82 FR 38730 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 156 (August 15, 2017)
Federal Register Volume 82, Issue 156 (August 15, 2017)
| Page Range | 38730-38733 | |
| FR Document | 2017-17170 |
[Federal Register Volume 82, Number 156 (Tuesday, August 15, 2017)] [Notices] [Pages 38730-38733] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-17170] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81362; File No. SR-Phlx-2017-61] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule August 9, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on July 31, 2017 NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I, II, and III, below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Exchange's Pricing Schedule to: (i) Increase the Options Transaction Charge for Specialists and Market Makers who engage in NDX transactions on the Exchange Floor; (ii) exclude NDX transactions from the Exchange's Monthly Firm Fee Cap that otherwise applies to the monthly transaction fees that market participants incur when trading on the Exchange; and (iii) exempt NDX transactions from the Exchange's waiver of Options Transaction Charges for certain facilitation orders. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on August 1, 2017. The text of the proposed rule change is available on the Exchange's Web site at http://nasdaqphlx.cchwallstreet. com/, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to make three changes to Section II of its Pricing Schedule. First, the Exchange proposes to increase its Options Transaction Charge for Specialists and Market Makers that engage in NDX transactions on the Exchange Floor. Last March, the Exchange increased its Options Transaction Charges from $0.25 to $0.75 per contract for all categories of market participants transacting in NDX, except for Specialists and Market Makers which transact in NDX on the Floor and [[Page 38731]] Customers.\3\ At that time, the Exchange decided not to raise its $0.35 per contract Option Transaction Charge for Specialists and Market Makers transacting in NDX on the Floor because it sought to incentivize Specialists and Market Makers to continue to make markets in the NDX product on the Floor. However, the Exchange has decided to discontinue this incentive program and, as such, the Exchange now seeks to increase the Transaction Charge to $0.75 per contract. This proposal will harmonize the schedule of NDX Options Transaction Charges for all non- Customer market participants in all circumstances in which they trade in NDX on the Exchange in that it will charge them the same per contract fee and will do so for both Floor-based and electronic transactions (except that the Exchange will continue to refrain from imposing an Options Transaction Charge on Customers that engage in NDX transactions). Moreover, the fee increase will permit the Exchange to recoup its operational costs for listing NDX, which is a proprietary product of the Exchange. --------------------------------------------------------------------------- \3\ See Securities Exchange Act Release No. 34-80244 (March 13, 2017), 82 FR 14388 (March 20, 2017). The categories of market participants that incur an Options Transaction Charge of $0.75 per contract when they transact in NDX include Professionals (both electronic and Floor trading), Specialists and Market Makers (electronic trading only), Broker-Dealers (both electronic and Floor Trading), and Firms (both electronic and Floor trading). --------------------------------------------------------------------------- Second, the Exchange proposes to exempt NDX Options Transaction Charges from the $75,000 Monthly Firm Fee Cap that it otherwise applies to member organizations that trade on the Exchange in their own proprietary accounts. The Exchange bases this proposal upon a similar exemption that CBOE applies from its $75,000 monthly transaction fee cap for its proprietary options index products, including VIX and SPX.\4\ --------------------------------------------------------------------------- \4\ See Chicago Board Options Exchange, Inc., Fees Schedule (July 11, 2017), at n.22 (``For all non-facilitation business executed in AIM or open outcry, or as a QCC or FLEX transaction, transaction fees for Clearing Trading Permit Holder Proprietary and/ or their Non-Trading Permit Holder Affiliates (as defined in footnote 11) in all products except Underlying Symbol List A (34), excluding binary options, in the aggregate, are capped at $75,000 per month per Clearing Trading Permit Holder. As CBOE assesses no Clearing Trading Permit Holder Proprietary transaction fees for facilitation orders (other than Underlying Symbol List A (34), excluding binary options) (as described in footnote 11), such trades will not count towards the cap. Surcharge fees do not count towards the cap.''); id. at n.34 (defining ``Underlying Symbol List A'' to include SPX and VIX). --------------------------------------------------------------------------- Third, the Exchange proposes to exclude NDX Options Transactions from several waivers that it otherwise grants to certain categories of market participants of its Floor Options Transaction Charges. Specifically, the Exchange will not waive Firm Floor Options Transaction Charges for members that execute NDX facilitation orders when such members trade in their own proprietary account (including Cabinet Options Transaction Charges). Also, the Exchange will not waive Firm Floor Options Transaction Charges for the buy side of an NDX transaction if the same member or its affiliates under Common Ownership represents both sides of a Firm transaction when such members are trading in their own proprietary account. Lastly, the Exchange will not waive the Broker-Dealer Floor Options Transaction Charge (including Cabinet Options Transaction Charges) for members that execute NDX facilitation in their own proprietary account contra to a Customer (``BD-Customer Facilitation''), where the member's BD-Customer Facilitation average daily volume (including both FLEX and non-FLEX transactions) exceeds 10,000 contracts per day in a given month. The Exchange intends for these exclusions to help it recoup its costs of developing and maintaining NDX as a proprietary product. Again, moreover, this proposal is consistent with an exclusion for proprietary products that CBOE applies to fee waivers involving facilitation orders.