Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate Section I Pricing for Select Symbols, 42567-42572 [2013-16935]
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Federal Register / Vol. 78, No. 136 / Tuesday, July 16, 2013 / Notices
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Secretary.
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Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Eliminate
Section I Pricing for Select Symbols
July 10, 2013.
emcdonald on DSK67QTVN1PROD with NOTICES
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold a Closed Meeting
on Thursday, July 18, 2013 at 2:00 p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or her designee, has
certified that, in her opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matters at the Closed
Meeting.
Commissioner Aguilar, as duty
officer, voted to consider the items
listed for the Closed Meeting in a closed
session.
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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 June 26,
2013, NASDAQ OMX 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to remove its
Select Symbols,3 along with pricing in
Section I of the Pricing Schedule
entitled ‘‘Rebates and Fees for Adding
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Select Symbols are noted in Section I of the
Pricing Schedule.
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42567
and Removing Liquidity in Select
Symbols.’’
While the changes proposed herein
are effective upon filing, the Exchange
has designated that the amendments be
operative on July 1, 2013.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://
nasdaqomxphlx.cchwallstreet.com/, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to eliminate
the current pricing in Section I of the
Pricing Schedule which is applicable to
Select Symbols. The Exchange would
apply the pricing in Section II entitled
‘‘Multiply Listed Options Fees’’ 4 to
these Select Symbols in order to attract
additional order flow to the Exchange.
Section I Select Symbols
Today, the Exchange applies the
pricing in Section I to the following
Select Symbols: Bank of America
Corporation (‘‘BAC’’), iShares MSCI
Emerging Markets Index (‘‘EEM’’), SPDR
Gold Shares (‘‘GLD’’), iShares Russell
2000 Index (‘‘IWM’’), Microsoft
Corporation (‘‘MSFT’’), PowerShares
QQQ (‘‘QQQ’’), and Financial Select
Sector SPDR (‘‘XLF’’). Specifically, the
Exchange applies the following Simple
Order and Complex Order Pricing:
1 15
2 17
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4 This includes options overlying currencies,
equities, ETFs, ETNS and indexes not listed on
another exchange.
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Federal Register / Vol. 78, No. 136 / Tuesday, July 16, 2013 / Notices
PART A—SIMPLE ORDER
Customer
Rebate for Adding Liquidity ..................................
Fee for Adding Liquidity ...
Fee for Removing Liquidity ..................................
Specialist
Market maker
Firm
Broker-dealer
Professional
N/A
$0.00
$0.20
0.10
$0.20
0.10
N/A
$0.45
N/A
$0.45
N/A
$0.45
0.00
0.45
0.45
0.45
0.45
0.45
PART B—COMPLEX ORDER
Customer
Fee for Adding Liquidity ...
Fee for Removing Liquidity ..................................
Specialist
Firm
Broker-dealer
Professional
$0.00
$0.10
$0.10
$0.10
$0.10
$0.10
0.00
0.25
0.25
0.50
0.50
0.50
The Exchange proposes to eliminate
this Section I pricing and instead apply
the pricing which currently applies to
all other Multiply Listed Options in
Section II of the Pricing Schedule: 5
Professional
Specialist and market
maker
Customer
Electronic
Options Transaction
Charge (Penny
Pilot) ........................
Options Transaction
Charge (non-Penny
Pilot) ........................
Options Surcharge in
MNX and NDX ........
Options Surcharge in
BKX .........................
Cabinet Options .........
Market maker
Floor
Electronic
Broker-dealer
Firm
Floor
Floor
Electronic
Floor
Electronic
$0.00
$0.30
$0.25
$0.22
$0.25
$0.45
$0.25
$0.45
$0.25
0.00
0.30
0.25
0.23
0.25
0.60
0.25
0.50
0.25
N/A
0.15
0.15
0.15
0.15
0.15
0.15
0.15
0.15
N/A
0.00
0.10
N/A
0.10
0.10
0.10
N/A
0.10
0.10
0.10
N/A
0.10
0.10
0.10
N/A
0.10
0.10
emcdonald on DSK67QTVN1PROD with NOTICES
The Select Symbols that are being
eliminated in Section I are all Penny
Pilot Options and would be subject to
Section II Penny Pilot electronic
Options Transaction Charges. With
respect to Simple and Complex Orders,
Customers 6 would continue to not be
assessed any fees in the Select Symbols
with this proposal.
A Professional 7 that currently pays a
$0.45 per contract Simple Order Fee for
Adding and Removing Liquidity, a
$0.10 per contract Complex Order Fee
for Adding Liquidity and a $0.50 per
contract Complex Order Fee for
Removing Liquidity would now be
assessed a $0.30 per contract electronic
Options Transaction Charge in Penny
Pilot Options.
A Specialist 8 and Market Maker 9 that
today receives a Simple Order Rebate
for Adding Liquidity of $0.20 per
contract and pays a Simple and
Complex Order Fee for Adding
Liquidity of $0.10 per contract, a $0.45
per contract Simple Order Fee for
Removing Liquidity and a Complex
Order Fee for Removing Liquidity of
$0.25 per contract,10 would now be
assessed a $0.22 per contract electronic
Options Transaction Charge in Penny
Pilot Options. There are no rebates paid
in Section II for Simple Orders.
A Firm 11 that currently pays a $0.45
per contract Simple Order Fee for
Adding and Removing Liquidity, a
$0.10 per contract Complex Order Fee
for Adding Liquidity and a $0.50 per
contract Complex Order Fee for
Removing Liquidity would be now
assessed a $0.45 per contract electronic
Options Transaction Charge in Penny
Pilot Options. In addition, Firm
electronic Options Transaction Charges
in Penny Pilot Options (and Non-Penny
Pilot Options) are reduced to $0.17 per
contract for a given month provided that
a Firm has volume greater than 500,000
electronically-delivered contracts in a
month.
5 SPY has its own pricing in Section C, which will
be renamed as new Section I. See Section C of the
Pricing Schedule.
6 The term ‘‘Customer’’ applies to any transaction
that is identified by a member or member
organization for clearing in the Customer range at
The Options Clearing Corporation (‘‘OCC’’) which
is not for the account of broker or dealer or for the
account of a ‘‘Professional’’ (as that term is defined
in Rule 1000(b)(14)).
7 The term ‘‘professional’’ means any person or
entity that (i) is not a broker or dealer in securities,
and (ii) places more than 390 orders in listed
options per day on average during a calendar month
for its own beneficial account(s). See Rule
1000(b)(14).
8 A Specialist is an Exchange member who is
registered as an options specialist pursuant to Rule
1020(a).
9 A Market Maker includes Registered Options
Traders (Rule 1014(b)(i) and (ii)), which includes
Streaming Quote Traders (see Rule 1014(b)(ii)(A))
and Remote Streaming Quote Traders (see Rule
1014(b)(ii)(B)). Directed Participants are also Market
Makers.
10 Today, Complex Order Fees for Removing
Liquidity, applicable to Specialists and Market
Makers, are decreased by $0.02 per contract when
the Specialist or Market Maker transacts against a
Customer Order directed to that Specialist or
Market Maker for execution.
11 The term ‘‘Firm’’ applies to any transaction that
is identified by a member or member organization
for clearing in the Firm range at OCC.
