Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NASDAQ OMX BX, Inc. To Amend the BOX Fee Schedule, 46858-46860 [2011-19563]
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46858
Federal Register / Vol. 76, No. 149 / Wednesday, August 3, 2011 / Notices
1. The Postal Service shall file the
applicable administrative record
regarding this appeal no later than
August 10, 2011.
2. Any responsive pleading by the
Postal Service to this notice is due no
later than August 10, 2011.
3. The procedural schedule listed
below is hereby adopted.
4. Pursuant to 39 U.S.C. 505,
Cassandra L. Hicks is designated officer
of the Commission (Public
Representative) to represent the
interests of the general public.
5. The Secretary shall arrange for
publication of this notice and order in
the Federal Register.
PROCEDURAL SCHEDULE
July 26, 2011 .............
August 10, 2011 ........
August 10, 2011 ........
August 22, 2011 ........
August 30, 2011 ........
September 19, 2011 ..
October 4, 2011 ........
October 11, 2011 ......
November 16, 2011 ...
Filing of Appeal.
Deadline for the Postal Service to file the applicable administrative record in this appeal.
Deadline for the Postal Service to file any responsive pleading.
Deadline for notices to intervene (see 39 CFR 3001.111(b)).
Deadline for Petitioners’ Form 61 or initial brief in support of petition (see 39 CFR 3001.115(a) and (b)).
Deadline for answering brief in support of the Postal Service (see 39 CFR 3001.115(c)).
Deadline for reply briefs in response to answering briefs (see 39 CFR 3001.115(d)).
Deadline for motions by any party requesting oral argument; the Commission will schedule oral argument only when it is
a necessary addition to the written filings (see 39 CFR 3001.116).
Expiration of the Commission’s 120-day decisional schedule (see 39 U.S.C. 404(d)(5)).
By the Commission.
Shoshana M. Grove,
Secretary.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
[FR Doc. 2011–19576 Filed 8–2–11; 8:45 am]
The Exchange proposes to amend the
Fee Schedule of the Boston Options
Exchange Group, LLC (‘‘BOX’’). While
changes to the BOX Fee Schedule
pursuant to this proposal will be
effective upon filing, the changes will
become operative on August 1, 2011.
The text of the proposed rule change is
available from the principal office of the
Exchange, at the Commission’s Public
Reference Room, on the Exchange’s
Internet Web site at https://
nasdaqomxbx.cchwallstreet.com/
NASDAQOMXBX/Filings and on the
Commission’s Web site at https://
www.sec.gov.
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64981; File No. SR–BX–
2011–046]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by NASDAQ
OMX BX, Inc. To Amend the BOX Fee
Schedule
srobinson on DSK4SPTVN1PROD with NOTICES
July 28, 2011.
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 15,
2011, NASDAQ OMX BX, Inc. (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Exchange filed the
proposed rule change pursuant to
Section 19(b)(3)(A)(ii) of the Act,3 and
Rule 19b–4(f)(2) thereunder,4 which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
16:24 Aug 02, 2011
In its filing with the Commission, the
self-regulatory organization 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 self-regulatory organization 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
Fees and Credits in Section 7
1 15
VerDate Mar<15>2010
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Currently, Section 7d of the BOX Fee
Schedule specifies a $0.30 credit and fee
for transactions in the BOX Price
Jkt 223001
Improvement Period (‘‘PIP’’). These
credits and fees apply equally to all
account types, whether Public
Customer, Broker Dealer or Market
Maker, and across options classes, both
those within the Penny Pilot program
and those not in the Penny Pilot
program (‘‘Non-Penny classes’’), and are
in addition to any applicable trading
fees, as described in Sections 1 through
3 of the BOX Fee Schedule.
The Exchange proposes to increase
the existing credits and fees within
Section 7d for PIP transactions in NonPenny classes, and in Penny Pilot
classes (other than QQQQ, SPY, and
IWM) where the trade price is equal to
or greater than $3.00, from $0.30 to
$0.75. Further, the Exchange proposes
to add corresponding provisions and
clarifying language to Section 7d of the
BOX Fee Schedule to specify that the
fee and credit for all PIP transactions
will remain $0.30: (1) In QQQQ, SPY,
and IWM; and (2) in all other Penny
Pilot Classes where the trade price is
less than $3.00.5
The proposed increase in credits and
fees for the specified PIP transactions is
designed to provide all BOX market
participants an additional incentive to
submit their customer orders to the PIP
and allow those orders the opportunity
to benefit from its potential price
improvement. BOX believes that the
change to PIP transaction fees and
credits are competitive, fair and
reasonable, and non-discriminatory in
that they apply to all categories of
participants and across all account
types. Additionally, BOX believes the
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Frm 00138
Fmt 4703
Sfmt 4703
5 See BOX Trading Rules Chapter V, Section 6(b).
For the QQQQs, SPR, and IWM, the minimum
trading increment for all options contracts will be
one cent, and that for all classes in the Penny Pilot
trading at less than $3.00 per option, the minimum
trading increment shall be one cent.
