82 FR 38962 - 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 157 (August 16, 2017)
Federal Register Volume 82, Issue 157 (August 16, 2017)
| Page Range | 38962-38964 | |
| FR Document | 2017-17278 |
[Federal Register Volume 82, Number 157 (Wednesday, August 16, 2017)] [Notices] [Pages 38962-38964] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-17278] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81370; File No. SR-Phlx-2017-64] Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Pricing Schedule August 10, 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 at Section I, entitled ``Rebates and Fees for Adding and Removing Liquidity in SPY,'' and Section IV, Part A entitled ``PIXL Pricing'' to amend pricing related to PIXL \3\ executions. --------------------------------------------------------------------------- \3\ PIXL\TM\ is the Exchange's price improvement mechanism known as Price Improvement XL or PIXL. A member or member organization may electronically submit for execution an order it represents as agent on behalf of a public customer, broker-dealer, or any other entity (``PIXL Order'') against principal interest or against any other order (except as provided in Rule 1080(n)(i)(E)) it represents as agent (``Initiating Order''), provided it submits the PIXL order for electronic execution into the PIXL Auction pursuant to Rule 1080. See Exchange Rule 1080(n). --------------------------------------------------------------------------- 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 purpose of the proposed rule change is to amend the Exchange's Pricing Schedule at Section I, entitled ``Rebates and Fees for Adding and Removing Liquidity in SPY'' and specifically, the section that pertains to PIXL Executions in Standard and Poor's Depositary Receipts/ SPDRs (``SPY'').\4\ The Exchange also proposes to amend PIXL Pricing in Section IV, Part A, entitled ``PIXL Pricing'' for all other Multiply- Listed options symbols. --------------------------------------------------------------------------- \4\ Options overlying Standard and Poor's Depositary Receipts/ SPDRs (``SPY'') are based on the SPDR exchange-traded fund (``ETF''), which is designed to track the performance of the S&P 500 Index. --------------------------------------------------------------------------- First, the Exchange proposes to increase the SPY Complex PIXL rebate it offers Phlx members or member organizations that qualify for Section B, Customer Rebate Tiers \5\ 2 through 6 or qualify for the Monthly Firm Fee Cap. Presently, the Exchange offers a rebate of $0.10 per contract for all SPY Complex PIXL Orders greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of SPY Complex PIXL Orders in a month. The Exchange proposes to increase that rebate to $0.12 per contract. In doing so, the Exchange desires to incentivize members or member organizations to transact a greater number of SPY Complex PIXL Orders while also incentivizing members or member organizations to submit Customer order flow on Phlx. --------------------------------------------------------------------------- \5\ Section B of the Pricing Schedule contains Customer Rebate Tiers which are calculated by totaling Customer volume in Multiply Listed Options (including SPY) that are electronically-delivered and executed, except volume associated with electronic QCC Orders, as defined in Exchange Rule 1080(o). Rebates are paid on Customer Rebate Tiers according to certain categories. Members and member organizations under Common Ownership may aggregate their Customer volume for purposes of calculating the Customer Rebate Tiers and receiving rebates. Affiliated Entities may aggregate their Customer volume for purposes of calculating the Customer Rebate Tiers and receiving rebates. See Section B of the Pricing Schedule. --------------------------------------------------------------------------- Second, the Exchange proposes to increase the Complex PIXL (excluding SPY Options rebate it offers to Phlx members and member organizations that qualify for Section B, Customer Rebate Tiers 2 through 6 or qualify for the Monthly Firm Fee Cap. Presently, the Exchange offers a rebate of $0.10 per contract for all Complex PIXL Orders (excluding SPY Options) greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of Complex SPY PIXL Orders in a month. The Exchange proposes to increase that rebate to $0.12 per contract. In doing so, the Exchange desires to incentivize members and member organizations to transact a greater number of Complex PIXL Orders while also incentivizing members and member organizations to submit Customer order flow on Phlx to obtain the $0.12 rebate on all Complex PIXL Orders (excluding SPY Options). 