) of the Exchange Act
and Rule 19b–4 thereunder, seeking approval of
in the Advance Notice, a bank
should refer to File Number SR– changes to its Rules necessary to implement the participating in the escrow deposit
BatsEDGX–2016–55, and should be Advance Notice. 15 U.S.C. 78s(b)(1) and 17 CFR program (‘‘Tri-Party Custodian Bank’’)
submitted on or before November 9, 240.19b–4, respectively. This proposed rule change would also provide OCC with online
2016. was published in the Federal Register on August
31, 2016. Securities Exchange Act Release No.
view access to each customer’s cash
78675 (August 25, 2016), 81 FR 60108 (August 31, account designated for the escrow
19 17 CFR 200.30–3(a)(12). 2016) (SR–OCC–2016–009). deposit program, allowing visibility into

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Document Created: 2016-10-19 02:11:49
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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 72135