Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees, 31171-31174 [2014-12519]

Download as PDF Federal Register / Vol. 79, No. 104 / Friday, May 30, 2014 / Notices are related but are currently performed separately by the NC and GC and that adding two Public Directors to the Board would broaden the mix of viewpoints and business expertise that informs the administration of OCC’s affairs with respect to the markets that it serves. These proposed modifications would not disadvantage or favor any particular user in relationship to another user because they relate to the overarching governance structure of OCC that affects all users and does not relate directly to any particular service or particular use of OCC’s facilities. For the foregoing reasons, OCC believes that the proposed rule change is in the public interest, would be consistent with the requirements of the Act applicable to clearing agencies and would not impose a burden on competition. (C) Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments on the proposed rule change were not and are not intended to be solicited with respect to the proposed rule change and none have been received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. The proposal shall not take effect until all regulatory actions required with respect to the proposal are completed.21 mstockstill on DSK4VPTVN1PROD with NOTICES 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– OCC–2014–09 on the subject line. also filed the proposed rule change as an advance notice under Section 806(e)(1) of the Payment, Clearing and Settlement Supervision Act. See supra note 3. VerDate Mar<15>2010 18:23 May 29, 2014 Jkt 232001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–72239; File No. SR–BX– 2014–026] Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees May 23, 2014. All submissions should refer to File Number SR–OCC–2014–09. 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 20549–1090 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 OCC and on OCC’s Web site: https://www.theocc.com/components/ docs/legal/rules_and_bylaws/sr_occ_14_ 09.pdf. 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–OCC–2014–09 and should be submitted on or before June 20, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–12522 Filed 5–29–14; 8:45 am] 21 OCC 31171 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 May 16, 2014, NASDAQ OMX BX, Inc. (‘‘BX’’ 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 proposed to amend Chapter XV, Section 2 entitled ‘‘BX Options Market—Fees and Rebates’’. Specifically, the Exchange is proposing to amend Routing Fees. While the changes proposed herein are effective upon filing, the Exchange has designated that the amendments be operative on June 2, 2014. 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. BILLING CODE 8011–01–P 1 15 22 17 PO 00000 CFR 200.30–3(a)(12). Frm 00094 Fmt 4703 Sfmt 4703 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. E:\FR\FM\30MYN1.SGM 30MYN1 31172 Federal Register / Vol. 79, No. 104 / Friday, May 30, 2014 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change mstockstill on DSK4VPTVN1PROD with NOTICES 1. Purpose The purpose of this filing is to amend the Routing Fees in Chapter XV, Section 2(3) to recoup costs incurred by the Exchange to route orders to away markets. Today, the Exchange assesses a NonCustomer a $0.95 per contract Routing Fee to any options exchange. The Customer 3 Routing Fee for option orders routed to NASDAQ OMX PHLX LLC (‘‘PHLX’’) and The NASDAQ Options Market LLC (‘‘NOM’’) is a $0.10 per contract Fixed Fee in addition to the actual transaction fee assessed. The Customer Routing Fee for option orders routed to all other options exchanges 4 (excluding PHLX and NOM) is a fixed fee of $0.20 per contract (‘‘Fixed Fee’’) in addition to the actual transaction fee assessed. If the away market pays a rebate, the Routing Fee is $0.10 per contract. With respect to the fixed costs, the Exchange incurs a fee when it utilizes Nasdaq Execution Services LLC (‘‘NES’’),5 a member of the Exchange and the Exchange’s exclusive order router. Each