Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Customer Rebate Program, 68895-68897 [2013-27323]

Download as PDF Federal Register / Vol. 78, No. 221 / Friday, November 15, 2013 / Notices A proposed rule change filed under Rule 19b–4(f)(6) 12 normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii),13 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. FINRA has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest because such waiver will allow the pilot program to continue without interruption. Therefore, the Commission designates the proposal operative upon filing.14 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. 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: 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 St. NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. 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–FINRA– 2013–049, and should be submitted on or before December 6,2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.15 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–27322 Filed 11–14–13; 8:45 am] Electronic Comments BILLING CODE 8011–01–P • 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– FINRA–2013–049 on the subject line. SECURITIES AND EXCHANGE COMMISSION emcdonald on DSK67QTVN1PROD with NOTICES 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–FINRA–2013–049. This file Commission. The Exchange has satisfied this requirement. 12 17 CFR 240.19b–4(f)(6). 13 17 CFR 240.19b–4(f)(6)(iii). 14 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). VerDate Mar<15>2010 16:58 Nov 14, 2013 Jkt 232001 [Release No. 34–70840; File No. SR–Phlx– 2013–110] Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Customer Rebate Program November 8, 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 October 31, 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 amend the Customer Rebate Program in Section B of the Pricing Schedule. While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on November 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 lower certain rebate tier percentage thresholds in the ‘‘Customer Rebate Program,’’ in Section B of the Pricing Schedule to provide members a greater opportunity to receive Customer rebates. Currently, the Exchange has a Customer Rebate Program consisting of four tiers which pays Customer rebates 15 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 68895 E:\FR\FM\15NON1.SGM 15NON1 68896 Federal Register / Vol. 78, No. 221 / Friday, November 15, 2013 / Notices on two Categories, A 3 and B,4 of transactions.5 A Phlx member qualifies for a certain rebate tier based on the percentage of total national customer volume in multiply-listed options Customer Rebate Tiers Tier Tier Tier Tier 1 2 3 4 ......................... ......................... ......................... ......................... Category A 0.00%–0.75% ........................................................................................................... Above 0.75%–1.60% ............................................................................................... Above 1.60%–2.60% ............................................................................................... Above 2.60% ........................................................................................................... 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,9 in general, and with Section 6(b)(4) and 6(b)(5) of the Act,10 in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among members and issuers and other persons using any facility or system which the Exchange operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that its proposal to lower the Tier 4 percentage threshold is reasonable because a greater number of market participants may qualify for the Tier 4 rebates. Tier 4 pays emcdonald on DSK67QTVN1PROD with NOTICES electronic Qualified Contingent Cross (‘‘QCC’’) Orders,6 as defined in Exchange Rule 1080(o).7 The Exchange pays the following rebates:8 Percentage thresholds of national customer volume in Multiply-Listed Equity and ETF Options Classes, excluding SPY Options (Monthly) The Exchange is proposing to amend the percentage threshold of national customer volume in multiply-listed options in Tier 3 from ‘‘Above 1.60%— 2.60%’’ to ‘‘Above 1.60%—2.50%.’’ The Exchange also proposes to amend the Tier 4 percentage threshold from ‘‘Above 2.60%’’ to ‘‘Above 2.50%.’’ The Exchange believes that by lowering the percentage threshold in Tier 4 to 2.50%, as well as shortening the Tier 3 rebate at 2.50%, a greater number of market participants may qualify for Tier 4 Customer rebates and this will encourage market participants to direct a greater number of Customer orders to the Exchange. 3 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 of the Pricing Schedule. 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 are paid a rebate regardless of the contra party to the transaction. 4 Category B rebates are paid to members executing electronically-delivered Customer Complex Orders in Penny Pilot Options and NonPenny Pilot Options in Section II. 