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 [[Page 38963]] 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 is reasonable to offer to Phlx members or member organizations that qualify for Section B, Customer Rebate Tiers 2 through 6 or qualify for the Monthly Firm Fee Cap an increased rebate of $0.12 per contract for all SPY Complex PIXL Orders greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of SPY Complex PIXL Orders in a month. The proposed rebate increase will incentivize members and member organizations to transact a greater number of SPY Complex PIXL Orders will also incentivize members and member organizations to submit Customer order flow on Phlx. All members and member organizations are eligible for this increased rebate. The Exchange also believes that its proposal is equitable and not unfairly discriminatory because all members and member organizations are eligible for the proposed rebate increase, provided they met the requisite qualifications. Members and member organizations would be uniformly paid the increased rebate. The Exchange also believes that its proposal is reasonable to offer to Phlx members or member organizations that qualify for Section B, Customer Rebate Tiers 2 through 6 or qualify for the Monthly Firm Fee Cap an increased rebate of $0.12 per contract for all Complex PIXL Orders (excluding SPY Options) greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of SPY Complex PIXL Orders in a month. The proposed increased rebate will incentivize members and member organizations to transact a greater number of Complex PIXL Orders and will also incentivize members and member organizations to submit Customer order flow on Phlx. All members and member organizations are eligible for this rebate, which applies to all Complex PIXL Orders excluding SPY Options. This proposal is equitable and not unfairly discriminatory because all members and member organizations are eligible for the proposed increased rebate, provided that they meet the requisite qualifications. 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. The Exchange believes that increasing its rebates will promote inter-market competition by differentiating it from other options exchanges (e.g., MIAX) and making it a more attractive options trading venue. The Exchange also believes that its proposal does not impose an undue burden on intra-market competition to offer Phlx members and member organizations that qualify for Section B, Customer Rebate Tiers 2 through 6 or qualify for the Monthly Firm Fee Cap an increased rebate of $0.12 per contract for all SPY Complex PIXL Orders greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of SPY Complex PIXL Orders in a month. All members and member organizations are eligible for the proposed rebate increase, provided they met the requisite qualifications. Members and member organizations would be uniformly paid the increased rebate. For the same reasons, the Exchange does not believe that its proposal imposes an undue burden on intra-market competition to offer to Phlx members and member organizations that qualify for Section B, Customer Rebate Tiers 2 through 6 or qualify for the Monthly Firm Fee Cap an increased rebate of $0.12 per contract for all Complex PIXL Orders (excluding SPY Options) greater than 499 contracts, provided the member or member organization executes an average of 2,500 contracts per day of SPY Complex PIXL Orders in a month. 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.\13\ --------------------------------------------------------------------------- \13\ 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: [[Page 38964]] 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-2017-64 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-2017-64. 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-Phlx-2017-64 and should be submitted on or before September 6, 2017. --------------------------------------------------------------------------- \14\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\14\ Robert W. Errett, Deputy Secretary. [FR Doc. 2017-17278 Filed 8-15-17; 8:45 am] BILLING CODE 8011-01-P
![38962 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices
For the Commission, by the Division of II. Self-Regulatory Organization’s transact a greater number of SPY
Trading and Markets, pursuant to delegated Statement of the Purpose of, and Complex PIXL Orders while also
authority.21 Statutory Basis for, the Proposed Rule incentivizing members or member
Robert W. Errett, Change organizations to submit Customer order
Deputy Secretary. flow on Phlx.