time NES routes an order to an away market, NES is charged a clearing fee 6 and, in the case of certain exchanges, a transaction fee is also charged in certain symbols, which fees are passed through to the Exchange. The Exchange currently recoups clearing and transaction charges incurred by the Exchange as well as certain other costs incurred by the Exchange when routing to away markets, such as administrative and technical costs associated with operating NES, membership fees at away markets, Options Regulatory Fees 3 The term ‘‘Customer’’ or (‘‘C’’) applies to any transaction that is identified by a Participant 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 Chapter I, Section 1(a)(48)). 4 Including BATS Exchange, Inc. (‘‘BATS’’), BOX Options Exchange LLC (‘‘BOX’’), the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’), C2 Options Exchange, Incorporated (‘‘C2’’), International Securities Exchange, LLC (‘‘ISE’’), the Miami International Securities Exchange, LLC (‘‘MIAX’’), NYSE Arca, Inc. (‘‘NYSE Arca’’), NYSE MKT LLC (‘‘NYSE Amex’’) and ISE Gemini, LLC (‘‘Gemini’’). 5 The Exchange filed a proposed rule change to utilize Nasdaq Execution Services, LLC (‘‘NES’’) for outbound order routing. See Securities Exchange Act Release No. 71420 (January 28, 2014), 79 FR 6256 (February 3, 2014) (SR–BX–2014–004). 6 OCC assessed a $0.01 per contract side. The fee has recently been increased from $0.01 to $0.02 per contract side. See Securities Exchange Act Release No. 71769 (March 21, 2014), 79 FR 17214 (March 21, 2014) (SR–OCC–2014–05). VerDate Mar<15>2010 18:23 May 29, 2014 Jkt 232001 (‘‘ORFs’’), staffing and technical costs associated with routing options. The Exchange assesses the actual away market fee at the time that the order was entered into the Exchange’s System. This transaction fee is calculated on an order-by-order basis since different away markets charge different amounts. The Exchange is proposing to increase Routing Fees to account for increased OCC fees and other increased costs associated with clearing, ORFs and other operational costs. The Exchange proposes to increase Routing Fees for Non-Customer orders from $0.95 to $0.97 per contract. The Exchange also proposes to increase Customer Routing Fees as described herein. The Exchange proposes to increase Customer Routing Fees to NOM and PHLX from a Fixed Fee of $0.10 to $0.12 per contract, in addition to the actual transaction fee assessed. The Exchange also proposes to amend Routing Fees to all other exchanges (except NOM and PHLX) from $0.20 to $0.22 per contract, in addition to the actual transaction fee assessed, provided the away market does not pay a rebate. If the away market pays a rebate, the Routing Fee assessed would be $0.12 per contract, an increase from the current $0.10 per contract. The Exchange proposes these increases to recoup an additional portion of the costs incurred by the Exchange for routing these orders. The Exchange is proposing to increase Non-Customer and Customer Routing Fees by $0.02 per contract to cover the increased costs of offering its members the opportunity to route to other options exchanges. With the recent increase by OCC 7 as well as increases in ORFs and BX’s operational expenses, the Exchange seeks to further recoup a portion of increased costs with the increase to its Routing Fees. The Exchange is proposing to amend the Customer Routing Fee assessed when routing to all other options exchanges, if the away market pays a rebate, from a $0.10 to a $0.12 per contract Fixed Fee, in order to recoup an additional portion of the costs incurred by the Exchange for routing these orders. The Exchange does not assess the actual transaction fee assessed by the away market, rather the Exchange only assesses the Fixed Fee, because the Exchange would continue to retain the rebate to offset the cost to route orders to these away markets. This will remain the same. 2. Statutory Basis BX believes that its proposal to amend its Pricing Schedule is consistent with Section 6(b) of the Act 8 in general, and furthers the objectives of Section 6(b)(4) and (b)(5) of the Act 