82 FR 28147 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Bats BZX Exchange, Inc.'s Options Platform
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 117 (June 20, 2017)
Federal Register Volume 82, Issue 117 (June 20, 2017)
| Page Range | 28147-28150 | |
| FR Document | 2017-12760 |
[Federal Register Volume 82, Number 117 (Tuesday, June 20, 2017)] [Notices] [Pages 28147-28150] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-12760] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80919; File No. SR-BatsBZX-2017-41)] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use on Bats BZX Exchange, Inc.'s Options Platform June 14, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ [[Page 28148]] notice is hereby given that on June 1, 2017, Bats BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (the ``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 its fees and rebates applicable to Members \5\ and non-Members of the Exchange pursuant to BZX Rule 15.1(a) and (c). The text of the proposed rule change is attached as Exhibit 5. --------------------------------------------------------------------------- \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.bats.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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its fee schedule for its equity options platform (``BZX Options'') to: (i) Increase the standard fee provided by fee code PC; (ii) decrease the standard rebate provided by fee code PN; (iii) modify the conditions and rebates of the Firm,\6\ Broker Dealer \7\ and Joint Back Office \8\ Non-Penny Pilot \9\ Add Volume Tiers 1 and 2 under footnote 8; and (iv) eliminate the (A) Firm, Broker Dealer and Joint Back Office, Penny Pilot Add Volume Tier 2 under footnote 2; (B) Away Market Maker \10\ Penny Pilot Add Volume Tiers 1 and 3 under footnote 10; and (C) Customer \11\ Penny Pilot Take Volume Tier under footnote 14. --------------------------------------------------------------------------- \6\ ``Firm'' applies to any transaction identified by a Member for clearing in the Firm range at the OCC, excluding any Joint Back Office transaction. See the Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/. \7\ ``Broker Dealer'' applies to any order for the account of a broker dealer, including a foreign broker dealer, that clears in the Customer range at the Options Clearing Corporation (``OCC''). Id. \8\ ``Joint Back Office'' applies to any transaction identified by a Member for clearing in the Firm range at the OCC that is identified with an origin code as Joint Back Office. A Joint Back Office participant is a Member that maintains a Joint Back Office arrangement with a clearing broker-dealer. Id. \9\ ``Penny Pilot Securities'' are those issues quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. Id. \10\ ``Away Market Maker'' applies to any transaction identified by a Member for clearing in the Market Maker range at the OCC, where such Member is not registered with the Exchange as a Market Maker, but is registered as a market maker on another options exchange. Id. \11\ ``Customer'' applies to any transaction identified by a Member for clearing in the Customer range at the OCC, excluding any transaction for a Broker Dealer or a ``Professional'' as defined in Exchange Rule 16.1. See the Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/. --------------------------------------------------------------------------- Fee Code PC Currently, fee code PC charges a standard fee of $0.49 per contract for Customer orders that remove liquidity on the Exchange in Penny- Pilot securities.\12\ The Exchange proposes to increase this fee to $0.50 per contract. The Exchange also proposes to update the Standard Rates table accordingly to reflect new rate. --------------------------------------------------------------------------- \12\ ``Penny Pilot Securities'' are those issues quoted pursuant to Exchange Rule 21.5, Interpretation and Policy .01. Id. --------------------------------------------------------------------------- Fee Code PN Currently, fee code PN provides a standard rebate of $0.30 per contract for Away Market Maker orders that add liquidity on the Exchange in Penny-Pilot securities. The Exchange proposes to reduce this rebate to $0.26 per contract. The Exchange also proposes to update the Standard Rates table accordingly to reflect new rate. Firm, Broker Dealer and Joint Back Office Non-Penny Add Volume Tiers The Exchange currently offers three Firm, Broker Dealer and Joint Back Office Non-Penny Add Volume Tiers under footnote 8, which provide an enhanced rebate ranging from $0.45 to $0.82 per contract for qualifying orders that add liquidity in Non Penny Pilot Securities and yields fee code NF.\13\ The Exchange now proposes to modify Tier 1 and Tier 2's required criteria and rebate. --------------------------------------------------------------------------- \13\ Fee code NF is appended to Firm, Broker Dealer and Joint Back Office orders in Non-Penny Pilot Securities that add liquidity. Orders that yield fee code NF are provided a rebate of $0.30 per contract. Id. --------------------------------------------------------------------------- Currently under Tier 1, Member's orders that yield fee code NF will receive an enhanced rebate of $0.45 per contract where they have an ADV \14\ greater than or equal to 0.20% of average OCV.