Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Options Fees and Rebates, 48518-48520 [2013-19142]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 153 (Thursday, August 8, 2013)]
[Notices]
[Pages 48518-48520]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19142]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70095; File No. SR-BX-2013-046]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Options Fees and Rebates

August 2, 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 July 30, 2013, NASDAQ OMX BX, Inc. (``BX'' or ``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 Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Chapter XV, Section 2 entitled ``BX 
Options Market--Fees and Rebates'' to add iPath S&P 500 VIX Short Term 
Futures (``VXX'') to the list of options underlying certain penny pilot 
options.
    While the changes proposed herein are effective upon filing, the 
Exchange has designated these changes to be operative on August 1, 
2013.
    The text of the proposed rule change is available on the Exchange's 
Web site at https://nasdaqomxbx.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
    BX proposes to amend Chapter XV, Section 2(1) to add VXX to the 
list of options underlying certain penny pilot options (the others 
include BAC, IWM, QQQ and SPY, collectively with VXX, the ``Specified 
Penny Pilot Options'').
    The proposed rule change will reflect the fees and rebates as 
follows:

                                                Fees and Rebates
                                             [per executed contract]
----------------------------------------------------------------------------------------------------------------
                                                                                    BX options     Non-customer
                                                                     Customer      market maker         \1\
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BAC, IWM, QQQ, SPY and VXX:
    Rebate to Add Liquidity.....................................       \2\ $0.00       \2\ $0.20             N/A
    Fee to Add Liquidity........................................        \3\ 0.10        \3\ 0.10            0.45
    Rebate to Remove Liquidity..................................            0.00             N/A             N/A
    Fee to Remove Liquidity.....................................             N/A            0.45            0.45
All Other Penny Pilot Options:
    Rebate to Add Liquidity.....................................        \2\ 0.00        \2\ 0.10             N/A

[[Page 48519]]

 
    Fee to Add Liquidity........................................        \3\ 0.40        \3\ 0.40            0.45
    Rebate to Remove Liquidity..................................            0.32             N/A             N/A
    Fee to Remove Liquidity.....................................             N/A            0.45            0.45
Non-Penny Pilot Options:
    Fee to Add Liquidity........................................       \4\ 0.25/       \4\ 0.50/            0.88
                                                                            0.85            0.85
    Rebate to Remove Liquidity..................................            0.70             N/A             N/A
    Fee to Remove Liquidity.....................................             N/A            0.88            0.88
----------------------------------------------------------------------------------------------------------------

    Currently, the fees that apply to VXX as are the listed above under 
the ``All Other Penny Pilot Options'' category. The new fees applicable 
to VXX as a Specified Penny Pilot Option are unchanged for Non-
Customers. The Rebate to Add Liquidity and the Fee to Remove Liquidity 
for Customers also remains unchanged. For BX Options Market Makers, 
both the Rebate and Fee to Remove Liquidity are unchanged. The Rebate 
to Add Liquidity for BX Options Market Makers increases from $0.10 to 
$0.20 per executed contract. The Fee to Add Liquidity for both 
Customers and BX Options Market Makers decreases from $0.40 to $0.10 
per executed contract. Finally, the Rebate to Remove Liquidity for 
Customers decreases from $0.32 to $0.00 per executed contract.
    The Exchange believes that including VXX to the list of Specified 
Penny Pilot Options, is competitive and will encourage BX members to 
transact business on the Exchange.
2. Statutory Basis
    BX believes that the proposed rule changes are consistent with the 
provisions of Section 6 of the Act,\3\ in general, and with Section 
6(b)(4) of the Act,\4\ in particular, in that they provide for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system 
which BX operates or controls.
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    \3\ 15 U.S.C. 78f.
    \4\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that its proposal to include VXX in the list 
of Specified Penny Pilot Options and subject to the fees and rebates 
applicable thereto, is reasonable given the fact that certain symbols 
such as the Specified Penny Pilot Options are highly liquid as compared 
to other penny pilot options and pricing by symbol is not novel as 
other options exchanges differentiate pricing by security today.\5\ The 
Exchange believes that its proposal to assess an increase to the Rebate 
to Add Liquidity for BX Options Market Makers, a decrease to the Fee to 
Add Liquidity for both Customers and BX Options Market Makers, and a 
decrease to the Rebate to Remove Liquidity for Customers for VXX (as is 
the case for the other Specified Penny Pilot Options) as compared to 
all other penny pilot options is equitable and not unfairly 
discriminatory because it will help to attract order flow from BX 
Options Market Makers and Customers to the Exchange to the benefit of 
all market participants through increased liquidity.
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    \5\ See NASDAQ OMX PHLX LLC's Pricing Schedule, which has 
different pricing for its Select Symbols and different pricing for 
other Multiply Listed Options. See also the NASDAQ Options Market 
LLC at Chapter XV, Section 2(1), which distinguishes pricing for NDX 
and MNX; the International Securities Exchange LLC's Fee Schedule, 
which distinguishes pricing for Special Non-Select Penny Pilot 
Symbols; and the Chicago Board Options Exchange, Incorporated's Fees 
Schedule, which distinguishes index products.
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    The Exchange operates in a highly competitive market comprised of 
eleven U.S. options exchanges in which sophisticated and knowledgeable 
market participants can and do send order flow to competing exchanges 
if they deem fee levels at a particular exchange to be excessive. The 
Exchange believes that its proposal to include VXX in the list of 
Specified Penny Pilot Options and subject to the fees and rebates 
applicable thereto, is competitive and similar to other fees and 
rebates in place on other exchanges. The Exchange believes that this 
competitive marketplace materially impacts the fees and rebates present 
on the Exchange today and substantially influences the proposal set 
forth above.

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

    BX 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 the fee/rebate 
pricing structure for VXX as included in the Specified Penny Pilot 
Options list, would attract liquidity to and benefit order interaction 
at the Exchange to the benefit of all market participants.
    Additionally, since the fees and rebates for VXX as included in the 
list of Specified Penny Pilot Options are comparable to those present 
at other options venues, the Exchange believes the proposals discussed 
herein do not pose a burden on competition amongst Exchange 
participants.

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.\6\ 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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    \6\ 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

[[Page 48520]]

     Send an email to rule-comments@sec.gov. Please 
include File Number SR-BX-2013-046 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-2013-046. 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-BX-2013-046 and should be 
submitted on or before August 29, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19142 Filed 8-7-13; 8:45 am]
BILLING CODE 8011-01-P