9 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 it operates or controls, and is not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange believes that amending the Non-Customer and Customer Routing Fees by $0.02 per contracts is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing NonCustomer and Customer orders. Specifically, the Exchange’s proposal to increase Non-Customer fees from $0.95 to $0.97 per contract is reasonable because the additional $0.02 per contract fee will recoup increased costs borne by BX. The Exchange believes that amending the Customer Routing Fees for orders routed to NOM and PHLX from a Fixed Fee of $0.10 to $0.12 per contract is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing Customer orders to NOM or PHLX. The Exchange will continue to also assess actual transaction fees assessed by NOM and PHLX for Customer orders. The Exchange believes that continuing to assess lower Fixed Fees to route Customer orders to NOM and PHLX, as compared to other options exchanges, is reasonable as the Exchange is able to leverage certain infrastructure to offer those markets lower fees as explained further below. The Exchange believes that increasing the fee for routing to all other options exchanges (other than NOM and PHLX) from $0.20 to $0.22 per contact is reasonable because the increased fee would recoup costs associated with routing Customer orders, in addition to the actual transaction fee when no rebate is paid. Similarly, the Exchange believes that amending the Customer Routing Fee to other away markets, other than NOM and PHLX, in the instance the away market pays a rebate from $0.10 to $0.12 per contract is reasonable because the Exchange desires to recoup an additional portion of the cost it incurs when routing orders to these away markets. While the Exchange would continue to retain any rebate paid by these away markets, the Exchange does not assess the actual transaction fee that is charged by the away market for Customer orders. The 8 15 7 Id. PO 00000 Frm 00095 9 15 Fmt 4703 Sfmt 4703 U.S.C. 78f(b). U.S.C. 78f(b)(4), (5). E:\FR\FM\30MYN1.SGM 30MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 79, No. 104 / Friday, May 30, 2014 / Notices Fixed Fee for Customer orders is an approximation of the costs the Exchange will be charged for routing orders to away markets. As a general matter, the Exchange believes that the proposed fees for Customer orders routed to markets which pay a rebate would allow it to recoup and cover a portion of the costs of providing optional routing services for Customer orders because it better approximates the costs incurred by the Exchange for routing such orders. While each destination market’s transaction charge varies and there is a cost incurred by the Exchange when routing orders to away markets, including, OCC clearing costs, administrative and technical costs associated with operating NES, membership fees at away markets, ORFs and technical costs associated with routing options, the Exchange believes that the proposed Routing Fees will enable it to recover the increased costs it incurs to route Customer orders to away markets. The Exchange believes that amending the Non-Customer Routing Fees from $0.95 to $0.97 per contract is equitable and not unfairly discriminatory because the Exchange would assess the same Non-Customer Routing Fee to all NonCustomer orders routed away. The Exchange believes that amending the Customer Routing Fee for orders routed to NOM and PHLX from a Fixed Fee of $0.10 to $0.12 per contract, in addition to the actual transaction fee, is equitable and not unfairly discriminatory because the Exchange would assess the same Fixed Fee to all orders routed to NOM or PHLX in addition to the transaction fee assessed by that market. With respect to routing Customer orders to all other away markets (except NOM and PHLX) the Exchange believes that amending the Customer Routing Fee from $0.20 to $0.22 per contract, in addition to the actual transaction fee assessed) is equitable and not unfairly discriminatory because the Exchange would assess the same fee to all