E:\FR\FM\03AUN1.SGM
03AUN1
Federal Register / Vol. 76, No. 149 / Wednesday, August 3, 2011 / Notices
srobinson on DSK4SPTVN1PROD with NOTICES
proposed change to the PIP fees and
credits is fair and reasonable as applied
only to the specified classes and
transactions because such options trade
at minimum increments of $.05 or $.10,
providing greater opportunity for market
participants to offer additional price
improvement. BOX believes that the
opportunity for additional price
improvement provided by these wider
spreads merits offering more
inducement for market participants to
increase the price improvement for
customer orders in these PIP
transactions.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with the
requirements of Section 6(b) of the Act,6
in general, and Section 6(b)(4) of the
Act,7 in particular, in that it provides for
the equitable allocation of reasonable
dues, fees, and other charges among its
members and other persons using its
facilities. The Exchange believes the
proposal is an equitable allocation of
reasonable fees and other charges among
BOX Options Participants. The
Exchange also believes that there is an
equitable allocation of reasonable
credits among BOX Options
Participants.
The Exchange believes that it is
equitable to provide a credit to any
Participant that removes liquidity
through the PIP on behalf of its
customer. The Exchange believes this
credit will attract additional order flow
to BOX and to the PIP in particular, to
the benefit of all market participants.
The Exchange believes that it is an
equitable allocation of the fees and
credits for PIP transactions because such
fees and credits apply uniformly to all
categories of participants and across all
account types in the PIP. As stated
above, the Exchange believes the
proposed change to the PIP fees and
credits is fair as applied only to the
specified classes and transactions
because such options trade at minimum
increments of $.05 or $.10, providing
greater opportunity for market
participants to offer price improvement.
The Exchange believes it is fair to offer
an additional incentive to market
participants to provide price
improvement in these PIP transactions.
These options classes trade at minimum
increments of $.05 or $.10, providing
greater opportunity for market
participants to offer price improvement.
BOX believes that the opportunity for
additional price improvement provided
by these wider spreads merits offering
6 15
7 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
VerDate Mar<15>2010
16:24 Aug 02, 2011
Jkt 223001
more inducement for market
participants to increase the price
improvement for customer orders in
these PIP transactions. The Exchange
believes that customer orders in these
PIP transactions will benefit from this
proposed change. All market
participants that trade within the PIP,
and all PIP transactions will continue to
be subject to the fees and credits in
Section 7 of the BOX Fee Schedule.
Further, the Exchange believes the
proposed fees and credits related to the
specified PIP transactions to be
reasonable. BOX operates within a
highly competitive market in which
market participants can readily direct
order flow to any of eight other
competing venues if they deem fee
levels at a particular venue to be
excessive. The changes to BOX credits
and fees proposed by this filing are
intended to attract order flow to BOX by
offering incentives to all market
participants to submit their orders to the
PIP for potential price improvement.
BOX notes that this proposed rule
change will increase both the fees and
credit for these PIP transactions. The
result is that BOX will collect a $0.75
fee from Participants that add liquidity
in Non-Penny classes and PIP
transactions in Penny classes, other than
QQQQ, SPY, and IWM, where the trade
price is equal to or greater than $3.00
and credit another Participant $0.75 for
removing liquidity in the same
transactions. Stated otherwise, the fees
collected will not necessarily result in
additional revenue to BOX, but will
simply allow BOX to provide the credit
incentive to Participants to attract
additional order flow to the PIP. BOX
believes it is appropriate to provide
incentives to market participants to use
PIP, resulting in potential benefit to
customers through potential price
improvement, and to all market
participants from greater liquidity.