\15\ First, the Exchange proposes to reduce the rebate provided under Tier 1 from $0.45 per contract to $0.33 per contract. The Exchange also proposes to update the Standard Rates table accordingly to reflect the new rate. Second, the Exchange proposes to increase the tier's ADV requirement from 0.20% to 1.00%. Going forward, Member's orders that yield fee code NF will receive an enhanced rebate of $0.33 per contract where they have an ADV greater than or equal to 1.00% of average OCV. --------------------------------------------------------------------------- \14\ ``ADV'' means average daily volume calculated as the number of contracts added or removed, combined, per day. Id. \15\ ``OCV'' means the total equity and ETF options volume that clears in the Customer 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 and on any day with a scheduled early market close. Id. --------------------------------------------------------------------------- Currently under Tier 2, Member's orders that yield fee code NF will receive an enhanced rebate of $0.60 per contract where they have an ADV greater than or equal to 0.35% of average OCV. First, the Exchange proposes to reduce the rebate provided under Tier 1 from $0.60 per contract to $0.53 per contract. The Exchange also proposes to update the Standard Rates table accordingly to reflect the new rate. Second, the Exchange proposes to amend the Tier's criteria by increasing the tier's current ADV requirement from 0.35% to 3.00% and to add a second criteria under which the Member must also have an ADAV \16\ in Market [[Page 28149]] Maker \17\ orders greater than or equal to 2.75% of average OCV. Going forward, Member's orders that yield fee code NF will receive an enhanced rebate of $0.53 per contract where they have an: (i) ADV greater than or equal to 3.00% of average OCV; (ii) and ADAV in Market Maker orders greater than or equal to 2.75% of average OCV. --------------------------------------------------------------------------- \16\ ``ADAV'' means average daily added volume calculated as the number of contracts added and ``ADV'' means average daily volume calculated as the number of contracts added or removed, combined, per day. See the Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/. \17\ ``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). Id. --------------------------------------------------------------------------- Firm, Broker Dealer and Joint Back Office, Penny Pilot Add Volume Tiers The Exchange currently offers two Firm, Broker Dealer and Joint Back Office, Penny Pilot Add Volume Tiers under footnote 2, which provide an additional rebate of $0.43 or $0.46 per contract for qualifying Firm, Broker Dealer and Joint Back Office orders that add liquidity in Penny Pilot Securities that yield fee code PF.\18\ The Exchange now proposes to delete Tier 2 under footnote 2. Under Tier 2, a Member's orders that yield fee code PF would have received an enhanced rebate of $0.43 per contract where they have an: (i) An ADV greater than or equal 0.50% of average OCV; and an (ii) ADAV in Away Market Maker, Firm, Broker Dealer and Joint Back Office orders greater than or equal to 0.40% of average OCV. The Exchange also proposes update the Standard Rates table accordingly to reflect deletion of the rate. --------------------------------------------------------------------------- \18\ Fee code PF is appended to Firm, Broker Dealer and Joint Back Office orders in Penny Pilot Securities that add liquidity. Orders that yield fee code PF are provided a rebate of $0.25 per contract. Id. --------------------------------------------------------------------------- Away Market Maker Penny Pilot Add Volume Tiers The Exchange currently offers three Away Market Maker Penny Pilot Add Volume Tiers under footnote 10, which provide an enhanced rebate ranging from $0.40 to $0.45 per contract for qualifying Away Market Maker orders that add liquidity in Penny Pilot Securities that yield fee code PN.\19\ The Exchange now proposes to delete current Tiers 1 and 3 under footnote 10 and to update the Standard Rates table accordingly to reflect deletion of the rate. Under the current Tier 1, a Member's orders that yield fee code PN would have received an enhanced rebate of $0.40 per contract where they have an an [sic] ADV greater than or equal 0.40% of average OCV. . [sic] Under the current Tier 3, a Member's orders that yield fee code PN would have received an enhanced rebate of $0.43 per contract where they have an: (i) An ADV greater than or equal 0.50% of average OCV; and an (ii) ADAV in Away Market Maker, Firm, Broker Dealer and Joint Back Office orders greater than or equal to 0.40% of average OCV. --------------------------------------------------------------------------- \19\ Fee code PN is appended to Away Market Market orders in Penny Pilot Securities that add liquidity. Orders that yield fee code PN are provided a rebate of $0.30 per contract. Id. --------------------------------------------------------------------------- Customer Penny Pilot Take Volume Tier The Exchange proposes to delete the tier described under footnote 14 of the fee schedule. The Exchange offers a single Customer Penny Pilot Take Volume Tier under footnote 14, by which a Member's orders that yield fee code PC \20\ would have received a reduced fee of $0.48 per contract where that Member had an: (i) ADAV in Customer orders greater than or equal to 0.50% of average OCV; and (ii) on the Exchange's equities trading platform (``BZX Equities'') an ADAV of 0.50% of average TCV.