Customer orders routed to away markets, provided the away market does not pay a rebate. The Exchange believes that increasing the Routing Fee to away markets (other than NOM and PHLX), when the away market pays a rebate, from $0.10 to $0.12 per contract is equitable and not unfairly discriminatory because all Customer orders routed to away markets (other than NOM and PHLX) would be assessed the same fee, provided the away market paid a rebate. The Exchange would uniformly assess a $0.12 per contract Fixed Fee to orders routed to NASDAQ OMX exchanges because the Exchange is passing along VerDate Mar<15>2010 18:23 May 29, 2014 Jkt 232001 the saving realized by leveraging NASDAQ OMX’s infrastructure and scale to market participants when those orders are routed to NOM or PHLX and is providing those savings to all market participants. Furthermore, it is important to note that when orders are routed to an away market they are routed based on price first.10 The Exchange believes that it is equitable and not unfairly discriminatory to assess a fixed cost of $0.12 per contract to route orders to NOM and PHLX because the cost, in terms of actual cash outlays, to the Exchange to route to those markets is lower. For example, costs related to routing to NOM and PHLX are lower as compared to other away markets because NES is utilized by all three exchanges to route orders.11 NES and the three NASDAQ OMX options markets have a common data center and staff that are responsible for the day-to-day operations of NES. Because the three exchanges are in a common data center, Routing Fees are reduced because costly expenses related to, for example, telecommunication lines to obtain connectivity are avoided when routing orders in this instance. The costs related to connectivity to route orders to other NASDAQ OMX exchanges are lower than the costs to route to a non-NASDAQ OMX exchange. When routing orders to nonNASDAQ OMX exchanges, the Exchange incurs costly connectivity charges related to telecommunication lines, membership and access fees, and other related costs when routing orders. Market participants may submit orders to the Exchange as ineligible for routing or ‘‘DNR’’ to avoid Routing Fees.12 Also, orders are routed to an away market based on price first.13 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 does not believe that the proposal creates a burden on intra-market competition because the Exchange is applying the same Routing Fee increase of $0.02 per contract to all market participants. The Exchange will continue to assess separate Customer Routing Fees. Customers will continue to receive the lowest fees as compared to Non10 See BX Rules at Chapter VI, Section 11(e) (Order Routing). 11 See Chapter VI, Section 11 of the NOM and BX Rules and PHLX Rule 1080(m)(iii). 12 See note 11. 13 Id. PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 31173 Customers when routing orders, as is the case today. Other options exchanges also assess lower Routing Fees for customer orders as compared to noncustomer orders.14 Market participants may submit orders to the Exchange as ineligible for routing or ‘‘DNR’’ to avoid Routing Fees.15 Also, orders are routed to an away market based on price first.16 The Exchange’s proposal would allow the Exchange to continue to recoup its costs when routing both Non-Customer and Customer orders. The Exchange continues to pass along savings realized by leveraging NASDAQ OMX’s infrastructure and scale to market participants when Customer orders are routed to NOM and PHLX and is providing those savings to all market participants. Today, other options exchanges also assess fixed routing fees to recoup costs incurred by the exchange to route orders to away markets.17 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.18 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. 14 BATS assesses lower customer routing fees as compared to non-customer routing fees per the away market. For example BATS assesses Phlx customer routing fees of $0.45 per contract and an ISE non-customer routing fee of $0.65 per contract. See BATS BZX Exchange Fee Schedule. 