Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Customer Rebate Program, 48289-48291 [2014-19334]
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Federal Register / Vol. 79, No. 158 / Friday, August 15, 2014 / Notices
arguments concerning the foregoing.
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–2014–803 on the subject line.
Paper Comments
emcdonald on DSK67QTVN1PROD with NOTICES
• 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–OCC–2014–803. 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 advance notice that
are filed with the Commission, and all
written communications relating to the
advance notice 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 OCC and on OCC’s Web site
(https://www.theocc.com/components/
docs/legal/rules_and_bylaws/sr_occ_14_
803.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–2014–803 and should
be submitted on or before September 5,
2014.
By the Commission.
Kevin M. O’Neill,
Deputy Secretary.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72807; File No. SR–Phlx–
2014–52]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the
Customer Rebate Program
August 11, 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 August 1,
2014, 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 the Substance
of the Proposed Rule Change
The Exchange proposes to amend the
Customer Rebate Program in Section B
of the Pricing Schedule.
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 amend the
‘‘Customer Rebate Program,’’ in Section
B of the Pricing Schedule to provide
[FR Doc. 2014–19330 Filed 8–14–14; 8:45 am]
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BILLING CODE 8011–01–P
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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48289
that the Category B rebate will not be
paid when an electronically-delivered
Customer Complex Order 3 executes
against another electronically-delivered
Customer Complex Order. The
Exchange believes that Customer
Complex Order to Customer Complex
Order transactions are rare and no
longer believes that offering rebates
pursuant to Section B for this scenario
is necessary to attract Customer
Complex Orders to the Exchange.
Currently, the Exchange has a
Customer Rebate Program consisting of
five tiers that pays Customer rebates on
two Categories, A 4 and B,5 of
transactions.6 A Phlx member qualifies
for a certain rebate tier based on the
percentage of total national customer
volume in multiply-listed options that it
transacts monthly on Phlx. The
Exchange calculates Customer volume
in Multiply Listed Options by totaling
electronically-delivered and executed
volume, exclude volume associated
with electronic Qualified Contingent
Cross (‘‘QCC’’) Orders,7 as defined in
3 A Complex Order is any order involving the
simultaneous purchase and/or sale of two or more
different options series in the same underlying
security, priced at a net debit or credit based on the
relative prices of the individual components, for the
same account, for the purpose of executing a
particular investment strategy. Furthermore, a
Complex Order can also be a stock-option order,
which is an order to buy or sell a stated number
of units of an underlying stock or exchange-traded
fund (‘‘ETF’’) coupled with the purchase or sale of
options contract(s). See Exchange Rule 1080,
Commentary .08(a)(i).
4 Category A rebates are paid to members
executing electronically-delivered Customer Simple
Orders in Penny Pilot Options and Customer
Simple Orders in Non-Penny Pilot Options in
Section II symbols. Rebates are paid on Customer
PIXL Orders in Section II symbols that execute
against non-Initiating Order interest. In the instance
where member organizations qualify for Tier 4 or
higher in the Customer Rebate Program, Customer
PIXL Orders that execute against a PIXL Initiating
Order will be paid a rebate of $0.14 per contract.
5 Category B rebates are paid to members
executing electronically-delivered Customer
Complex Orders in Penny Pilot Options and NonPenny Pilot Options in Section II symbols. Rebates
are paid on Customer PIXL Complex Orders in
Section II symbols that execute against nonInitiating Order interest. In the instance where
member organizations qualify for Tier 4 or higher
in the Customer Rebate Program, Customer
Complex PIXL Orders that execute against a
Complex PIXL Initiating Order will be paid a rebate
of $0.17 per contract.
6 See Section B of the Pricing Schedule.
7 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
Continued
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48290
Federal Register / Vol. 79, No. 158 / Friday, August 15, 2014 / Notices
Exchange Rule 1080(o).8 The Exchange
pays the following rebates: 9
Percentage thresholds of national customer volume in
Multiply-Listed Equity and ETF options Classes,
excluding SPY options
(monthly)
Customer rebate tiers
Tier
Tier
Tier
Tier
Tier
1
2
3
4
5
............................................................................
............................................................................
............................................................................
............................................................................
............................................................................
Today, the Exchange pays Category B
rebates to members executing
electronically-delivered Customer
Complex Orders in Penny Pilot Options
and Non-Penny Pilot Options in Section
II symbols. The Exchange proposes to
exclude electronically-delivered
Customer Complex Orders that execute
against another electronically-delivered
Customer Complex Orders from the
Category B rebates.
