82 FR 8238 - Self-Regulatory Organizations; C2 Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule To Amend the Fees Schedule

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 14 (January 24, 2017)

Page Range		8238-8241
FR Document		2017-01462

Federal Register, Volume 82 Issue 14 (Tuesday, January 24, 2017)

[Federal Register Volume 82, Number 14 (Tuesday, January 24, 2017)]
[Notices]
[Pages 8238-8241]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2017-01462]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79807; File No. SR-C2-2017-002]

Self-Regulatory Organizations; C2 Options Exchange, Incorporated;
Notice of Filing and Immediate Effectiveness of a Proposed Rule To
Amend the Fees Schedule

January 17, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 3, 2017, C2 Options Exchange, Incorporated (the
``Exchange'' or ``C2'') 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 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 its Fees Schedule. The text of the
proposed rule change is available on the Exchange's Web site (http://www.c2exchange.com/Legal/), at the Exchange's Office of the Secretary,
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 amend its Fees Schedule. The Exchange is
adding fees for functionality related to its PULSe workstation. The
Exchange is also making minor formatting updates to organize the
footnotes in PULSe workstation section of its Fees Schedule.\3\ The
fees herein will be effective on January 3, 2017.
---------------------------------------------------------------------------

\3\ The footnotes in the PULSe workstation section have been
changed from asterisks to numerical footnotes to account for the
increased volume of footnotes.
---------------------------------------------------------------------------

By way of background, the PULSe workstation is a front-end order
entry system designed for use with respect to orders that may be sent
to the trading systems of the Exchange. Exchange Trading Permit Holders
(``TPHs'') may also make workstations available to their customers,
which may include TPHs, non-broker dealer public customers and non-TPH
broker dealers.
Drop Copies
Financial Information eXchange (``FIX'') language-based
connectivity, upon request, provides customers (both TPH and non-TPH)
of TPHs that are brokers and PULSe users (``PULSe brokers'') with the
ability to receive ``drop-copy'' order fill messages from their PULSe
brokers. These fill messages allow customers to update positions, risk
calculations and streamline back-office functions.
The Exchange is proposing a monthly fee to be assessed on TPHs who
are either receiving or sending drop copies via a PULSe workstation.
This fee will allow for the recoupment of costs of maintaining and
supporting drop copy functionality. Whether the drop copy sender or
receiver is assessed the fee is dependent upon whether the customer
receiving the drop copies is a TPH or non-TPH.
If a customer receiving drop copies is a TPH, that TPH customer
(the receiving TPH) will be charged a fee of $1000 per month, per PULSe
broker from whom it receives drop copies via PULSe. For example, if TPH
customer A receives drop copies from each of PULSe broker A, PULSe
broker B, and PULSe broker C (all of which are TPHs), TPH A (the
receiving TPH) will be charged a fee of $3000 per month for receiving
drop copies via PULSe from PULSe brokers A, B and C (the sending TPHs).
If a customer receiving drop copies is a non-TPH, the PULSe broker
(the sending TPH) who sends drop copies via PULSe to that customer will
be charged a fee of $500 per month. If that PULSe broker sends drop
copies via PULSe to multiple non-TPH customers, the PULSe broker will
be charged the fee for each customer. For example, if PULSe broker A
sends drop copies via its PULSe workstation to each of non-TPH customer
A, non-TPH customer B and non-TPH customer C, PULSe broker A (the
sending TPH) will be charged a fee of $1500 per month for drop copies
it sends via PULSe to non-TPH customers A, B and C (the receiving non-
TPHs).
Non-PULSe-to-PULSe Routing
Upon request, the Exchange provides customers, both TPH and non-
TPH, of PULSe brokers with the ability to transmit orders
electronically to PULSe brokers' PULSe workstations using order
management systems other than PULSe (i.e., non-PULSe-to-PULSe).\4\
These customers utilize the existing infrastructure of such systems to
send orders to their PULSe brokers electronically.
---------------------------------------------------------------------------

\4\ Non-PULSe-to-PULSe routing is an ``add-on'' feature to drop
copy connectivity. If a TPH or non-TPH customer of a PULSe brokers
elects to send orders through its third-party order management
system to its broker's PULSe workstations, it must also elect to
have the drop copy connectivity.
---------------------------------------------------------------------------