In particular, the proposed change
will allow the fees charged on BOX to
remain competitive with other
exchanges as well as apply such fees in
a manner which is equitable among all
BOX Participants. The Exchange
believes that the PIP transaction fees
and credits it assesses are fair and
reasonable and must be competitive
with fees and credits in place on other
exchanges. Further, the Exchange
believes that this competitive
marketplace impacts the fees and credits
present on BOX today and influences
the proposal set forth above.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
PO 00000
Frm 00139
Fmt 4703
Sfmt 4703
46859
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has 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)(ii) of the Exchange Act 8 and
Rule 19b–4(f)(2) thereunder,9 because it
establishes or changes a due, fee, or
other charge applicable only to a
member.
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 the
action is necessary or appropriate in the
public interest, for the protection of
investors, or would otherwise further
the purposes of the Act.
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. In
addition, the Commission seeks
comment generally on (1) whether the
proposed increases to the fees and
credits for specified PIP transactions are
consistent with Section 6(b)(8) of the
Act, which requires that the rules of an
exchange not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act, and (2) whether the
proposed fees are equitable as that term
is used in Section 6(b)(4) of the Act, and
not unfairly discriminatory as that term
is used in Section 6(b)(5) of the Act. The
Commission notes that a commenter on
previous proposals by the Exchange
relating to these same fees and credits
argued that the Exchange’s fee structure
discriminates against PIP auction
responders in favor of PIP auction
initiators.10 According to this
commenter, the net cost to a responder
is much more than the net cost to a PIP
initiator because initiators may receive
8 15
U.S.C. 78s(b)(3)(A)(ii).
CFR 240.19b–4(f)(2).
10 See Letters to Elizabeth M. Murphy, Secretary,
Commission, from John C. Nagel, Managing Director
and General Counsel, Asset Management and
Markets, Citadel LLC, dated August 30, 2010 and
May 3, 2011.
9 17
E:\FR\FM\03AUN1.SGM
03AUN1
46860
Federal Register / Vol. 76, No. 149 / Wednesday, August 3, 2011 / Notices
a credit for removing liquidity when a
customer order is executed in the PIP,
but no such credit is available to
responders. As a result of these
comparatively higher fees, according to
this commenter, competitive responders
will be less likely to participate in the
PIP and will participate less
aggressively when they do participate,
thus burdening competition and
reducing the likelihood and size of price
improvement in the PIP. Do you agree
with this commenter? Please explain
why or why not.
Comments may be submitted by any
of the following methods:
srobinson on DSK4SPTVN1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BX–2011–046 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–BX–2011–046. This file
number should be included on the
subject line if e-mail 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 (https://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, NW.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such 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–BX–
VerDate Mar<15>2010
16:24 Aug 02, 2011
Jkt 223001
2011–046 and should be submitted on
or before August 24, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–19563 Filed 8–2–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64988; File No. SR–NYSE–
2011–36]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Proposed Rule Change
Amending the Definition of Approved
Person To Exclude Foreign Affiliates,
Creating a New Definition of ‘‘Foreign
Securities Affiliate,’’ Eliminating the
Application Process for Approved
Persons, and Making Related
Technical and Conforming Changes
July 29, 2011.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on July 15,
2011, New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) 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 substantially prepared by the
self-regulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
definition of approved person to
exclude foreign affiliates, create a new
definition of ‘‘foreign securities
affiliate,’’ eliminate the application
process for approved persons, and make
related technical and conforming
changes. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
11 17
CFR 200.30–3(a)(12).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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Frm 00140
Fmt 4703
Sfmt 4703
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
self-regulatory organization 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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
definition of approved person to
exclude foreign affiliates, create a new
definition of ‘‘foreign securities
affiliate,’’ eliminate the application
process for approved persons, and make
related technical and conforming
changes. Following approval of the
proposed rule change, the Exchange will
advise member organizations of the
implementation date of the rule change
via Information Memo.
Background
The current rules governing the
definition of and application process for
an approved person are NYSE Rules 2
and 304.4 If the definition requirements
under NYSE Rule 2 are met, then the
person or entity has to apply to the
Exchange for approval to register as an
approved person. This requirement is
intended to bring certain affiliates of
Exchange member organizations within
the Exchange’s jurisdiction and to
subject such affiliates’ activities to
Exchange rules to the extent their
activities are related to the activities of
the member organization.