15 See note 11. 16 Id. 17 See CBOE’s Fees Schedule and ISE’s Fee Schedule. 18 15 U.S.C. 78s(b)(3)(A)(ii). E:\FR\FM\30MYN1.SGM 30MYN1 31174 Federal Register / Vol. 79, No. 104 / Friday, May 30, 2014 / Notices Comments may be submitted by any of the following methods: SECURITIES AND EXCHANGE COMMISSION SMALL BUSINESS ADMINISTRATION Electronic Comments In the Matter of Asia Global Holdings Corp., Ikona Gear International, Inc., Imagin Molecular Corp. (n/k/a The Planet Bottle Corporation), Sungold International Holdings Corp., and Westergaard.com, Inc., Order of Suspension of Trading File No. 500–1 Florida Disaster Number FL–00100 • 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– BX–2014–026 on the subject line. May 28, 2014. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. mstockstill on DSK4VPTVN1PROD with NOTICES All submissions should refer to File Number SR–BX–2014–026. 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–2014–026 and should be submitted on or before June 20, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Kevin M. O’Neill, Deputy Secretary. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Asia Global Holdings Corp. because it has not filed any periodic reports since the period ended June 30, 2011. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Ikona Gear International, Inc. because it has not filed any periodic reports since the period ended May 31, 2008. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Imagin Molecular Corp. (n/k/a The Planet Bottle Corporation) because it has not filed any periodic reports since the period ended September 30, 2010. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Sungold International Holdings Corp. because it has not filed any periodic reports since the period ended August 31, 2008. It appears to the Securities and Exchange Commission that there is a lack of current and accurate information concerning the securities of Westergaard.com, Inc. because it has not filed any periodic reports since the period ended June 30, 2011. The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-listed companies. Therefore, it is ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading in the securities of the abovelisted companies is suspended for the period from 9:30 a.m. EDT on May 28, 2014, through 11:59 p.m. EDT on June 10, 2014. [Disaster Declaration #13971 and #13972] U.S. Small Business Administration. ACTION: Amendment 2. AGENCY: This is an amendment of the Presidential declaration of a major disaster for the State of Florida (FEMA– 4177–DR), dated 05/06/2014. Incident: Severe storms, tornadoes, straight-line winds, and flooding. Incident Period: 04/28/2014 through 05/06/2014. Effective Date: 05/21/2014. Physical Loan Application Deadline Date: 07/07/2014. EIDL Loan Application Deadline Date: 02/06/2015. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the Presidential disaster declaration for the State of Florida, dated 05/06/ 2014 is hereby amended to include the following areas as adversely affected by the disaster: Primary Counties: (Physical Damage and Economic Injury Loans): Jackson Contiguous Counties: (Economic Injury Loans Only): Florida: Calhoun Gadsden Liberty Alabama: Houston Georgia: Seminole All other information in the original declaration remains unchanged. SUMMARY: (Catalog of Federal Domestic Assistance Numbers 59002 and 59008). James E. Rivera, Associate Administrator, for Disaster Assistance. [FR Doc. 2014–12556 Filed 5–29–14; 8:45 am] BILLING CODE 8025–01–P SMALL BUSINESS ADMINISTRATION National Women’s Business Council; Quarterly Public Meeting National Women’s Business Council, SBA. ACTION: Notice of open public meeting. BILLING CODE 8011–01–P 19 17 CFR 200.30–3(a)(12). VerDate Mar<15>2010 18:23 May 29, 2014 AGENCY: [FR Doc. 2014–12669 Filed 5–28–14; 11:15 am] [FR Doc. 2014–12519 Filed 5–29–14; 8:45 am] By the Commission. Jill M. Peterson, Assistant Secretary. SUMMARY: BILLING CODE 8011–01–P Jkt 232001 PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 The SBA is issuing this notice to announce the location, date, time, E:\FR\FM\30MYN1.SGM 30MYN1