2. Statutory Basis
emcdonald on DSK67QTVN1PROD with NOTICES
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the Act,10
in general, and with Section 6(b)(4) and
6(b)(5) of the Act,11 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 that the Exchange operates or
controls, and is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange’s proposal to not pay a
Category B rebate when an
electronically-delivered Customer
Complex Order executes against another
electronically-delivered Customer
Complex Order is reasonable because
the Exchange does not believe it is
necessary to pay rebates on Customer
orders in the above scenario to attract
Customer Complex Orders to the
Exchange for execution. Further, the
instances of electronically-delivered
Customer Complex Orders that execute
against other electronically-delivered
Customer Complex Orders is rare and
the Exchange believes it is reasonable to
not incur negative revenue scenarios for
Complex Orders as would be the case
with the above described transaction.
Also, the Exchange does not feel that the
(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).
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Jkt 232001
0.00%–0.60% ...............................................................
Above 0.60%–1.10% ....................................................
Above 1.10%–1.60% ....................................................
Above 1.60%–2.50% ....................................................
Above 2.50% ................................................................
Customer rebate incentive brings a
greater number of Customer orders as a
result of this incentive and therefore
desires to exclude these types of
transactions from the Category B rebate.
The Exchange’s proposal to not pay a
Category B rebate when an
electronically-delivered Customer
Complex Order executes against another
electronically-delivered Customer
Complex Order is equitable and not
unfairly discriminatory because no
market participant would be entitled to
a Category B rebate for these type of
transactions.
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. While market
participants will be encouraged to
transact a greater number of Customer
orders to qualify for a rebate, the
Exchange does not believe the current
rebate incentivizes a greater number of
Customer Complex Orders executing
against other electronically-delivered
Customer Complex Orders on Phlx. The
Exchange’s proposal to not pay a
Category B rebate on Customer Complex
Orders executing against other
electronically-delivered Customer
Complex Orders will not impose an
undue burden on competition because
no market participant would be entitled
to a Category B rebate for these type of
transactions.
The Exchange operates in a highly
competitive market, comprised of
8 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.
9 SPY is included in the calculation of Customer
volume in Multiply Listed Options that are
PO 00000
Frm 00179
Fmt 4703
Sfmt 4703
Category A
Category B
$0.00
* 0.10
* 0.12
0.16
0.17
$0.00
* 0.17
* 0.17
0.19
0.19
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
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.12 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.
electronically-delivered and executed for purposes
of the Customer Rebate Program, however, the
rebates do not apply to electronic executions in
SPY.
10 15 U.S.C. 78f.
11 15 U.S.C. 78f(b)(4) and (5).
12 15 U.S.C. 78s(b)(3)(A)(ii).
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Federal Register / Vol. 79, No. 158 / Friday, August 15, 2014 / 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–
Phlx–2014–52 on the subject line.
Paper Comments
emcdonald on DSK67QTVN1PROD with NOTICES
• 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–Phlx–2014–52. 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 such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–Phlx–
2014–52, and should be submitted on or
before September 5, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
13 17
CFR 200.30–3(a)(12).
VerDate Mar<15>2010
17:31 Aug 14, 2014
Jkt 232001
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–19334 Filed 8–14–14; 8:45 am]
BILLING CODE 8011–01–P
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
Request for Comments and Notice of
Public Hearing Concerning China’s
Compliance With WTO Commitments
Office of the United States
Trade Representative.
ACTION: Request for comments and
notice of public hearing concerning
China’s compliance with its WTO
commitments.
AGENCY:
The interagency Trade Policy
Staff Committee (TPSC) will convene a
public hearing and seek public
comment to assist the Office of the
United States Trade Representative
(USTR) in the preparation of its annual
report to the Congress on China’s
compliance with the commitments
made in connection with its accession
to the World Trade Organization (WTO).
DATES: Persons wishing to testify at the
hearing must provide written
notification of their intention, as well as
a summary of their testimony, by
Wednesday, September 17, 2014.
Written comments are also due by
Wednesday, September 17, 2014. A
hearing will be held in Washington, DC,
on Wednesday, October 1, 2014.
ADDRESSES: Notifications of intent to
testify and written comments should be
submitted electronically via the Internet
at https://www.regulations.gov. For
alternatives to on-line submissions,
please contact Yvonne Jamison, Trade
Policy Staff Committee, at (202) 395–
3475.
SUMMARY:
For
procedural questions concerning written
comments or participation in the public
hearing, contact Yvonne Jamison at
(202) 395–3475. All other questions
should be directed to Terrence J.