\5\ --------------------------------------------------------------------------- \5\ See id. (noting that CBOE excludes its proprietary products from its $0.00 charge for facilitation orders). --------------------------------------------------------------------------- 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,\6\ in general, and furthers the objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\7\ in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \6\ 15 U.S.C. 78f(b). \7\ 15 U.S.C. 78f(b)(4) and (5). --------------------------------------------------------------------------- The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system ``has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.'' \8\ --------------------------------------------------------------------------- \8\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting Release''). --------------------------------------------------------------------------- Likewise, in NetCoalition v. Securities and Exchange Commission \9\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of a market-based approach in evaluating the fairness of market data fees against a challenge claiming that Congress mandated a cost-based approach.\10\ As the court emphasized, the Commission ``intended in Regulation NMS that `market forces, rather than regulatory requirements' play a role in determining the market data . . . to be made available to investors and at what cost.'' \11\ --------------------------------------------------------------------------- \9\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010). \10\ See NetCoalition, at 534-535. \11\ Id. at 537. --------------------------------------------------------------------------- Further, ``[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers'. . . .'' \12\ Although the court and the SEC were discussing the cash equities markets, the Exchange believes that these views apply with equal force to the options markets. --------------------------------------------------------------------------- \12\ Id. at 539 (quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008) (SR-NYSEArca-2006-21)). --------------------------------------------------------------------------- The Exchange believes that its proposal to increase its Option Transaction Charges for Specialists and Market Makers transacting in NDX on the Floor is reasonable because the Exchange already charges Specialists and Market Makers $0.75 per contract for electronic transactions involving NDX as well the same amount for Professionals, Broker-Dealers, and Firms that engage in NDX transactions both electronically and on the Floor. The proposal, in other words, will bring the Exchange's Pricing Schedule for Option Transaction Charges into harmony, except for Customers. The Exchange also believes that its proposal is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same Options Transaction Charges to all similarly situated market participants, except for Customers. [[Page 38732]] The Exchange believes that its decision to refrain from assessing to Customers Options Transaction Charges for NDX is equitable and not unfairly discriminatory because Customer orders bring valuable liquidity to the market, which benefits other market participants. Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Specialists and Market Makers. An increase in these in the activity of these market participants, in turn, facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. The Exchange also believes that its proposal to exempt NDX from the Monthly Firm Fee Cap on Options Transaction Charges is reasonable because CBOE employs a similar exemption from its monthly option transaction fee cap for transactions in its proprietary products.\13\ This proposal is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same fee to all similarly situated members. --------------------------------------------------------------------------- \13\ See Chicago Board Options Exchange, Inc., Fees Schedule, supra. --------------------------------------------------------------------------- Finally, the Exchange believes that its proposal is reasonable to exclude NDX from the waivers of Options Transaction Charges that it otherwise grants in certain circumstances involving the execution of facilitation orders. Again, the Exchange's proposal is similar to that which CBOE employs with respect to facilitation orders involving its proprietary products. The Exchange also believes this proposal is reasonable insofar as the Exchange incurs costs associated with the development and maintenance of NDX as a proprietary product and the exclusion from the fee waiver will help it to recoup those costs. Furthermore, the Exchange believes that this proposal is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same fee waiver exclusion to all similarly situated members. 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. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed increase to the Options Transaction Charge for Specialists and Market Makers engaging in Floor-based MDX transactions does not impose a burden on competition because the increase will result in the Exchange uniformly assessing a $0.75 per contract Options Transaction charge for all market participants, except Customers, regardless of whether the transaction is submitted electronically or on the Floor. The Exchange believes that assessing Customers no transaction fees for NDX does not impose an undue burden on intramarket competition because Customer orders bring valuable liquidity to the market, which benefits other market participants. Customer liquidity benefits all market participants by providing more trading opportunities, which attracts Specialists and Market Makers. An increase in these in the activity of these market participants, in turn, facilitates tighter spreads, which may cause an additional corresponding increase in order flow from other market participants. The Exchange does not believe that its proposals to exempt NDX from its Monthly Firm Fee Cap and to exclude NDX transactions from its fee waivers for certain facilitation transactions will impose a burden competition. These proposals are similar to CBOE's practices with respect to its proprietary products. 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 Act.\14\ --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(3)(A)(ii). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. 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-Phlx-2017-61 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-Phlx-2017-61. 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 [[Page 38733]] submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR- Phlx-2017-61 and should be submitted on or before September 5, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ --------------------------------------------------------------------------- \15\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-17170 Filed 8-14-17; 8:45 am] BILLING CODE 8011-01-P
![38730 Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices
In its filing, MRX requests that the Internet Web site (http://www.sec.gov/ solicit comments on the proposed rule
Commission waive the 30-day operative rules/sro.shtml). Copies of the change from interested persons.
delay in order to enable the Exchange to submission, all subsequent
I. Self-Regulatory Organization’s
coordinate the implementation of the amendments, all written statements
Statement of the Terms of Substance of
proposed rule changes with its planned with respect to the proposed rule
the Proposed Rule Change
migration to the INET platform, which change that are filed with the
will commence in Q3 of 2017. Although Commission, and all written The Exchange proposes to amend the
the Exchange proposes certain technical communications relating to the Exchange’s Pricing Schedule to: (i)
changes to how the risk parameters will proposed rule change between the Increase the Options Transaction Charge
operate (e.g., limiting the Specified Commission and any person, other than for Specialists and Market Makers who
Time Period to 30 seconds), the those that may be withheld from the engage in NDX transactions on the
proposed changes are largely intended public in accordance with the Exchange Floor; (ii) exclude NDX
to provide more detail about the provisions of 5 U.S.C. 552, will be transactions from the Exchange’s
operation of the existing risk available for Web site viewing and Monthly Firm Fee Cap that otherwise
parameters. Accordingly, the printing in the Commission’s Public applies to the monthly transaction fees
Commission believes that granting a Reference Room, 100 F Street NE., that market participants incur when
waiver of the operative delay is Washington, DC 20549, on official trading on the Exchange; and (iii)
consistent with the protection of business days between the hours of exempt NDX transactions from the
investors and the public interest and 10:00 a.m. and 3:00 p.m. Copies of the Exchange’s waiver of Options
therefore designates the proposed rule filing also will be available for Transaction Charges for certain
change to be operative upon filing.13 inspection and copying at the principal facilitation orders.
At any time within 60 days of the office of the Exchange. All comments While these amendments are effective
filing of the proposed rule change, the received will be posted without change; upon filing, the Exchange has
Commission summarily may the Commission does not edit personal designated the proposed amendments to
temporarily suspend such rule change if identifying information from be operative on August 1, 2017.
it appears to the Commission that such submissions. You should submit only The text of the proposed rule change
action is necessary or appropriate in the information that you wish to make is available on the Exchange’s Web site
public interest; for the protection of available publicly. All submissions at http://nasdaqphlx.cchwallstreet.
investors; or otherwise in furtherance of should refer to File Number SR–MRX– com/, at the principal office of the
the purposes of the Act. 2017–14, and should be submitted on or Exchange, and at the Commission’s
IV. Solicitation of Comments before September 5, 2017. Public Reference Room.
For the Commission, by the Division of
Interested persons are invited to Trading and Markets, pursuant to delegated II. Self-Regulatory Organization’s
submit written data, views, and authority.14 Statement of the Purpose of, and
arguments concerning the foregoing, Eduardo A. Aleman, Statutory Basis for, the Proposed Rule
including whether the proposed rule Change
Assistant Secretary.
change is consistent with the Act.