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Federal Register / Vol. 78, No. 136 / Tuesday, July 16, 2013 / Notices
emcdonald on DSK67QTVN1PROD with NOTICES
Finally, a Broker-Dealer 12 that
currently pays a $0.45 per contract
Simple Order Fee for Adding and
Removing Liquidity, a $0.10 per
contract Complex Order Fee for Adding
Liquidity and a $0.50 per contract
Complex Order Fee for Removing
Liquidity would now be assessed a
$0.45 per contract electronic Options
Transaction Charge in Penny Pilot
Options.13
With this proposal, the Monthly
Market Maker Cap 14 on transaction fees
that is currently applicable to Market
Makers and Specialists transacting
Multiply Listed Options is applicable to
electronic transactions in the Section II
symbols, except for QCC 15 Transaction
Fees. The Monthly Market Maker Cap
would now apply to the Select Symbols
as part of Section II. As is the case
today, the Monthly Firm Fee Cap 16 will
12 The term ‘‘Broker-Dealer’’ applies to any
transaction which is not subject to any of the other
transaction fees applicable within a particular
category.
13 All market participants, other than Customers,
would continue to be assessed a $0.15 per contract
Options Surcharge on options on the one-tenth
value of the Nasdaq 100 Index traded under the
symbol ‘‘MNX’’ and options on the Nasdaq 100
Index traded under the symbol ‘‘NDX’’ and a $0.10
per contract surcharge on options on PHLX/KBW
Bank Index (‘‘BKX’’). Today, all Select Symbols
transacted on the Exchange’s trading floor are
assessed the fees in Section II with respect to floor
transactions.
14 Specialists and Market Makers are subject to a
‘‘Monthly Market Maker Cap’’ of $550,000 for: (i)
Electronic and floor Option Transaction Charges;
(ii) Qualified Contingent Cross (‘‘QCC’’) Transaction
Fees (as defined in Exchange Rule 1080(o) and
Floor QCC Orders, as defined in 1064(e)); and (iii)
fees related to an order or quote that is contra to
a PIXL Order or specifically responding to a PIXL
auction. The trading activity of separate Specialist
and Market Maker member organizations is
aggregated in calculating the Monthly Market Maker
Cap if there is Common Ownership between the
member organizations. All dividend, merger, short
stock interest and reversal and conversion strategy
executions (as defined in Section II) are excluded
from the Monthly Market Maker Cap.
15 A QCC Order is comprised of an order to buy
or sell at least 1000 contracts that is identified as
being part of a qualified contingent trade, as that
term is defined in Rule 1080(o)(3), coupled with a
contra-side order to buy or sell an equal number of
contracts. The QCC Order must be executed at a
price at or between the National Best Bid and Offer
(NBBO) and be rejected if a Customer order is
resting on the Exchange book at the same price. A
QCC Order shall only be submitted electronically
from off the floor to the PHLX XL II System. See
Rule 1080(o). See also Securities Exchange Act
Release No. 64249 (April 7, 2011), 76 FR 20773
(April 13, 2011) (SR–Phlx–2011–47) (a rule change
to establish a QCC Order to facilitate the execution
of stock/option Qualified Contingent Trades (QCT)
that satisfy the requirements of the trade through
exemption in connection with Rule 611(d) of the
Regulation NMS).
16 Firms are subject to a maximum fee of $75,000
(‘‘Monthly Firm Fee Cap’’). Firm Floor Option
Transaction Charges and QCC Transaction Fees in
the aggregate, for one billing month may not exceed
the Monthly Firm Fee Cap per member organization
when such members are trading in their own
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continue to apply to the Select Symbols
as part of Section II. Today, Payment for
Order Flow (‘‘PFOF’’) 17 fees are
collected on transactions in the Select
Symbols, except when a Specialist or
Market Maker is also assessed the
Simple Order Fee for Removing
Liquidity, in which case the PFOF fees
will not apply. Section II symbols are
subject to PFOF fees on electronic
orders and, with this proposal, these
Select Symbols.
Currently, the Cancellation Fee 18 for
each cancelled electronically delivered
Professional AON order applies to the
Select Symbols. The Cancellation Fee
does not apply for each cancelled
electronically delivered Customer order
in Select Symbols. With this proposal,
the application of the Cancellation Fees
to the Select Symbols would remain the
same.
As noted above, transactions in the
Select Symbols originating on the
Exchange floor are subject to the
Multiply Listed Options Fees in Section
II. However, today if one side of the
transaction originates on the Exchange
floor and any other side of the trade was
the result of an electronically submitted
order or a quote, then Section I fees
apply to the transactions which
originated on the Exchange floor and
proprietary account. All dividend, merger, and
short stock interest strategy executions (as defined
in Section II) are excluded from the Monthly Firm
Fee Cap. Reversal and conversion strategy
executions (as defined in Section II) are included
in the Monthly Firm Fee Cap. QCC Transaction
Fees are included in the calculation of the Monthly
Firm Fee Cap.
17 The PFOF program started on July 1, 2005 as
a pilot and after a series of orders extending the
pilot became effective on April 29, 2012. See
Securities Exchange Act Release No. 52114 (July 22,
2005), 70 FR 44138 (August 1, 2005) (SR–Phlx–
2005–44); 57851 (May 22, 2008), 73 FR 31177 (May
20, 2008) (SR–Phlx–2008–38); 55891 (June 11,
2007), 72 FR 333271 (June 15, 2007) (SR–Phlx–
2007–39); 53754 (May 3, 2006), 71 FR 27301 (May
10, 2006) (SR–Phlx–2006–25); 53078 (January 9,
2006), 71 FR 2289 (January 13, 2006) (SR–Phlx–
2005–88); 52568 (October 6, 2005), 70 FR 60120
(October 14, 2005) (SR–Phlx–2005–58); and 59841
(April 29, 2009), 74 FR 21035 (May 6, 2009) (SR–
Phlx–2009–38).
18 A Cancellation Fee of $1.10 per order is
assessed for each cancelled electronically delivered
All-or-None (AON) order submitted by a
Professional in excess of the number of AON orders
submitted by a Professional executed on the
Exchange by a member organization in a given
month. All AON orders submitted by a Professional
from the same member organization that are
executed in the same series on the same side of the
market at the same price within a 300 second
period will be aggregated and counted as one
executed AON option order submitted by a
Professional. A Cancellation Fee is not assessed in
a month in which fewer than 500 electronically
delivered AON orders submitted by a Professional
are cancelled. A Cancellation Fee will not apply to
pre-market cancellations or Complex Orders that
are submitted electronically. A Cancellation Fee is
assessed on AON orders submitted by a
Professional.
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42569
contracts that are executed
electronically on all sides of the
transaction. With this proposal, Section
II pricing would apply to these
transactions.