The Exchange is proposing a monthly fee payable by TPH customers
who request non-PULSe-to-PULSe functionality. This fee will allow for
the recoupment of costs of maintaining and supporting non-PULSe-to-
PULSe routing functionality. A TPH customer sending orders
electronically to PULSe brokers through these non-PULSe systems will be
charged a fee of $500 a month per PULSe broker to which the customer
sends orders. For example, if TPH customer A transmits orders
electronically through a non-PULSe order management terminal to PULSe
workstations of each of PULSe broker A, PULSe broker B, and PULSe
broker C, TPH customer A (the sending TPH) will be charged a fee of
$1500 per month for the ability to send orders electronically to the
PULSe workstations of PULSe brokers A, B and C.\5\ The Exchange does
not assess any fee, to the PULSe broker or otherwise, for a non-TPH
customer electing to use non-PULSe-to-PULSe routing functionality.
---------------------------------------------------------------------------

\5\ In addition, the TPH customer would be charged $3,000/month
for receiving drop copies from the three PULSe brokers, as discussed
above.
---------------------------------------------------------------------------

FIX Integration Drop Copy Start-Up/Cancellation Fees
The Exchange is proposing fees for both the start-up and
cancellation of the FIX integration needed to send and

[[Page 8239]]

receive drop copies from PULSe workstations. The Exchange is proposing
a one-time fee of $500 to recoup the costs required to connect a new
drop copy customer to workstations of its PULSe broker(s) and add the
drop copy functionality for that customer. Additionally, the Exchange
is proposing a one-time fee of $500 for cancellation of the drop copy
functionality to recoup the costs required to disconnect the cancelling
drop copy customer from workstations of its PULSe broker(s) and remove
the drop copy functionality for that customer. In the case of both
start-up and cancellation, the fees are charged to the TPH who is
charged for the drop copy connectivity (in the case of a TPH customer,
the TPH customer that receives drop copies from PULSe broker; in the
case of a non-TPH customer, the PULSe broker that sends drop copies to
the non-TPH customer). If the TPH customer is charged these fees, each
fee is $500 for each PULSe broker to which the TPH customer requests to
start or cancel drop copy functionality, as applicable. If the PULSe
broker is charged these fees, each fee is $500 for each non-TPH
customer that requests to start or cancel drop copy functionality from
that PULSe broker.
Routing Intermediary Certification and Inactivity Fees
Routing intermediaries route orders entered into PULSe to away
markets and to route orders from non-TPH PULSe workstations to TPHs for
entry and execution on the Exchange. Routing intermediaries are
currently charged routing intermediary transactional fees for away
market routing from any PULSe workstation for which it serves as the
routing intermediary. The Exchange is proposing a $5000 one-time fee
for certification of a new PULSe routing intermediary. This fee will
allow for the recoupment of costs of adding connectivity for the new
routing intermediary, including connectivity to away-market routing
technology, and testing necessary to support the new order routing
features.
The Exchange is also proposing a routing intermediary inactivity
fee of up to $5000. The fees currently charged to routing
intermediaries allow for the recoupment of costs of developing,
maintaining, and supporting routing intermediary functionality,
including away-market routing technology. If the Exchange is unable to
collect sufficient fees in a year from a routing intermediary to cover
theses costs, the inactivity fee allows for sufficient recoupment of
these costs for that year. The fee will be charged to a routing
intermediary each calendar year in which the routing intermediary has
been charged Away-Market Routing Intermediary and Exchange Routing fees
in the aggregate of less than $5000. The inactivity fee will be reduced
by the amount of any of these fees charged to the routing intermediary
during a calendar year. For example, if a routing intermediary was
charged an aggregate of $4500 in Away-Market Routing Intermediary and
Exchange Routing fees in the calendar year 2017, that routing
intermediary would be assessed a $500 routing intermediary inactivity
fee. The routing intermediary inactivity fee may first be charged in
the calendar year following the year in which the routing intermediary
was charged the routing intermediary certification fee. A TPH that
withdraws as a routing intermediary will not be charged an inactivity
fee for the calendar year in which they withdrew.
OATS Reporting Fees
The Exchange is proposing a $250 per month Order Audit Trail System
(``OATS'') reporting fee. The fee will be charged to any PULSe customer
(TPH or non-TPH) who elects to receive daily transmission of OATS
reports for its orders submitted through PULSe. This fee will allow for
the recoupment of costs of developing, maintaining and supporting OATS
reporting functionality.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\6\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \7\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with
Section 6(b)(4) of the Act,\8\ which requires that Exchange rules
provide for the equitable allocation of reasonable dues, fees, and
other charges among its Trading Permit Holders and other persons using
its facilities.
---------------------------------------------------------------------------