McCartin, Deputy Assistant United
States Trade Representative for China
Enforcement, at (202) 395–3900, or
Philip D. Chen, Chief Counsel for China
Enforcement, at (202) 395–3150.
SUPPLEMENTARY INFORMATION:
FOR FURTHER INFORMATION CONTACT:
1. Background
China became a Member of the WTO
on December 11, 2001. In accordance
with section 421 of the U.S.-China
Relations Act of 2000 (Pub. L. 106–286),
USTR is required to submit, by
December 11 of each year, a report to
PO 00000
Frm 00180
Fmt 4703
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48291
Congress on China’s compliance with
commitments made in connection with
its accession to the WTO, including
both multilateral commitments and any
bilateral commitments made to the
United States. In accordance with
section 421, and to assist it in preparing
this year’s report, the TPSC is hereby
soliciting public comment. Last year’s
report is available on USTR’s Internet
Web site (https://www.ustr.gov/sites/
default/files/2013-Report-to-CongressChina-WTO-Compliance.pdf).
The terms of China’s accession to the
WTO are contained in the Protocol on
the Accession of the People’s Republic
of China (including its annexes)
(Protocol), the Report of the Working
Party on the Accession of China
(Working Party Report), and the WTO
agreements. The Protocol and Working
Party Report can be found on the
Department of Commerce Web page,
https://www.mac.doc.gov/china/
WTOAccessionPackageNEW.html, or on
the WTO Web site, https://
docsonline.wto.org (document symbols:
WT/L/432, WT/MIN(01)/3, WT/
MIN(01)/3/Add.1, WT/MIN(01)/3/
Add.2).
2. Public Comment and Hearing
USTR invites written comments and/
or oral testimony of interested persons
on China’s compliance with
commitments made in connection with
its accession to the WTO, including, but
not limited to, commitments in the
following areas: (a) Trading rights; (b)
import regulation (e.g., tariffs, tariff-rate
quotas, quotas, import licenses); (c)
export regulation; (d) internal policies
affecting trade (e.g., subsidies, standards
and technical regulations, sanitary and
phytosanitary measures, government
procurement, trade-related investment
measures, taxes and charges levied on
imports and exports); (e) intellectual
property rights (including intellectual
property rights enforcement); (f)
services; (g) rule of law issues (e.g.,
transparency, judicial review, uniform
administration of laws and regulations)
and status of legal reform; and (h) other
WTO commitments. In addition, given
the United States’ view that China
should be held accountable as a full
participant in, and beneficiary of, the
international trading system, USTR
requests that interested persons
specifically identify unresolved
compliance issues that warrant review
and evaluation by USTR’s China
Enforcement Task Force.
Written comments must be received
no later than Wednesday, September 17,
2014.
A hearing will be held on Wednesday,
October 1, 2014, in Room 1, 1724 F
E:\FR\FM\15AUN1.SGM
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]]>Agencies
[Federal Register Volume 79, Number 158 (Friday, August 15, 2014)]
[Notices]
[Pages 48289-48291]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-19334]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72807; File No. SR-Phlx-2014-52]
Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Customer Rebate Program
August 11, 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 August 1, 2014, NASDAQ OMX PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
the proposed rule change as described in Items I, II, and III, below,
which Items have been prepared by the Exchange. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The Exchange proposes to amend the Customer Rebate Program in
Section B of the Pricing Schedule.
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 amend the ``Customer Rebate Program,'' in
Section B of the Pricing Schedule to provide that the Category B rebate
will not be paid when an electronically-delivered Customer Complex
Order \3\ executes against another electronically-delivered Customer
Complex Order. The Exchange believes that Customer Complex Order to
Customer Complex Order transactions are rare and no longer believes
that offering rebates pursuant to Section B for this scenario is
necessary to attract Customer Complex Orders to the Exchange.
---------------------------------------------------------------------------
\3\ A Complex Order is any order involving the simultaneous
purchase and/or sale of two or more different options series in the
same underlying security, priced at a net debit or credit based on
the relative prices of the individual components, for the same
account, for the purpose of executing a particular investment
strategy. Furthermore, a Complex Order can also be a stock-option
order, which is an order to buy or sell a stated number of units of
an underlying stock or exchange-traded fund (``ETF'') coupled with
the purchase or sale of options contract(s). See Exchange Rule 1080,
Commentary .08(a)(i).