Comments may be submitted by any of [FR Doc. 2017–17167 Filed 8–14–17; 8:45 am] In its filing with the Commission, the
the following methods: BILLING CODE 8011–01–P Exchange included statements
concerning the purpose of and basis for
Electronic Comments the proposed rule change and discussed
• Use the Commission’s Internet SECURITIES AND EXCHANGE any comments it received on the
comment form (http://www.sec.gov/ COMMISSION proposed rule change. The text of these
rules/sro.shtml); or statements may be examined at the
[Release No. 34–81362; File No. SR–Phlx–
• Send an email to rule-comments@ 2017–61] places specified in Item IV below. The
sec.gov. Please include File Number SR– Exchange has prepared summaries, set
MRX–2017–14 on the subject line. Self-Regulatory Organizations; forth in sections A, B, and C below, of
NASDAQ PHLX LLC; Notice of Filing the most significant aspects of such
Paper Comments statements.
and Immediate Effectiveness of
• Send paper comments in triplicate Proposed Rule Change To Amend the A. Self-Regulatory Organization’s
to Secretary, Securities and Exchange Exchange’s Pricing Schedule Statement of the Purpose of, and
Commission, 100 F Street NE.,
August 9, 2017. Statutory Basis for, the Proposed Rule
Washington, DC 20549–1090.
Pursuant to Section 19(b)(1) of the Change
All submissions should refer to File
Number SR–MRX–2017–14. This file Securities Exchange Act of 1934 1. Purpose
number should be included on the (‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 31, The Exchange proposes to make three
subject line if email is used. To help the changes to Section II of its Pricing
Commission process and review your 2017 NASDAQ PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities Schedule. First, the Exchange proposes
comments more efficiently, please use to increase its Options Transaction
only one method. The Commission will and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule Charge for Specialists and Market
post all comments on the Commission’s Makers that engage in NDX transactions
change as described in Items I, II, and
mstockstill on DSK30JT082PROD with NOTICES
III, below, which Items have been on the Exchange Floor. Last March, the
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this prepared by the Exchange. The Exchange increased its Options
requirement. Commission is publishing this notice to Transaction Charges from $0.25 to $0.75
13 For purposes only of waiving the 30-day per contract for all categories of market
operative delay, the Commission has also participants transacting in NDX, except
14 17 CFR 200.30–3(a)(12).
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See 1 15 U.S.C. 78s(b)(1). for Specialists and Market Makers
15 U.S.C. 78c(f). 2 17 CFR 240.19b–4. which transact in NDX on the Floor and
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![Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 38731
Customers.3 At that time, the Exchange participants of its Floor Options promoting market competition in its
decided not to raise its $0.35 per Transaction Charges. Specifically, the broader forms that are most important to
contract Option Transaction Charge for Exchange will not waive Firm Floor investors and listed companies.’’ 8
Specialists and Market Makers Options Transaction Charges for Likewise, in NetCoalition v. Securities
transacting in NDX on the Floor because members that execute NDX facilitation and Exchange Commission 9
it sought to incentivize Specialists and orders when such members trade in (‘‘NetCoalition’’) the D.C. Circuit upheld
Market Makers to continue to make their own proprietary account the Commission’s use of a market-based
markets in the NDX product on the (including Cabinet Options Transaction approach in evaluating the fairness of
Floor. However, the Exchange has Charges). Also, the Exchange will not market data fees against a challenge
decided to discontinue this incentive waive Firm Floor Options Transaction claiming that Congress mandated a cost-
program and, as such, the Exchange Charges for the buy side of an NDX based approach.10 As the court
now seeks to increase the Transaction transaction if the same member or its emphasized, the Commission ‘‘intended
Charge to $0.75 per contract. This affiliates under Common Ownership in Regulation NMS that ‘market forces,
proposal will harmonize the schedule of represents both sides of a Firm rather than regulatory requirements’
NDX Options Transaction Charges for transaction when such members are play a role in determining the market
all non-Customer market participants in trading in their own proprietary data . . . to be made available to
all circumstances in which they trade in account. Lastly, the Exchange will not investors and at what cost.’’ 11
NDX on the Exchange in that it will waive the Broker-Dealer Floor Options Further, ‘‘[n]o one disputes that
charge them the same per contract fee Transaction Charge (including Cabinet competition for order flow is ‘fierce.’