\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
\8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

The Exchange believes that assessing a $1000 per month fee on a TPH
receiving drop copies from PULSe is reasonable because the Exchange
incurs costs to monitor, develop and implement upgrade, maintain and
customize PULSe to ensure the TPH customer receives timely and accurate
drop copies. The Exchange believes the fee is equitable and not
unfairly discriminatory because the monthly fee is assessed to any TPH
electing to receive drop copies from a PULSe broker. Use of the drop
copy functionality by a TPH customer is voluntary.
The Exchange believes that assessing a $500 per month fee on a TPH
sending drop copies from PULSe to a non-TPH customer is reasonable
because the Exchange incurs costs to monitor, develop and implement
upgrades, maintain and customize PULSe to ensure a non-TPH customer
receives timely and accurate drop copies. The Exchange believes the fee
is equitable and not unfairly discriminatory because the monthly fee is
assessed equally to any TPH sending drop copies to its non-TPH
customers. The Exchange believes that assessing a TPH sending drop
copies to a non-TPH a monthly fee of $500, as opposed to the $1000 per
month rate assessed to TPH customers receiving drop copies from PULSe,
is reasonable, equitable, and not unfairly discriminatory. Specially,
the lower rates are designed to encourage non-TPH market participants
to interact with the Exchange, which will accordingly attract more
volume and liquidity to the Exchange and benefit all Exchange
participants through increased opportunities to trade. Use of the drop
copy functionality by a non-TPH customer is voluntary.
The Exchange believes that assessing a $500 per month fee for a TPH
customer electing to use non-PULSe-to-PULSe routing functionality (in
addition to receiving drop copies) is reasonable because the Exchange
incurs costs to monitor, develop and implement upgrades, maintain and
customize PULSe to ensure a reliable connection between a TPH customer
and its PULSe broker through which the customer's orders reach the
PULSe broker in a timely and accurate manner. The Exchange believes the
fee is equitable and not unfairly discriminatory because the monthly
fee is assessed equally to any TPH electing to use the non-PULSe-to-
PULSe routing functionality. The

[[Page 8240]]

Exchange does not assess any fee, to the PULSe broker or otherwise, for
a non-TPH customer electing to use non-PULSe-to-PULSe routing
functionality. The Exchange believes not assessing a fee for a non-TPH
customer electing to use non-PULSe-to-PULSe routing functionality is
reasonable, equitable, and not unfairly discriminatory in that it is
designed to encourage non-TPH market participants to interact with the
Exchange, which will accordingly attract more volume and liquidity to
the Exchange and benefit all Exchange participants through increased
opportunities to trade. Use of non-PULSe-to-PULSe routing functionality
is voluntary.
The Exchange believes that assessing a TPH sending drop copies to a
non-TPH a monthly $500, as opposed to the $1,000 per month rate
assessed to TPH customers receiving drop copies from PULSe, is
reasonable, equitable, and not unfairly discriminatory. The lower rates
are designed to encourage non-TPH market participants to interact with
the Exchange, which will accordingly attract more volume and liquidity
to the Exchange and benefit all Exchange participants through increased
opportunities to trade.
The Exchange believes that assessing a $500 one-time fee for FIX
integration necessary to receive or send drop copies from PULSe is
reasonable because the Exchange incurs costs in the setup of a new FIX
connection to allow the receiving and sending of drop copies via PULSe.
The Exchange believes the fee is equitable and not unfairly
discriminatory as it is assessed equally to any TPH electing to receive
drop copies from PULSe brokers or to any TPH electing to send drop
copies to a non-TPH customer.
The Exchange believes that assessing a $500 one-time fee for the
cancellation of a FIX connection necessary to receive or send drop
copies from PULSe is reasonable because the Exchange incurs costs in
the shutting down of a FIX connection. The Exchange believes the fee is
equitable and not unfairly discriminatory as it is assessed equally to
any TPH electing to cancel a FIX connection to a PULSe broker or to a
PULSe broker electing to cancel a connection to a non-TPH customer.
The Exchange believes that assessing a $5000 one-time fee for the
certification of a new PULSe routing intermediary is reasonable because
the Exchange incurs costs to develop connectivity for the routing
intermediary and test the routing functionality to Exchange and away
marketplaces. The Exchange believes the fee is equitable and not
unfairly discriminatory as it is assessed to every TPH who elects to
become a routing intermediary on PULSe. Becoming a routing intermediary
is voluntary.
The Exchange believes that assessing a routing intermediary
inactivity fee of up to $5000 in years in which a routing intermediary
pays less than that amount in fees is reasonable because the Exchange
incurs costs to maintain, monitor, upgrade and test routing
intermediary connections. The fees are assessed to cover those Exchange
costs in the event the costs are not recovered via routing intermediary
transaction fees. The Exchange believes the fee is equitable and not
unfairly discriminatory as it will be assessed to any routing
intermediary and only to the extent the TPH's routing intermediary
transaction fees are less than $5000 in a calendar year.
The Exchange believes that assessing a $250 a month fee for the
daily transmission of OATS reports from PULSe is reasonable because the
Exchange incurs costs to monitor, develop and implement upgrades,
maintain and customize PULSe to allow sending and receiving of OATS
reports. The Exchange believes the fee is equitable and not unfairly
discriminatory as it is assessed to all customers electing to receive
daily OATS reports.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule changes will
impose any burdens on competition that are not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe that the proposed rule change will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the proposed PULSe-
related fees relate to optional reports and/or functionality and are
assessed equally on PULSe users or TPH electing to use the
functionality and/or receive the reports. The Exchange does not believe
that the proposed change will cause any unnecessary burden on
intermarket competition because the proposed relate to use of an
Exchange-provided order entry system. To the extent that any proposed
change makes the Exchange a more attractive marketplace for market
participants at other exchanges, such market participants are welcome
to become Exchange market participants.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