Today, a non-Complex electronic
auction includes the Quote Exhaust
auction and, for purposes of these fees,
the opening process. A Complex
electronic auction includes, but is not
limited to, the Complex Order Live
Auction (‘‘COLA’’). Customer
executions that occur as part of a
Complex electronic auction are assessed
$0.00 per contract. Customer executions
that occur as part of a non-Complex
electronic auction are assessed $0.00 per
contract. Professional, Firm, BrokerDealer, Specialist and Market Maker
executions that occur as part of a
Complex electronic auction are assessed
the Fees for Removing Liquidity in
Section I, Part B. Professional, Firm,
Broker-Dealer, Specialist and Market
Maker executions that occur as part of
a non-Complex electronic auction are
assessed the Fees for Removing
Liquidity in Section I, Part A. However,
during an opening auction a Specialist
or Market Maker is assessed the Simple
Order Fee for Adding Liquidity in
Section I if contra to a Customer order.
With this proposal, the Exchange would
assess the Options Transaction Charges
in Section II with respect to nonComplex electronic auctions, Complex
electronic auctions and the opening
process. With this proposal, the QCC
Transaction fees and rebates, defined in
Section II, are and will continue to be
applicable to the Select Symbols as part
of Section II.
The Exchange also proposes to
remove the current reference to Section
I in the Preface and instead renumber
current Section C entitled ‘‘Rebates and
Fees for Adding Liquidity in SPY’’ as
new Section I. The Exchange proposes
to remove references to the Select
Symbols in the Customer Rebate
Program along with Categories C 19 and
D 20 of the Customer Rebate Program,
19 Category C Rebates are paid to members
executing electronically-delivered Customer
Complex Orders in Select Symbols in Section I
symbols. Rebates are paid on Customer PIXL
Complex Orders in Section I symbols that execute
against non-Initiating Order interest, except in the
case of Customer PIXL Complex Orders that are
greater than 999 contracts. All Customer PIXL
Complex Orders that are greater than 999 contracts
are paid a rebate regardless of the contra-party to
the transaction.
20 Category D Rebates are paid to members
executing electronically-delivered Customer Simple
Orders in Select Symbols in Section I. Rebates are
paid on PIXL Orders in Section I symbols that
execute against non-Initiating Order interest.
Rebates are paid on Customer PIXL Orders in
Section I symbols that execute against non-
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Federal Register / Vol. 78, No. 136 / Tuesday, July 16, 2013 / Notices
which relate to Simple and Complex
Orders in Select Symbols. These
Categories will no longer be relevant
with this proposal. All Multiply Listed
Options in Section II would qualify for
either the Category A 21 or B 22 rebates.
The Exchange also proposes to amend
Sections II and IV 23 to remove
references to Select Symbols and also
pricing in PIXL 24 concerning
transactions in Select Symbols, as that
pricing is no longer relevant.
The Exchange believes that the
proposed pricing will enable the
Exchange to remain competitive.
Monthly Market Maker Cap
The Exchange also proposes to
increase the $0.16 per contract fee that
today is assessed to Specialists and
Market Makers that are on the contraside of an electronically-delivered and
executed Customer order; and have
reached the Monthly Market Maker Cap
to $0.17 per contract. The Exchange is
amending this fee to capture the cost to
the Exchange of paying a Category B
Customer Rebate.
emcdonald on DSK67QTVN1PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal to amend its Pricing Schedule
is consistent with Section 6(b) of the
Act 25 in general, and furthers the
objectives of Section 6(b)(4) of the Act 26
in particular, in that it provides for an
equitable allocation of reasonable fees
Initiating Order interest, except in the case of
Customer PIXL Order that are greater than 999
contracts. All Customer PIXL Orders that are greater
than 999 contracts are paid a rebate regardless of
the contra-party to the transaction.
21 Category A Rebates are paid to members
executing electronically-delivered Customer Simple
Orders in Penny Pilot Options and Customer
Simple Orders in Non-Penny Pilot Options in
Section II symbols. Rebates are paid on Customer
PIXL Orders in Section II symbols that execute
against non-Initiating Order interest, except in the
case of Customer PIXL Orders that are greater than
999 contracts. All Customer PIXL Orders that are
greater than 999 contracts will be paid a rebate
regardless of the contra-party to the transaction.
22 Category B Rebates are paid to members
executing electronically-delivered Customer
Complex Orders in Penny Pilot Options and NonPenny Pilot Options in Section II symbols. Rebates
are paid on Customer PIXL Complex Orders in
Section II symbols that execute against nonInitiating Order interest, except in the case of
Customer PIXL Complex Orders that are greater
than 999 contracts. All Customer PIXL Complex
Orders that are greater than 999 contracts will be
paid a rebate regardless of the contra-party to the
transaction.
23 Today, the Exchange assesses PIXL Pricing
based on whether the symbol is a Select Symbol in
Section I or a Multiply Listed Options symbol
subject to Section II pricing. See Section IV of the
Pricing Schedule.
24 PIXL is the Exchange’s price improvement
mechanism known as Price Improvement XL or
(PIXLSM). See Rule 1080(n).
25 15 U.S.C. 78f(b).
26 15 U.S.C. 78f(b)(4).
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and other charges among Exchange
members and other persons using its
facilities.
Section I Select Symbols
The Exchange believes that it is
reasonable to remove BAC, EEM, GLD,
IWM, MSFT, QQQ, and XLF from the
list of Select Symbols, eliminate the
pricing in Section I and apply the
pricing for Multiply Listed Options in
Section II to the Select Symbols in order
to attract additional order flow to the
Exchange as result of the new pricing.
The Exchange believes that it is
equitable and not unfairly
discriminatory to eliminate the list of
Select Symbols and Section I pricing
because the Exchange would uniformly
apply Section II pricing to all Multiply
Listed Options, with the exception of
SPY,27 to all market participants.
Customers would not be assessed
Section II Options Transaction Charges,
including transaction fees related to
electronic and non-electronic Complex
auctions. Today, Customers are not
assessed transaction fees in Section I.
With this proposal, a Customer would
pay a Cancellation Fee for cancelled
orders. In addition, with this proposal,
the Exchange would pay Customers that
qualify for the Customer Rebate Program
the Category A rebates instead of the
Category D rebates they may qualify for
today with respect to the Select
Symbols. The ability to qualify for
Category A rebates would result in
increased rebates for Customers.28
A Professional would incur lower fees
except for adding liquidity in Complex
Order where the fee today is $0.10 per
contract. Section II fees do not
distinguish between adding and
removing liquidity; the Select Symbols
would be subject to the electronic
Options Transaction Charges for Penny
Pilot Options regardless of whether the
market participant was adding or
removing liquidity. The Exchange
believes that it is equitable and not
unfairly discriminatory to assess
Professionals the same Options
Transaction Charges for Select Symbols
that are assessed today for all other
Multiply Listed Options symbols,
except SPY options.
Specialist and Market Maker fees
would increase except with respect to
removing liquidity, however Specialists
27 SPY has its own pricing in Section C, which
will be renamed as new Section I. See Section C of
the Pricing Schedule.
28 Simple Order Category A rebates range between
$0.12 and $0.15 per contract and Category D rebates
are $0.08 per contract, where applicable. Complex
Order Category C rebates are $0.17 per contract.
With this proposal, Customers transacting Select
Symbols could qualify for Category B rebates,
which are also $0.17 per contract where applicable.
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and Market Makers would now be able
to cap their fees because the Monthly
Market Maker Cap is applicable to
Section II symbols. Specialists and
Market Makers would no longer be
entitled to the $0.20 per contract Simple
Order Rebate for Adding Liquidity.
