Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Common Ownership, 53483-53485 [2014-21358]
Download as PDF
Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
of the Act and Rule 19b–4(f)(6)(iii)
thereunder.
A proposed rule change filed under
Rule 19b–4(f)(6) 14 normally does not
become operative prior to 30 days after
the date of the filing. However, pursuant
to Rule 19b–4(f)(6)(iii),15 the
Commission may designate a shorter
time if such action is consistent with the
protection of investors and the public
interest.
At any time within 60 days of the
filing of such 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
under Section 19(b)(2)(B) 16 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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
offices 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–
NYSEMKT–2014–71, and should be
submitted on or before September 30,
2014.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Kevin M. O’ Neill,
Deputy Secretary.
tkelley on DSK3SPTVN1PROD 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–NYSEMKT–2014–71 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–NYSEMKT–2014–71. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
[FR Doc. 2014–21390 Filed 9–8–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72964; File No. SR–BX–
2014–041]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change Relating to
Common Ownership
September 3, 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
21, 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.
14 17
17 17
15 17
1 15
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
16 15 U.S.C. 78s(b)(2)(B).
VerDate Mar<15>2010
17:39 Sep 08, 2014
Jkt 232001
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
53483
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to harmonize
the treatment of the aggregation of
activity of affiliated members for the
purposes of assessing charges or credits.
The Exchange requests that this filing
become operative on December 1, 2014.
The text of the proposed rule change
is set forth below. Proposed new
language is in italics; deleted text is in
brackets.
*
*
*
*
*
7027. Aggregation of Activity of
Affiliated Members
(a) No Change
(b) No Change
(c) For purposes of this Rule 7027, the
term[s set forth below shall have the
following meanings:]
[(1) An] ‘‘affiliate’’ of a member shall
mean any [wholly owned subsidiary,
parent, or sister of the ]member under
75% common ownership or control of
that [is also a ]member.
[(2) A ‘‘wholly owned subsidiary’’
shall mean a subsidiary of a member,
100% of whose voting stock or
comparable ownership interest is owned
by the member, either directly or
indirectly through other wholly owned
subsidiaries.]
[(3) A ‘‘parent’’ shall mean an entity
that directly or indirectly owns 100% of
the voting stock or comparable
ownership interest of a member.]
[(4) A ‘‘sister’’ shall mean an entity,
100% of whose voting stock or
comparable ownership interest is owned
by a parent that also owns 100% of the
voting stock or comparable ownership
interest of a member.]
*
*
*
*
*
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.
E:\FR\FM\09SEN1.SGM
09SEN1
53484
Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange is proposing to amend
BX Rule 7027 to harmonize the
treatment of the aggregation of activity
of affiliated members for the purposes of
assessing charges or credits by making
it consistent with the definition of
‘‘Common Ownership’’ in Chapter XV
which relates to options pricing. The
aggregation suggested by these rules
impacts the Rule 7000 series where the
charge assessed, or credit provided, by
BX depends upon the volume of a
member’s activity. A member may
request that BX aggregate its activity
with the activity of its affiliates.3
Therefore, for purposes of applying any
provision of the Rule 7000 series where
the charge assessed, or credit provided,
by BX depends upon the volume of a
member’s activity, references to an
entity (including references to a
‘‘member’’, a ‘‘participant’’, or a ‘‘BX
Quoting Market Participant’’) shall be
deemed to include the entity and its
affiliates that have been approved for
aggregation.4
Currently, BX Rule 7027 states that for
purposes of applying any provision of
the Rule 7000 Series where the charge
assessed, or credit provided, by BX
depends upon the volume of a member’s
activity, a member may request that BX
aggregate its activity with the activity of
its affiliates.5 The rule further stipulates
that an affiliate is considered to be a
wholly-owned subsidiary, parent, or
sister of the member where the member
holds 100 percent of the voting stock or
other comparable ownership interest,
either directly or indirectly, in the
wholly owned subsidiary, parent, or
sister member.
The Exchange proposes to amend
Rule 7027 to conform that rule to that
of BX Options at Chapter XV so that
equities and options members are
3 See
Rule 7027(a)(1).
Rule 7027(b).
5 An ‘‘affiliate’’ of a member shall mean any
wholly owned subsidiary, parent, or sister of the
member that is also a member. See Rule 7027(c)(1).