The Exchange neither solicited nor received comments on the
proposed rule change.

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 \9\ and paragraph (f) of Rule 19b-4 \10\
thereunder. 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. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
---------------------------------------------------------------------------

\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 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 Comments

Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-C2-2017-002 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-C2-2017-002. 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

[[Page 8241]]

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-C2-2017-002 and should be submitted on or before
February 14, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-01462 Filed 1-23-17; 8:45 am]
BILLING CODE 8011-01-P

8238 Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices

For the Commission, by the Division of A. Self-Regulatory Organization’s via PULSe to that customer will be
Trading and Markets, pursuant to delegated Statement of the Purpose of, and charged a fee of $500 per month. If that
authority.37 Statutory Basis for, the Proposed Rule PULSe broker sends drop copies via
Eduardo A. Aleman, Change PULSe to multiple non-TPH customers,
Assistant Secretary. the PULSe broker will be charged the
1. Purpose
[FR Doc. 2017–01467 Filed 1–23–17; 8:45 am] fee for each customer. For example, if
BILLING CODE 8011–01–P
The Exchange proposes to amend its PULSe broker A sends drop copies via
Fees Schedule. The Exchange is adding its PULSe workstation to each of non-
fees for functionality related to its TPH customer A, non-TPH customer B
SECURITIES AND EXCHANGE PULSe workstation. The Exchange is and non-TPH customer C, PULSe broker
COMMISSION also making minor formatting updates to A (the sending TPH) will be charged a
organize the footnotes in PULSe fee of $1500 per month for drop copies
[Release No. 34–79807; File No. SR–C2– workstation section of its Fees
2017–002] it sends via PULSe to non-TPH
Schedule.3 The fees herein will be customers A, B and C (the receiving
Self-Regulatory Organizations; C2 effective on January 3, 2017. non-TPHs).
By way of background, the PULSe
Options Exchange, Incorporated; Non-PULSe-to-PULSe Routing
workstation is a front-end order entry
Notice of Filing and Immediate
system designed for use with respect to Upon request, the Exchange provides
Effectiveness of a Proposed Rule To
orders that may be sent to the trading customers, both TPH and non-TPH, of
Amend the Fees Schedule
systems of the Exchange. Exchange PULSe brokers with the ability to
January 17, 2017. Trading Permit Holders (‘‘TPHs’’) may transmit orders electronically to PULSe
Pursuant to Section 19(b)(1) of the also make workstations available to brokers’ PULSe workstations using
Securities Exchange Act of 1934 (the their customers, which may include order management systems other than
‘‘Act’’),1 and Rule 19b–4 thereunder,2 TPHs, non-broker dealer public PULSe (i.e., non-PULSe-to-PULSe).4
notice is hereby given that on January 3, customers and non-TPH broker dealers. These customers utilize the existing
2017, C2 Options Exchange, Drop Copies infrastructure of such systems to send
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) orders to their PULSe brokers
filed with the Securities and Exchange Financial Information eXchange
(‘‘FIX’’) language-based connectivity, electronically.
Commission (the ‘‘Commission’’) the The Exchange is proposing a monthly
proposed rule change as described in upon request, provides customers (both
TPH and non-TPH) of TPHs that are fee payable by TPH customers who
Items I, II, and III below, which Items request non-PULSe-to-PULSe
have been prepared by the Exchange. brokers and PULSe users (‘‘PULSe