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. VerDate Mar<15>2010 which it transacts monthly on Phlx. The Exchange calculates Customer volume in Multiply Listed Options by totaling electronically-delivered and executed volume, except volume associated with 16:58 Nov 14, 2013 Jkt 232001 0.00 0.12 0.14 0.15 Category B 0.00 0.17 0.17 0.17 higher Category A rebates as compared to Tier 3 Category A rebates. Today, a Phlx member that qualified for a Tier 3 rebate would receive a Customer rebate of $0.14 per contract in Category A. That same member would receive a $0.15 per contract Category A rebate with this proposal if the member were to transact volume greater than 2.50% of total national customer volume in multiplylisted options in a month. The Exchange believes that lowering the Tier 4 rebate, thereby shortening the Tier 3 rebate at 2.50%, would cause members to direct an even greater number of Customer orders to the Exchange to qualify for the higher Tier 4 Category A rebate. The proposal would not impact a market participant that currently qualifies for a Tier 3 Category B rebate because both Tiers 3 and 4 pay a Category B Customer rebate of $0.17 per contract. The Exchange believes that its proposal to lower the Tier 4 percentage threshold, thereby shortening the Tier 3 rebate at 2.50%, is equitable and not unfairly discriminatory because it will be applied to all market participants in a uniform matter. Any market participant is eligible to receive the rebate provided they transact a qualifying amount of electronic Customer volume. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose an undue burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the Customer Rebate Program will continue to encourage Customer order flow to be directed to the Exchange. By incentivizing members to route Customer orders, the Exchange desires to attract liquidity to the Exchange, which in turn benefits all market participants. All market participants are eligible to qualify for a Customer Rebate. The Exchange believes the proposed amendment would allow a greater number of market participants to qualify for Tier 4 Customer rebates. The Exchange believes this pricing amendment does not impose a burden on competition but rather that the proposed rule change will continue to promote competition on the Exchange. The Exchange operates in a highly competitive market, comprised of twelve options 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 All Customer PIXL Complex Orders that are greater than 999 contracts are paid a rebate regardless of the contra-party to the transaction. 5 See Section B of the Pricing Schedule. 6 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 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 (‘‘QCTs’’) that satisfy the requirements of the trade through exemption in connection with Rule 611(d) of the Regulation NMS). 7 Members and member organizations under common ownership may aggregate their Customer volume for purposes of calculating the Customer Rebate Tiers and receiving rebates. Common ownership means members or member organizations under 75% common ownership or control. 8 SPY is included in the calculation of Customer volume in Multiply Listed Options that are electronically-delivered and executed for purposes of the Customer Rebate Program, however, the rebates do not apply to electronic executions in SPY. 9 15 U.S.C. 78f. 10 15 U.S.C. 78f(b)(4) and (5). PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 E:\FR\FM\15NON1.SGM 15NON1 Federal Register / Vol. 78, No. 221 / Friday, November 15, 2013 / Notices 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.11 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. 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: emcdonald on DSK67QTVN1PROD with NOTICES 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–2013–110 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–2013–110. 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– 2013–110 and should be submitted on or before December 6, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.12 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–27323 Filed 11–14–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–70836; File No. SR–EDGX– 2013–40] Self-Regulatory Organizations; EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend EDGX Rule 3.5 (Advertising Practices) and To Repeal Rule 3.20 (Initial or Partial Payments) To Conform with the Rules of the Financial Industry Regulatory Authority, Inc. November 8, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on October 28, 2013, EDGX Exchange, Inc. (‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which items have been substantially prepared by the Exchange. The Exchange has designated the proposed rule change as constituting a ‘‘non-controversial’’ rule change under Exchange Act Rule 19b–4(f)(6), which renders the proposal effective upon receipt of this filing by the Commission.3 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 EDGX Rule 3.5 (Advertising Practices) and repeal EDGX Rule 3.20 (Initial or Partial Payments) to conform with the rules of the Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) for purposes of an agreement between the Exchange and FINRA pursuant to Exchange Act Rule 17d–2.4 The text of the proposed rule change is available on the Exchange’s Web site at https:// www.directedge.com, at the Exchange’s principal office, 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose Pursuant to Exchange Act Rule 17d– 2,5 the Exchange and FINRA entered into an agreement to allocate regulatory responsibility for common rules (‘‘17d– 2 Agreement’’). The 17d–2 Agreement covers common members of the Exchange and FINRA (‘‘Common Members’’) and allocates to FINRA regulatory responsibility, with respect to Common Members, for the following: (i) Examination of Common Members for compliance with federal securities laws, U.S.C. 78s(b)(3)(A)(ii). VerDate Mar<15>2010 16:58 Nov 14, 2013 Jkt 232001 12 17 3 17 1 15 11 15 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 4 17 PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 68897 CFR 240.19b–4(f)(6). CFR 240.17d–2. 5 Id. E:\FR\FM\15NON1.SGM 15NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 78, Number 221 (Friday, November 15, 2013)]
[Notices]
[Pages 68895-68897]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-27323]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70840; File No. SR-Phlx-2013-110]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Customer Rebate Program