\21\ The Exchange also proposes to update the Standard Rates table accordingly to reflect deletion of the rate. --------------------------------------------------------------------------- \20\ Fee code PC is appended to Customer orders in Penny Pilot Securities that remove liquidity. Orders that yield fee code PC are charged a fee of $0.49 per contract. Id. \21\ ``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. See the Exchange's fee schedule available at http://www.bats.com/us/options/membership/fee_schedule/bzx/. --------------------------------------------------------------------------- Implementation Date The Exchange proposes to implement the above changes to its fee schedule on June 1, 2017. 2. Statutory Basis The Exchange believes that the proposed rule changes are consistent with the objectives of Section 6 of the Act,\22\ in general, and furthers the objectives of Section 6(b)(4),\23\ 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 or incentives to be insufficient. The proposed rule changes reflect a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange. --------------------------------------------------------------------------- \22\ 15 U.S.C. 78f. \23\ 15 U.S.C. 78f(b)(4). --------------------------------------------------------------------------- Fee Codes PC and PN The Exchange believes that its proposals to increase the fee charged by fee code PC and decrease the rebate provided by fee code PN are fair and equitable and reasonable because the proposed rates remain consistent with pricing previously offered by the Exchange as well as its competitors and does not represent a significant departure from the Exchange's general pricing structure. Specifically, the proposed rebate for fee code PN is higher than the rebate provided by the Nasdaq Stock Market LLC (``Nasdaq'') to non-Nasdaq Market Markers that add liquidity in Penny Pilot Securities on the Nasdaq Options Market (``NOM'').\24\ In addition, the proposed rate for fee code PC equals the rate NOM charges for Customer orders that remove liquidity in Penny Pilot Securities.\25\ Lastly, the proposed changes to fee codes PC and PN are not unfairly discriminatory because they will apply equally to all Members. --------------------------------------------------------------------------- \24\ See Section 2(1) of the NOM fee schedule available at http://www.nasdaqtrader.com/Micro.aspx?id=OptionsPricing (providing a standard rebate of $0.10 per contract to non-NOM market makers that add liquidity). \25\ Id. --------------------------------------------------------------------------- Tier Modifications The Exchange believes that the proposed modifications 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 or incentives provided to be insufficient. The proposed 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 pricing 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 [[Page 28150]] and volume discovery processes. In particular, the proposed changes to footnote 8 are intended to further incentivize Members to send increased order flow to the Exchange in an effort to qualify for the enhanced rebates made available by the tiers, which in turn, contributes to the growth of the Exchange. The Exchange also believes the rebate associate with each tier is reasonable as they continue to reflect the difficultly in achieving the corresponding tier. These incentives remain reasonably related to the value to the Exchange's market quality associated with higher levels of market activity, including liquidity provision and the introduction of higher volumes of orders into the price and volume discovery processes. The proposed changes to the tiered pricing structure are not unfairly discriminatory because they will apply equally to all Members. Lastly, the Exchange believes that eliminating Tier 2 under footnote 2, Tiers 1 and 3 under footnote 10, and the Cross Asset Tier under footnote 14 is reasonable, fair, and equitable because these tiers were not providing the desired results of incentivizing Members to increase their participation on the Exchange. As such, the Exchange also believes that the proposed elimination of these tiers would be non-discriminatory in that they currently apply equally to all Members and, upon elimination, would no longer be available to any Members. Further, their elimination could allow the Exchange to explore other pricing mechanisms such as those described herein, in which it may enhance market quality for all Members. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange believes the proposed amendment 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. The Exchange does not believe that the proposed changes represent 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. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange does not believe that the proposed changes to the Exchange's standard fees, rebates and tiered pricing structure burdens competition, but instead, enhances competition as it is intended to increase the competitiveness of the Exchange. 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 \26\ and paragraph (f) of Rule 19b-4 thereunder.\27\ 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. --------------------------------------------------------------------------- \26\ 15 U.S.C. 78s(b)(3)(A). \27\ 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 Number SR-BatsBZX-2017-41 on the subject line. Paper Comments Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BatsBZX-2017-41. 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-BatsBZX-2017-41 and should be submitted on or before July 11, 2017. --------------------------------------------------------------------------- \28\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\28\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-12760 Filed 6-19-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices 28147
that, by simplifying the terms of the to implement the New Accord. None of number should be included on the
existing agreement in this way, the New these proposed rule changes, either subject line if email is used. To help the
Accord is designed to be efficient and individually or together, would affect Commission process and review your
effective in meeting the requirements of Common Members’ access to NSCC’s comments more efficiently, please use
OCC’s and NSCC’s participants and the services, nor would any of these only one method. The Commission will
markets they serve. proposed changes disadvantage or favor post all comments on the Commission’s
Additionally, the proposal to put any particular user in relationship to Internet Web site (http://www.sec.gov/
additional arrangements into place another user. As such, NSCC believes rules/sro.shtml). Copies of the
concerning the procedures, information that the proposed changes would not submission, all subsequent
sharing, and overall governance have any impact or impose any burden amendments, all written statements
processes under the New Accord would on competition. with respect to the proposed rule
create new efficiencies in the change that are filed with the
management of this important link (C) Clearing Agency’s Statement on
Commission, and all written
between OCC and NSCC. The proposal Comments on the Proposed Rule
communications relating to the
to enhance information sharing between Change Received From Members,
proposed rule change between the
OCC and NSCC would allow the Participants, or Others
Commission and any person, other than
clearing agencies to more effectively Written comments were not and are those that may be withheld from the
identify, monitor, and manage risks that not intended to be solicited with respect public in accordance with the
may be presented by certain Common to the proposed rule change and none provisions of 5 U.S.C. 552, will be
Members, and would create new have been received. NSCC will notify available for Web site viewing and
efficiencies in their general surveillance the Commission of any written printing in the Commission’s Public
efforts with respect to these firms. comments received by NSCC. Reference Room, 100 F Street NE.,
In these ways, NSCC believes the Washington, DC 20549 on official
proposed New Accord is consistent with III. Date of Effectiveness of the
Proposed Rule Change and Timing for business days between the hours of
the requirements of Rule 17Ad– 10:00 a.m. and 3:00 p.m. Copies of the
22(e)(21).28 Commission Action
filing also will be available for
The proposed rule change is not Within 45 days of the date of inspection and copying at the principal
inconsistent with the existing NSCC publication of this notice in the Federal office of NSCC and on DTCC’s Web site
Rules, including any other rules Register or within such longer period (http://dtcc.com/legal/sec-rule-
proposed to be amended. up to 90 days (i) as the Commission may filings.aspx). All comments received
(B) Clearing Agency’s Statement on designate if it finds such longer period will be posted without change; the
Burden on Competition to be appropriate and publishes its Commission does not edit personal
reasons for so finding or (ii) as to which identifying information from
Section 17A(b)(3)(I) of the Act the self-regulatory organization
requires that the rules of a clearing submissions. You should submit only
consents, the Commission will: information that you wish to make
agency not impose any burden on (A) by order approve or disapprove
competition not necessary or available publicly. All submissions
such proposed rule change, or should refer to File Number SR–NSCC–
appropriate in furtherance of the (B) institute proceedings to determine
purposes of the Act.29 NSCC does not 2017–007 and should be submitted on
whether the proposed rule change or before July 11, 2017.