brokers’’) with the ability to receive functionality. This fee will allow for the
The Commission is publishing this recoupment of costs of maintaining and
‘‘drop-copy’’ order fill messages from
notice to solicit comments on the supporting non-PULSe-to-PULSe
their PULSe brokers. These fill messages
proposed rule change from interested routing functionality. A TPH customer
allow customers to update positions,
persons. sending orders electronically to PULSe
risk calculations and streamline back-
I. Self-Regulatory Organization’s office functions. brokers through these non-PULSe
Statement of the Terms of Substance of The Exchange is proposing a monthly systems will be charged a fee of $500 a
the Proposed Rule Change fee to be assessed on TPHs who are month per PULSe broker to which the
either receiving or sending drop copies customer sends orders. For example, if
The Exchange proposes to amend its TPH customer A transmits orders
via a PULSe workstation. This fee will
Fees Schedule. The text of the proposed electronically through a non-PULSe
allow for the recoupment of costs of
rule change is available on the order management terminal to PULSe
maintaining and supporting drop copy
Exchange’s Web site (http:// workstations of each of PULSe broker A,
functionality. Whether the drop copy
www.c2exchange.com/Legal/), at the PULSe broker B, and PULSe broker C,
sender or receiver is assessed the fee is
Exchange’s Office of the Secretary, and TPH customer A (the sending TPH) will
dependent upon whether the customer
at the Commission’s Public Reference be charged a fee of $1500 per month for
receiving the drop copies is a TPH or
Room. the ability to send orders electronically
non-TPH.
II. Self-Regulatory Organization’s If a customer receiving drop copies is to the PULSe workstations of PULSe
Statement of the Purpose of, and a TPH, that TPH customer (the receiving brokers A, B and C.5 The Exchange does
Statutory Basis for, the Proposed Rule TPH) will be charged a fee of $1000 per not assess any fee, to the PULSe broker
Change month, per PULSe broker from whom it or otherwise, for a non-TPH customer
receives drop copies via PULSe. For electing to use non-PULSe-to-PULSe
In its filing with the Commission, the
example, if TPH customer A receives routing functionality.
Exchange included statements
drop copies from each of PULSe broker
concerning the purpose of and basis for FIX Integration Drop Copy Start-Up/
A, PULSe broker B, and PULSe broker
the proposed rule change and discussed Cancellation Fees
C (all of which are TPHs), TPH A (the
any comments it received on the The Exchange is proposing fees for
receiving TPH) will be charged a fee of
proposed rule change. The text of these both the start-up and cancellation of the
$3000 per month for receiving drop
statements may be examined at the FIX integration needed to send and
copies via PULSe from PULSe brokers
places specified in Item IV below. The
A, B and C (the sending TPHs).
sradovich on DSK3GMQ082PROD with NOTICES

Exchange has prepared summaries, set If a customer receiving drop copies is 4 Non-PULSe-to-PULSe routing is an ‘‘add-on’’

forth in sections A, B, and C below, of a non-TPH, the PULSe broker (the feature to drop copy connectivity. If a TPH or non-
the most significant aspects of such TPH customer of a PULSe brokers elects to send
sending TPH) who sends drop copies orders through its third-party order management
statements. system to its broker’s PULSe workstations, it must
3 The footnotes in the PULSe workstation section also elect to have the drop copy connectivity.
37 17 CFR 200.30–3(a)(12). have been changed from asterisks to numerical 5 In addition, the TPH customer would be charged
1 15 U.S.C. 78s(b)(1).
footnotes to account for the increased volume of $3,000/month for receiving drop copies from the
2 17 CFR 240.19b–4. footnotes. three PULSe brokers, as discussed above.

VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 E:\FR\FM\24JAN1.SGM 24JAN1

Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / Notices 8241

communications relating to the change was published for comment in Broker is not permitted to execute an
proposed rule change between the the Federal Register on August 22, order in the trading crowd unless one of
Commission and any person, other than 2016.3 On October 3, 2016, the three exceptions applies.9 The
those that may be withheld from the Commission extended the time period exceptions to the mandatory use of the
public in accordance with the within which to approve the proposed FBMS 10 are set forth in Phlx Rule
provisions of 5 U.S.C. 552, will be rule change, disapprove the proposed 1000(f)(iii). These exceptions allow a
available for Web site viewing and rule change, or institute proceedings to Floor Broker to execute a transaction in
printing in the Commission’s Public determine whether to approve or the trading crowd (rather than through
Reference Room, 100 F Street NE., disapprove the proposed rule change to the FBMS) if: (i) There is a problem with
Washington, DC 20549 on official November 20, 2016.4 On November 17, Exchange’s systems; (ii) the Floor Broker
business days between the hours of 2016, the Commission instituted is executing the trade pursuant to Phlx
10:00 a.m. and 3:00 p.m. Copies of the proceedings under Section 19(b)(2)(B) of Rule 1059 (‘‘Accommodation
filing also will be available for the Act to determine whether to approve Transactions’’) or Phlx Rule 1079 (‘‘Flex
inspection and copying at the principal or disapprove the proposed rule Index, Equity and Currency Options’’);
office of the Exchange. All comments change.5 On December 9, 2016, the or (iii) the transaction involves a multi-
received will be posted without change; Exchange filed Amendment No. 1 to the leg order with more than 15 legs.11
the Commission does not edit personal proposed rule change.6 The Commission
B. Split-Price Order Exception Proposal
identifying information from received no comments on the proposed
submissions. You should submit only rule change. This order provides notice Phlx Rule 1014(g)(i)(B) provides a
information that you wish to make of filing of Amendment No. 1 and priority rule regarding open outcry split-
available publicly. All submissions approves the proposal, as modified by price transactions in equity options and
should refer to File Number SR–C2– Amendment No. 1, on an accelerated options overlying ETFs to permit a
2017–002 and should be submitted on basis. member who is responding to an order
or before February 14, 2017. for at least 100 contracts who buys
II. Description of the Proposal 7 (sells) at least 50 contracts at a
For the Commission, by the Division of
Trading and Markets, pursuant to delegated A. Background particular price to have priority over all
authority.11 others in purchasing (selling) up to an
Currently, Phlx Rule 1000(f) requires
Eduardo A. Aleman, equivalent number of contracts of the
that all Exchange options transactions
same order at the next lower (higher)
Assistant Secretary. be executed in one of the following
price without being required to yield to
[FR Doc. 2017–01462 Filed 1–23–17; 8:45 am] three ways: ‘‘(i) [a]utomatically by the
existing customer interest in the limit
BILLING CODE 8011–01–P Exchange Trading System pursuant to
order book.12 Absent Phlx Rule
Rule 1080 and other applicable options
1014(g)(i)(B), such orders would be
rules; (ii) by and among members in the
required to yield priority. The Exchange
SECURITIES AND EXCHANGE Exchange’s options trading crowd none
states that ‘‘[t]he purpose behind the
COMMISSION of whom is a Floor Broker; or (iii)
split-price priority exception was ‘to
through the Options [FBMS] for trades
[Release No. 34–79805; File No. SR–Phlx– bring about the execution of large
2016–82] involving at least one Floor Broker.’’ 8
orders, which by virtue of their size and
Although a Floor Broker may represent
the need to execute them at multiple
Self-Regulatory Organizations; orders in the trading crowd, a Floor
NASDAQ PHLX LLC; Notice of Filing of 9 See Phlx Rule 1000(f)(iii).
3 See Securities Exchange Act Release No. 78593
Amendment No. 1, and Order Granting 10 The original FBMS (‘‘FBMS 1’’) began operating
(August 16, 2016), 81 FR 56724 (‘‘Notice’’).
Accelerated Approval of a Proposed 4 See Securities Exchange Act Release No. 79023
in 2005. The Exchange retired FBMS 1 on March
Rule Change, as Modified by 31, 2016 after operating it concurrently with the
(October 3, 2016), 81 FR 69877 (October 7, 2016). Exchange’s enhanced FBMS (‘‘FBMS 2’’), which
Amendment No. 1, To Adopt a New 5 See Securities Exchange Act Release No. 79345
was made available on March 7, 2014. As of April
Exception in Phlx Rule 1000(f) for Sub- (November 17, 2016), 81 FR 84629 (November 23, 1, 2016, the Exchange only operated FBMS 2. See
MPV Split-Price Orders 2016). Notice, supra note 3, at 56725. On November 3,
6 Amendment No. 1 updated the original filing to:
2016, the Exchange implemented FBMS 3 and
January 17, 2017. (1) Reflect the implementation of the Exchange’s retired FBMS 2. According to the Exchange, FBMS
new Floor Broker Management System (‘‘FBMS 3’’) 3 is currently the sole operating version of FBMS
I. Introduction on November 3, 2016; (2) modify proposed Rule on the Exchange. See Amendment No. 1, supra note
1000(f)(iii)(D) to provide additional detail regarding 6, at 3 and 8–10. References throughout this Order
On August 3, 2016, NASDAQ PHLX how certain split-price orders will be rounded; and to ‘‘FBMS’’ refer to FBMS 3.
LLC (the ‘‘Exchange’’ or ‘‘Phlx’’) filed (3) offer three examples to illustrate how split-price 11 See Notice, supra note 3, at 56726. See also