Agencies

[Federal Register Volume 79, Number 104 (Friday, May 30, 2014)]
[Notices]
[Pages 31171-31174]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-12519]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72239; File No. SR-BX-2014-026]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Routing Fees

May 23, 2014.
    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 May 16, 2014, NASDAQ OMX BX, Inc. (``BX'' 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 proposed to amend Chapter XV, Section 2 entitled ``BX 
Options Market--Fees and Rebates''. Specifically, the Exchange is 
proposing to amend Routing Fees. While the changes proposed herein are 
effective upon filing, the Exchange has designated that the amendments 
be operative on June 2, 2014.
    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.

[[Page 31172]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

 1. Purpose
    The purpose of this filing is to amend the Routing Fees in Chapter 
XV, Section 2(3) to recoup costs incurred by the Exchange to route 
orders to away markets.
    Today, the Exchange assesses a Non-Customer a $0.95 per contract 
Routing Fee to any options exchange. The Customer \3\ Routing Fee for 
option orders routed to NASDAQ OMX PHLX LLC (``PHLX'') and The NASDAQ 
Options Market LLC (``NOM'') is a $0.10 per contract Fixed Fee in 
addition to the actual transaction fee assessed. The Customer Routing 
Fee for option orders routed to all other options exchanges \4\ 
(excluding PHLX and NOM) is a fixed fee of $0.20 per contract (``Fixed 
Fee'') in addition to the actual transaction fee assessed. If the away 
market pays a rebate, the Routing Fee is $0.10 per contract.
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    \3\ The term ``Customer'' or (``C'') applies to any transaction 
that is identified by a Participant 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 Chapter I, Section 
1(a)(48)).
    \4\ Including BATS Exchange, Inc. (``BATS''), BOX Options 
Exchange LLC (``BOX''), the Chicago Board Options Exchange, 
Incorporated (``CBOE''), C2 Options Exchange, Incorporated (``C2''), 
International Securities Exchange, LLC (``ISE''), the Miami 
International Securities Exchange, LLC (``MIAX''), NYSE Arca, Inc. 
(``NYSE Arca''), NYSE MKT LLC (``NYSE Amex'') and ISE Gemini, LLC 
(``Gemini'').
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    With respect to the fixed costs, the Exchange incurs a fee when it 
utilizes Nasdaq Execution Services LLC (``NES''),\5\ a member of the 
Exchange and the Exchange's exclusive order router. Each time NES 
routes an order to an away market, NES is charged a clearing fee \6\ 
and, in the case of certain exchanges, a transaction fee is also 
charged in certain symbols, which fees are passed through to the 
Exchange. The Exchange currently recoups clearing and transaction 
charges incurred by the Exchange as well as certain other costs 
incurred by the Exchange when routing to away markets, such as 
administrative and technical costs associated with operating NES, 
membership fees at away markets, Options Regulatory Fees (``ORFs''), 
staffing and technical costs associated with routing options. The 
Exchange assesses the actual away market fee at the time that the order 
was entered into the Exchange's System. This transaction fee is 
calculated on an order-by-order basis since different away markets 
charge different amounts.
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    \5\ The Exchange filed a proposed rule change to utilize Nasdaq 
Execution Services, LLC (``NES'') for outbound order routing. See 
Securities Exchange Act Release No. 71420 (January 28, 2014), 79 FR 
6256 (February 3, 2014) (SR-BX-2014-004).
    \6\ OCC assessed a $0.01 per contract side. The fee has recently 
been increased from $0.01 to $0.02 per contract side. See Securities 
Exchange Act Release No. 71769 (March 21, 2014), 79 FR 17214 (March 
21, 2014) (SR-OCC-2014-05).
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    The Exchange is proposing to increase Routing Fees to account for 
increased OCC fees and other increased costs associated with clearing, 
ORFs and other operational costs. The Exchange proposes to increase 
Routing Fees for Non-Customer orders from $0.95 to $0.97 per contract. 
The Exchange also proposes to increase Customer Routing Fees as 
described herein. The Exchange proposes to increase Customer Routing 
Fees to NOM and PHLX from a Fixed Fee of $0.10 to $0.12 per contract, 
in addition to the actual transaction fee assessed. The Exchange also 
proposes to amend Routing Fees to all other exchanges (except NOM and 
PHLX) from $0.20 to $0.22 per contract, in addition to the actual 
transaction fee assessed, provided the away market does not pay a 
rebate. If the away market pays a rebate, the Routing Fee assessed 
would be $0.12 per contract, an increase from the current $0.10 per 
contract. The Exchange proposes these increases to recoup an additional 
portion of the costs incurred by the Exchange for routing these orders.
    The Exchange is proposing to increase Non-Customer and Customer 
Routing Fees by $0.02 per contract to cover the increased costs of 
offering its members the opportunity to route to other options 
exchanges. With the recent increase by OCC \7\ as well as increases in 
ORFs and BX's operational expenses, the Exchange seeks to further 
recoup a portion of increased costs with the increase to its Routing 
Fees.
---------------------------------------------------------------------------

    \7\ Id.
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    The Exchange is proposing to amend the Customer Routing Fee 
assessed when routing to all other options exchanges, if the away 
market pays a rebate, from a $0.10 to a $0.12 per contract Fixed Fee, 
in order to recoup an additional portion of the costs incurred by the 
Exchange for routing these orders. The Exchange does not assess the 
actual transaction fee assessed by the away market, rather the Exchange 
only assesses the Fixed Fee, because the Exchange would continue to 
retain the rebate to offset the cost to route orders to these away 
markets. This will remain the same.
2. Statutory Basis
    BX believes that its proposal to amend its Pricing Schedule is 
consistent with Section 6(b) of the Act \8\ in general, and furthers 
the objectives of Section 6(b)(4) and (b)(5) of the Act \9\ 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 it operates or 
controls, and is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------