Specialists and Market Makers would
also incur increased costs during the
opening auction. Specialists and Market
Makers would now be subject to PFOF
fees for Simple Orders that remove
liquidity. The Exchange believes that it
is equitable and not unfairly
discriminatory to assess the Section II
Options Transaction Charges to
Specialists and Market Makers because
while certain fees will increase and the
Exchange would no longer pay Simple
Order rebates, Specialists and Market
Makers will be able to cap fees. Also,
Specialists and Market Makers will be
assessed the same Options Transaction
Charges for the Select Symbols that are
assessed today for all other Multiply
Listed Options symbols, except SPY
options. In addition, PFOF fees will
apply to Select Symbols similar to the
manner in which they apply today to
Section II symbols.
Firms would pay the same or lower
fees with respect to removing liquidity,
except where they have volume greater
than 500,000 electronically-delivered
contracts in a month, than the fee would
be reduced.29 A Firm would pay more
to add liquidity in Complex Orders.
Firms would continue to have the
opportunity to cap their fees with the
Monthly Firm Fee Cap which is
applicable to Section II symbols as it
was applicable to Section I Select
Symbols. The Exchange believes that it
is equitable and not unfairly
discriminatory to assess Section II fees
to Firms because they will continue to
have the ability to cap fees and also
have the ability to pay a reduced
Options Transaction Charge when
executing a certain amount of volume.
Also, Firms will be assessed the same
Options Transaction Charges for the
Select Symbols that are assessed today
for all other Multiply Listed Options
symbols, except SPY options.
Broker-Dealers would pay the same or
lower fees with respect to removing
liquidity. A Broker-Dealer would pay
more to add liquidity in Complex
Orders. The Exchange believes that it is
equitable and not unfairly
discriminatory to assess Section II fees
to Broker Dealers because they will be
29 Firm electronic Options Transaction Charges in
Penny Pilot and non-Penny Pilot Options will be
reduced to $0.17 per contract for a given month
provided that a Firm has volume greater than
500,000 electronically-delivered contracts in a
month.
E:\FR\FM\16JYN1.SGM
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Federal Register / Vol. 78, No. 136 / Tuesday, July 16, 2013 / Notices
assessed the same Options Transaction
Charges for the Select Symbols that are
assessed today for all other Multiply
Listed Options symbols, except SPY
options.
emcdonald on DSK67QTVN1PROD with NOTICES
Monthly Market Maker Cap
The Exchange’s proposal to increase
the $0.16 per contract fee that today is
assessed to Specialists and Market
Makers that are on the contra-side of an
electronically-delivered and executed
Customer order and have reached the
Monthly Market Maker Cap to $0.17 per
contract is reasonable because today the
Exchange pays a Customer rebate of
$0.17 for Customer Complex Orders
pursuant to Section B of the Pricing
Schedule. The Exchange is amending
this fee to capture the $0.17 per contract
cost to the Exchange of paying an
increased Category B Customer Rebate
for transactions in Complex Orders.
This amendment will allow the
Exchange to continue to pay certain
qualifying Complex Order Customer
rebates pursuant to the Customer Rebate
Program in Section B. This fee is only
paid once the Monthly Market Maker
Cap is exceeded and Specialists or
Market Makers are not otherwise
incurring fees and the Specialist or
Market Maker is contra to a Customer
order.
The Exchange’s proposal to increase
the $0.16 per contract fee that today is
assessed to Specialists and Market
Makers that are on the contra-side of an
electronically-delivered and executed
Customer order and have reached the
Monthly Market Maker Cap to $0.17 per
contract is equitable and not unfairly
discriminatory because all Specialists
and Market Makers would be uniformly
assessed the fee as long as they have
reached the cap and are contra to an
electronically-delivered Customer order.
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. The
Exchange believes that its proposal to
eliminate the Section I pricing
applicable to Select Symbols and
instead assess BAC, EEM, GLD, IWM,
MSFT, QQQ, and XLF the fees in
Section II and subject these Select
Symbols to other Section II pricing does
not impose any undue burden on
competition. In most cases, market
participants will be subject to the same
or better pricing. There will be no
pricing differentials among market
participants for adding versus removing
liquidity. All of these Select Symbols
VerDate Mar<15>2010
18:49 Jul 15, 2013
Jkt 229001
are Penny Pilot Options and therefore
would be subject a single electronic
Options Transaction Charge applicable
to Penny Pilot Options. The floor
transaction fees remain unaffected
because today Section II pricing applies
to Select Symbols. Other than options
on SPY, which are subject to different
pricing, all Multiply Listed Options
symbols would be subject to the pricing
in Section II with this proposal.
With respect to increasing the $0.16
per contract fee that today is assessed to
Specialists and Market Makers that are
on the contra-side of an electronicallydelivered and executed Customer order
and have reached the Monthly Market
Maker Cap to $0.17 per contract the
Exchange believes that this proposed
amendment will also not impose an
undue burden on competition. The
Exchange will uniformly assess this fee
to Specialists and Market Makers in
limited circumstances.
The Exchange operates in a highly
competitive market, comprised of
eleven exchanges, in which market
participants can easily and readily
direct order flow to competing venues if
they deem fee levels at a particular
venue to be excessive or rebates to be
inadequate. Accordingly, the fees that
are assessed and the rebates paid by the
Exchange described in the above
proposal are influenced by these robust
market forces and therefore must remain
competitive with fees charged and
rebates paid by other venues and
therefore must continue to be reasonable
and equitably allocated to those
members that opt to direct orders to the
Exchange rather than competing venues.
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.30 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 shall
institute proceedings to determine
PO 00000
30 15
U.S.C. 78s(b)(3)(A)(ii).
Frm 00086
Fmt 4703
Sfmt 4703
42571
whether the proposed rule should be
approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
Number SR–Phlx–2013–71 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–Phlx–2013–71. 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 (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 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–
2013–71 and should be submitted on or
before August 6, 2013.
E:\FR\FM\16JYN1.SGM
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42572
Federal Register / Vol. 78, No. 136 / Tuesday, July 16, 2013 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2013–16935 Filed 7–15–13; 8:45 am]
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Kevin M. O’Neill,
Deputy Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69961; File No. SR–CBOE–
2013–054]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Designation of
a Longer Period for Commission
Action on Proposed Rule Change To
Amend Rule 6.42
emcdonald on DSK67QTVN1PROD with NOTICES
July 10, 2013.
On May 13, 2013, Chicago Board
Options Exchange, Incorporated (the
‘‘Exchange’’ or ‘‘CBOE’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
amend Exchange Rule 6.42. The
proposed rule change was published for
comment in the Federal Register on
May 30, 2013.3 The Commission has not
received comment letters on this
proposal.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is July 14, 2013. The Commission is
extending this 45-day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider this proposed rule change,
which relates to minimum quoting
increments for complex orders.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,5
31 17
designates August 28, 2013, as the date
by which the Commission should either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–CBOE–2013–054).
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 69629
(May 23, 2013), 78 FR 32496.
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2).
[FR Doc. 2013–16933 Filed 7–15–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–69956; File No. SR–CME–
2013–09]
Self-Regulatory Organizations;
Chicago Mercantile Exchange Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Regarding Interest Rate Swap
Clearing Changes
July 10, 2013.