and will do so for both Floor-based and Options Transaction Charges) for . . . As the SEC explained, ‘[i]n the U.S.
electronic transactions (except that the members that execute NDX facilitation national market system, buyers and
Exchange will continue to refrain from in their own proprietary account contra sellers of securities, and the broker-
imposing an Options Transaction to a Customer (‘‘BD-Customer dealers that act as their order-routing
Charge on Customers that engage in Facilitation’’), where the member’s BD- agents, have a wide range of choices of
NDX transactions). Moreover, the fee Customer Facilitation average daily where to route orders for execution’;
increase will permit the Exchange to volume (including both FLEX and non- [and] ‘no exchange can afford to take its
recoup its operational costs for listing FLEX transactions) exceeds 10,000 market share percentages for granted’
NDX, which is a proprietary product of contracts per day in a given month. The because ‘no exchange possesses a
the Exchange. Exchange intends for these exclusions to monopoly, regulatory or otherwise, in
Second, the Exchange proposes to help it recoup its costs of developing the execution of order flow from broker
exempt NDX Options Transaction and maintaining NDX as a proprietary dealers’. . . .’’ 12 Although the court and
Charges from the $75,000 Monthly Firm product. Again, moreover, this proposal the SEC were discussing the cash
Fee Cap that it otherwise applies to is consistent with an exclusion for equities markets, the Exchange believes
member organizations that trade on the proprietary products that CBOE applies that these views apply with equal force
Exchange in their own proprietary to fee waivers involving facilitation to the options markets.
accounts. The Exchange bases this orders.5 The Exchange believes that its
proposal upon a similar exemption that proposal to increase its Option
CBOE applies from its $75,000 monthly 2. Statutory Basis Transaction Charges for Specialists and
transaction fee cap for its proprietary The Exchange believes that its Market Makers transacting in NDX on
options index products, including VIX proposal is consistent with Section 6(b) the Floor is reasonable because the
and SPX.4 of the Act,6 in general, and furthers the Exchange already charges Specialists
Third, the Exchange proposes to objectives of Sections 6(b)(4) and 6(b)(5) and Market Makers $0.75 per contract
exclude NDX Options Transactions from of the Act,7 in particular, in that it for electronic transactions involving
several waivers that it otherwise grants provides for the equitable allocation of NDX as well the same amount for
to certain categories of market reasonable dues, fees and other charges Professionals, Broker-Dealers, and Firms
among members and issuers and other that engage in NDX transactions both
3 See Securities Exchange Act Release No. 34–
80244 (March 13, 2017), 82 FR 14388 (March 20,
persons using any facility, and is not electronically and on the Floor. The
2017). The categories of market participants that designed to permit unfair proposal, in other words, will bring the
incur an Options Transaction Charge of $0.75 per discrimination between customers, Exchange’s Pricing Schedule for Option
contract when they transact in NDX include issuers, brokers, or dealers. Transaction Charges into harmony,
Professionals (both electronic and Floor trading),
Specialists and Market Makers (electronic trading
The Commission and the courts have except for Customers. The Exchange
only), Broker-Dealers (both electronic and Floor repeatedly expressed their preference also believes that its proposal is an
Trading), and Firms (both electronic and Floor for competition over regulatory equitable allocation and is not unfairly
trading). intervention in determining prices, discriminatory because the Exchange
4 See Chicago Board Options Exchange, Inc., Fees
products, and services in the securities will apply the same Options
Schedule (July 11, 2017), at n.22 (‘‘For all non-
facilitation business executed in AIM or open markets. In Regulation NMS, while Transaction Charges to all similarly
outcry, or as a QCC or FLEX transaction, transaction adopting a series of steps to improve the situated market participants, except for
fees for Clearing Trading Permit Holder Proprietary current market model, the Commission Customers.
and/or their Non-Trading Permit Holder Affiliates highlighted the importance of market
(as defined in footnote 11) in all products except
Underlying Symbol List A (34), excluding binary forces in determining prices and SRO 8 Securities Exchange Act Release No. 51808
revenues and, also, recognized that (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
options, in the aggregate, are capped at $75,000 per
mstockstill on DSK30JT082PROD with NOTICES
(‘‘Regulation NMS Adopting Release’’).
month per Clearing Trading Permit Holder. As current regulation of the market system 9 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
CBOE assesses no Clearing Trading Permit Holder ‘‘has been remarkably successful in
Proprietary transaction fees for facilitation orders 2010).