In its filing with the Commission, the
[FR Doc. 2017–17273 Filed 8–15–17; 8:45 am]
Exchange included statements Second, the Exchange proposes to
BILLING CODE 8011–01–P concerning the purpose of and basis for increase the Complex PIXL (excluding
the proposed rule change and discussed SPY Options rebate it offers to Phlx
any comments it received on the members and member organizations that
SECURITIES AND EXCHANGE proposed rule change. The text of these qualify for Section B, Customer Rebate
COMMISSION statements may be examined at the Tiers 2 through 6 or qualify for the
[Release No. 34–81370; File No. SR–Phlx– places specified in Item IV below. The Monthly Firm Fee Cap. Presently, the
2017–64] Exchange has prepared summaries, set Exchange offers a rebate of $0.10 per
forth in sections A, B, and C below, of contract for all Complex PIXL Orders
Self-Regulatory Organizations; the most significant aspects of such (excluding SPY Options) greater than
NASDAQ PHLX LLC; Notice of Filing statements. 499 contracts, provided the member or
and Immediate Effectiveness of member organization executes an
Proposed Rule Change To Amend the A. Self-Regulatory Organization’s average of 2,500 contracts per day of
Exchange’s Pricing Schedule Statement of the Purpose of, and Complex SPY PIXL Orders in a month.
Statutory Basis for, the Proposed Rule The Exchange proposes to increase that
August 10, 2017. Change rebate to $0.12 per contract. In doing so,
Pursuant to Section 19(b)(1) of the the Exchange desires to incentivize
Securities Exchange Act of 1934 1. Purpose
members and member organizations to
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 The purpose of the proposed rule transact a greater number of Complex
notice is hereby given that on July 31, change is to amend the Exchange’s PIXL Orders while also incentivizing
2017 NASDAQ PHLX LLC (‘‘Phlx’’ or Pricing Schedule at Section I, entitled members and member organizations to
‘‘Exchange’’) filed with the Securities ‘‘Rebates and Fees for Adding and submit Customer order flow on Phlx to
and Exchange Commission (‘‘SEC’’ or Removing Liquidity in SPY’’ and obtain the $0.12 rebate on all Complex
‘‘Commission’’) the proposed rule specifically, the section that pertains to PIXL Orders (excluding SPY Options).
change as described in Items I, II, and PIXL Executions in Standard and Poor’s
III, below, which Items have been Depositary Receipts/SPDRs (‘‘SPY’’).4 2. Statutory Basis
prepared by the Exchange. The The Exchange also proposes to amend The Exchange believes that its
Commission is publishing this notice to PIXL Pricing in Section IV, Part A, proposal is consistent with Section 6(b)
solicit comments on the proposed rule entitled ‘‘PIXL Pricing’’ for all other of the Act,6 in general, and furthers the
change from interested persons. Multiply-Listed options symbols. objectives of Sections 6(b)(4) and 6(b)(5)
First, the Exchange proposes to of the Act,7 in particular, in that it
I. Self-Regulatory Organization’s increase the SPY Complex PIXL rebate
Statement of the Terms of Substance of provides for the equitable allocation of
it offers Phlx members or member reasonable dues, fees and other charges
the Proposed Rule Change organizations that qualify for Section B, among members and issuers and other
The Exchange proposes to amend the Customer Rebate Tiers 5 2 through 6 or persons using any facility, and is not
Exchange’s Pricing Schedule at Section qualify for the Monthly Firm Fee Cap. designed to permit unfair
I, entitled ‘‘Rebates and Fees for Adding Presently, the Exchange offers a rebate discrimination between customers,
and Removing Liquidity in SPY,’’ and of $0.10 per contract for all SPY issuers, brokers, or dealers.