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 June 28,
2013, Chicago Mercantile Exchange Inc.
(‘‘CME’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change described in
Items I, II and III below, which Items
have been prepared primarily by CME.
CME filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act 3 and Rule 19b–4(f)(4)(ii) 4
thereunder, so that the proposal was
effective upon filing with the
Commission. 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
CME is filing proposed rules changes
that are limited to its business as a
derivatives clearing organization
offering interest rate swap (‘‘IRS’’)
clearing services. More specifically, the
proposed rule changes that are the
subject of this filing would facilitate the
addition of new IRS products for
clearing and would also include certain
changes to its existing IRS clearing
offering.
1 15
VerDate Mar<15>2010
18:49 Jul 15, 2013
Jkt 229001
PO 00000
6 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(4)(ii).
1 15
Frm 00087
Fmt 4703
Sfmt 4703
The text of the proposed rule changes
is also available at the CME’s Web site
at https://www.cmegroup.com, at the
principal office of CME, 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
self-regulatory organization included
statements concerning the purpose 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
CME is registered as a derivatives
clearing organization with the
Commodity Futures Trading
Commission and currently offers
clearing services for interest rate swaps
(‘‘IRS’’). With this filing, CME proposes
to accept the following swaps for
clearing beginning July 1, 2013:
• Fixed-Floating IRS denominated in
Hong Kong Dollar (‘‘HKD’’), New
Zealand Dollar (‘‘NZD’’) and Singapore
Dollar (‘‘SGD’’) with Termination Dates
up to 15 years.
Additionally, CME will amend CME
Rules 90002.F and 90102.E to add the
following swap specifications to its
existing offering of IRS:
• OIS swaps with Termination Dates
up to 30 years;
• Variable notional amounts
(amortizing, roller coaster and accreting)
for fixed-floating and basis swaps;
• Swaps with straight and spread
compounding; and
• New Zealand as an acceptable
calendar adjustment for Business Day
Conventions.
The changes to CME Rule 90002.F
reflect the addition of variable notional
amounts. The changes to CME Rule
90102.E reflect the addition of certain
Floating Rate Options for HKD, NZD
and SGD swaps and certain addition
OIS rates. The Manual of Operations for
CME Cleared Interest Rate Swaps (the
‘‘IRS Manual’’) is also being updated in
connection with these proposed changes
described in this filing.
The changes that are described in this
filing are limited to CME’s IRS clearing
offering and do not materially impact
CME’s credit default swap clearing
E:\FR\FM\16JYN1.SGM
16JYN1
]]>Agencies
[Federal Register Volume 78, Number 136 (Tuesday, July 16, 2013)]
[Notices]
[Pages 42567-42572]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-16935]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-69958; File No. SR-Phlx-2013-71]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Eliminate
Section I Pricing for Select Symbols
July 10, 2013.
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 June 26, 2013, NASDAQ OMX 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 remove its Select Symbols,\3\ along with
pricing in Section I of the Pricing Schedule entitled ``Rebates and
Fees for Adding and Removing Liquidity in Select Symbols.''
---------------------------------------------------------------------------
\3\ The Select Symbols are noted in Section I of the Pricing
Schedule.
---------------------------------------------------------------------------
While the changes proposed herein are effective upon filing, the
Exchange has designated that the amendments be operative on July 1,
2013.
The text of the proposed rule change is available on the Exchange's
Web site at https://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to eliminate the current pricing in Section I
of the Pricing Schedule which is applicable to Select Symbols. The
Exchange would apply the pricing in Section II entitled ``Multiply
Listed Options Fees'' \4\ to these Select Symbols in order to attract
additional order flow to the Exchange.
---------------------------------------------------------------------------
\4\ This includes options overlying currencies, equities, ETFs,
ETNS and indexes not listed on another exchange.
---------------------------------------------------------------------------
Section I Select Symbols
Today, the Exchange applies the pricing in Section I to the
following Select Symbols: Bank of America Corporation (``BAC''),
iShares MSCI Emerging Markets Index (``EEM''), SPDR Gold Shares
(``GLD''), iShares Russell 2000 Index (``IWM''), Microsoft Corporation
(``MSFT''), PowerShares QQQ (``QQQ''), and Financial Select Sector SPDR
(``XLF''). Specifically, the Exchange applies the following Simple
Order and Complex Order Pricing:
[[Page 42568]]
Part A--Simple Order
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Specialist Market maker Firm Broker-dealer Professional
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rebate for Adding Liquidity................. N/A $0.20 $0.20 N/A N/A N/A
Fee for Adding Liquidity.................... $0.00 0.10 0.10 $0.45 $0.45 $0.45
Fee for Removing Liquidity.................. 0.00 0.45 0.45 0.45 0.45 0.45
--------------------------------------------------------------------------------------------------------------------------------------------------------
Part B--Complex Order
--------------------------------------------------------------------------------------------------------------------------------------------------------
Customer Specialist Market maker Firm Broker-dealer Professional
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fee for Adding Liquidity.................... $0.00 $0.10 $0.10 $0.10 $0.10 $0.10
Fee for Removing Liquidity.................. 0.00 0.25 0.25 0.50 0.50 0.50
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Exchange proposes to eliminate this Section I pricing and
instead apply the pricing which currently applies to all other Multiply
Listed Options in Section II of the Pricing Schedule: \5\
---------------------------------------------------------------------------
\5\ SPY has its own pricing in Section C, which will be renamed
as new Section I. See Section C of the Pricing Schedule.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Professional Specialist and market Broker-dealer Firm
------------------------ maker ------------------------------------------------
Customer ------------------------ Floor
Electronic Floor Electronic Floor Electronic Floor Electronic
--------------------------------------------------------------------------------------------------------------------------------------------------------
Options Transaction Charge (Penny Pilot).... $0.00 $0.30 $0.25 $0.22 $0.25 $0.45 $0.25 $0.45 $0.25
Options Transaction Charge (non-Penny Pilot) 0.00 0.30 0.25 0.23 0.25 0.60 0.25 0.50 0.25
Options Surcharge in MNX and NDX............ N/A 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
Options Surcharge in BKX.................... N/A 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10
Cabinet Options............................. 0.00 N/A 0.10 N/A 0.10 N/A 0.10 N/A 0.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Select Symbols that are being eliminated in Section I are all
Penny Pilot Options and would be subject to Section II Penny Pilot
electronic Options Transaction Charges. With respect to Simple and
Complex Orders, Customers \6\ would continue to not be assessed any
fees in the Select Symbols with this proposal.
---------------------------------------------------------------------------
\6\ The term ``Customer'' applies to any transaction that is
identified by a member or member organization for clearing in the
Customer range at The Options Clearing Corporation (``OCC'') which
is not for the account of broker or dealer or for the account of a
``Professional'' (as that term is defined in Rule 1000(b)(14)).
---------------------------------------------------------------------------
A Professional \7\ that currently pays a $0.45 per contract Simple
Order Fee for Adding and Removing Liquidity, a $0.10 per contract
Complex Order Fee for Adding Liquidity and a $0.50 per contract Complex
Order Fee for Removing Liquidity would now be assessed a $0.30 per
contract electronic Options Transaction Charge in Penny Pilot Options.