A ‘‘wholly owned subsidiary’’ shall mean a
subsidiary of a member, 100 percent of whose
voting stock or comparable ownership interest is
owned by the member, either directly or indirectly
through other wholly owned subsidiaries. See Rule
7027(c)(2). A ‘‘parent’’ shall mean an entity that
directly or indirectly owns 100 percent of the voting
stock or comparable ownership interest of a
member. See Rule 7027(c)(3). A ‘‘sister’’ shall mean
an entity, 100 percent of whose voting stock or
comparable ownership interest is owned by a
parent that also owns 100 percent of the voting
stock or comparable ownership interest of a
member. See Rule 7027(c)(4).
tkelley on DSK3SPTVN1PROD with NOTICES
4 See
VerDate Mar<15>2010
17:39 Sep 08, 2014
Jkt 232001
treated consistently with respect to
affiliations of members for purposes of
pricing. BX’s Options Rule provides,
‘‘Common Ownership’’ shall mean
Participants under 75 percent common
ownership or control.6 The Exchange
desires to take the current standard of
100 percent for equities members and
align that standard to the 75 percent
standard for Options Participants.
Pursuant to Rule 7027(a)(1), a member
requesting aggregation of affiliate
activity shall be required to certify to BX
the affiliate status of entities whose
activity it seeks to aggregate prior to
receiving approval for aggregation, and
shall be required to inform BX
immediately of any event that causes an
entity to cease to be an affiliate. BX shall
review available information regarding
the entities, and reserves the right to
request additional information to verify
the affiliate status of an entity. BX shall
approve a request unless it determines
that the certification is not accurate.
Pursuant to Rule 7027(a)(2), if two or
more members become affiliated on or
prior to the sixteenth day of a month,
and submit the required request for
aggregation on or prior to the twentysecond day of the month, an approval of
the request by BX shall be deemed to be
effective as of the first day of that
month. If two or more members become
affiliated after the sixteenth day of a
month, or submit a request for
aggregation after the twenty-second day
of the month, an approval of the request
by BX shall be deemed to be effective
as of the first day of the next calendar
month. The Exchange intends to amend
the BX options rules to similarly require
the certifications and approvals as noted
herein. The Exchange intends that this
rule change and the options rule
changes noted herein harmonize the
process by which the Exchange gathers
information related to affiliated
members and then in turn, for purposes
of pricing, treat both equities and
options members alike with respect to
the application of aggregated pricing.
The Exchange proposes to apply this
pricing as of December 1, 2014 and
issue a Trader Alert to its members.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act 7 in general, and furthers the
objectives of Section 6(b)(5) of the Act 8
in particular, in that it is designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
6 See
BX Options Rules at Chapter XV.
U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
7 15
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
open market and a national market
system, and, in general to protect
investors and the public interest, in that
the proposal will harmonize the
treatment of the aggregation of activity
of affiliated members for the purposes of
assessing charges or credits with the
treatment of the aggregation of activity
of affiliated members in relation to
options pricing so that more members
will be able to benefit from lower
charges and/or increased credits. The
proposal will further serve to reduce
disparity of treatment between members
with regards to the pricing of different
services and reduce any potential for
confusion in how activity can be
aggregated. The Exchange believes the
rule change avoids disparate treatment
of members that have divided their
various business activities between
separate corporate entities as compared
to members that operate those business
activities within a single corporate
entity. By way of example, subject to
appropriate information barriers, many
firms that are members of the Exchange
operate both a market making desk and
a public customer business within the
same corporate entity. In contrast, other
members may be part of a corporate
structure that separates those business
lines into different corporate affiliates,
either for business, compliance or
historical reasons, and those affiliates
are not also considered wholly owned
affiliates. Those corporate affiliates, in
turn, are required to maintain separate
memberships with the Exchange.
Absent the proposed change, such
corporate affiliates that cannot be
considered wholly owned but are under
common control would not receive the
same treatment as members who are
considered wholly owned affiliates.
Accordingly, the Exchange believes that
its proposed policy is fair and equitable,
and not unreasonably discriminatory in
permitting both wholly owned and
common control. In addition to ensuring
fair and equal treatment of its members,
the Exchange does not want to create
incentives for its members to restructure
their business operations or compliance
functions simply due to the Exchange’s
pricing structure.