Section IV, Part A entitled ‘‘PIXL Complex PIXL Orders greater than 499 The Commission and the courts have
Pricing’’ to amend pricing related to contracts, provided the member or repeatedly expressed their preference
PIXL 3 executions. member organization executes an for competition over regulatory
While these amendments are effective average of 2,500 contracts per day of intervention in determining prices,
upon filing, the Exchange has SPY Complex PIXL Orders in a month. products, and services in the securities
designated the proposed amendments to The Exchange proposes to increase that markets. In Regulation NMS, while
be operative on August 1, 2017. rebate to $0.12 per contract. In doing so, adopting a series of steps to improve the
The text of the proposed rule change the Exchange desires to incentivize current market model, the Commission
is available on the Exchange’s Web site members or member organizations to highlighted the importance of market
at http://nasdaqphlx.cchwallstreet. forces in determining prices and SRO
com/, at the principal office of the 4 Options overlying Standard and Poor’s
revenues and, also, recognized that
Exchange, and at the Commission’s Depositary Receipts/SPDRs (‘‘SPY’’) are based on
current regulation of the market system
Public Reference Room. the SPDR exchange-traded fund (‘‘ETF’’), which is
designed to track the performance of the S&P 500 ‘‘has been remarkably successful in
21 17
Index. promoting market competition in its
CFR 200.30–3(a)(12). 5 Section B of the Pricing Schedule contains
1 15 U.S.C. 78s(b)(1).
broader forms that are most important to
Customer Rebate Tiers which are calculated by
2 17 CFR 240.19b–4.
totaling Customer volume in Multiply Listed
investors and listed companies.’’ 8
3 PIXLTM is the Exchange’s price improvement Options (including SPY) that are electronically- Likewise, in NetCoalition v. Securities
and Exchange Commission 9
asabaliauskas on DSKBBXCHB2PROD with NOTICES
mechanism known as Price Improvement XL or delivered and executed, except volume associated
PIXL. A member or member organization may with electronic QCC Orders, as defined in Exchange (‘‘NetCoalition’’) the D.C. Circuit upheld
electronically submit for execution an order it Rule 1080(o). Rebates are paid on Customer Rebate
represents as agent on behalf of a public customer, Tiers according to certain categories. Members and 6 15
broker-dealer, or any other entity (‘‘PIXL Order’’) member organizations under Common Ownership U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(4) and (5).
against principal interest or against any other order may aggregate their Customer volume for purposes
8 Securities Exchange Act Release No. 51808
(except as provided in Rule 1080(n)(i)(E)) it of calculating the Customer Rebate Tiers and
represents as agent (‘‘Initiating Order’’), provided it receiving rebates. Affiliated Entities may aggregate (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
submits the PIXL order for electronic execution into their Customer volume for purposes of calculating (‘‘Regulation NMS Adopting Release’’).
the PIXL Auction pursuant to Rule 1080. See the Customer Rebate Tiers and receiving rebates. 9 NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
Exchange Rule 1080(n). See Section B of the Pricing Schedule. 2010).
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![Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices 38963
the Commission’s use of a market-based Tiers 2 through 6 or qualify for the increased rebate of $0.12 per contract
approach in evaluating the fairness of Monthly Firm Fee Cap an increased for all SPY Complex PIXL Orders greater
market data fees against a challenge rebate of $0.12 per contract for all than 499 contracts, provided the
claiming that Congress mandated a cost- Complex PIXL Orders (excluding SPY member or member organization
based approach.10 As the court Options) greater than 499 contracts, executes an average of 2,500 contracts
emphasized, the Commission ‘‘intended provided the member or member per day of SPY Complex PIXL Orders in
in Regulation NMS that ‘market forces, organization executes an average of a month. All members and member
rather than regulatory requirements’ 2,500 contracts per day of SPY Complex organizations are eligible for the
play a role in determining the market PIXL Orders in a month. The proposed proposed rebate increase, provided they
data . . . to be made available to increased rebate will incentivize met the requisite qualifications.
investors and at what cost.’’ 11 members and member organizations to Members and member organizations
Further, ‘‘[n]o one disputes that transact a greater number of Complex would be uniformly paid the increased
competition for order flow is ‘fierce.’ PIXL Orders and will also incentivize rebate.