---------------------------------------------------------------------------
\7\ The term ``professional'' means any person or entity that
(i) is not a broker or dealer in securities, and (ii) places more
than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). See Rule
1000(b)(14).
---------------------------------------------------------------------------
A Specialist \8\ and Market Maker \9\ that today receives a Simple
Order Rebate for Adding Liquidity of $0.20 per contract and pays a
Simple and Complex Order Fee for Adding Liquidity of $0.10 per
contract, a $0.45 per contract Simple Order Fee for Removing Liquidity
and a Complex Order Fee for Removing Liquidity of $0.25 per
contract,\10\ would now be assessed a $0.22 per contract electronic
Options Transaction Charge in Penny Pilot Options. There are no rebates
paid in Section II for Simple Orders.
---------------------------------------------------------------------------
\8\ A Specialist is an Exchange member who is registered as an
options specialist pursuant to Rule 1020(a).
\9\ A Market Maker includes Registered Options Traders (Rule
1014(b)(i) and (ii)), which includes Streaming Quote Traders (see
Rule 1014(b)(ii)(A)) and Remote Streaming Quote Traders (see Rule
1014(b)(ii)(B)). Directed Participants are also Market Makers.
\10\ Today, Complex Order Fees for Removing Liquidity,
applicable to Specialists and Market Makers, are decreased by $0.02
per contract when the Specialist or Market Maker transacts against a
Customer Order directed to that Specialist or Market Maker for
execution.
---------------------------------------------------------------------------
A Firm \11\ that currently pays a $0.45 per contract Simple Order
Fee for Adding and Removing Liquidity, a $0.10 per contract Complex
Order Fee for Adding Liquidity and a $0.50 per contract Complex Order
Fee for Removing Liquidity would be now assessed a $0.45 per contract
electronic Options Transaction Charge in Penny Pilot Options. In
addition, Firm electronic Options Transaction Charges in Penny Pilot
Options (and Non-Penny Pilot Options) are reduced to $0.17 per contract
for a given month provided that a Firm has volume greater than 500,000
electronically-delivered contracts in a month.
---------------------------------------------------------------------------
\11\ The term ``Firm'' applies to any transaction that is
identified by a member or member organization for clearing in the
Firm range at OCC.
---------------------------------------------------------------------------
[[Page 42569]]
Finally, a Broker-Dealer \12\ that currently pays a $0.45 per
contract Simple Order Fee for Adding and Removing Liquidity, a $0.10
per contract Complex Order Fee for Adding Liquidity and a $0.50 per
contract Complex Order Fee for Removing Liquidity would now be assessed
a $0.45 per contract electronic Options Transaction Charge in Penny
Pilot Options.\13\
---------------------------------------------------------------------------
\12\ The term ``Broker-Dealer'' applies to any transaction which
is not subject to any of the other transaction fees applicable
within a particular category.
\13\ All market participants, other than Customers, would
continue to be assessed a $0.15 per contract Options Surcharge on
options on the one-tenth value of the Nasdaq 100 Index traded under
the symbol ``MNX'' and options on the Nasdaq 100 Index traded under
the symbol ``NDX'' and a $0.10 per contract surcharge on options on
PHLX/KBW Bank Index (``BKX''). Today, all Select Symbols transacted
on the Exchange's trading floor are assessed the fees in Section II
with respect to floor transactions.
---------------------------------------------------------------------------
With this proposal, the Monthly Market Maker Cap \14\ on
transaction fees that is currently applicable to Market Makers and
Specialists transacting Multiply Listed Options is applicable to
electronic transactions in the Section II symbols, except for QCC \15\
Transaction Fees. The Monthly Market Maker Cap would now apply to the
Select Symbols as part of Section II. As is the case today, the Monthly
Firm Fee Cap \16\ will continue to apply to the Select Symbols as part
of Section II. Today, Payment for Order Flow (``PFOF'') \17\ fees are
collected on transactions in the Select Symbols, except when a
Specialist or Market Maker is also assessed the Simple Order Fee for
Removing Liquidity, in which case the PFOF fees will not apply. Section
II symbols are subject to PFOF fees on electronic orders and, with this
proposal, these Select Symbols.
---------------------------------------------------------------------------
\14\ Specialists and Market Makers are subject to a ``Monthly
Market Maker Cap'' of $550,000 for: (i) Electronic and floor Option
Transaction Charges; (ii) Qualified Contingent Cross (``QCC'')
Transaction Fees (as defined in Exchange Rule 1080(o) and Floor QCC
Orders, as defined in 1064(e)); and (iii) fees related to an order
or quote that is contra to a PIXL Order or specifically responding
to a PIXL auction. The trading activity of separate Specialist and
Market Maker member organizations is aggregated in calculating the
Monthly Market Maker Cap if there is Common Ownership between the
member organizations. All dividend, merger, short stock interest and
reversal and conversion strategy executions (as defined in Section
II) are excluded from the Monthly Market Maker Cap.
\15\ A QCC Order is comprised of an order to buy or sell at
least 1000 contracts that is identified as being part of a qualified
contingent trade, as that term is defined in Rule 1080(o)(3),
coupled with a contra-side order to buy or sell an equal number of
contracts. The QCC Order must be executed at a price at or between
the National Best Bid and Offer (NBBO) and be rejected if a Customer
order is resting on the Exchange book at the same price. A QCC Order
shall only be submitted electronically from off the floor to the
PHLX XL II System. See Rule 1080(o). See also Securities Exchange
Act Release No. 64249 (April 7, 2011), 76 FR 20773 (April 13, 2011)
(SR-Phlx-2011-47) (a rule change to establish a QCC Order to
facilitate the execution of stock/option Qualified Contingent Trades
(QCT) that satisfy the requirements of the trade through exemption
in connection with Rule 611(d) of the Regulation NMS).
\16\ Firms are subject to a maximum fee of $75,000 (``Monthly
Firm Fee Cap''). Firm Floor Option Transaction Charges and QCC
Transaction Fees in the aggregate, for one billing month may not
exceed the Monthly Firm Fee Cap per member organization when such
members are trading in their own proprietary account. All dividend,
merger, and short stock interest strategy executions (as defined in
Section II) are excluded from the Monthly Firm Fee Cap. Reversal and
conversion strategy executions (as defined in Section II) are
included in the Monthly Firm Fee Cap. QCC Transaction Fees are
included in the calculation of the Monthly Firm Fee Cap.
\17\ The PFOF program started on July 1, 2005 as a pilot and
after a series of orders extending the pilot became effective on
April 29, 2012. See Securities Exchange Act Release No. 52114 (July
22, 2005), 70 FR 44138 (August 1, 2005) (SR-Phlx-2005-44); 57851
(May 22, 2008), 73 FR 31177 (May 20, 2008) (SR-Phlx-2008-38); 55891
(June 11, 2007), 72 FR 333271 (June 15, 2007) (SR-Phlx-2007-39);
53754 (May 3, 2006), 71 FR 27301 (May 10, 2006) (SR-Phlx-2006-25);
53078 (January 9, 2006), 71 FR 2289 (January 13, 2006) (SR-Phlx-
2005-88); 52568 (October 6, 2005), 70 FR 60120 (October 14, 2005)
(SR-Phlx-2005-58); and 59841 (April 29, 2009), 74 FR 21035 (May 6,
2009) (SR-Phlx-2009-38).