    The Exchange believes that amending the Non-Customer and Customer 
Routing Fees by $0.02 per contracts is reasonable because the Exchange 
desires to recoup an additional portion of the cost it incurs when 
routing Non-Customer and Customer orders. Specifically, the Exchange's 
proposal to increase Non-Customer fees from $0.95 to $0.97 per contract 
is reasonable because the additional $0.02 per contract fee will recoup 
increased costs borne by BX.
    The Exchange believes that amending the Customer Routing Fees for 
orders routed to NOM and PHLX from a Fixed Fee of $0.10 to $0.12 per 
contract is reasonable because the Exchange desires to recoup an 
additional portion of the cost it incurs when routing Customer orders 
to NOM or PHLX. The Exchange will continue to also assess actual 
transaction fees assessed by NOM and PHLX for Customer orders.
    The Exchange believes that continuing to assess lower Fixed Fees to 
route Customer orders to NOM and PHLX, as compared to other options 
exchanges, is reasonable as the Exchange is able to leverage certain 
infrastructure to offer those markets lower fees as explained further 
below.
    The Exchange believes that increasing the fee for routing to all 
other options exchanges (other than NOM and PHLX) from $0.20 to $0.22 
per contact is reasonable because the increased fee would recoup costs 
associated with routing Customer orders, in addition to the actual 
transaction fee when no rebate is paid. Similarly, the Exchange 
believes that amending the Customer Routing Fee to other away markets, 
other than NOM and PHLX, in the instance the away market pays a rebate 
from $0.10 to $0.12 per contract is reasonable because the Exchange 
desires to recoup an additional portion of the cost it incurs when 
routing orders to these away markets. While the Exchange would continue 
to retain any rebate paid by these away markets, the Exchange does not 
assess the actual transaction fee that is charged by the away market 
for Customer orders. The

[[Page 31173]]