The Exchange believes that this
proposed rule change may enable
additional equity members to aggregate
pricing because the standard will be
reduced from 100 percent to 75 percent
for these members. There are no current
equity members that would no longer be
entitled to the aggregation as a result of
this rule change. Further, the Exchange
seeks to harmonize the manner in which
aggregated pricing is treated on its three
markets, The NASDAQ Stock Market
E:\FR\FM\09SEN1.SGM
09SEN1
Federal Register / Vol. 79, No. 174 / Tuesday, September 9, 2014 / Notices
LLC, NASDAQ OMX PHLX LLC and BX
and as between equities and options, by
developing one standard for aggregated
pricing and one method for collecting
such information on aggregated pricing
to ensure proper validation of that
pricing in the manner in which it is
occurring on BX for equity members
today.
Today, BATS Exchange, Inc.
(‘‘BATS’’) equity members are permitted
to aggregate share volume calculations
for wholly owned affiliates. The
Exchange [sic] allows a member to
aggregate volume with other members
that control, are controlled by, or are
under common control with such
member.9 To the extent two or more
affiliated companies maintain separate
Exchange memberships and can
demonstrate their affiliation by showing
they control, are controlled by, or are
under common control with each other,
the Exchange will permit such members
to count overall volume of the affiliates
in calculating volume. BATS does not
specify a specific percentage for such
aggregation. The Exchange is specifying
75 percent, similar to the percentage
applied to Options Participants.
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 is
merely seeking to harmonize the
treatment of the aggregation of activity
of affiliated members for the purposes of
assessing charges or credits with those
rules contained in Chapter XV which
relate to options pricing. The Exchange
also believes that certain market
participants may be able to aggregate
because the standard is decreasing from
100 percent to 75 percent.
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.
tkelley on DSK3SPTVN1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not significantly affect the
protection of investors or the public
interest; does not impose any significant
burden on competition; and by its terms
does not become operative for 30 days
9 See Securities Exchange Act Release No. 64211
(April 6, 2011), 76 FR 20414 (April 12, 2014) [sic]
(SR–BATS–2011–012).
VerDate Mar<15>2010
17:39 Sep 08, 2014
Jkt 232001
from the date on which it was filed, or
such shorter time as the Commission
may designate., it has become effective
pursuant to Section 19(b)(3)(A) 10 of the
Act and Rule 19b–4(f)(6)(iii)
thereunder.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:
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–BX–2014–041 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–2014–041. 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–
2014–041 and should be submitted on
or before September 30, 2014.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–21358 Filed 9–8–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–72969; File No. SR–Phlx–
2014–56]
Self-Regulatory Organizations;
NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to
Collection of Information Related to
Aggregation of Activity of Affiliates
September 3, 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
20, 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 Substance of
the Proposed Rule Change
The Exchange proposes to harmonize
the process by which it collects and
aggregates information from its equity
and option members and member
organizations for the purposes of
assessing charges or credits for options
and equities trading.
The Exchange requests that this filing
become operative on December 1, 2014.
12 17
10 15
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(6)(iii).
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
53485
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
1 15
E:\FR\FM\09SEN1.SGM
09SEN1
Agencies
[Federal Register Volume 79, Number 174 (Tuesday, September 9, 2014)]
[Notices]
[Pages 53483-53485]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21358]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-72964; File No. SR-BX-2014-041]
Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Common Ownership
September 3, 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 21, 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 proposes to harmonize the treatment of the aggregation
of activity of affiliated members for the purposes of assessing charges
or credits.
The Exchange requests that this filing become operative on December
1, 2014.
The text of the proposed rule change is set forth below. Proposed
new language is in italics; deleted text is in brackets.
* * * * *
7027. Aggregation of Activity of Affiliated Members
(a) No Change
(b) No Change
(c) For purposes of this Rule 7027, the term[s set forth below
shall have the following meanings:]
[(1) An] ``affiliate'' of a member shall mean any [wholly owned
subsidiary, parent, or sister of the ]member under 75% common ownership
or control of that [is also a ]member.