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Currently, the Cancellation Fee \18\ for each cancelled
electronically delivered Professional AON order applies to the Select
Symbols. The Cancellation Fee does not apply for each cancelled
electronically delivered Customer order in Select Symbols. With this
proposal, the application of the Cancellation Fees to the Select
Symbols would remain the same.
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\18\ A Cancellation Fee of $1.10 per order is assessed for each
cancelled electronically delivered All-or-None (AON) order submitted
by a Professional in excess of the number of AON orders submitted by
a Professional executed on the Exchange by a member organization in
a given month. All AON orders submitted by a Professional from the
same member organization that are executed in the same series on the
same side of the market at the same price within a 300 second period
will be aggregated and counted as one executed AON option order
submitted by a Professional. A Cancellation Fee is not assessed in a
month in which fewer than 500 electronically delivered AON orders
submitted by a Professional are cancelled. A Cancellation Fee will
not apply to pre-market cancellations or Complex Orders that are
submitted electronically. A Cancellation Fee is assessed on AON
orders submitted by a Professional.
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As noted above, transactions in the Select Symbols originating on
the Exchange floor are subject to the Multiply Listed Options Fees in
Section II. However, today if one side of the transaction originates on
the Exchange floor and any other side of the trade was the result of an
electronically submitted order or a quote, then Section I fees apply to
the transactions which originated on the Exchange floor and contracts
that are executed electronically on all sides of the transaction. With
this proposal, Section II pricing would apply to these transactions.
Today, a non-Complex electronic auction includes the Quote Exhaust
auction and, for purposes of these fees, the opening process. A Complex
electronic auction includes, but is not limited to, the Complex Order
Live Auction (``COLA''). Customer executions that occur as part of a
Complex electronic auction are assessed $0.00 per contract. Customer
executions that occur as part of a non-Complex electronic auction are
assessed $0.00 per contract. Professional, Firm, Broker-Dealer,
Specialist and Market Maker executions that occur as part of a Complex
electronic auction are assessed the Fees for Removing Liquidity in
Section I, Part B. Professional, Firm, Broker-Dealer, Specialist and
Market Maker executions that occur as part of a non-Complex electronic
auction are assessed the Fees for Removing Liquidity in Section I, Part
A. However, during an opening auction a Specialist or Market Maker is
assessed the Simple Order Fee for Adding Liquidity in Section I if
contra to a Customer order. With this proposal, the Exchange would
assess the Options Transaction Charges in Section II with respect to
non-Complex electronic auctions, Complex electronic auctions and the
opening process. With this proposal, the QCC Transaction fees and
rebates, defined in Section II, are and will continue to be applicable
to the Select Symbols as part of Section II.
The Exchange also proposes to remove the current reference to
Section I in the Preface and instead renumber current Section C
entitled ``Rebates and Fees for Adding Liquidity in SPY'' as new
Section I. The Exchange proposes to remove references to the Select
Symbols in the Customer Rebate Program along with Categories C \19\ and
D \20\ of the Customer Rebate Program,
[[Page 42570]]
which relate to Simple and Complex Orders in Select Symbols. These
Categories will no longer be relevant with this proposal. All Multiply
Listed Options in Section II would qualify for either the Category A
\21\ or B \22\ rebates. The Exchange also proposes to amend Sections II
and IV \23\ to remove references to Select Symbols and also pricing in
PIXL \24\ concerning transactions in Select Symbols, as that pricing is
no longer relevant.
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\19\ Category C Rebates are paid to members executing
electronically-delivered Customer Complex Orders in Select Symbols
in Section I symbols. Rebates are paid on Customer PIXL Complex
Orders in Section I symbols that execute against non-Initiating
Order interest, except in the case of Customer PIXL Complex Orders
that are greater than 999 contracts. All Customer PIXL Complex
Orders that are greater than 999 contracts are paid a rebate
regardless of the contra-party to the transaction.
\20\ Category D Rebates are paid to members executing
electronically-delivered Customer Simple Orders in Select Symbols in
Section I. Rebates are paid on PIXL Orders in Section I symbols that
execute against non-Initiating Order interest. Rebates are paid on
Customer PIXL Orders in Section I symbols that execute against non-
Initiating Order interest, except in the case of Customer PIXL Order
that are greater than 999 contracts. All Customer PIXL Orders that
are greater than 999 contracts are paid a rebate regardless of the
contra-party to the transaction.
\21\ Category A Rebates are paid to members executing
electronically-delivered Customer Simple Orders in Penny Pilot
Options and Customer Simple Orders in Non-Penny Pilot Options in
Section II symbols. Rebates are paid on Customer PIXL Orders in
Section II symbols that execute against non-Initiating Order
interest, except in the case of Customer PIXL Orders that are
greater than 999 contracts. All Customer PIXL Orders that are
greater than 999 contracts will be paid a rebate regardless of the
contra-party to the transaction.
\22\ Category B Rebates are paid to members executing
electronically-delivered Customer Complex Orders in Penny Pilot
Options and Non-Penny Pilot Options in Section II symbols. Rebates
are paid on Customer PIXL Complex Orders in Section II symbols that
execute against non-Initiating Order interest, except in the case of
Customer PIXL Complex Orders that are greater than 999 contracts.
All Customer PIXL Complex Orders that are greater than 999 contracts
will be paid a rebate regardless of the contra-party to the
transaction.
\23\ Today, the Exchange assesses PIXL Pricing based on whether
the symbol is a Select Symbol in Section I or a Multiply Listed
Options symbol subject to Section II pricing. See Section IV of the
Pricing Schedule.
\24\ PIXL is the Exchange's price improvement mechanism known as
Price Improvement XL or (PIXL\SM\). See Rule 1080(n).
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The Exchange believes that the proposed pricing will enable the
Exchange to remain competitive.
Monthly Market Maker Cap
The Exchange also proposes to increase the $0.16 per contract fee
that today is assessed to Specialists and Market Makers that are on the
contra-side of an electronically-delivered and executed Customer order;
and have reached the Monthly Market Maker Cap to $0.17 per contract.
The Exchange is amending this fee to capture the cost to the Exchange
of paying a Category B Customer Rebate.
2. Statutory Basis
The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \25\ in general,
and furthers the objectives of Section 6(b)(4) of the Act \26\ in
particular, in that it provides for an equitable allocation of
reasonable fees and other charges among Exchange members and other
persons using its facilities.
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\25\ 15 U.S.C. 78f(b).
\26\ 15 U.S.C. 78f(b)(4).
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Section I Select Symbols
The Exchange believes that it is reasonable to remove BAC, EEM,
GLD, IWM, MSFT, QQQ, and XLF from the list of Select Symbols, eliminate
the pricing in Section I and apply the pricing for Multiply Listed
Options in Section II to the Select Symbols in order to attract
additional order flow to the Exchange as result of the new pricing.
The Exchange believes that it is equitable and not unfairly
discriminatory to eliminate the list of Select Symbols and Section I
pricing because the Exchange would uniformly apply Section II pricing
to all Multiply Listed Options, with the exception of SPY,\27\ to all
market participants.