believe the proposed rule change would should be disapproved.
have any impact or impose any burden The proposal shall not take effect For the Commission, by the Division of
on competition. The primary purpose of until all regulatory actions required Trading and Markets, pursuant to delegated
the proposed rule change is to adopt a authority.30
with respect to the proposal are
clearer, simpler framework for the completed. Eduardo A. Aleman,
settlement of Stock Options issued by Assistant Secretary.
OCC and settled through the facilities of IV. Solicitation of Comments [FR Doc. 2017–12892 Filed 6–19–17; 8:45 am]
NSCC, through the introduction of a Interested persons are invited to BILLING CODE 8011–01–P
new Guaranty Substitution Time. The submit written data, views and
proposed New Accord would also arguments concerning the foregoing,
extend this framework to both (1) Stock including whether the proposed rule SECURITIES AND EXCHANGE
Options contracts in securities that are change is consistent with the Act. COMMISSION
eligible to be settled through NSCC’s Comments may be submitted by any of
[Release No. 34–80919; File No. SR–
Balance Order Accounting Operation the following methods: BatsBZX–2017–41)]
and (2) certain delivery obligations
Electronic Comments
arising from matured physically-settled Self-Regulatory Organizations; Bats
Stock Futures contracts cleared by OCC • Use the Commission’s Internet BZX Exchange, Inc.; Notice of Filing
that are eligible to be settled through comment form (http://www.sec.gov/ and Immediate Effectiveness of a
NSCC’s CNS Accounting Operation or rules/sro.shtml); or Proposed Rule Change Related to Fees
Balance Order Accounting Operation. • Send an email to rule-comments@ for Use on Bats BZX Exchange, Inc.’s
The New Accord would put additional sec.gov. Please include File Number SR– Options Platform
arrangements into place concerning the NSCC–2017–007 on the subject line.
sradovich on DSK3GMQ082PROD with NOTICES
procedures, information sharing, and June 14, 2017.
Paper Comments
overall governance processes under the Pursuant to Section 19(b)(1) of the
agreement. NSCC is also proposing to • Send paper comments in triplicate Securities Exchange Act of 1934 (the
make certain clarifying and conforming to Secretary, Securities and Exchange ‘‘Act’’),1 and Rule 19b–4 thereunder,2
changes to the NSCC Rules as necessary Commission, 100 F Street NE.,
Washington, DC 20549–1090. 30 17 CFR 200.30–3(a)(12).
28 Id. All submissions should refer to File 1 15 U.S.C. 78s(b)(1).
29 15 U.S.C. 78q–1(b)(3)(I). Number SR–NSCC–2017–007. This file 2 17 CFR 240.19b–4.
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Maker 17 orders greater than or equal to Under the current Tier 3, a Member’s to incentivize market participants to
2.75% of average OCV. Going forward, orders that yield fee code PN would direct their order flow to the Exchange.