. . . As the SEC explained, ‘[i]n the U.S. members and member organizations to
national market system, buyers and submit Customer order flow on Phlx. For the same reasons, the Exchange
sellers of securities, and the broker- All members and member organizations does not believe that its proposal
dealers that act as their order-routing are eligible for this rebate, which imposes an undue burden on intra-
agents, have a wide range of choices of applies to all Complex PIXL Orders market competition to offer to Phlx
where to route orders for execution’; excluding SPY Options. members and member organizations that
[and] ‘no exchange can afford to take its This proposal is equitable and not qualify for Section B, Customer Rebate
market share percentages for granted’ unfairly discriminatory because all Tiers 2 through 6 or qualify for the
because ‘no exchange possesses a members and member organizations are Monthly Firm Fee Cap an increased
monopoly, regulatory or otherwise, in eligible for the proposed increased rebate of $0.12 per contract for all
the execution of order flow from broker rebate, provided that they meet the Complex PIXL Orders (excluding SPY
dealers’. . . .’’ 12 Although the court requisite qualifications. Options) greater than 499 contracts,
and the SEC were discussing the cash provided the member or member
B. Self-Regulatory Organization’s organization executes an average of
equities markets, the Exchange believes
Statement on Burden on Competition 2,500 contracts per day of SPY Complex
that these views apply with equal force
to the options markets. The Exchange does not believe that PIXL Orders in a month.
The Exchange believes that its the proposed rule change will impose
proposal is reasonable to offer to Phlx any burden on competition not C. Self-Regulatory Organization’s
members or member organizations that necessary or appropriate in furtherance Statement on Comments on the
qualify for Section B, Customer Rebate of the purposes of the Act. In terms of Proposed Rule Change Received From
Tiers 2 through 6 or qualify for the inter-market competition, the Exchange Members, Participants, or Others
Monthly Firm Fee Cap an increased notes that it operates in a highly
No written comments were either
rebate of $0.12 per contract for all SPY competitive market in which market
participants can readily favor competing solicited or received.
Complex PIXL Orders greater than 499
contracts, provided the member or venues if they deem fee levels at a III. Date of Effectiveness of the
member organization executes an particular venue to be excessive, or Proposed Rule Change and Timing for
average of 2,500 contracts per day of rebate opportunities available at other Commission Action
SPY Complex PIXL Orders in a month. venues to be more favorable. In such an
The proposed rebate increase will environment, the Exchange must The foregoing rule change has become
incentivize members and member continually adjust its fees to remain effective pursuant to Section
organizations to transact a greater competitive with other exchanges and 19(b)(3)(A)(ii) of the Act.13
number of SPY Complex PIXL Orders with alternative trading systems that At any time within 60 days of the
will also incentivize members and have been exempted from compliance filing of the proposed rule change, the
member organizations to submit with the statutory standards applicable Commission summarily may
Customer order flow on Phlx. All to exchanges. Because competitors are temporarily suspend such rule change if
members and member organizations are free to modify their own fees in it appears to the Commission that such
eligible for this increased rebate. response, and because market action is: (i) Necessary or appropriate in
The Exchange also believes that its participants may readily adjust their the public interest; (ii) for the protection
proposal is equitable and not unfairly order routing practices, the Exchange of investors; or (iii) otherwise in
discriminatory because all members and believes that the degree to which fee furtherance of the purposes of the Act.
member organizations are eligible for changes in this market may impose any If the Commission takes such action, the
the proposed rebate increase, provided burden on competition is extremely Commission shall institute proceedings
they met the requisite qualifications. limited. to determine whether the proposed rule
Members and member organizations The Exchange believes that increasing
should be approved or disapproved.