10 See NetCoalition, at 534–535.
(other than Underlying Symbol List A (34),
5 See id. (noting that CBOE excludes its 11 Id. at 537.
excluding binary options) (as described in footnote
11), such trades will not count towards the cap. proprietary products from its $0.00 charge for 12 Id. at 539 (quoting Securities Exchange Act
Surcharge fees do not count towards the cap.’’); id. facilitation orders). Release No. 59039 (December 2, 2008), 73 FR
6 15 U.S.C. 78f(b).
at n.34 (defining ‘‘Underlying Symbol List A’’ to 74770, 74782–83 (December 9, 2008) (SR–
include SPX and VIX). 7 15 U.S.C. 78f(b)(4) and (5). NYSEArca–2006–21)).
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![Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 38733
submissions. You should submit only exemption are scheduled to expired on For the Commission, by the Division of
information that you wish to make July 31, 2017. Trading and Markets, pursuant to delegated
available publicly. All submissions authority.7
The Exchange now seeks to extend
should refer to File Number SR–Phlx– Eduardo A. Aleman,
the exemption until July 31, 2018.4 The
2017–61 and should be submitted on or Exchange’s request was made in Assistant Secretary.
before September 5, 2017. conjunction with an immediately [FR Doc. 2017–17162 Filed 8–14–17; 8:45 am]
For the Commission, by the Division of effective filing that extends the BILLING CODE 8011–01–P
Trading and Markets, pursuant to delegated operation of the Program until July 31,
authority.15 2018.5 In its request to extend the
Eduardo A. Aleman, exemption, the Exchange notes that the SECURITIES AND EXCHANGE
Assistant Secretary. Program was implemented gradually COMMISSION
[FR Doc. 2017–17170 Filed 8–14–17; 8:45 am] over time. Accordingly, the Exchange [Release No. 34–81358; File No. 265–29]
BILLING CODE 8011–01–P has asked for additional time to allow
itself and the Commission to analyze Equity Market Structure Advisory
data concerning the Program, which the Committee
SECURITIES AND EXCHANGE Exchange committed to provide to the
COMMISSION Commission, as well as to allow AGENCY: Securities and Exchange
additional opportunities for greater Commission.
[Release No. 34–81364; File No. SR–BYX–
2012–019] participation in the Program.6 For this ACTION: Notice of Federal Advisory
reason and the reasons stated in the Committee Renewal.
Self-Regulatory Organization; BATS Order originally granting the limited
BYX-Exchange, Inc.; Order Granting an SUMMARY: The Securities and Exchange
exemption, the Commission finds that
Extension to Limited Exemption From Commission is publishing this notice to
extending the exemption, pursuant to its
Rule 612(c) of Regulation NMS in announce that the Chairman of the
authority under Rule 612(c) of
Connection With the Exchange’s Retail Commission, with the concurrence of
Regulation NMS, is appropriate in the
Price Improvement Program the other Commissioners, has approved
public interest and consistent with the
the renewal of the Securities and
August 9, 2017.
protection of investors.
Exchange Commission Equity Market
On November 27, 2012, the Securities Therefore, it is hereby ordered, that, Structure Advisory Committee.
and Exchange Commission pursuant to Rule 612(c) of Regulation FOR FURTHER INFORMATION CONTACT:
(‘‘Commission’’) issued an order NMS, the Exchange is granted a limited Arisa Kettig, Senior Special Counsel,
pursuant to its authority under Rule exemption from Rule 612(c) of Division of Trading and Markets,
612(c) of Regulation NMS (‘‘Sub-Penny Regulation NMS that allows it to accept Securities and Exchange Commission,
Rule) 1 that granted the BATS BYX- and rank orders priced equal to or 100 F Street NE., Washington, DC
Exchange, Inc. (‘‘BYX’’ or the greater than $1.00 per share in 20549, (202) 551–5676.