Member’s orders that yield fee code NF have received an enhanced rebate of
Fee Codes PC and PN
will receive an enhanced rebate of $0.53 $0.43 per contract where they have an:
per contract where they have an: (i) (i) An ADV greater than or equal 0.50% The Exchange believes that its
ADV greater than or equal to 3.00% of of average OCV; and an (ii) ADAV in proposals to increase the fee charged by
average OCV; (ii) and ADAV in Market Away Market Maker, Firm, Broker fee code PC and decrease the rebate
Maker orders greater than or equal to Dealer and Joint Back Office orders provided by fee code PN are fair and
2.75% of average OCV. greater than or equal to 0.40% of equitable and reasonable because the
average OCV. proposed rates remain consistent with
Firm, Broker Dealer and Joint Back pricing previously offered by the
Office, Penny Pilot Add Volume Tiers Customer Penny Pilot Take Volume Tier Exchange as well as its competitors and
The Exchange currently offers two The Exchange proposes to delete the does not represent a significant
Firm, Broker Dealer and Joint Back tier described under footnote 14 of the departure from the Exchange’s general
Office, Penny Pilot Add Volume Tiers fee schedule. The Exchange offers a pricing structure. Specifically, the
under footnote 2, which provide an single Customer Penny Pilot Take proposed rebate for fee code PN is
additional rebate of $0.43 or $0.46 per Volume Tier under footnote 14, by higher than the rebate provided by the
contract for qualifying Firm, Broker which a Member’s orders that yield fee Nasdaq Stock Market LLC (‘‘Nasdaq’’) to
Dealer and Joint Back Office orders that code PC 20 would have received a non-Nasdaq Market Markers that add
add liquidity in Penny Pilot Securities reduced fee of $0.48 per contract where liquidity in Penny Pilot Securities on
that yield fee code PF.18 The Exchange that Member had an: (i) ADAV in the Nasdaq Options Market (‘‘NOM’’).24
now proposes to delete Tier 2 under Customer orders greater than or equal to In addition, the proposed rate for fee
footnote 2. Under Tier 2, a Member’s 0.50% of average OCV; and (ii) on the code PC equals the rate NOM charges
orders that yield fee code PF would Exchange’s equities trading platform for Customer orders that remove
have received an enhanced rebate of (‘‘BZX Equities’’) an ADAV of 0.50% of liquidity in Penny Pilot Securities.25
$0.43 per contract where they have an: average TCV.21 The Exchange also Lastly, the proposed changes to fee
(i) An ADV greater than or equal 0.50% proposes to update the Standard Rates codes PC and PN are not unfairly
of average OCV; and an (ii) ADAV in table accordingly to reflect deletion of discriminatory because they will apply
Away Market Maker, Firm, Broker the rate. equally to all Members.
Dealer and Joint Back Office orders Tier Modifications
greater than or equal to 0.40% of Implementation Date
The Exchange believes that the
average OCV. The Exchange also The Exchange proposes to implement
proposed modifications to the tiered
proposes update the Standard Rates the above changes to its fee schedule on
pricing structure are reasonable, fair and
table accordingly to reflect deletion of June 1, 2017.
equitable, and non-discriminatory. The
the rate.
2. Statutory Basis Exchange operates in a highly
Away Market Maker Penny Pilot Add competitive market in which market
The Exchange believes that the
Volume Tiers participants may readily send order
proposed rule changes are consistent
The Exchange currently offers three flow to many competing venues if they
with the objectives of Section 6 of the
Away Market Maker Penny Pilot Add deem fees at the Exchange to be
Act,22 in general, and furthers the
Volume Tiers under footnote 10, which excessive or incentives provided to be
objectives of Section 6(b)(4),23 in
provide an enhanced rebate ranging insufficient. The proposed structure
particular, as it is designed to provide remains intended to attract order flow to
from $0.40 to $0.45 per contract for for the equitable allocation of reasonable
qualifying Away Market Maker orders the Exchange by offering market
dues, fees and other charges among its participants a competitive pricing
that add liquidity in Penny Pilot Members and other persons using its
Securities that yield fee code PN.19 The structure. The Exchange believes it is
facilities. The Exchange also notes that reasonable to offer and incrementally
Exchange now proposes to delete it operates in a highly-competitive
current Tiers 1 and 3 under footnote 10 modify incentives intended to help to
market in which market participants can contribute to the growth of the
and to update the Standard Rates table readily direct order flow to competing
accordingly to reflect deletion of the Exchange.
venues if they deem fee levels at a Volume-based pricing such as that
rate. Under the current Tier 1, a particular venue to be excessive or proposed herein have been widely
Member’s orders that yield fee code PN incentives to be insufficient. The adopted by exchanges, including the
would have received an enhanced proposed rule changes reflect a Exchange, and are equitable because
rebate of $0.40 per contract where they competitive pricing structure designed they are open to all Members on an
have an an [sic] ADV greater than or
equal basis and provide additional
equal 0.40% of average OCV. . [sic] 20 Fee code PC is appended to Customer orders
benefits or discounts that are reasonably
in Penny Pilot Securities that remove liquidity.