[(2) A ``wholly owned subsidiary'' shall mean a subsidiary of a
member, 100% of whose voting stock or comparable ownership interest is
owned by the member, either directly or indirectly through other wholly
owned subsidiaries.]
[(3) A ``parent'' shall mean an entity that directly or indirectly
owns 100% of the voting stock or comparable ownership interest of a
member.]
[(4) A ``sister'' shall mean an entity, 100% of whose voting stock
or comparable ownership interest is owned by a parent that also owns
100% of the voting stock or comparable ownership interest of a member.]
* * * * *
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 53484]]
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend BX Rule 7027 to harmonize the
treatment of the aggregation of activity of affiliated members for the
purposes of assessing charges or credits by making it consistent with
the definition of ``Common Ownership'' in Chapter XV which relates to
options pricing. The aggregation suggested by these rules impacts the
Rule 7000 series where the charge assessed, or credit provided, by BX
depends upon the volume of a member's activity. A member may request
that BX aggregate its activity with the activity of its affiliates.\3\
Therefore, for purposes of applying any provision of the Rule 7000
series where the charge assessed, or credit provided, by BX depends
upon the volume of a member's activity, references to an entity
(including references to a ``member'', a ``participant'', or a ``BX
Quoting Market Participant'') shall be deemed to include the entity and
its affiliates that have been approved for aggregation.\4\
---------------------------------------------------------------------------
\3\ See Rule 7027(a)(1).
\4\ See Rule 7027(b).
---------------------------------------------------------------------------
Currently, BX Rule 7027 states that for purposes of applying any
provision of the Rule 7000 Series where the charge assessed, or credit
provided, by BX depends upon the volume of a member's activity, a
member may request that BX aggregate its activity with the activity of
its affiliates.\5\ The rule further stipulates that an affiliate is
considered to be a wholly-owned subsidiary, parent, or sister of the
member where the member holds 100 percent of the voting stock or other
comparable ownership interest, either directly or indirectly, in the
wholly owned subsidiary, parent, or sister member.
---------------------------------------------------------------------------
\5\ An ``affiliate'' of a member shall mean any wholly owned
subsidiary, parent, or sister of the member that is also a member.
See Rule 7027(c)(1). A ``wholly owned subsidiary'' shall mean a
subsidiary of a member, 100 percent of whose voting stock or
comparable ownership interest is owned by the member, either
directly or indirectly through other wholly owned subsidiaries. See
Rule 7027(c)(2). A ``parent'' shall mean an entity that directly or
indirectly owns 100 percent of the voting stock or comparable
ownership interest of a member. See Rule 7027(c)(3). A ``sister''
shall mean an entity, 100 percent of whose voting stock or
comparable ownership interest is owned by a parent that also owns
100 percent of the voting stock or comparable ownership interest of
a member. See Rule 7027(c)(4).
---------------------------------------------------------------------------
The Exchange proposes to amend Rule 7027 to conform that rule to
that of BX Options at Chapter XV so that equities and options members
are treated consistently with respect to affiliations of members for
purposes of pricing. BX's Options Rule provides, ``Common Ownership''
shall mean Participants under 75 percent common ownership or
control.\6\ The Exchange desires to take the current standard of 100
percent for equities members and align that standard to the 75 percent
standard for Options Participants.
---------------------------------------------------------------------------
\6\ See BX Options Rules at Chapter XV.
---------------------------------------------------------------------------
Pursuant to Rule 7027(a)(1), a member requesting aggregation of
affiliate activity shall be required to certify to BX the affiliate
status of entities whose activity it seeks to aggregate prior to
receiving approval for aggregation, and shall be required to inform BX
immediately of any event that causes an entity to cease to be an
affiliate. BX shall review available information regarding the
entities, and reserves the right to request additional information to
verify the affiliate status of an entity. BX shall approve a request
unless it determines that the certification is not accurate. Pursuant
to Rule 7027(a)(2), if two or more members become affiliated on or
prior to the sixteenth day of a month, and submit the required request
for aggregation on or prior to the twenty-second day of the month, an
approval of the request by BX shall be deemed to be effective as of the
first day of that month. If two or more members become affiliated after
the sixteenth day of a month, or submit a request for aggregation after
the twenty-second day of the month, an approval of the request by BX
shall be deemed to be effective as of the first day of the next
calendar month. The Exchange intends to amend the BX options rules to
similarly require the certifications and approvals as noted herein. The
Exchange intends that this rule change and the options rule changes
noted herein harmonize the process by which the Exchange gathers
information related to affiliated members and then in turn, for
purposes of pricing, treat both equities and options members alike with
respect to the application of aggregated pricing.