would be uniformly paid the increased its rebates will promote inter-market
rebate. competition by differentiating it from IV. Solicitation of Comments
The Exchange also believes that its other options exchanges (e.g., MIAX)
proposal is reasonable to offer to Phlx Interested persons are invited to
asabaliauskas on DSKBBXCHB2PROD with NOTICES
and making it a more attractive options
members or member organizations that trading venue. submit written data, views, and
qualify for Section B, Customer Rebate The Exchange also believes that its arguments concerning the foregoing,
proposal does not impose an undue including whether the proposed rule
10 See NetCoalition, at 534–535. burden on intra-market competition to change is consistent with the Act.
11 Id. at 537. offer Phlx members and member Comments may be submitted by any of
12 Id. at 539 (quoting Securities Exchange Act
organizations that qualify for Section B, the following methods:
Release No. 59039 (December 2, 2008), 73 FR
74770, 74782–83 (December 9, 2008) (SR– Customer Rebate Tiers 2 through 6 or
NYSEArca–2006–21)). qualify for the Monthly Firm Fee Cap an 13 15 U.S.C. 78s(b)(3)(A)(ii).
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![38964 Federal Register / Vol. 82, No. 157 / Wednesday, August 16, 2017 / Notices
Electronic Comments SECURITIES AND EXCHANGE any comments it received on the
COMMISSION proposed rule change. The text of these
• Use the Commission’s Internet statements may be examined at the
comment form (http://www.sec.gov/ [Release No. 34–81372; File No. SR–MIAX–
places specified in Item IV below. The
rules/sro.shtml); or 2017–40]
Exchange has prepared summaries, set
• Send an email to rule-comments@ Self-Regulatory Organizations; Miami forth in sections A, B, and C below, of
sec.gov. Please include File Number SR– International Securities Exchange LLC; the most significant aspects of such
Phlx–2017–64 on the subject line. Notice of Filing and Immediate statements.
Effectiveness of a Proposed Rule A. Self-Regulatory Organization’s
Paper Comments
Change To Amend Its Fee Schedule in Statement of the Purpose of, and
• Send paper comments in triplicate Connection With the Adoption of Statutory Basis for, the Proposed Rule
to Brent J. Fields, Secretary, Securities Certain New Complex Order Types Change
and Exchange Commission, 100 F Street August 10, 2017. 1. Purpose
NE., Washington, DC 20549–1090. Pursuant to the provisions of Section The Exchange proposes to amend its
All submissions should refer to File 19(b)(1) of the Securities Exchange Act Fee Schedule to adopt transaction fees
Number SR–Phlx–2017–64. This file of 1934 (‘‘Act’’),1 and Rule 19b–4 and rebates for certain new complex
number should be included on the thereunder,2 notice is hereby given that order types that have become available
subject line if email is used. To help the on August 7, 2017, Miami International for trading on the Exchange, as
Commission process and review your Securities Exchange LLC (‘‘MIAX described below. The Exchange also
Options’’ or ‘‘Exchange’’) filed with the proposes to clarify an existing
comments more efficiently, please use
Securities and Exchange Commission transaction fee that applies to an
only one method. The Commission will
(‘‘Commission’’) a proposed rule change existing order type, as well as make a
post all comments on the Commission’s as described in Items I, II, and III below,
Internet Web site (http://www.sec.gov/ number of technical corrections to the
which Items have been prepared by the Fee Schedule.