NYSE Rule 2(c) defines the term
‘‘approved person’’ as ‘‘a person, other
than a member, principal executive or
employee of a member organization,
who controls a member organization or
is engaged in a securities or kindred
business that is controlled by or under
common control with a member or
member organization who has been
approved by the Exchange as an
approved person.’’ NYSE Rule 2(d)
further defines ‘‘person’’ to include not
only natural persons, but also
4 NYSE Amex LLC has filed a companion rule
filing to conform its Equities Rules to the changes
proposed in this filing. See SR–NYSEAmex–2011–
54.
E:\FR\FM\03AUN1.SGM
03AUN1
]]>Agencies
[Federal Register Volume 76, Number 149 (Wednesday, August 3, 2011)]
[Notices]
[Pages 46858-46860]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19563]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-64981; File No. SR-BX-2011-046]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by NASDAQ OMX BX, Inc. To Amend
the BOX Fee Schedule
July 28, 2011.
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 15, 2011, NASDAQ OMX BX, Inc. (the ``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the self-regulatory organization. The Exchange filed
the proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the
Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Fee Schedule of the Boston
Options Exchange Group, LLC (``BOX''). While changes to the BOX Fee
Schedule pursuant to this proposal will be effective upon filing, the
changes will become operative on August 1, 2011. The text of the
proposed rule change is available from the principal office of the
Exchange, at the Commission's Public Reference Room, on the Exchange's
Internet Web site at https://nasdaqomxbx.cchwallstreet.com/NASDAQOMXBX/Filings and on the Commission's Web site at https://www.sec.gov.
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 self-regulatory organization
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 self-regulatory organization
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
Fees and Credits in Section 7
Currently, Section 7d of the BOX Fee Schedule specifies a $0.30
credit and fee for transactions in the BOX Price Improvement Period
(``PIP''). These credits and fees apply equally to all account types,
whether Public Customer, Broker Dealer or Market Maker, and across
options classes, both those within the Penny Pilot program and those
not in the Penny Pilot program (``Non-Penny classes''), and are in
addition to any applicable trading fees, as described in Sections 1
through 3 of the BOX Fee Schedule.
The Exchange proposes to increase the existing credits and fees
within Section 7d for PIP transactions in Non-Penny classes, and in
Penny Pilot classes (other than QQQQ, SPY, and IWM) where the trade
price is equal to or greater than $3.00, from $0.30 to $0.75. Further,
the Exchange proposes to add corresponding provisions and clarifying
language to Section 7d of the BOX Fee Schedule to specify that the fee
and credit for all PIP transactions will remain $0.30: (1) In QQQQ,
SPY, and IWM; and (2) in all other Penny Pilot Classes where the trade
price is less than $3.00.\5\
---------------------------------------------------------------------------
\5\ See BOX Trading Rules Chapter V, Section 6(b). For the
QQQQs, SPR, and IWM, the minimum trading increment for all options
contracts will be one cent, and that for all classes in the Penny
Pilot trading at less than $3.00 per option, the minimum trading
increment shall be one cent.
---------------------------------------------------------------------------
The proposed increase in credits and fees for the specified PIP
transactions is designed to provide all BOX market participants an
additional incentive to submit their customer orders to the PIP and
allow those orders the opportunity to benefit from its potential price
improvement. BOX believes that the change to PIP transaction fees and
credits are competitive, fair and reasonable, and non-discriminatory in
that they apply to all categories of participants and across all
account types. Additionally, BOX believes the
[[Page 46859]]
proposed change to the PIP fees and credits is fair and reasonable as
applied only to the specified classes and transactions because such
options trade at minimum increments of $.05 or $.10, providing greater
opportunity for market participants to offer additional price
improvement. BOX believes that the opportunity for additional price
improvement provided by these wider spreads merits offering more
inducement for market participants to increase the price improvement
for customer orders in these PIP transactions.
2. Statutory Basis
The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\6\ in general, and Section
6(b)(4) of the Act,\7\ in particular, in that it provides for the
equitable allocation of reasonable dues, fees, and other charges among
its members and other persons using its facilities. The Exchange
believes the proposal is an equitable allocation of reasonable fees and
other charges among BOX Options Participants. The Exchange also
believes that there is an equitable allocation of reasonable credits
among BOX Options Participants.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
The Exchange believes that it is equitable to provide a credit to
any Participant that removes liquidity through the PIP on behalf of its
customer. The Exchange believes this credit will attract additional
order flow to BOX and to the PIP in particular, to the benefit of all
market participants. The Exchange believes that it is an equitable
allocation of the fees and credits for PIP transactions because such
fees and credits apply uniformly to all categories of participants and
across all account types in the PIP. As stated above, the Exchange
believes the proposed change to the PIP fees and credits is fair as
applied only to the specified classes and transactions because such
options trade at minimum increments of $.05 or $.10, providing greater
opportunity for market participants to offer price improvement. The
Exchange believes it is fair to offer an additional incentive to market
participants to provide price improvement in these PIP transactions.