17 ‘‘Market Maker’’ applies to any transaction Orders that yield fee code PC are charged a fee of related to: (i) The value to an exchange’s
identified by a Member for clearing in the Market $0.49 per contract. Id. market quality; (ii) associated higher
Maker range at the OCC, where such Member is 21 ‘‘TCV’’ means total consolidated volume levels of market activity, such as higher
registered with the Exchange as a Market Maker as calculated as the volume reported by all exchanges levels of liquidity provisions and/or
defined in Rule 16.1(a)(37). Id. to the consolidated transaction reporting plan for
growth patterns; and (iii) introduction of
sradovich on DSK3GMQ082PROD with NOTICES
18 Fee code PF is appended to Firm, Broker Dealer the month for which the fees apply, excluding
and Joint Back Office orders in Penny Pilot volume on any day that the Exchange experiences higher volumes of orders into the price
Securities that add liquidity. Orders that yield fee an Exchange System Disruption and on any day
code PF are provided a rebate of $0.25 per contract. with a scheduled early market close. See the 24 See Section 2(1) of the NOM fee schedule
Id. Exchange’s fee schedule available at http:// available at http://www.nasdaqtrader.com/
19 Fee code PN is appended to Away Market www.bats.com/us/options/membership/fee_ Micro.aspx?id=OptionsPricing (providing a
Market orders in Penny Pilot Securities that add schedule/bzx/. standard rebate of $0.10 per contract to non-NOM
22 15 U.S.C. 78f. market makers that add liquidity).
liquidity. Orders that yield fee code PN are
provided a rebate of $0.30 per contract. Id. 23 15 U.S.C. 78f(b)(4). 25 Id.
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![28150 Federal Register / Vol. 82, No. 117 / Tuesday, June 20, 2017 / Notices
and volume discovery processes. In enhances competition as it is intended with respect to the proposed rule
particular, the proposed changes to to increase the competitiveness of the change that are filed with the
footnote 8 are intended to further Exchange. Commission, and all written
incentivize Members to send increased communications relating to the
C. Self-Regulatory Organization’s
order flow to the Exchange in an effort proposed rule change between the
Statement on Comments on the
to qualify for the enhanced rebates made Commission and any person, other than
available by the tiers, which in turn, Proposed Rule Change Received From
those that may be withheld from the
contributes to the growth of the Members, Participants, or Others
public in accordance with the
Exchange. The Exchange also believes The Exchange has not solicited, and provisions of 5 U.S.C. 552, will be
the rebate associate with each tier is does not intend to solicit, comments on available for Web site viewing and
reasonable as they continue to reflect this proposed rule change. The printing in the Commission’s Public
the difficultly in achieving the Exchange has not received any written Reference Room, 100 F Street NE.,
corresponding tier. These incentives comments from members or other Washington, DC 20549, on official
remain reasonably related to the value interested parties. business days between the hours of
to the Exchange’s market quality 10:00 a.m. and 3:00 p.m. Copies of the
III. Date of Effectiveness of the
associated with higher levels of market filing also will be available for
Proposed Rule Change and Timing for
activity, including liquidity provision inspection and copying at the principal
Commission Action
and the introduction of higher volumes office of the Exchange. All comments
of orders into the price and volume The foregoing rule change has become received will be posted without change;
discovery processes. The proposed effective pursuant to Section 19(b)(3)(A) the Commission does not edit personal
changes to the tiered pricing structure of the Act 26 and paragraph (f) of Rule identifying information from
are not unfairly discriminatory because 19b–4 thereunder.27 At any time within submissions. You should submit only
they will apply equally to all Members. 60 days of the filing of the proposed rule information that you wish to make
Lastly, the Exchange believes that change, the Commission summarily may available publicly. All submissions
eliminating Tier 2 under footnote 2, temporarily suspend such rule change if should refer to File Number SR–
Tiers 1 and 3 under footnote 10, and the it appears to the Commission that such BatsBZX–2017–41 and should be
Cross Asset Tier under footnote 14 is action is necessary or appropriate in the submitted on or before July 11, 2017.