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\27\ SPY has its own pricing in Section C, which will be renamed
as new Section I. See Section C of the Pricing Schedule.
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Customers would not be assessed Section II Options Transaction
Charges, including transaction fees related to electronic and non-
electronic Complex auctions. Today, Customers are not assessed
transaction fees in Section I. With this proposal, a Customer would pay
a Cancellation Fee for cancelled orders. In addition, with this
proposal, the Exchange would pay Customers that qualify for the
Customer Rebate Program the Category A rebates instead of the Category
D rebates they may qualify for today with respect to the Select
Symbols. The ability to qualify for Category A rebates would result in
increased rebates for Customers.\28\
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\28\ Simple Order Category A rebates range between $0.12 and
$0.15 per contract and Category D rebates are $0.08 per contract,
where applicable. Complex Order Category C rebates are $0.17 per
contract. With this proposal, Customers transacting Select Symbols
could qualify for Category B rebates, which are also $0.17 per
contract where applicable.
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A Professional would incur lower fees except for adding liquidity
in Complex Order where the fee today is $0.10 per contract. Section II
fees do not distinguish between adding and removing liquidity; the
Select Symbols would be subject to the electronic Options Transaction
Charges for Penny Pilot Options regardless of whether the market
participant was adding or removing liquidity. The Exchange believes
that it is equitable and not unfairly discriminatory to assess
Professionals the same Options Transaction Charges for Select Symbols
that are assessed today for all other Multiply Listed Options symbols,
except SPY options.
Specialist and Market Maker fees would increase except with respect
to removing liquidity, however Specialists and Market Makers would now
be able to cap their fees because the Monthly Market Maker Cap is
applicable to Section II symbols. Specialists and Market Makers would
no longer be entitled to the $0.20 per contract Simple Order Rebate for
Adding Liquidity. Specialists and Market Makers would also incur
increased costs during the opening auction. Specialists and Market
Makers would now be subject to PFOF fees for Simple Orders that remove
liquidity. The Exchange believes that it is equitable and not unfairly
discriminatory to assess the Section II Options Transaction Charges to
Specialists and Market Makers because while certain fees will increase
and the Exchange would no longer pay Simple Order rebates, Specialists
and Market Makers will be able to cap fees. Also, Specialists and
Market Makers will be assessed the same Options Transaction Charges for
the Select Symbols that are assessed today for all other Multiply
Listed Options symbols, except SPY options. In addition, PFOF fees will
apply to Select Symbols similar to the manner in which they apply today
to Section II symbols.
Firms would pay the same or lower fees with respect to removing
liquidity, except where they have volume greater than 500,000
electronically-delivered contracts in a month, than the fee would be
reduced.\29\ A Firm would pay more to add liquidity in Complex Orders.
Firms would continue to have the opportunity to cap their fees with the
Monthly Firm Fee Cap which is applicable to Section II symbols as it
was applicable to Section I Select Symbols. The Exchange believes that
it is equitable and not unfairly discriminatory to assess Section II
fees to Firms because they will continue to have the ability to cap
fees and also have the ability to pay a reduced Options Transaction
Charge when executing a certain amount of volume. Also, Firms will be
assessed the same Options Transaction Charges for the Select Symbols
that are assessed today for all other Multiply Listed Options symbols,
except SPY options.
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\29\ Firm electronic Options Transaction Charges in Penny Pilot
and non-Penny Pilot Options will be reduced to $0.17 per contract
for a given month provided that a Firm has volume greater than
500,000 electronically-delivered contracts in a month.
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Broker-Dealers would pay the same or lower fees with respect to
removing liquidity. A Broker-Dealer would pay more to add liquidity in
Complex Orders. The Exchange believes that it is equitable and not
unfairly discriminatory to assess Section II fees to Broker Dealers
because they will be
[[Page 42571]]
assessed the same Options Transaction Charges for the Select Symbols
that are assessed today for all other Multiply Listed Options symbols,
except SPY options.
Monthly Market Maker Cap
The Exchange's proposal to increase the $0.16 per contract fee that
today is assessed to Specialists and Market Makers that are on the
contra-side of an electronically-delivered and executed Customer order
and have reached the Monthly Market Maker Cap to $0.17 per contract is
reasonable because today the Exchange pays a Customer rebate of $0.17
for Customer Complex Orders pursuant to Section B of the Pricing
Schedule. The Exchange is amending this fee to capture the $0.17 per
contract cost to the Exchange of paying an increased Category B
Customer Rebate for transactions in Complex Orders. This amendment will
allow the Exchange to continue to pay certain qualifying Complex Order
Customer rebates pursuant to the Customer Rebate Program in Section B.
This fee is only paid once the Monthly Market Maker Cap is exceeded and
Specialists or Market Makers are not otherwise incurring fees and the
Specialist or Market Maker is contra to a Customer order.
The Exchange's proposal to increase the $0.16 per contract fee that
today is assessed to Specialists and Market Makers that are on the
contra-side of an electronically-delivered and executed Customer order
and have reached the Monthly Market Maker Cap to $0.17 per contract is
equitable and not unfairly discriminatory because all Specialists and
Market Makers would be uniformly assessed the fee as long as they have
reached the cap and are contra to an electronically-delivered Customer
order.
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. The Exchange believes that its
proposal to eliminate the Section I pricing applicable to Select
Symbols and instead assess BAC, EEM, GLD, IWM, MSFT, QQQ, and XLF the
fees in Section II and subject these Select Symbols to other Section II
pricing does not impose any undue burden on competition. In most cases,
market participants will be subject to the same or better pricing.
There will be no pricing differentials among market participants for
adding versus removing liquidity. All of these Select Symbols are Penny
Pilot Options and therefore would be subject a single electronic
Options Transaction Charge applicable to Penny Pilot Options. The floor
transaction fees remain unaffected because today Section II pricing
applies to Select Symbols. Other than options on SPY, which are subject
to different pricing, all Multiply Listed Options symbols would be
subject to the pricing in Section II with this proposal.
With respect to increasing the $0.16 per contract fee that today is
assessed to Specialists and Market Makers that are on the contra-side
of an electronically-delivered and executed Customer order and have
reached the Monthly Market Maker Cap to $0.17 per contract the Exchange
believes that this proposed amendment will also not impose an undue
burden on competition. The Exchange will uniformly assess this fee to
Specialists and Market Makers in limited circumstances.
The Exchange operates in a highly competitive market, comprised of
eleven exchanges, in which market participants can easily and readily
direct order flow to competing venues if they deem fee levels at a
particular venue to be excessive or rebates to be inadequate.
Accordingly, the fees that are assessed and the rebates paid by the
Exchange described in the above proposal are influenced by these robust
market forces and therefore must remain competitive with fees charged
and rebates paid by other venues and therefore must continue to be
reasonable and equitably allocated to those members that opt to direct
orders to the Exchange rather than competing venues.
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.\30\ 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 shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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\30\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-Phlx-2013-71 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-Phlx-2013-71. 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 (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 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-2013-71 and should be
submitted on or before August 6, 2013.
[[Page 42572]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-16935 Filed 7-15-13; 8:45 am]
BILLING CODE 8011-01-P