November 8, 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 October 31, 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.
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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 the Customer Rebate Program in
Section B of the Pricing Schedule.
While the changes proposed herein are effective upon filing, the
Exchange has designated that the amendments be operative on November 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 lower certain rebate tier percentage
thresholds in the ``Customer Rebate Program,'' in Section B of the
Pricing Schedule to provide members a greater opportunity to receive
Customer rebates.
Currently, the Exchange has a Customer Rebate Program consisting of
four tiers which pays Customer rebates

[[Page 68896]]

on two Categories, A \3\ and B,\4\ of transactions.\5\ A Phlx member
qualifies for a certain rebate tier based on the percentage of total
national customer volume in multiply-listed options which it transacts
monthly on Phlx. The Exchange calculates Customer volume in Multiply
Listed Options by totaling electronically-delivered and executed
volume, except volume associated with electronic Qualified Contingent
Cross (``QCC'') Orders,\6\ as defined in Exchange Rule 1080(o).\7\ The
Exchange pays the following rebates:\8\
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\3\ 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 of the Pricing Schedule. 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 are paid a rebate regardless of
the contra party to the transaction.
\4\ 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. 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
are paid a rebate regardless of the contra-party to the transaction.
\5\ See Section B of the Pricing Schedule.
\6\ 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 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 (``QCTs'')
that satisfy the requirements of the trade through exemption in
connection with Rule 611(d) of the Regulation NMS).
\7\ Members and member organizations under common ownership may
aggregate their Customer volume for purposes of calculating the
Customer Rebate Tiers and receiving rebates. Common ownership means
members or member organizations under 75% common ownership or
control.
\8\ SPY is included in the calculation of Customer volume in
Multiply Listed Options that are electronically-delivered and
executed for purposes of the Customer Rebate Program, however, the
rebates do not apply to electronic executions in SPY.

----------------------------------------------------------------------------------------------------------------
Percentage thresholds of national
customer volume in Multiply-Listed
Customer Rebate Tiers Equity and ETF Options Classes, Category A Category B
excluding SPY Options (Monthly)
----------------------------------------------------------------------------------------------------------------
Tier 1.................................. 0.00%-0.75%....................... 0.00 0.00
Tier 2.................................. Above 0.75%-1.60%................. 0.12 0.17
Tier 3.................................. Above 1.60%-2.60%................. 0.14 0.17
Tier 4.................................. Above 2.60%....................... 0.15 0.17
----------------------------------------------------------------------------------------------------------------

The Exchange is proposing to amend the percentage threshold of
national customer volume in multiply-listed options in Tier 3 from
``Above 1.60%--2.60%'' to ``Above 1.60%--2.50%.'' The Exchange also
proposes to amend the Tier 4 percentage threshold from ``Above 2.60%''
to ``Above 2.50%.'' The Exchange believes that by lowering the
percentage threshold in Tier 4 to 2.50%, as well as shortening the Tier
3 rebate at 2.50%, a greater number of market participants may qualify
for Tier 4 Customer rebates and this will encourage market participants
to direct a greater number of Customer orders to the Exchange.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\9\ in general, and with
Section 6(b)(4) and 6(b)(5) of the Act,\10\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility or system which the Exchange operates or controls, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------

\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

The Exchange believes that its proposal to lower the Tier 4
percentage threshold is reasonable because a greater number of market
participants may qualify for the Tier 4 rebates. Tier 4 pays higher
Category A rebates as compared to Tier 3 Category A rebates. Today, a
Phlx member that qualified for a Tier 3 rebate would receive a Customer
rebate of $0.14 per contract in Category A. That same member would
receive a $0.15 per contract Category A rebate with this proposal if
the member were to transact volume greater than 2.50% of total national
customer volume in multiply-listed options in a month. The Exchange
believes that lowering the Tier 4 rebate, thereby shortening the Tier 3
rebate at 2.50%, would cause members to direct an even greater number
of Customer orders to the Exchange to qualify for the higher Tier 4
Category A rebate. The proposal would not impact a market participant
that currently qualifies for a Tier 3 Category B rebate because both
Tiers 3 and 4 pay a Category B Customer rebate of $0.17 per contract.
The Exchange believes that its proposal to lower the Tier 4
percentage threshold, thereby shortening the Tier 3 rebate at 2.50%, is
equitable and not unfairly discriminatory because it will be applied to
all market participants in a uniform matter. Any market participant is
eligible to receive the rebate provided they transact a qualifying
amount of electronic Customer volume.

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

The Exchange does not believe that the proposed rule change will
impose an undue burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Exchange believes that the
Customer Rebate Program will continue to encourage Customer order flow
to be directed to the Exchange. By incentivizing members to route
Customer orders, the Exchange desires to attract liquidity to the
Exchange, which in turn benefits all market participants. All market
participants are eligible to qualify for a Customer Rebate.
The Exchange believes the proposed amendment would allow a greater
number of market participants to qualify for Tier 4 Customer rebates.
The Exchange believes this pricing amendment does not impose a burden
on competition but rather that the proposed rule change will continue
to promote competition on the Exchange.
The Exchange operates in a highly competitive market, comprised of
twelve options 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

[[Page 68897]]

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.\11\ 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.
---------------------------------------------------------------------------

\11\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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-2013-110 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-2013-110. 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-2013-110 and should be
submitted on or before December 6, 2013.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-27323 Filed 11-14-13; 8:45 am]
BILLING CODE 8011-01-P

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