Fixed Fee for Customer orders is an approximation of the costs the 
Exchange will be charged for routing orders to away markets. As a 
general matter, the Exchange believes that the proposed fees for 
Customer orders routed to markets which pay a rebate would allow it to 
recoup and cover a portion of the costs of providing optional routing 
services for Customer orders because it better approximates the costs 
incurred by the Exchange for routing such orders. While each 
destination market's transaction charge varies and there is a cost 
incurred by the Exchange when routing orders to away markets, 
including, OCC clearing costs, administrative and technical costs 
associated with operating NES, membership fees at away markets, ORFs 
and technical costs associated with routing options, the Exchange 
believes that the proposed Routing Fees will enable it to recover the 
increased costs it incurs to route Customer orders to away markets.
    The Exchange believes that amending the Non-Customer Routing Fees 
from $0.95 to $0.97 per contract is equitable and not unfairly 
discriminatory because the Exchange would assess the same Non-Customer 
Routing Fee to all Non-Customer orders routed away. The Exchange 
believes that amending the Customer Routing Fee for orders routed to 
NOM and PHLX from a Fixed Fee of $0.10 to $0.12 per contract, in 
addition to the actual transaction fee, is equitable and not unfairly 
discriminatory because the Exchange would assess the same Fixed Fee to 
all orders routed to NOM or PHLX in addition to the transaction fee 
assessed by that market.
    With respect to routing Customer orders to all other away markets 
(except NOM and PHLX) the Exchange believes that amending the Customer 
Routing Fee from $0.20 to $0.22 per contract, in addition to the actual 
transaction fee assessed) is equitable and not unfairly discriminatory 
because the Exchange would assess the same fee to all Customer orders 
routed to away markets, provided the away market does not pay a rebate. 
The Exchange believes that increasing the Routing Fee to away markets 
(other than NOM and PHLX), when the away market pays a rebate, from 
$0.10 to $0.12 per contract is equitable and not unfairly 
discriminatory because all Customer orders routed to away markets 
(other than NOM and PHLX) would be assessed the same fee, provided the 
away market paid a rebate.
    The Exchange would uniformly assess a $0.12 per contract Fixed Fee 
to orders routed to NASDAQ OMX exchanges because the Exchange is 
passing along the saving realized by leveraging NASDAQ OMX's 
infrastructure and scale to market participants when those orders are 
routed to NOM or PHLX and is providing those savings to all market 
participants. Furthermore, it is important to note that when orders are 
routed to an away market they are routed based on price first.\10\ The 
Exchange believes that it is equitable and not unfairly discriminatory 
to assess a fixed cost of $0.12 per contract to route orders to NOM and 
PHLX because the cost, in terms of actual cash outlays, to the Exchange 
to route to those markets is lower. For example, costs related to 
routing to NOM and PHLX are lower as compared to other away markets 
because NES is utilized by all three exchanges to route orders.\11\ NES 
and the three NASDAQ OMX options markets have a common data center and 
staff that are responsible for the day-to-day operations of NES. 
Because the three exchanges are in a common data center, Routing Fees 
are reduced because costly expenses related to, for example, 
telecommunication lines to obtain connectivity are avoided when routing 
orders in this instance. The costs related to connectivity to route 
orders to other NASDAQ OMX exchanges are lower than the costs to route 
to a non-NASDAQ OMX exchange. When routing orders to non-NASDAQ OMX 
exchanges, the Exchange incurs costly connectivity charges related to 
telecommunication lines, membership and access fees, and other related 
costs when routing orders. Market participants may submit orders to the 
Exchange as ineligible for routing or ``DNR'' to avoid Routing 
Fees.\12\ Also, orders are routed to an away market based on price 
first.\13\
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    \10\ See BX Rules at Chapter VI, Section 11(e) (Order Routing).
    \11\ See Chapter VI, Section 11 of the NOM and BX Rules and PHLX 
Rule 1080(m)(iii).
    \12\ See note 11.
    \13\ Id.
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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 does not believe that the 
proposal creates a burden on intra-market competition because the 
Exchange is applying the same Routing Fee increase of $0.02 per 
contract to all market participants. The Exchange will continue to 
assess separate Customer Routing Fees. Customers will continue to 
receive the lowest fees as compared to Non-Customers when routing 
orders, as is the case today. Other options exchanges also assess lower 
Routing Fees for customer orders as compared to non-customer 
orders.\14\ Market participants may submit orders to the Exchange as 
ineligible for routing or ``DNR'' to avoid Routing Fees.\15\ Also, 
orders are routed to an away market based on price first.\16\
---------------------------------------------------------------------------

    \14\ BATS assesses lower customer routing fees as compared to 
non-customer routing fees per the away market. For example BATS 
assesses Phlx customer routing fees of $0.45 per contract and an ISE 
non-customer routing fee of $0.65 per contract. See BATS BZX 
Exchange Fee Schedule.
    \15\ See note 11.
    \16\ Id.
---------------------------------------------------------------------------

    The Exchange's proposal would allow the Exchange to continue to 
recoup its costs when routing both Non-Customer and Customer orders. 
The Exchange continues to pass along savings realized by leveraging 
NASDAQ OMX's infrastructure and scale to market participants when 
Customer orders are routed to NOM and PHLX and is providing those 
savings to all market participants. Today, other options exchanges also 
assess fixed routing fees to recoup costs incurred by the exchange to 
route orders to away markets.\17\
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    \17\ See CBOE's Fees Schedule and ISE's Fee Schedule.
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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.\18\ 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.
---------------------------------------------------------------------------

    \18\ 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.

[[Page 31174]]

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-BX-2014-026 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BX-2014-026. 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-2014-026 and 
should be submitted on or before June 20, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-12519 Filed 5-29-14; 8:45 am]
BILLING CODE 8011-01-P
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