with the Securities and Exchange orders will be handled pursuant to the proposed Phlx Rule 1000(f)(iii)(A)–(C). According to the
exception. Amendment No. 1 replaced the original Exchange, each time a Floor Broker uses one of the
Commission (‘‘Commission’’), pursuant proposed rule change in its entirety. To promote current exceptions to Phlx Rule 1000(f)(iii), the
to Section 19(b)(1) of the Securities transparency of its proposed amendment, when Floor Broker is required by Phlx Rule 1063(e)(ii), to
Exchange Act of 1934 (‘‘Act’’) 1 and Rule Phlx filed Amendment No. 1 with the Commission, record the information required by Phlx Rule
19b–4 thereunder,2 a proposed rule it also submitted Amendment No. 1 as a comment 1063(e)(i) on paper trade tickets. The Exchange
letter to the file, which the Commission posted on further represents that a Floor Broker may only
change to provide an additional its Web site and placed in the public comment file represent an order for execution that has been
exception to the mandatory use of the for SR–Phlx–2016–82 (available at https:// timestamped with the time of entry on the trading
Exchange’s Floor Broker Management www.sec.gov/comments/sr=phlx-2016-82/ floor. In addition, according to the Exchange, once
phlx201682-1.pdf https://www.sec.gov/comments/ an execution occurs, the trade ticket must be
System (‘‘FBMS’’) pursuant to Rule sr-cboe-2016-071/cboe2016071.shtml). The stamped with the time of execution of such order.
sradovich on DSK3GMQ082PROD with NOTICES

1000(f)(iii) to permit Floor Brokers to Exchange also posted a copy of its Amendment No. See Notice, supra note 3, at 56726 and Amendment
execute certain sub-minimum price 1 on its Web site (http:// No. 1, supra note 6, at 11.
variation (‘‘sub-MPV’’) split-price orders nasdaqphlx.cchwallstreet.com/NASDAQPHLX/pdf/ 12 See Notice, supra note 3, at 56726 (citing
phlx-filings/2016/SR-Phlx-2016-82_ Securities Exchange Act Release No. 51820 (June
in the trading crowd. The proposed rule Amendment_1.pdf) when it filed Amendment No.1 10, 2005), 70 FR 35759 (June 21, 2005) (SR–Phlx–
with the Commission. 2005–28)) (approving pilot). See also Securities
11 17 CFR 200.30–3(a)(12). 7 A more detailed description of the proposal
Exchange Act Release No. 55993 (June 29, 2007), 72
1 15 U.S.C. 78s(b)(1). appears in the Notice and in Amendment No. 1. FR 37301 (July 9, 2007) (SR–Phlx–2007–44)
2 17 CFR 240.19b–4. 8 See Phlx Rule 1000(f). (permanent approval)).

VerDate Sep<11>2014 19:36 Jan 23, 2017 Jkt 241001 PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 E:\FR\FM\24JAN1.SGM 24JAN1

Document Created: 2018-02-01 15:12:40
Document Modified: 2018-02-01 15:12:40

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 8238