---------------------------------------------------------------------------
Currently, the Exchange has a Customer Rebate Program consisting of
five tiers that pays Customer rebates on two Categories, A \4\ and
B,\5\ of transactions.\6\ A Phlx member qualifies for a certain rebate
tier based on the percentage of total national customer volume in
multiply-listed options that it transacts monthly on Phlx. The Exchange
calculates Customer volume in Multiply Listed Options by totaling
electronically-delivered and executed volume, exclude volume associated
with electronic Qualified Contingent Cross (``QCC'') Orders,\7\ as
defined in
[[Page 48290]]
Exchange Rule 1080(o).\8\ The Exchange pays the following rebates: \9\
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\4\ Category A rebates are paid to members executing
electronically-delivered Customer Simple Orders in Penny Pilot
Options and Customer Simple Orders in Non-Penny Pilot Options in
Section II symbols. Rebates are paid on Customer PIXL Orders in
Section II symbols that execute against non-Initiating Order
interest. In the instance where member organizations qualify for
Tier 4 or higher in the Customer Rebate Program, Customer PIXL
Orders that execute against a PIXL Initiating Order will be paid a
rebate of $0.14 per contract.
\5\ Category B rebates are paid to members executing
electronically-delivered Customer Complex Orders in Penny Pilot
Options and Non-Penny Pilot Options in Section II symbols. Rebates
are paid on Customer PIXL Complex Orders in Section II symbols that
execute against non-Initiating Order interest. In the instance where
member organizations qualify for Tier 4 or higher in the Customer
Rebate Program, Customer Complex PIXL Orders that execute against a
Complex PIXL Initiating Order will be paid a rebate of $0.17 per
contract.
\6\ See Section B of the Pricing Schedule.
\7\ 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).
\8\ 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.
\9\ 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
Customer rebate tiers Multiply-Listed Equity and ETF Category A Category B
options Classes, excluding SPY
options (monthly)
----------------------------------------------------------------------------------------------------------------
Tier 1........................................ 0.00%-0.60%..................... $0.00 $0.00
Tier 2........................................ Above 0.60%-1.10%............... * 0.10 * 0.17
Tier 3........................................ Above 1.10%-1.60%............... * 0.12 * 0.17
Tier 4........................................ Above 1.60%-2.50%............... 0.16 0.19
Tier 5........................................ Above 2.50%..................... 0.17 0.19
----------------------------------------------------------------------------------------------------------------
Today, the Exchange pays Category B rebates to members executing
electronically-delivered Customer Complex Orders in Penny Pilot Options
and Non-Penny Pilot Options in Section II symbols. The Exchange
proposes to exclude electronically-delivered Customer Complex Orders
that execute against another electronically-delivered Customer Complex
Orders from the Category B rebates.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\10\ in general, and with
Section 6(b)(4) and 6(b)(5) of the Act,\11\ 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 that the Exchange operates or controls, and is not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange's proposal to not pay a Category B rebate when an
electronically-delivered Customer Complex Order executes against
another electronically-delivered Customer Complex Order is reasonable
because the Exchange does not believe it is necessary to pay rebates on
Customer orders in the above scenario to attract Customer Complex
Orders to the Exchange for execution. Further, the instances of
electronically-delivered Customer Complex Orders that execute against
other electronically-delivered Customer Complex Orders is rare and the
Exchange believes it is reasonable to not incur negative revenue
scenarios for Complex Orders as would be the case with the above
described transaction. Also, the Exchange does not feel that the
Customer rebate incentive brings a greater number of Customer orders as
a result of this incentive and therefore desires to exclude these types
of transactions from the Category B rebate.
The Exchange's proposal to not pay a Category B rebate when an
electronically-delivered Customer Complex Order executes against
another electronically-delivered Customer Complex Order is equitable
and not unfairly discriminatory because no market participant would be
entitled to a Category B rebate for these type of transactions.
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. While market participants will be
encouraged to transact a greater number of Customer orders to qualify
for a rebate, the Exchange does not believe the current rebate
incentivizes a greater number of Customer Complex Orders executing
against other electronically-delivered Customer Complex Orders on Phlx.
The Exchange's proposal to not pay a Category B rebate on Customer
Complex Orders executing against other electronically-delivered
Customer Complex Orders will not impose an undue burden on competition
because no market participant would be entitled to a Category B rebate
for these type of transactions.
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 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.\12\ 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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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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[[Page 48291]]
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-2014-52 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-Phlx-2014-52. 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-Phlx-2014-52, and should be
submitted on or before September 5, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-19334 Filed 8-14-14; 8:45 am]
BILLING CODE 8011-01-P