reasonable, fair, and equitable because public interest, for the protection of
these tiers were not providing the investors, or otherwise in furtherance of For the Commission, by the Division of
Trading and Markets, pursuant to delegated
desired results of incentivizing the purposes of the Act. authority.28
Members to increase their participation
on the Exchange. As such, the Exchange IV. Solicitation of Comments Eduardo A. Aleman,
also believes that the proposed Interested persons are invited to Assistant Secretary.
elimination of these tiers would be non- submit written data, views, and [FR Doc. 2017–12760 Filed 6–19–17; 8:45 am]
discriminatory in that they currently arguments concerning the foregoing, BILLING CODE 8011–01–P
apply equally to all Members and, upon including whether the proposed rule
elimination, would no longer be change is consistent with the Act.
available to any Members. Further, their Comments may be submitted by any of SECURITIES AND EXCHANGE
elimination could allow the Exchange to the following methods: COMMISSION
explore other pricing mechanisms such [Release No. 34–80925; File No. SR–CBOE–
Electronic Comments
as those described herein, in which it 2017–047]
may enhance market quality for all • Use the Commission’s Internet
Members. comment form (http://www.sec.gov/ Self-Regulatory Organizations;
rules/sro.shtml); or Chicago Board Options Exchange,
B. Self-Regulatory Organization’s • Send an email to rule-
Statement on Burden on Competition Incorporated; Notice of Filing and
comments@sec.gov. Please include File Immediate Effectiveness of a Proposed
The Exchange believes the proposed Number SR–BatsBZX–2017–41 on the Rule Change To Amend the Fees
amendment to its fee schedule would subject line. Schedule
not impose any burden on competition
that is not necessary or appropriate in Paper Comments June 14, 2017.
furtherance of the purposes of the Act. • Send paper comments in triplicate Pursuant to Section 19(b)(1) of the
The Exchange does not believe that the to Brent J. Fields, Secretary, Securities Securities Exchange Act of 1934 (the
proposed changes represent a significant and Exchange Commission, 100 F Street ‘‘Act’’),1 and Rule 19b–4 thereunder,2
departure from previous pricing offered NE., Washington, DC 20549–1090. notice is hereby given that on June 1,
by the Exchange or pricing offered by All submissions should refer to File 2017, Chicago Board Options Exchange,
the Exchange’s competitors. Number SR–BatsBZX–2017–41. This file Incorporated (the ‘‘Exchange’’ or
Additionally, Members may opt to number should be included on the ‘‘CBOE’’) filed with the Securities and
disfavor the Exchange’s pricing if they subject line if email is used. To help the Exchange Commission (the
believe that alternatives offer them Commission process and review your ‘‘Commission’’) the proposed rule
better value. Accordingly, the Exchange comments more efficiently, please use change as described in Items I, II, and
does not believe that the proposed only one method. The Commission will III below, which Items have been
changes will impair the ability of
sradovich on DSK3GMQ082PROD with NOTICES
post all comments on the Commission’s prepared by the Exchange. The
Members or competing venues to Internet Web site (http://www.sec.gov/ Commission is publishing this notice to
maintain their competitive standing in rules/sro.shtml). Copies of the solicit comments on the proposed rule
the financial markets. The Exchange submission, all subsequent change from interested persons.
does not believe that the proposed amendments, all written statements
changes to the Exchange’s standard fees, 28 17 CFR 200.30–3(a)(12).
rebates and tiered pricing structure 26 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1).
burdens competition, but instead, 27 17 CFR 240.19b–4(f). 2 17 CFR 240.19b–4.
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Document Created: 2017-06-20 02:21:11
Document Modified: 2017-06-20 02:21:11
| 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 | 82 FR 28147 |
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