rules/sro.shtml). Exchange. The Commission is The Exchange began trading complex
Copies of the submission, all publishing this notice to solicit orders 3 in October, 2016.4 As part of its
subsequent amendments, all written comments on the proposed rule change effort to continue to build out its
statements with respect to the proposed from interested persons. complex order market segment, the
rule change that are filed with the I. Self-Regulatory Organization’s Exchange recently adopted rules to
Commission, and all written Statement of the Terms of Substance of establish the following three new types
communications relating to the the Proposed Rule Change of complex orders as well as adopted
proposed rule change between the new provisions that relate to the
Commission and any person, other than The Exchange is filing a proposal to processing of such complex order types:
those that may be withheld from the amend the MIAX Options Fee Schedule (i) Complex PRIME (‘‘cPRIME’’) Orders,
(the ‘‘Fee Schedule’’) to adopt (ii) Complex Qualified Contingent Cross
public in accordance with the
transaction fees and rebates for certain (‘‘cQCC’’) Orders, and (iii) Complex
provisions of 5 U.S.C. 552, will be
new complex order types that have Customer Cross (‘‘cC2C’’) Orders.5 A
available for Web site viewing and become available for trading on the
printing in the Commission’s Public cPRIME Order is a complex order that
Exchange, as described below. The is submitted for participation in a
Reference Room, 100 F Street NE., Exchange also proposes to clarify an cPRIME Auction. A cQCC Order is
Washington, DC 20549, on official existing transaction fee that applies to comprised of an originating complex
business days between the hours of an existing order type, as well as make order to buy or sell where each leg is at
10:00 a.m. and 3:00 p.m. Copies of the a number of technical corrections to its
filing also will be available for Fee Schedule. 3 A ‘‘complex order’’ is any order involving the
inspection and copying at the principal The Exchange initially filed the concurrent purchase and/or sale of two or more
office of the Exchange. All comments proposal on July 27, 2017 (SR–MIAX– different options in the same underlying security
(the ‘‘legs’’ or ‘‘components’’ of the complex order),
received will be posted without change; 2017–37). That filing was withdrawn for the same account, in a ratio that is equal to or
the Commission does not edit personal and replaced with the current filing greater than one-to-three (.333) and less than or
identifying information from (SR–MIAX–2017–40). equal to three-to-one (3.00) and for the purposes of
. [sic] executing a particular investment strategy. Mini-
submissions. You should submit only options may only be part of a complex order that
information that you wish to make The text of the proposed rule change
includes other mini-options. Only those complex
available publicly. All submissions is available on the Exchange’s Web site orders in the classes designated by the Exchange
should refer to File Number SR–Phlx– at http://www.miaxoptions.com/rule- and communicated to Members via Regulatory
2017–64 and should be submitted on or filings, at MIAX’s principal office, and Circular with no more than the applicable number
at the Commission’s Public Reference of legs, as determined by the Exchange on a class-
before September 6, 2017. by-class basis and communicated to Members via
Room. Regulatory Circular, are eligible for processing. See
For the Commission, by the Division of Exchange Rule 518(a)(5).
Trading and Markets, pursuant to delegated II. Self-Regulatory Organization’s 4 For a complete description of the trading of
authority.14 Statement of the Purpose of, and complex orders on the Exchange, see Exchange Rule
Statutory Basis for, the Proposed Rule
asabaliauskas on DSKBBXCHB2PROD with NOTICES
518. See also, Securities Exchange Act Release No.
Robert W. Errett,
Change 79072 (October 7, 2016), 81 FR 71131 (October 14,
Deputy Secretary. 2016) (SR–MIAX–2016–26).
[FR Doc. 2017–17278 Filed 8–15–17; 8:45 am]
In its filing with the Commission, the 5 See Securities Exchange Act Release No. 81131
Exchange included statements (July 12, 2017), 82 FR 32900 (July 18, 2017) (SR–
BILLING CODE 8011–01–P MIAX–2017–19). (Order Granting Approval of a
concerning the purpose of and basis for
Proposed Rule Change to Amend MIAX Options
the proposed rule change and discussed Rules 515, Execution of Orders and Quotes; 515A,
MIAX Price Improvement Mechanism (‘‘PRIME’’)
1 15 U.S.C. 78s(b)(1). and PRIME Solicitation Mechanism; and 518,
14 17 CFR 200.30–3(a)(12). 2 17 CFR 240.19b–4. Complex Orders).
VerDate Sep<11>2014 18:33 Aug 15, 2017 Jkt 241001 PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 E:\FR\FM\16AUN1.SGM 16AUN1](https://thefederalregister.org/doc/82_FR_39119/page/3.svg)
Document Created: 2017-08-16 10:27:03
Document Modified: 2017-08-16 10:27:03
| 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 38962 |
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