‘‘Exchange’’) a limited exemption from increments of $0.001, in connection
SUPPLEMENTARY INFORMATION: In
the Sub-Penny Rule in connection with with the operation of its RPI Program.
the operation of the Exchange’s Retail accordance with the requirements of the
The limited and temporary exemption Federal Advisory Committee Act, 5
Price Improvement (‘‘RPI’’) Program (the extended by this Order is subject to
‘‘Program’’). The limited exemption was U.S.C. App., the Commission is
modification or revocation if at any time publishing this notice that the Chairman
granted concurrently with the the Commission determines that such
Commission’s approval of the of the Commission, with the
action is necessary or appropriate in concurrence of the other
Exchange’s proposal to adopt the furtherance of the purposes of the
Program for a one-year pilot term.2 The Commissioners, has approved the
Securities Exchange Act of 1934. renewal of the Securities and Exchange
exemption was granted coterminous Responsibility for compliance with any
with the effectiveness of the pilot Commission Equity Market Structure
applicable provisions of the federal Advisory Committee (the ‘‘Committee’’).
Program and has been extended four securities laws must rest with the
times; 3 both the pilot Program and The Chairman of the Commission
persons relying on the exemptions that affirms that the renewal of the
15 17
are the subject of this Order. Committee is necessary and in the
CFR 200.30–3(a)(12).
1 17 CFR 242.612(c). public interest.
2 See Securities Exchange Act Release No. 68303 01)(Notice of Filing and Immediate Effectiveness of The Committee’s objective is to
(November 27, 2012), 77 FR 71652 (December 3, a Proposed Rule Change to Extend the Pilot Period
for the RPI); 76953 (January 21, 2016), 81 FR 4728
provide the Commission with diverse
2012) (‘‘RPI Approval Order’’) (SR–BXY–2012–019).
3 See Securities Exchange Act Release Nos. 71249 (January 27, 2016)(Order Granting an Extension to perspectives on the structure and
(January 7, 2014), 79 FR 2229 (January 13, 2012) Limited Exemption From Rule 612(c) of Regulation operations of the U.S. equities markets,
(SR–BYX–2014–001) (Notice of Filing and NMS in Connection With the Exchange’s Retail as well as advice and recommendations
Price Improvement Program); 78180 (June 28, 2016),
Immediate Effectiveness of a Proposed Rule Change
81 FR 43306 (July 1, 2016) (SR–BYX–2016–15)
on matters related to equity market
to Extend the Pilot Period for the RPI); 71250 structure.
(January 7, 2014), 79 FR 2234 (January 13, 2012) (Notice of Filing and Immediate Effectiveness of a
(Order Granting an Extension to Limited Exemption Proposed Rule Change to Extend the Pilot Period for No more than seventeen voting
From Rule 612(c) of Regulation NMS in Connection the RPI); 78178 (July 5, 2016), 81 FR 43689 (July members will be appointed to the
5, 2016)(Order Granting an Extension to Limited
With the Exchange’s Retail Price Improvement
Exemption From Rule 612(c) of Regulation NMS in
Committee, representing a cross-section
Program); 74111 (January 22, 2015), 80 FR 4598 of those directly affected by, interested
mstockstill on DSK30JT082PROD with NOTICES
(January 28, 2015) (SR–BYX–2015–05) (Notice of Connection With the Exchange’s Retail Price
Filing and Immediate Effectiveness of a Proposed Improvement Program). in, and/or qualified to provide advice to
Rule Change to Extend the Pilot Period for the RPI);
4 See letter from Anders Franzon, Senior Vice
the Commission on matters related to
and 74115 (January 22, 2015), 80 FR 4324 (January President and Associate General Counsel, BYX, to equity market structure. The
27, 2015) (Order Granting an Extension to Limited Brent J. Fields, Secretary, Commission, dated
August 7, 2017. Committee’s membership will continue
Exemption From Rule 612(c) of Regulation NMS in
Connection With the Exchange’s Retail Price 5 See SR-BatsBYX–2017–18. to be balanced fairly in terms of points
Improvement Program); 76965 (January 22, 2016), 6 See RPI Approval Order, supra note 2, at 77 FR
81 FR 4682 (January 27, 2016) (SR–BYX–2016– at 71657. 7 17 CFR 200.30–3(a)(83).
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Document Created: 2017-08-15 01:12:54
Document Modified: 2017-08-15 01:12:54
| 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 38730 |
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