The Exchange proposes to apply this pricing as of December 1, 2014
and issue a Trader Alert to its members.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \7\ in general, and furthers the objectives of Section
6(b)(5) of the Act \8\ in particular, in that it is designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general to protect investors and the public interest,
in that the proposal will harmonize the treatment of the aggregation of
activity of affiliated members for the purposes of assessing charges or
credits with the treatment of the aggregation of activity of affiliated
members in relation to options pricing so that more members will be
able to benefit from lower charges and/or increased credits. The
proposal will further serve to reduce disparity of treatment between
members with regards to the pricing of different services and reduce
any potential for confusion in how activity can be aggregated. The
Exchange believes the rule change avoids disparate treatment of members
that have divided their various business activities between separate
corporate entities as compared to members that operate those business
activities within a single corporate entity. By way of example, subject
to appropriate information barriers, many firms that are members of the
Exchange operate both a market making desk and a public customer
business within the same corporate entity. In contrast, other members
may be part of a corporate structure that separates those business
lines into different corporate affiliates, either for business,
compliance or historical reasons, and those affiliates are not also
considered wholly owned affiliates. Those corporate affiliates, in
turn, are required to maintain separate memberships with the Exchange.
Absent the proposed change, such corporate affiliates that cannot be
considered wholly owned but are under common control would not receive
the same treatment as members who are considered wholly owned
affiliates. Accordingly, the Exchange believes that its proposed policy
is fair and equitable, and not unreasonably discriminatory in
permitting both wholly owned and common control. In addition to
ensuring fair and equal treatment of its members, the Exchange does not
want to create incentives for its members to restructure their business
operations or compliance functions simply due to the Exchange's pricing
structure.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that this proposed rule change may enable
additional equity members to aggregate pricing because the standard
will be reduced from 100 percent to 75 percent for these members. There
are no current equity members that would no longer be entitled to the
aggregation as a result of this rule change. Further, the Exchange
seeks to harmonize the manner in which aggregated pricing is treated on
its three markets, The NASDAQ Stock Market
[[Page 53485]]
LLC, NASDAQ OMX PHLX LLC and BX and as between equities and options, by
developing one standard for aggregated pricing and one method for
collecting such information on aggregated pricing to ensure proper
validation of that pricing in the manner in which it is occurring on BX
for equity members today.
Today, BATS Exchange, Inc. (``BATS'') equity members are permitted
to aggregate share volume calculations for wholly owned affiliates. The
Exchange [sic] allows a member to aggregate volume with other members
that control, are controlled by, or are under common control with such
member.\9\ To the extent two or more affiliated companies maintain
separate Exchange memberships and can demonstrate their affiliation by
showing they control, are controlled by, or are under common control
with each other, the Exchange will permit such members to count overall
volume of the affiliates in calculating volume. BATS does not specify a
specific percentage for such aggregation. The Exchange is specifying 75
percent, similar to the percentage applied to Options Participants.
---------------------------------------------------------------------------
\9\ See Securities Exchange Act Release No. 64211 (April 6,
2011), 76 FR 20414 (April 12, 2014) [sic] (SR-BATS-2011-012).
---------------------------------------------------------------------------
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 is merely seeking to harmonize
the treatment of the aggregation of activity of affiliated members for
the purposes of assessing charges or credits with those rules contained
in Chapter XV which relate to options pricing. The Exchange also
believes that certain market participants may be able to aggregate
because the standard is decreasing from 100 percent to 75 percent.
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
Because the foregoing proposed rule change does not significantly
affect the protection of investors or the public interest; does not
impose any significant burden on competition; and by its terms does not
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate., it has become
effective pursuant to Section 19(b)(3)(A) \10\ of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\11\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------
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:
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-2014-041 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-2014-041. 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-2014-041 and should be
submitted on or before September 30, 2014.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21358 Filed 9-8-14; 8:45 am]
BILLING CODE 8011-01-P