These options classes trade at minimum increments of $.05 or $.10,
providing greater opportunity for market participants to offer price
improvement. BOX believes that the opportunity for additional price
improvement provided by these wider spreads merits offering more
inducement for market participants to increase the price improvement
for customer orders in these PIP transactions. The Exchange believes
that customer orders in these PIP transactions will benefit from this
proposed change. All market participants that trade within the PIP, and
all PIP transactions will continue to be subject to the fees and
credits in Section 7 of the BOX Fee Schedule.
Further, the Exchange believes the proposed fees and credits
related to the specified PIP transactions to be reasonable. BOX
operates within a highly competitive market in which market
participants can readily direct order flow to any of eight other
competing venues if they deem fee levels at a particular venue to be
excessive. The changes to BOX credits and fees proposed by this filing
are intended to attract order flow to BOX by offering incentives to all
market participants to submit their orders to the PIP for potential
price improvement. BOX notes that this proposed rule change will
increase both the fees and credit for these PIP transactions. The
result is that BOX will collect a $0.75 fee from Participants that add
liquidity in Non-Penny classes and PIP transactions in Penny classes,
other than QQQQ, SPY, and IWM, where the trade price is equal to or
greater than $3.00 and credit another Participant $0.75 for removing
liquidity in the same transactions. Stated otherwise, the fees
collected will not necessarily result in additional revenue to BOX, but
will simply allow BOX to provide the credit incentive to Participants
to attract additional order flow to the PIP. BOX believes it is
appropriate to provide incentives to market participants to use PIP,
resulting in potential benefit to customers through potential price
improvement, and to all market participants from greater liquidity.
In particular, the proposed change will allow the fees charged on
BOX to remain competitive with other exchanges as well as apply such
fees in a manner which is equitable among all BOX Participants. The
Exchange believes that the PIP transaction fees and credits it assesses
are fair and reasonable and must be competitive with fees and credits
in place on other exchanges. Further, the Exchange believes that this
competitive marketplace impacts the fees and credits present on BOX
today and influences the proposal set forth above.
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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has 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)(ii) of the Exchange Act \8\ and Rule 19b-4(f)(2)
thereunder,\9\ because it establishes or changes a due, fee, or other
charge applicable only to a member.
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\8\ 15 U.S.C. 78s(b)(3)(A)(ii).
\9\ 17 CFR 240.19b-4(f)(2).
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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 the action is necessary or
appropriate in the public interest, for the protection of investors, or
would otherwise further the purposes of the Act.
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. In addition, the Commission seeks
comment generally on (1) whether the proposed increases to the fees and
credits for specified PIP transactions are consistent with Section
6(b)(8) of the Act, which requires that the rules of an exchange not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act, and (2) whether the proposed
fees are equitable as that term is used in Section 6(b)(4) of the Act,
and not unfairly discriminatory as that term is used in Section 6(b)(5)
of the Act. The Commission notes that a commenter on previous proposals
by the Exchange relating to these same fees and credits argued that the
Exchange's fee structure discriminates against PIP auction responders
in favor of PIP auction initiators.\10\ According to this commenter,
the net cost to a responder is much more than the net cost to a PIP
initiator because initiators may receive
[[Page 46860]]
a credit for removing liquidity when a customer order is executed in
the PIP, but no such credit is available to responders. As a result of
these comparatively higher fees, according to this commenter,
competitive responders will be less likely to participate in the PIP
and will participate less aggressively when they do participate, thus
burdening competition and reducing the likelihood and size of price
improvement in the PIP. Do you agree with this commenter? Please
explain why or why not.
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\10\ See Letters to Elizabeth M. Murphy, Secretary, Commission,
from John C. Nagel, Managing Director and General Counsel, Asset
Management and Markets, Citadel LLC, dated August 30, 2010 and May
3, 2011.
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Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-BX-2011-046 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-BX-2011-046. This file
number should be included on the subject line if e-mail 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 (https://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, NW.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such 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-BX-2011-046 and should be
submitted on or before August 24, 2011.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-19563 Filed 8-2-11; 8:45 am]
BILLING CODE 8011-01-P
